How to Start an S Corp in Mississippi: IRS Election, State Treatment and the Franchise Tax

An S corp is a federal tax election, not a separate kind of entity. A Mississippi S corp is first formed as a corporation under state law, then the owners file Form 2553 with the IRS to elect S treatment. Mississippi does not drop its own tax rules because of that federal election. The franchise tax still applies to S corporations, so an S corp carries a state cost that an LLC taxed as a partnership does not. Most how-to guides skip that point, and it is the one that changes the budget.

This guide covers the order of operations, the Mississippi fees and filings to plan for, and the mistakes that cause the most trouble. It is informational content, not legal or tax advice. Confirm every figure with the agency named before you file, and work with a CPA on the election itself.

What You Need Before You Start

• An available corporate name. Search the Secretary of State business search. The name must be distinguishable from every corporation, LLC, partnership and reserved name already on record.
• Articles of Incorporation (Form F0001) and the $50 filing fee.
• A registered agent for service of process. Confirm the corporate registered agent rules on the Secretary of State business services page.
• An Employer Identification Number (EIN) from the IRS.
• Founding documents: bylaws, an organizational meeting plan and a stock issuance record.
• A rough budget for capital, owner pay and payroll, so you can estimate the franchise tax.
• A CPA who has handled a Form 2553 election and Mississippi pass-through returns before.

Step 1: Confirm an S Corp Fits Your Plan

Compare three structures before you file: an LLC taxed as a partnership, an LLC that elects corporate tax treatment, and an S corp. The S election is designed for owners who work in the business. Those owners generally pay payroll tax on the salary they are paid, not on all of the profit. Whether that saving beats the state cost depends on your expected profit and the franchise tax on your capital. Run both numbers with your CPA before you choose.

Note that an LLC taxed as a partnership pays no Mississippi franchise tax, while an S corp does. That single difference can decide the structure for a small company with a large capital base.

Step 2: Reserve the Name (Optional)

If you need time to finish paperwork, Mississippi allows a name reservation that holds a name for 180 days for a $25 fee. Reserve the name through the Secretary of State. A reservation is not a formation, so the corporation does not exist until the Articles are filed.

Step 3: File the Articles of Incorporation

Form F0001, the Articles of Incorporation, is filed with the Secretary of State Business Services Division. The filing fee is $50. File through the Secretary of State online portal. Online filings paid for online are normally approved and filed immediately. Filings that need staff review are normally returned filed within 24 hours of submission. Paper filings take significantly longer.

Because an S corp is a corporation under state law, you file Articles of Incorporation, not an LLC Certificate of Formation. Using the wrong form is a common reason for a rejected or delayed filing.

Step 4: Complete the Organizational Actions

After the Articles are filed, the board or incorporator adopts bylaws, elects directors and officers, and issues stock. Keep minutes of these actions. Banks, CPAs and the IRS will ask for them later.

S corps must meet federal eligibility rules, including limits on the type of shareholders and a requirement for only one class of stock. Check those rules on IRS.gov before you issue shares, because a stock issue that breaks an eligibility rule can put the election at risk.

Step 5: Get an EIN from the IRS

Apply for an EIN through the IRS online application. Use the EIN on Form 2553, your bank account, your payroll registration and every state filing. Keep the confirmation letter with your formation records.

Step 6: File Form 2553 With the IRS

The S election is federal. You file Form 2553 with the IRS, not with Mississippi. Every shareholder must sign the consent. The election has a deadline tied to the tax year it takes effect, and the IRS publishes the timing rules and any late election relief on its Form 2553 page. Confirm the deadline there before you choose a start date, and ask your CPA whether a late election option applies to you.

Filing Form 2553 does not change the corporation's Mississippi status. The state franchise tax and annual report still apply.

Step 7: Register With the Department of Revenue

The Mississippi Department of Revenue, at dor.ms.gov, handles your state tax accounts. Register for two things if they apply to you:

• Withholding. If you pay yourself or employees wages, you withhold Mississippi income tax and need a withholding account. Confirm the registration steps with DOR.
• Sales tax permit. If you sell taxable goods, register for a sales tax permit through the DOR sales and use tax registration page. DOR describes the permit as a permit for the privilege of operating a business in Mississippi, and it carries no fee. A bond may be required for applicants with no permanent Mississippi location.

The state sales tax rate is 7%. There is no county add-on. Cities levy their own sales tax only in Jackson and Tupelo, so confirm the local rate for your address before you charge tax.

Step 8: Get Your City Privilege License

Mississippi has no general statewide business license. Registering the corporation with the Secretary of State is a registration, not a license. Instead, each city, town and village issues its own privilege license under Miss. Code 27-17. Counties license only businesses located outside municipalities. Some industries also need a license from a state board. Your city clerk or county chancery office can tell you which applies, but this guide does not list city fee amounts, so check each city's schedule directly.

