How to Form a Professional Corporation in Mississippi


Steve Goldstein
Steve Goldstein
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Form a Professional Corporation in Mississippi

Are you considering starting a professional corporation in Mississippi? Congratulations! Establishing a professional corporation is an excellent choice for entrepreneurs and professionals alike who seek to benefit from a business structure that provides limited liability protection, tax advantages, and enhanced credibility. However, navigating the process of forming a professional corporation in Mississippi can be daunting.

This article aims to provide a comprehensive guide on how to form a professional corporation in Mississippi, covering everything from understanding the basics of this business entity to the essential steps and requirements you must comply with to launch your new venture successfully. Let’s dive in and explore the ins and outs of forming a professional corporation in Mississippi!

What is a Professional Corporation in Mississippi?

A professional service corporation (PSC), sometimes called a professional corporation (abbreviated as PC), is a type of organization authorized by state law to allow owners of particularly licensed professions in Mississippi. The owner of a professional corporation is responsible for their own negligence or misconduct, but they are not held personally accountable for the actions of other owners. PC or P.C. is a regularly used abbreviation to identify professional corporations.

PCs and LLCs provide personal asset protection; that is, the personal assets are free from business debts. However, they do not have similar tax benefits. There is no secret formula as to which type of business structure is better than the other. It solely depends on the requirements of your business. However, forming an LLC is easier than setting up a PC in Mississippi.

LLCBuddy Editorial Team

Unlike other types of corporations, owners of Professional Corporations get two types of citizenship. One is where they incorporated the corporation, and the other is where they conduct the business. This benefit is not available for other types of corporations. You can form a free LLC in Mississippi if you hire a professional service that provides LLC formation at $0.

How to Form a Professional Corporation in Mississippi

To form a Professional Corporation 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-

  • Doctors
  • Architects
  • Engineers
  • Accountants
  • Lawyers and others

You should be qualified to have a license to provide your service. In most cases, once you have graduated with your studies, passed the exam, and got your license, you may now form a professional corporation. However, if you work in an industry that doesn’t offer a license or professional certification, you should consider forming a corporation or limited liability company.

Step 2: Name your Professional Corporation in Mississippi

After you have decided on the idea to form a professional corporation in Mississippi, deciding the name for your corporation is significant. There is a complete guide on Mississippi LLC name guidelines for you to have a proper business name. Here are some regulations you must follow while 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)
  • No confusion with a government entity name.
  • A unique name is needed with no match
  • Limit of restricted words that need a license.

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. To keep the name, you must file a name reservation application with Mississippi Secretary of State.

A professional corporation, professional association, service corporation, or professional service corporation must be present in the name if it doesn’t already. You might opt to register your business under a different legal name if your preferred name isn’t available. Once you have chosen a name, you can submit an application for a DBA (doing business as). In this manner, you can choose any name you desire to run a clinic or law firm.

Step 3: Choose the Mississippi Registered Agent

The next step in forming a professional corporation is hiring the Mississippi Registered Agent, a person that accepts legal paperwork on behalf of 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 Mississippi Registered Agent if you have the time. However, you must stay compliant to avoid missing any important documents from Mississippi.

Step 4: File the Articles of Incorporation in Mississippi

After you hire a Mississippi 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. You should also include the names of all co-owners. All owners have to prove they have the proper license to practice the specific profession they intend to.

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 states. 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 is a document that contains all of your company’s organizational details. It is not required to draft an operating agreement in most states. Yet, having one as an internal document is strongly advised. The Mississippi operating agreement includes information like-

  1. About Business
  2. Members and management
  3. Capital contribution
  4. Profit Distribution
  5. Change of membership
  6. Dissolution

Step 6: Designate the PC Board of Directors in Mississippi

The next step is to appoint the initial board of directors in your PC in Mississippi. All the initial directors must submit their details to the owner. The owner must keep the records and submit them in accordance with the Mississippi SOS. When writing the By-laws, as a shareholder and owner, you must make sure there is a point mentioned about appointing a new director later.

