How to Form a Professional Corporation in Mississippi (2024 Guide)

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Forming a Professional Corporation in Mississippi

If you would like to start and learn how to form a corporation in Mississippi, there are a few things that you should do now. However, in a professional corporation, professionals must create a special organizational structure to establish a professional or service corporation. Among the appropriate professions to organize a professional corporation in Mississippi are accountants, physicians, engineers, architects, and attorneys.

Forming a professional corporation in Mississippi or any business organization needs a certain number of steps. In this article, Webinarcare Editorial Team is going to share those steps. Keep in mind that these are general procedures. Depending on local law, it may be modified. For instance, your professional corporation may be subject to city or county-based rules.

Form a Professional Corporation in Mississippi

What is a Professional Corporation in Mississippi?

A professional service corporation (PSC), often known as a professional corporation (abbreviated as PC), is a particular type of organization that is permitted by state law to allow owners of specifically licensed professions to practice in the Mississippi. A professional corporation’s owner is answerable for their own negligence or wrongdoing but is not held personally liable for the actions of other owners. The abbreviation PC or P.C. is frequently used to denote professional corporations.

This structure allows professionals to enjoy some of the benefits and protections of a traditional corporation while maintaining their professional status and abiding by the regulations of their respective licensing boards.

LegalZoom is the recommended corporation formation if you are thinking of forming a professional corporation from scratch. However, you can always start an LLC in Mississippi, if you changed your mind.

– WEBINARCARE EDITORIAL TEAM

How to Form a Professional Corporation in Mississippi

To form a Professional Corporation in Mississippi for the professional service you provide, you must follow a few steps that include verifying if you are qualified for a PC, naming your business, hiring a Registered Agent, filing the Articles of Incorporation, outlining an operating agreement, requesting for an EIN, opening a bank account, getting a business license, and filing for an Annual report and taxes.

Step 1: Verify If You Are Qualified for a Professional Corporation

In forming a professional corporation in Mississippi, you should know if you are qualified. There are specific professions that are allowed to form a professional service corporation, including-

To provide your service, you must be qualified and have a license. In most cases, you can now form a professional corporation after finishing your studies, passing the exam, and receiving your license. If you work in an industry that does not provide a license or professional certification, you should consider starting an LLC or corporation.

Step 2: Name your Professional Corporation in Mississippi

After you have decided to form a professional corporation in Mississippi, you must choose a name for your corporation. Here are some pointers to consider when naming your professional corporation.

  • The business name should have the word PC, frequently followed by the name of the principal owner in place of Inc or LLC. (Example. John Doe, MD, PC)
  • Limit of restricted words that need a license.
  • A unique name is needed with no match
  • No confusion with a government entity name.

In Mississippi, if you do not wish to file your professional corporation right away but want to hold the name that you have decided on, then you can reserve your corporation name for 180 days. You must file a name reservation application in the Mississippi Secretary of State to keep the name.

If not already present, a professional corporation, professional association, service corporation, or professional service corporation must be included in the name. You may register your business under a different legal name if your preferred legal name is unavailable. Once you’ve decided on a name, you can apply for Mississippi DBA (doing business as). This way, you can run a clinic or law firm under your name.

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Step 3: Choose the Mississippi Registered Agent

The next step in forming a professional corporation is hiring a Registered Agent, who accepts legal paperwork for your business. This person or business will receive important tax forms, legal documents, all notices of lawsuits, and other official government correspondence in Mississippi. Forming a professional corporation for your service will be easier if you have Registered Agent in Mississippi.

Alternatively, you can serve as your own Registered Agent if you have the time. Usually, in Mississippi, a Registered Agent costs is ranging from $50 – $150. To make it easier, you can hire Mississippi Registered Agent Services for your professional corporation.

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Step 4: File the Articles of Incorporation in Mississippi

After you hire a Registered Agent to form a professional corporation, the next step is to file the Mississippi Articles of Incorporation. In writing the Articles of Incorporation, the business name, owner’s contact information, corporation address, and Registered Agent contact information, should be written. Include the names of all co-owners as well. All owners must demonstrate that they have the necessary licenses to practice the profession in question.

Filing the Articles of Incorporation in Mississippi may be done with one method, that is online. The Articles of Incorporation fee may vary from different state. However, in Mississippi, it costs $50 for filing online. Create an account/Log in to the SOS site, get the online form, fill it, and submit online. For offline filing, there’s no offline method of filing the documents.

