Mississippi LLC Taxes

If you're planning to form a Mississippi limited liability company (LLC), you'll need to comply with various tax requirements depending on your LLC’s tax treatment. 

This guide covers Mississippi LLC taxes, outlining the key tax obligations at local, state, and federal levels and simplifying the filing process with a step-by-step approach and essential resources.

Recommended: Schedule a free consultation with 1-800Accountant to stay on top of your taxes. 

How Is an LLC Taxed in Mississippi?

Taxation in Mississippi isn’t applied in the same way to all LLCs – instead, it varies depending on a number of factors, such as an LLC’s nature, locality, and tax election.

While LLCs typically benefit from pass-through taxation by default, they can elect to be taxed as one of the following:

• C Corporations: The LLC is treated as a separate entity to its owners, paying corporate income tax rates on its total profit while the owners also pay personal income taxes on any distributions they take.
• S Corporations: In return for paying owners a “reasonable salary,” the LLC’s remaining profits are distributed among members without a need to pay self-employment tax or FICA tax on them.

The following sections go into the various tax responsibilities of your LLC at local, state, and federal levels in Mississippi to help you ensure your LLC navigates them effectively.

Mississippi Local Taxes

Mississippi has different local tax regulations for each municipality. These local taxes that could impact your LLC are described below.

Local Sales Taxes

Cities in Mississippi can collect local sales taxes on goods and services ranging from 0% to 1%, depending on the city and type of business in question. 

If your LLC operates in these cities, you'll pay both city and state sales tax on your transactions. For example, Tupelo adds 0.25%, and Jackson imposes an additional 1% on specific retail sales within their boundaries. When combined with the 7% state rate, the total sales tax in these cities becomes 7.25% and 8%, respectively.

Property Taxes

If your LLC owns property in Mississippi, you'll likely owe property tax (ad valorem tax) based on its assessed value. You'll file and pay the local collector's office. 

County assessors appraise property at its true value and adjust it by the assessment ratio to determine the assessed value. This value is then multiplied by the local millage rate (e.g., 100 mills equals $100 per $1,000 of assessed value) to calculate the tax owed. 

Business-related property like inventory, furniture, and machinery are also subject to tax. 

See the Mississippi Department of Revenue website for a list of county officials, including assessors.

Municipal Gas Utility Tax

This annual tax applies to municipally owned gas utility companies. The $25,000 rate is prorated among companies based on their gross revenue reported by April 1st, with payment due 30 days after assessment. LLCs engaged in natural gas distribution or transmission require a license from the Mississippi Public Service Commission and pay a fee based on annual revenue.

Recommended Service: Schedule a free consultation with 1-800Accountant to ensure your business remains legally compliant. 

Mississippi State Taxes

Mississippi regulates businesses through various state-level taxes. Here's an overview of the most relevant ones for LLCs:

Individual Income Tax

Mississippi has a graduated income tax system for both individuals and businesses. This means that the tax rate increases as the taxable income increases. The annual income tax liability is calculated by applying the appropriate tax rate to each portion of the taxable income as outlined below:

This tax applies to LLCs taxed as pass-through entities (default tax status). This means that the LLC does not pay any corporate tax, but the members or owners of the LLC report their share of the LLC’s income and losses on their personal tax returns (Form 80-105).

Corporate Income and Franchise Tax

LLCs taxed as C corporations must pay corporate income and franchise tax to the Mississippi Department of Revenue using Form 83-105. LLCs taxed in any other way do not have to file this return.

The franchise tax rate is $1.25, paid on every $1,000 of assessed value above $100,000 ($25 minimum). Mississippi has a graduated corporate income tax rate, which is:

• 0% of the first $5,000 in taxable income
• 4% of the next $5,000
• 5% on all taxable income over $10,000

Withholding Tax

Employers withhold from employee wages and remit to the state based on taxable income. Monthly filing is required if you collect $300 or more in tax per month. The rate depends on the employee’s filing status. 

The forms required for Mississippi’s withholding taxes are:

• Form 89-350: Withholding Exemption Certificate Completed by employee and retained by employer
• Form 89-140: Annual W-2 and 1099 Information Return (Fill In Version).
• Form 89-386: Affidavit for Withholding Income Tax on Sale of Real Estate by Non-Resident.