Step 9: Set Owner Pay and Payroll

The most common S corp error is paying the owner only through distributions. A working shareholder should receive a reasonable salary through payroll, reported on a W-2, with federal and Mississippi withholding taken out. What counts as reasonable depends on the work performed and the pay for similar work, so document how you set the number.

Mississippi has no state minimum wage law, so federal wage rules govern hourly pay. Withholding rates and deposit schedules are set by the Department of Revenue and the IRS, so confirm them before your first payroll run.

Step 10: Calendar the Annual Filings

Each year, plan for these items:

• Corporate Annual Report (Form F0008). The fee is $25 and the report is due April 15. It must be filed online through the Secretary of State.
• Franchise tax. For tax year 2026, the franchise tax is $0.50 per $1,000 of capital in excess of $100,000, with a $25 minimum. Example: $250,000 of capital leaves $150,000 over the threshold, which produces a $75 tax for 2026. The rate steps to $0.25 per $1,000 for 2027 (the same $250,000 example produces $37.50), and the tax is repealed effective January 1, 2028. Confirm how DOR defines capital and the filing due date before you budget.
• Pass-through entity return. The S corp files a pass-through entity return with DOR, which reports the income that flows to shareholders.
• Form 84-381 (optional). An S corp may elect entity-level tax on Form 84-381. The form is due by the 15th day of the third month after year end, which is March 15 for a calendar-year corporation. Ask DOR and your CPA how the entity-level tax is calculated before you elect it.

Common Mistakes to Avoid

• Treating the S election as a state election. Form 2553 is filed with the IRS. The Mississippi franchise tax, annual report and withholding rules still apply to the corporation.
• Leaving the franchise tax out of the budget. The tax is small for a modest capital base but applies every year, and the $25 minimum applies even when the calculated amount is lower.
• Filing the wrong formation document. An S corp files Articles of Incorporation (Form F0001). An LLC Certificate of Formation will not create the corporation you intended.
• Taking only distributions. Owners who work in the business need a reasonable salary through payroll.
• Missing the April 15 annual report. The report is $25 and must be filed online. A late or missed report can cause problems with the corporation's standing, so calendar it early.
• Looking for a county business license. Counties license only businesses outside municipalities. Most businesses need a city privilege license instead.
• Filing a fictitious name with the county. A fictitious (assumed) business name is filed with the Secretary of State for $25, not the county.
• Issuing stock before checking eligibility. Shareholder and stock rules can affect the S election. Check them before any shares are issued.

Mississippi Costs at a Glance

Item	Amount	Agency	Timing
Articles of Incorporation (Form F0001)	$50	Secretary of State	At formation
Name reservation	$25, holds name 180 days	Secretary of State	Optional, before filing
Corporate Annual Report (Form F0008)	$25	Secretary of State	Due April 15 each year
Franchise tax	$0.50 per $1,000 of capital over $100,000 for 2026, $25 minimum	Department of Revenue	Annual, confirm due date with DOR
Fictitious name registration (Form F0070)	$25	Secretary of State	If operating under another name
City privilege license	Set by each city, confirm locally	City clerk	Before opening
Sales tax permit	No fee, bond may be required	Department of Revenue	Before selling taxable goods
Form 2553 (S election)	Federal, confirm on IRS.gov	IRS	Per IRS deadline

What to Expect

In most cases, an online Articles filing is approved quickly, often the same day, and the Secretary of State's processing time is the shortest part of the process. The IRS election, payroll setup and first franchise tax filing usually take longer and may need a CPA's review. Owners who plan the state costs early tend to avoid surprises in the first year, though results depend on the company's capital, profit and payroll.

Owners who set a reasonable salary, keep minutes and calendar the April 15 report typically have the cleanest first filing year. Those who skip those steps often spend more time correcting records than they saved on the structure.

When to Talk to a Professional

Bring in an attorney to draft bylaws, a shareholder agreement and any buy-sell terms. Bring in a CPA to decide on the S election, set owner pay and model the franchise tax against your expected profit. For questions about a specific tax account, contact the Department of Revenue directly. The Mississippi Small Business Development Center Network, hosted by the University of Mississippi with 19 locations statewide, is also a useful starting point at mississippisbdc.org.

Disclaimer

This article is informational content about forming a Mississippi S corp. It is not legal advice, tax advice or accounting advice, and it does not create an attorney-client or CPA relationship. Fees, deadlines and rates change, and some figures are marked for confirmation. Verify every number with the Mississippi Secretary of State, the Mississippi Department of Revenue and the IRS before you file, and consult a qualified attorney and CPA about your situation.