Step 5: Write an Operating Agreement in Mississippi

An operating agreement in Mississippi is a document that contains all of your company’s organizational details. It is optional to draft an operating agreement in most states. Yet, having one as an internal document is strongly advised. The operating agreement includes information like-

  • About Business
  • Members and management
  • Capital contribution
  • Profit Distribution
  • Change of membership
  • Dissolution

Step 6: Designate the PC Board of Directors in Mississippi

The next step is to form the first board of directors for your PC in Mississippi. All of the initial directors must provide the owner with their contact information. The owner must keep records and submit them by the Mississippi Secretary of State. As a shareholder and owner, you must ensure that a provision for appointing a new director is included in the By-laws. In Mississippi, you must have One directors in forming your Professional Corporation.

Step 7: Write the Corporate Bylaws

Now that you are done forming the team of the board of directors, the next step is to draft corporate bylaws. Corporate bylaws are the basic rules that control a corporation. It includes the organization’s structure, processes, laws, and rules. As a result, all personnel, managers, and corporation members must obey the firm’s rules.

Creating comprehensive corporate bylaws requires specific knowledge about the company, its structure, and operations. However, I can provide you with a general outline of what corporate bylaws usually include. It is crucial to consult with Mississippi Business Attorney or a legal expert to ensure that your bylaws comply with the laws and regulations governing your jurisdiction and industry.

  • Name and Purpose of the Corporation
  • Registered Office and Agent
  • Shareholders
  • Board of Directors
  • Officers
  • Committees
  • Indemnification and Insurance
  • Conflict of Interest
  • Records and Reports
  • Amendments
  • Miscellaneous

Step 8: Hold the First Board of Directors’ Meeting

Gather the board of directors for the first meeting after drafting the corporate bylaws. This meeting will conclude with the appointment of directors to manage the company’s daily operations, approval of the bylaws, selection of the corporation’s financial reporting year, and approval of the stock issue. Minutes should be taken at all board meetings and kept with the company’s records.

Step 9: Request an EIN in Mississippi.

After the operating agreement’s documentation, you should get or request an Employer Identification Number (EIN) in Mississippi. The tax ID for your professional corporation will be an EIN. The Internal Revenue Service can provide an EIN (IRS). It has nine digits and is comparable to a social security number. Nevertheless, EIN is different from SSN. Only business-related tasks, primarily filing general taxes, are performed using it. The form needs to be filled out and submitted online to the IRS.

The application of an EIN in Mississippi can be through the following:

  • Apply Online- The online EIN application is the preferred method for customers to apply for and obtain an EIN.
  • Apply by Fax- Taxpayers can fax the completed Form SS-4 application to the appropriate fax number), after ensuring that the Form SS-4 contains all of the required information.
  • Apply by Mail- The EIN application Form SS-4 can be filed via mail. The processing time frame to receive the mail is four weeks.
  • Apply by Telephone-International Applicants – International applicants may call 267-941-1099 (not a toll-free number) from 6 a.m. to 11 p.m. (Eastern Time) Monday through Friday to obtain their EIN.

After you have your EIN number, you can benefit in several ways. It will give your professional corporation the absolute advantage necessary to operate at full capacity without encountering legal or judicial issues.

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Step 10: Open a Bank Account and Prepare for Taxes.

You should open a business bank account as soon as you have applied for and received your Employer Identity Number because you will use this account for yourself, your clients, and your staff. Check out the Best Banks in Mississippi for you to decide on which bank you are going to open an account.

Due to your organization’s increased legality and liquidity, having a US business bank account may make conducting business in Mississippi easier. Most banks require an EIN for businesses other than sole proprietorships to open a business bank account. Also, keeping your accounts separate will prevent you from merging your personal and business finances. Also, filing taxes is simpler when you have an EIN. You can expect to pay employee and corporate taxes when you form a professional corporation.

Step 11: Get a Business License in Mississippi

Before your professional corporation operates in Mississippi, you must have Mississippi Business License first. A business license is a formal document issued by a state government agency that allows you to conduct business in the geographic area governed by that agency. The cost of business licenses and permits in Mississippi ranges from $50 – $300. You must check with the local authorities to see if any special licenses or permits are required.

Step 12: File Your Taxes in Mississippi

Finally, you’ve arrived at the final process. Remember to file your taxes when you have obtained a business license and are ready to begin operations. To avoid a large tax bill, you should begin paying taxes quarterly as soon as possible. Each state has different tax requirements. Start examining the Mississippi tax classification for the taxes that an LLC in Mississippi must pay.