Returns must be filed by the 15th of the following month. For example, if required to file in December, you will need to file by January 15.

Note: Check out the Withholding Income Tax Tables And Employer Instructions provided by the Mississippi Department of Revenue for more information. 

Sales and Use Taxes

In Mississippi, businesses must collect a 7% sales tax on all tangible goods sold. Additionally, a 7% use tax applies to goods bought outside the state and used within Mississippi unless exempt or differently taxed. Specific items like newspapers and books have a 5% sales tax, while gasoline and tobacco products have a 3% use tax.

You can acquire a sales tax permit from the Mississippi Department of Revenue. 

State Excise Taxes

In Mississippi, excise taxes are added to the price of specific goods and services, typically paid by consumers. These include taxes on: 

• Gasoline ($0.184 per gallon)
• Cigarettes ($0.68 per pack)
• Other tobacco products (15% of the manufacturer's price)
• Liquor ($7.46 per gallon), beer ($0.43 per gallon)
• Insurance premiums (3% of the total premium)

Business Privilege Taxes

These taxes are usually based on the gross receipts or net income of the business, and the rate may vary depending on the location and type of business. Some examples of business privilege taxes are:

•  $0.50 per employee per month for LLCs with over 10 employees providing wireless emergency services).
• Prepaid Wireless E911 Charge ($1 per retail transaction in Mississippi).

Severance Taxes

Mississippi charges severance taxes on extracting natural resources. The tax rate depends on the resource and its quantity. For oil and gas, it's 3% of production value, with tax returns due by the 25th of the next month. Timber tax rates vary and are due by the 15th of the next month. Salt is also taxed at 3% of production value, with returns due by the 20th of the next month.

Federal Taxes

Regardless of where your business is located, if you run an LLC in the US, there are a number of federal taxes you’ll need to pay. Below are some of the main types your LLC may be required to pay for federal tax purposes:

Income Tax

By default, the Internal Revenue Service (IRS) will not treat single and multi-member LLCs as separate entities from you for tax purposes. What this means is that you’ll need to report your share of your LLC’s profits on your individual tax returns and pay federal income tax on them at the personal rate of your tax bracket.

Having said that, keep in mind that LLCs can also elect to be taxed as C corps or S corps, which changes how these taxes are levied in different ways.

Self-Employment Tax

In addition to income tax, members of single- and multi-member LLCs will need to pay federal self-employment taxes on the share of the business’s profits that they report on their personal tax return at the end of the year.

This tax is levied at a flat rate of 15.3% against businesses with net earnings that exceed $400, though it is applied slightly differently to LLCs that have elected to be taxed as S corps or C corps.

Employer Taxes

If your LLC hires any employees, it will need to withhold a portion of their salaries to cover various types of taxes on your employees’ behalf – including Social Security, Medicare (FICA), and payroll taxes.

Furthermore, the members of any LLCs that have elected to be taxed as an S corp will be required to pay employment taxes on their salaries. However, in return for this, the remainder of the business’s profit after these salaries have been distributed will be safe from both self-employment and FICA taxes.

Excise Tax

If your LLC engages in certain types of business (such as the sale of alcohol and tobacco or operating a heavy highway vehicle, among others), it may need to pay federal excise taxes in order to do so legally. Each excise tax comes with its own set of rules, rates, and filing obligations you’ll need to be aware of.

Understanding and fulfilling these federal tax obligations is crucial for keeping your LLC compliant and avoiding unnecessary financial penalties and/or fines.

How to File LLC Taxes in Mississippi

Below, we’ve outlined the general process an LLC in Mississippi will need to follow in order to file their tax return correctly. Note that the specificities of each step will vary slightly depending on how your LLC is organized and the specific locality it’s based in. 