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.

In creating corporate bylaws, you should include the following on how the decisions will be made.

  • The responsibilities are given to each officer.
  • How will judgments in business be made?
  • Where and when are the annual shareholder meetings?
  • The minimum number of shareholders required for decision-making.
  • Location and timing of dividend payments.

Step 8: Hold the First Board of Directors’ Meeting

After drafting the corporate bylaws, gather all the board of directors for the first meeting. This meeting will be finalized by appointing directors to manage the company’s daily operations, approve the bylaws, choose the corporation’s accounting year, and approve the stock issue. All board meetings should have minutes taken and stored with the company’s records.

Step 9: Request an EIN in Mississippi

After documenting the operating agreement, you should get or request an Employer Identification Number (EIN). An EIN will serve as the tax ID for your professional corporation. EIN can be obtained from the Internal Revenue Service (IRS). It is a 9-digit number similar to Social Security Number. EIN, however, is distinct from SSN. It is only used for business-related activities, particularly for submitting general taxes. The form must be completed and uploaded to the IRS website.

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 4 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 a number of ways. It will give your professional corporation the final advantage necessary to operate at full capacity without encountering legal or judicial issues.

Step 10: Open a Bank Account and Prepare for Taxes

Once you have filed and received your Employer Identification Number, you should open a bank account since you will use this account for yourself, your clients, and your employees.

Your business dealings in Mississippi might be simpler by having a US business bank account because it boosts your company’s legitimacy and liquidity. For firms other than sole proprietorships, most banks demand an EIN to create a business bank account. Also, keeping separate finances helps you avoid combining personal and professional finances. Also, having an EIN makes tax preparation easier. With a professional corporation, you can anticipate paying employment and corporate taxes.

Step 11: Get a Business License in Mississippi

Before your professional corporation operates in Mississippi, you need to have a business license first. A business license is a formal document issued by the state government agency that allows you to operate your business in the geographic region that that agency governs. In Mississippi, business license and permit costs depend on the business’s nature and type. You must check with the local authorities if any special licenses or city-based permits are needed.

Step 12: File Your Taxes in Mississippi

Finally, you are down to the last step. After getting a business license and being ready to operate, do not forget to file your taxes first. You should start paying taxes quarterly as soon as possible to avoid a large tax bill. Each state has different tax requirements. Go through the Mississippi classification of taxes for the taxes an LLC in Mississippi has to pay.

Important Information

Maintaining Professional and Business License in Mississippi

Now that you have established your professional corporation, you must maintain or renew your professional license every now and then. Even if your business is established but you don’t have a valid license to operate, your business is irrelevant. And, even if your professional license is still valid for a year or two, but your business license is already expired, it is still irrelevant.

Make time to check the status of your licenses at least once per year. Then, you can keep from missing anything significant. If there are any issues, you can address them.

Filing an Annual Report in Mississippi

In Mississippi, you will be required to submit a report each year. 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 one yearly in Mississippi, and you can do it yourself or hire someone else to handle it. Everything must be precise and up to date.

Advantages of Forming a Professional Corporation in Mississippi

A professional corporation takes a lot of time to process and pursue. However, with the help of the Mississippi Registered Agent, everything will become easier. In fact, there are advantages that will help you form a professional corporation in Mississippi.

  1. Limited Liability: The biggest advantage of setting up a professional corporation is that the owners are not held personally responsible for the debts and obligations of the company. This indicates that only the company’s assets will be confiscated to settle claims and creditors if the business is sued or declares bankruptcy. Additionally, this protection exempts corporate owners from being held accountable for other owners’ reckless or criminally negligent acts.
  1. Tax Deductions: Similar company expenses, such as employee fringe benefits, startup and operating costs, and equipment purchases, can be written off by professional companies in the same ways they can be for other kinds of firms. However, there are several tax deductions professional corporations can take advantage of that other types of businesses can’t. For example, the salaries and bonuses paid to owners and employees are tax-deductible.
  1. Retained Earnings: Professional corporations can keep a portion of their profits under the corporate tax system to grow their companies.

