Start a business in Mississippi

Any non-residential construction contract worth more than $10,000 carries a separate 3.5% tax on the whole contract price. It is not sales tax collected from the customer and passed on — it is levied on the prime contractor. That distinction is the whole thing: whose tax it is determines who eats it when it is left out of a bid.

And it does not care who your customer is. The usual exemptions do not help here: the tax applies where the customer is a church, a charity, a non-profit hospital, the State of Mississippi or the federal government — all of whom are otherwise exempt from sales tax. Contractors who have worked for exempt bodies in other states find that intuition is exactly wrong at the Mississippi line.

Above $75,000, Miss. Code §27-65-21 requires the contractor to either pay the tax in advance or file a bond with the Commissioner before starting work. So on a large job the money leaves before the first invoice arrives — you are funding the state out of working capital and recovering it out of progress payments later.

The right answer is the boring one: treat the 3.5% as a line item in every non-residential estimate over $10,000, the way you treat materials. And if a run of large jobs lands at once, the prepayments stack — three $200,000 contracts starting the same month is $21,000 out of the bank before a penny comes in. Work that through on the runway calculator before you sign all three.

One thing that gates all of it: the Mississippi State Board of Contractors licenses commercial and residential contractors above statutory job-value thresholds, and that licence is what lets you take the work the contractor's tax then falls on. Get the licence question settled before you bid, not after you win.

Mississippi charges 7%, the highest general state-level sales tax rate in the country. What it does not do is stack anything much on top. Local add-on sales tax is genuinely rare here — most of the state charges nothing above the 7%, and the best-known exception is Jackson's 1% special infrastructure tax.

That means one rate, one return, and no sourcing a sale to a jurisdiction code. It is worth appreciating how unusual that is in this part of the country: the same business in Louisiana would be registering with parish collectors one at a time and filing a return to each of them every month.

The catch is the base rather than the rate. Mississippi taxes services much further than most states do: the Department of Revenue's own rate schedule lists shoe repair, storage lockers, laundry, and repair and installation labour among the taxable, with a long tail behind them, and oilfield services sit at a reduced 4.5%. A service business that would never have registered in Georgia or Missouri usually has to register here. The permit itself is free through TAP.

Under Miss. Code §71-3-5, workers' compensation is required once you regularly have five or more employees — one of the highest thresholds in the country, and the reason a four-person Mississippi shop can lawfully run with no cover at all. Agricultural and domestic workers are excluded from the count, and an employer under five can elect into the system voluntarily.

Unemployment tax has no such gap. Register with the Mississippi Department of Employment Security once you pay $1,500 in wages in a calendar quarter, or have at least one worker performing services in some part of a day in each of 20 different calendar weeks in a year — the standard test, and it will bite long before the fifth employee does.

The certificate of formation is $50. The annual report is free, filed online only, due 15 April. The sales tax permit is free. There is no state business licence. Municipalities may require a privilege licence — the amounts are set locally and generally modest, and a statewide fee range could not be confirmed when these figures were checked, so ask the city clerk where you will actually trade rather than trusting a number from a directory site.

That gives a first ninety days of $100–$800, which is about as low as this region goes — helped by workers' compensation not being compulsory until the fifth employee. The formation hub has the filing detail and how it compares.

Mississippi's current expedited-filing fees could not be confirmed from a primary source at the date checked. The Secretary of State files most online business formations quickly, and the LLC annual report is online-only and free, so the standard route is usually fast enough that the question does not arise.