Step 1: Gather Your Documentation

To ensure accurate tax filing, thorough record-keeping is essential. Begin by collecting your personal information, including:

• You and your partner’s Social Security number, date of birth, and residential address
• The previous year’s tax returns
• Your LLC’s Federal Tax Identification Number or Employer Identification Number (EIN)

Then, you’ll need to gather all documentation related to your business’s income, such as:

• Invoices you’ve issued
• Sales transaction logs
• Electronic payment reports from services like PayPal or Stripe

Lastly, assemble all records pertaining to your business expenses, which should cover:

• Lease receipts for your business premises
• Bills for utilities
• Records of office supplies purchases
• Documentation of business-related travel
• Payroll records for employees

Note: Depending on how your LLC is organized and its tax election, you may need different information for your tax return. 

Step 2: Find The Right Tax Forms

Once you've gathered all necessary documents, the next step is to select the correct tax forms for your LLC based on its organization:

• Single-Member LLCs: The business’s total income and expenses are reported on a Schedule C form, which is attached to the owner’s personal tax return and due by April 15 or the following business day if it lands on a weekend or holiday.
• Multi-Member LLCs: File an information return using Form 1065. Members must fill out a Schedule K-1 showing their individual earnings or losses by March 15 or the next business day.
• C Corporations: File a corporate tax return using Form 1120 by the April 15 deadline or on the next business day if it's a weekend or holiday.
• S Corporations: Use Form 1120-S for the corporate tax return and distribute Schedule K-1 forms to shareholders for reporting their shares of profits or losses. The deadline for filing taxes using 1120-S is March 15 or the following business day.

Since state and local taxes will have their own individual forms and requirements, we recommend contacting your municipality or hiring an accountant for guidance.

With the appropriate documentation gathered and the correct tax forms for your business entity on hand, you’ll be ready to fill them out and submit them.

Step 3: File Your Taxes

The majority of businesses choose electronic filing for its speed, enhanced security, and reliability compared to paper filing, which can be slower and more prone to errors. Here’s how it works:

• Federal Tax Returns: The IRS provides two electronic services for tax submission: Free File for businesses with an AGI below $72,000 and Free Fillable Forms for those above the threshold.
• State Tax Returns: You will file and pay most of your state taxes via the Mississippi Taxpayer Access Point (TAP) portal. However, for income taxes (individual, corporate, franchise, pass-through), you must file your annual returns through a state-authorized online filing provider. 
• Local Tax Returns: You can also use TAP to manage your tax account and file your local tax returns, such as special city and county taxes, city utility taxes, etc. However, you must contact your county officials for more information on how and where to file your property taxes. 

Note: These electronic filing tools are best suited for those who are already confident in handling their LLC taxes as if filling out a paper form. 

For new business owners, we recommend opting for the expertise of a tax professional in order to ensure both accuracy and compliance in your tax filings. 

Recommended: Schedule a free consultation with 1-800Accountant to stay on top of your taxes. 

Keep Your Mississippi LLC Compliant

While LLCs are generally easier to maintain than corporations, there are certain state and local formalities your LLC must satisfy in order to remain compliant. 

Mississippi LLC Annual Report

Mississippi LLCs must file an annual report with the Secretary of State by April 15 each year, starting January 1. The report includes details about the LLC's information, such as its registered agent, business address, and contact information. 

Domestic LLCs can file online for free, while foreign LLCs pay a $250 processing fee. Not filing on time can lead to penalties or dissolution, with a $50 reinstatement fee.

Licensure and Tax Requirements

Mississippi businesses are required to obtain various licenses and permits at the local, state, and federal levels. Below, we’ve broken down three of the most common types your LLC may need:

• Sales Tax Permit: If your LLC sells taxable goods or services in Mississippi, you need to obtain a sales tax permit via the Mississippi Taxpayer Access Point (TAP) provided by the Department of Revenue. 
• Professional Licenses: If your LLC provides professional services such as accounting, law, insurance, architecture, real estate, etc., you need to obtain a professional license from the appropriate state agency.
• Environmental Permits: If your LLC engages in activities that may affect the environment, such as waste disposal, air emissions, water discharge, etc., you need to obtain an environmental permit from the Mississippi Department of Environmental Quality (MDEQ).

Note: You can find a list of statewide licenses and permits on the State of Mississippi’s Services page.

Mississippi LLC Taxes FAQs