Main Characteristics of a Professional Corporation

In forming a Professional Corporation, the main characteristics must be distinguished before forming it. These are the general characteristics of forming a Professional Corporation in Mississippi.

  • Limited Liability Protection: A professional corporation provides its owners, shareholders, or members limited liability protection like a regular corporation. This means the shareholders’ personal assets are generally protected from business debts, obligations, and lawsuits, except in malpractice or professional negligence cases.
  • Mississippi Licensing Requirements: All shareholders must typically be licensed professionals in the same field in a professional corporation. The corporation must also comply with specific state regulations and licensing requirements that govern the profession.
  • Governance and Management: A professional corporation is governed by a board of directors, who the shareholders elect. The board appoints officers to manage the day-to-day operations of the corporation. All directors and officers must be licensed professionals in the same field as the corporation.
  • Taxation: Professional corporations are taxed as C corporations, where the corporation pays taxes on its income, and shareholders pay taxes on dividends received from the corporation. However, some professional corporations may be eligible for S corporation status, allowing pass-through taxation. Income, losses, deductions, and credits flow to the shareholders, who report this information on their income tax returns.
  • Restrictions on Ownership and Transfer of Shares: Professional corporations often restrict the ownership and transfer of shares to ensure that only licensed professionals in the same field can become shareholders. This helps maintain the professional nature of the corporation and adheres to state licensing requirements.
  • Malpractice Liability: While a professional corporation provides limited liability protection for general business debts and obligations, it does not shield shareholders from liability for their own malpractice or professional negligence. Shareholders can still be personally liable for their actions in providing professional services.

In summary, a professional corporation is a specialized corporate structure designed for licensed professionals, offering limited liability protection and a formal governance structure while adhering to state licensing requirements and regulations.

Maintain Professional and Business License in Mississippi

You must maintain or renew your professional license regularly now that you have established your professional corporation. Even if your company is well-established, it is only meaningful if you have a valid operating license. And it makes no difference if your professional license is still valid for a year or two, but your business license has already expired.

Make time at least once a year to check the status of your licenses. You won’t miss anything important this way. You can address any issues that arise.

Filing Annual Report in Mississippi

In Mississippi, you must submit a report. The owners’ and Registered Agent’s names and contact details are listed in the Annual Report. Also, it should include all of your yearly financial activity. You must submit the report every 1 year (15th April) in the Mississippi Secretary of State.

