How to File LLC Taxes in Mississippi? (A Complete Guide)
Filing state and federal taxes is important to running a successful Mississippi business that is also compliant with the Secretary of State.
To help you understand the tax filing requirements, we solicited legal advice from our in-house team of certified LLC attorneys with over sixteen years of experience in the business sector.
We spent the past three weeks reviewing the official Mississippi Department of Revenue website for the correct business tax requirements, and here's a summary of our findings.
- A single-member LLC is taxed like a sole proprietorship, while a multi-member LLC is treated like a partnership.
- LLC members are subject to a 15.3% federal income tax in Mississippi.
- The Mississippi sales and use tax for commercial LLCs is 7%.
How Are LLCs Taxed in Mississippi?
LLCs are taxed in Mississippi as pass-through entities based on the number of members. A single-member LLC is taxed like a sole proprietorship, and multi-member LLCs are taxed like partnerships.
The Mississippi Department of Revenue allows limited liability companies to select C or S Corp tax status by filing special forms with the Internal Revenue Service (IRS).
State Taxes for Mississippi LLCs
Here's the breakdown of state taxes for different LLC structures in Mississippi.
1. Single-Member LLCs
The IRS considers a single-member LLC a disregarded entity for tax purposes.
The individual owner must submit a Schedule C form as part of their personal tax return. The IRS form allows Mississippi LLC owners to declare the business's profit or loss, which is applied to their income tax rates.
2. Multi-Member LLCs
Individual Mississippi LLC members of the multi-member entity must also get a Schedule K-1 to report their portion of the LLC's profits and losses on their tax returns.
3. LLCs Taxed as S-Corp
However, an LLC with S-corp status can transfer revenue to its members without subjecting them to the 15.3% self-employment tax.
4. LLCs Taxed as C-corp
The default tax status for corporations is a C-corp, and a Mississippi LLC can be taxed as C-corp.
However, C-corps must pay Mississippi's franchise tax ($2.25 for every $1,000 above $100,000) and corporate income tax (beginning at 5% for profits of at least $10,000) in addition to the federal corporation income tax of 21%.
Federal Taxes for Mississippi LLCs
Once you have a federal tax identification number, your Mississippi LLC must pay the following taxes:
1. Federal Withholding Tax
If your business hires employees, you must withhold and remit employee income taxes to the DOR. Submit an online company registration form to the DOR via Mississippi's Taxpayer Access Point (TAP) .
After registering, you will have a recurring filing requirement (usually monthly or quarterly). Additionally, each year, you must reconcile the tax withholding made by your LLC using Form 89-140 .
2. State Income Tax
The Mississippi state income LLC tax is calculated based on your revenue amount; different income brackets have different state tax rates.
The graduated Mississippi income tax rates are as follows:
- 0% for the initial $3,000 of taxable revenue
- 3% for the next $2,000 of the taxable amount
- 4% for the next $5,000 of taxable income
- 5% on all taxable income over $10,000
You’ll pay income taxes based on the company’s taxable income.
However, suppose your LLC elects to be taxed as a C-corporation. In that case, it will also be responsible for paying Mississippi's franchise tax return, which is $2.25 for every $1,000 above $100,000 you spend operating a business there.
Any property the firm has with a value larger than the sum of cash spent is counted as taxable assets, even if the first $100,000 is exempt from the franchise tax. Corporate franchise tax has a $25 minimum.
Other additional business taxes your LLC may pay include the following:
1. Sales Tax
You must collect and pay sales tax if your Mississippi limited liability company (LLC) sells items to customers there.
This implies that the Department of Revenue will need you to register for this purpose; log in to the DOR website and register to pay the Mississippi sales tax of 7%.
"Once you receive a sales tax permit, you must provide reports on the state sales tax you've collected on a regular basis. "
- Mathew Limsky, LLC Attorney
The Mississippi sales tax filing frequency is determined by the total amount of tax you owe; if it's less than $600 for the year, you must submit it once. The DOR website offers online and mail options to file and collect sales tax.
2. Unemployment Insurance Tax (UI)
The employer taxes, like the UI tax for your Mississippi LLC, will fluctuate between 0.0% and 5.4% due to several factors.
A start-up's typical tax rate is 1% in the first year of responsibility, 1.10% in the second, and 1.20% each succeeding year until the employer qualifies for a reduced tax rate (often peaking at 5.4%).
3. Workers' Compensation
The projected Mississippi workers' compensation rate is $1.19 for every $100 insured payroll.
However, this can vary depending on many things, including how many employees your firm has, your work sector, how your business is run daily, and more.
Unless the employee is exempt, such as domestic or agricultural labor, all Mississippi enterprises with more than five employees must obtain workers' compensation insurance.
4. Local Taxes
Your LLC can be liable to regional Mississippi taxes depending on the county or city your firm is in. This varies from location to location and the type of business you operate.
Some regions require you to pay taxes on specific types of commerce, such as hospitality or tourism, and the privilege to sell specific items, like tobacco, cigarettes, or alcohol, in addition to sales tax.
For instance, Baldwyn levies a 2% tourism tax on the revenue from eateries, restaurants, and prepared food sales at convenience stores.
What is Tax-Deductible for an LLC in Mississippi?
The tax-deductible for an LLC in Mississippi are standard deductions, itemized deductions, child and dependent care tax credits, and earned income tax credits.
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Does Mississippi Have State Income Tax Withholding?
Yes, Mississippi has a state income tax withholding starting from 3% of taxable income of $4000-$5000.
What Is Exempt From Sales Tax in Mississippi?
A nonprofit business is exempt from sales tax in Mississippi. Also, government agencies and merchants purchasing goods for resale are exempt from this tax.
Do You Need Help Filing Your Mississippi Taxes?
Filing income taxes correctly and on time is a core component of running any business in Mississippi.
If you're not a tax pro, we recommend merging QuickBooks into your business computing software to help you calculate and organize your taxes.
QuickBooks offers automated bookkeeping, invoicing, and sales tax calculation and tracking, making it easier to complete your taxes with a few clicks.