FAQs

What is a professional corporation?
A professional corporation is a type of corporation that is formed for the purpose of providing professional services, such as accounting, engineering, legal services, or medical services.
How do I form a professional corporation in Mississippi?
In order to form a professional corporation in Mississippi, you must submit the articles of incorporation to the Mississippi Secretary of State. Additionally, you must also register with the Mississippi Department of Revenue and obtain a Mississippi business license.
What are the benefits of forming a professional corporation in Mississippi?
Forming a professional corporation in Mississippi provides several benefits, such as limited liability protection, easier access to capital, and tax advantages.
What are the requirements for forming a professional corporation in Mississippi?
In order to form a professional corporation in Mississippi, you must submit the articles of incorporation to the Mississippi Secretary of State. Additionally, you must also register with the Mississippi Department of Revenue and obtain a Mississippi business license.
What type of professionals can form a professional corporation in Mississippi?
Professionals such as doctors, lawyers, accountants, engineers, and other licensed professionals can form a professional corporation in Mississippi.
What name should I choose for my professional corporation in Mississippi?
The name you choose for your professional corporation in Mississippi must include one of the following words or abbreviations
Do I need to register my professional corporation with the Mississippi Secretary of State?
Yes, in order to form a professional corporation in Mississippi, you must submit the articles of incorporation to the Mississippi Secretary of State.
Do I need to obtain a Mississippi business license?
Yes, you must register with the Mississippi Department of Revenue and obtain a Mississippi business license in order to form a professional corporation in Mississippi.
What other documents do I need to form a professional corporation in Mississippi?
In addition to the articles of incorporation, you may need to obtain other documents such as an operating agreement and a tax identification number.
Who can be a director in a professional corporation in Mississippi?
In a professional corporation in Mississippi, directors must be individuals who are licensed in the same profession as the professional corporation.
What are the filing fees for forming a professional corporation in Mississippi?
The filing fees for forming a professional corporation in Mississippi depend on the number of shares the corporation is authorized to issue.
What are the ongoing requirements for a professional corporation in Mississippi?
The ongoing requirements for a professional corporation in Mississippi include filing annual reports, maintaining corporate records, and paying taxes.
What are the tax requirements for a professional corporation in Mississippi?
In Mississippi, professional corporations are subject to corporate income tax, franchise tax, and sales and use tax.
Does a professional corporation in Mississippi need to be registered with the IRS?
Yes, a professional corporation in Mississippi will need to obtain a federal tax identification number (EIN) from the IRS in order to file taxes and open a business bank account.
Does a professional corporation in Mississippi need to have a registered agent?
Yes, a professional corporation in Mississippi must have a registered agent located in the state in order to receive legal documents such as service of process.
Does a professional corporation in Mississippi need to obtain a surety bond?
No, a professional corporation in Mississippi is not required to obtain a surety bond.
What types of insurance does a professional corporation in Mississippi need to have?
It is recommended that a professional corporation in Mississippi obtain liability insurance to protect against potential lawsuits.
Does a professional corporation in Mississippi need to have an audit?
No, a professional corporation in Mississippi is not required to have an audit, but it is recommended that a business owner consult with an accountant to determine if an audit is needed.
Does a professional corporation in Mississippi need to file annual reports?
Yes, a professional corporation in Mississippi must file annual reports with the Mississippi Secretary of State in order to maintain its corporate status.
What are the penalties for failing to file annual reports for a professional corporation in Mississippi?
If a professional corporation in Mississippi fails to file annual reports, the corporation may be subject to fines and may lose its corporate status.
What are the requirements for dissolving a professional corporation in Mississippi?
In order to dissolve a professional corporation in Mississippi, the corporation must submit a Certificate of Dissolution to the Mississippi Secretary of State.
What are the requirements for transferring ownership of a professional corporation in Mississippi?
In order to transfer ownership of a professional corporation in Mississippi, the corporation must submit a Certificate of Transfer to the Mississippi Secretary of State.
Can a professional corporation in Mississippi issue stock?
Yes, a professional corporation in Mississippi can issue stock to shareholders in order to raise capital.
Can a professional corporation in Mississippi enter into contracts?
Yes, a professional corporation in Mississippi can enter into contracts with individuals and businesses.
Are professional corporations in Mississippi required to hold annual meetings?
Yes, professional corporations in Mississippi are required to hold annual meetings in order to review corporate documents and make decisions about the future of the corporation.
Are professional corporations in Mississippi allowed to pay dividends?
Yes, professional corporations in Mississippi are allowed to pay dividends to shareholders.
Are there any restrictions on professional corporations in Mississippi?
Yes, professional corporations in Mississippi are subject to the laws of the state, including restrictions on activities such as selling securities or providing professional services outside the state.
Does a professional corporation in Mississippi need to have a board of directors?
Yes, a professional corporation in Mississippi must have a board of directors in order to manage the business.
How can I learn more about forming a professional corporation in Mississippi?
You can learn more about forming a professional corporation in Mississippi by visiting the Mississippi Secretary of State’s website or by consulting with an attorney.
What is required to form a professional corporation in Mississippi?
To form a professional corporation in Mississippi, you will need to submit Articles of Incorporation to the Mississippi Secretary of State, along with the applicable filing fee. Additionally, a registered agent must be designated in Mississippi.
What is the filing fee to form a professional corporation in Mississippi?
The filing fee to form a professional corporation in Mississippi is $50.
Are there any other requirements for a professional corporation in Mississippi?
Yes, professional corporations must file an annual report with the Mississippi Secretary of State. The report must include the name and address of the corporation’s registered agent.