FAQs

What is a professional corporation in Mississippi?
A professional corporation in Mississippi is a type of corporation formed for licensed professionals, such as doctors, lawyers, engineers, and accountants.
Should I form a professional corporation or an LLC in Mississippi?
It depends on your specific needs and goals as a professional, but a professional corporation is typically recommended for licensed professionals who wish to incorporate their practice to protect their personal assets.
Do all members of a professional corporation in Mississippi need to be licensed professionals?
In Mississippi, at least one shareholder, director, or officer of the professional corporation must be a licensed professional in the business or profession in which the corporation provides services.
How do I form a professional corporation in Mississippi?
To form a professional corporation in Mississippi, you must file Articles of Incorporation with Mississippi Secretary of State and follow other corporate formalities.
What are the filing fees for forming a professional corporation in Mississippi?
The filing fee for forming a professional corporation in Mississippi is $50.
How long does it take to form a professional corporation in Mississippi?
It typically takes 3-5 business days to form a professional corporation in Mississippi after the filing has been submitted.
Can I form a professional corporation in Mississippi on my own, or do I need an attorney?
You can form a professional corporation on your own, but many people choose to use an attorney to ensure compliance with all legal requirements.
What are the advantages of forming a professional corporation in Mississippi?
The main advantages of forming a professional corporation in Mississippi include limiting personal liability, increasing credibility, and providing tax benefits.
What are the disadvantages of forming a professional corporation in Mississippi?
The main disadvantages of forming a professional corporation in Mississippi include increased administrative burden, heightened regulatory oversight, and increased costs.
Can I register my professional corporation in Mississippi to do business in other states?
Yes, you can register your professional corporation in Mississippi to do business in other states, but you will need to follow each state’s unique regulations.
Do professional corporations in Mississippi pay state-level corporate income taxes?
Yes, professional corporations in Mississippi are subject to state-level corporate income taxes.
How do professional corporations in Mississippi pay federal corporate income taxes?
Professional corporations in Mississippi typically pay federal income taxes as a C corporation or an S corporation.
What is the difference between a C corporation and an S corporation in Mississippi?
The main difference between a C corporation and an S corporation in Mississippi is the way they are taxed, with C corporations subject to double taxation and S corporations “passing through” income to shareholders.
Can unlimited liability strike down your professional corporation in Mississippi?
Forming a professional corporation in Mississippi can help limit personal liability for professional negligence, but it doesn’t entirely shield individual shareholders from all possible legal action.
Should I have a shareholders’ agreement for my professional corporation in Mississippi?
Yes, a shareholders’ agreement is generally recommended for professional corporations in Mississippi to help protect shareholders’ interests and reduce the potential for lawsuits or internal disputes.
What kind of insurance should I have for my professional corporation in Mississippi?
Professional liability insurance is highly recommended for corporations in any professional services industry in Mississippi.
Do I need to have an office in Mississippi to form a professional corporation in Mississippi?
No, you do not need to have an office in Mississippi to form a professional corporation as long as one licensed professional is located in Mississippi.
Can a professional corporation change its type to an LLC or vice versa in Mississippi?
Yes, a professional corporation may convert to an LLC or vice versa in Mississippi, but you will need to follow specific legal requirements.
Can a professional corporation in Mississippi exist indefinitely?
Yes, a professional corporation in Mississippi can exist indefinitely as long it complies with all applicable corporate formalities.
Can I operate a business under my personal name as a licensed professional in Mississippi?
You may operate a business as a licensed professional under your personal name, but registration as a professional corporation or other legal entity is typically recommended to protect personal assets.
What is the Mississippi professional corporation annual report fee?
The Mississippi Professional Corporation annual report fee is $50.
What is a foreign professional corporation in Mississippi?
A foreign professional corporation in Mississippi is a corporation that is organized outside of the state, but registers and qualifies to do business within the state.
What happens if a professional corporation in Mississippi fails to file its annual report on time?
Failure to file an annual report on time may result in a late penalty fee and administrative dissolution, which means that the corporation does not have legal authority to transact business in Mississippi.
Can I form a professional corporation online in Mississippi?
Yes, you can form a professional corporation online through the Mississippi Secretary of State’s website.
Can the secretary of state’s office give legal advice on forming a professional corporation in Mississippi?
No, the Secretary of State’s Office cannot provide legal advice.
What happens if I don’t renew my Mississippi professional corporation annually?
Failure to annually renew your professional corporation in Mississippi can result in administrative dissolution and the possible loss of limiting liability protections.
Do Mississippi Professional Corporations need a DBA?
A Mississippi Professional Corporation may do business under an assumed or DBA name but will also need to comply with registration requirements of the Secretary of State’s Office.
Is forming a professional corporation in Mississippi mandatory?
No, it is not mandatory but is recommended for licensed professionals who want their personal assets protected from business liability.
What are the benefits of forming a professional corporation in Mississippi?
The main benefit of forming a professional corporation in Mississippi is to limit personal liability for business debts and risks.
Can non-residents form a professional corporation in Mississippi?
Yes, they can as long as they meet the requirements set forth by the state.
How much does it cost to form a professional corporation in Mississippi?
The cost of forming a professional corporation in Mississippi varies and it ranges from $50 to $500, depending on different factors.
What is the process for forming a professional corporation in Mississippi?
The process of forming a professional corporation in Mississippi entails filing documents with the Secretary of State’s office.
What type of professionals can form a professional corporation in Mississippi?
Licensed professionals such as doctors, lawyers, accountants, and other licensed professionals can form a professional corporation in Mississippi.
Are there any restrictions on the shareholders in a professional corporation in Mississippi?
Shareholders in a professional corporation in Mississippi are restricted to being licensed professionals only.
Can professional corporations in Mississippi have more than one specialty?
Yes, a professional corporation in Mississippi can have several specialties.
Can the same individual form multiple professional corporations in Mississippi?
Yes, the same individual can form multiple professional corporations in Mississippi.
Is it possible to form a professional corporation in Mississippi without hiring an attorney?
Yes, it is possible to form a professional corporation in Mississippi without hiring an attorney, but hiring one can help ensure that the process is done correctly.
Do professional corporations in Mississippi pay income tax?
Yes, professional corporations in Mississippi are subject to paying income tax on their earnings.
Is there any paperwork required after forming a professional corporation in Mississippi?
Yes, professional corporations in Mississippi are required to file annual reports.
Can professional corporations in Mississippi be converted to other types of corporations?
Yes, professional corporations in Mississippi can be converted to other types of corporations.
How many shareholders are required to form a professional corporation in Mississippi?
In Mississippi, professional corporations require at least one shareholder who is a licensed professional.
Can professional corporations in Mississippi be formed using an online service?
Yes, many online legal services provide assistance in forming professional corporations in Mississippi.
Can a professional corporation in Mississippi have foreign shareholders?
Yes, professional corporations in Mississippi can have foreign shareholders.
How do professional corporations in Mississippi protect against personal liabilities?
By incorporating and following the approved guidelines, a professional corporation in Mississippi separates the business entity from the individual owners, shielding their personal liabilities.
What happens if a professional corporation in Mississippi violates state laws?
Violations of state law may put the corporation at risk of losing its liability protection and may lead to fines and other disciplinary action.
What is the purpose of bylaws for professional corporations in Mississippi?
Bylaws provide governance rules on the corporation, giving the officers guidance on their roles, terms, and voting rights.
Is every shareholder in a professional corporation in Mississippi protected against liability?
Yes, shareholders in professional corporations in Mississippi are all protected from personal liability, unless acting outside the scope of the corporation’s legal purposes.
Do professional corporations in Mississippi need a registered agent?
Yes, every professional corporation in Mississippi needs a registered agent who will receive legal documents on their behalf.
Is it necessary to file for a fictitious name to operate a professional corporation under a different name in Mississippi?
Yes, every professional corporation in Mississippi using a name other than its official title needs to register for a fictitious name.
What qualifications must professional corporations in Mississippi meet to obtain liability protection?
Professional corporations in Mississippi must ensure that their business practices follow acceptable standards and their activity must stay within their licensed fields of operation.
Can the Secretary of State reject a filing for a professional corporation in Mississippi?
Yes, if a filing for a professional corporation in Mississippi submitted online or by mail does not meet compliance standards, the state will not approve the requested action.
How does a professional corporation in Mississippi end its operations?
Bankruptcy or voluntary dissolution can bring an end to the operations of a professional corporation in Mississippi.
Are the articles of incorporation for professional corporations in Mississippi different from other corporation types?
Yes, articles of incorporation for a professional corporation in Mississippi are unique because they must contain specific information required by the state for anyone providing reserved professional services.

Also Read

How to Save Money While Forming Mississippi Professional Corporation

First and foremost, it is important to conduct thorough research and understanding of the legal requirements and regulations governing professional corporations in Mississippi. By having a clear understanding of the necessary steps and documents needed, potential business owners can avoid costly mistakes and unnecessary expenses down the road.

One of the key strategies to save money while forming a professional corporation is to handle as much of the process as possible without the need for expensive legal assistance. While seeking legal advice is recommended to ensure compliance and accuracy, there are many resources available online that can help guide individuals through the process at a fraction of the cost.

Choosing the right business structure for the professional corporation is another crucial step in saving money. By selecting the most appropriate structure for the business’s needs, entrepreneurs can potentially save on taxes, operational costs, and legal fees. It is advisable to consult with a professional accountant or tax advisor to determine the best structure for the business.

In addition, entrepreneurs can save money by carefully selecting the services and vendors needed to establish and maintain the professional corporation. By comparing prices and negotiating with service providers, business owners can potentially secure better deals and avoid unnecessary expenses.

Furthermore, utilizing technology and automation can significantly reduce costs associated with forming and operating a professional corporation. There are many software tools and online services available that can streamline processes, reduce paperwork, and increase efficiency, ultimately saving time and money.

Lastly, it is important for entrepreneurs to closely monitor and manage their finances throughout the formation process and beyond. By creating and sticking to a budget, business owners can avoid overspending and better allocate resources where they are needed most.

In conclusion, forming a professional corporation in Mississippi does not have to break the bank. By taking a strategic and proactive approach to the process, entrepreneurs can save money while ensuring their business is legally compliant and poised for success. With careful planning, research, and financial management, forming a professional corporation can be a cost-effective and rewarding endeavor.

Conclusion

In conclusion, forming a professional corporation in Mississippi is a strategic decision for licensed professionals who seek to combine their expertise and services under a single corporate entity. This business structure offers limited liability protection, a formal governance structure, and compliance with state licensing requirements. However, it also comes with certain restrictions on ownership, transfer of shares, and personal liability for professional malpractice. By carefully considering the advantages and disadvantages of a professional corporation, professionals can determine whether this structure aligns with their business goals, regulatory requirements, and risk management needs, ultimately contributing to a more organized, secure, and compliant professional practice.

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