Also Read

Why Mississippi Professional Corporation is So Important

Professional corporations in Mississippi offer a range of services that are vital for businesses to function effectively. These corporations provide expertise in legal matters, financial management, and regulatory compliance. They offer guidance on tax matters, commercial disputes, employee relations, and other legal issues that businesses may encounter. By leveraging the knowledge and experience of professionals, businesses can navigate complex regulatory requirements and make informed decisions that benefit their overall operations.

Moreover, Mississippi Professional Corporation also plays a critical role in protecting the personal assets of business owners and shareholders. By establishing a professional corporation, individuals can shield their personal assets from business liabilities and debts. This protection is invaluable for business owners who want to mitigate financial risk and safeguard their hard-earned assets.

Additionally, professional corporations promote transparency and accountability in business operations. By adhering to established ethical standards and best practices, these corporations uphold the integrity and credibility of business transactions. They help businesses maintain compliance with laws and regulations, minimize risks of legal disputes, and foster a culture of responsibility and trust within the organization.

Furthermore, Mississippi Professional Corporation facilitates business continuity and succession planning. By structuring the business as a professional corporation, companies can ensure a smooth transition of ownership and management in the event of unexpected events or changes. This continuity planning is essential for the long-term success and sustainability of businesses, as it enables them to adapt to changing circumstances and ensure stability in operations.

Overall, the establishment of a professional corporation is a strategic decision that can have far-reaching benefits for businesses in Mississippi. By partnering with professionals who have the expertise and resources to guide them through the complexities of business operations, companies can streamline their processes, protect their interests, and achieve their goals with confidence and security.

In conclusion, Mississippi Professional Corporation is an invaluable resource for businesses seeking to thrive in a competitive marketplace. These corporations provide essential services that enable businesses to operate effectively, protect their assets, and uphold ethical standards in all their dealings. By partnering with a professional corporation, businesses can navigate legal challenges, mitigate risks, and achieve long-term success in the dynamic business environment of Mississippi.

Conclusion

In forming a professional corporation in Mississippi, having someone to help you build it is not necessary but suggestible. Even though it is easy because of the listed benefits and advantages above, forming your group of professional individuals will make it somehow successful. Just make sure to be guided by the steps and ensure that every one of the details and records is accurate and precise. And if you have any questions, share them in the comment section below.

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