The Federal, State, Sales and Other Taxes You Need to Pay for Your Mississippi LLC
Business taxes are a fact of life, and your MS LLC will need to pay a variety of taxes to both the federal and Mississippi governments. We’ll cover all the main taxes in Mississippi including self-employment, payroll, federal, Mississippi state tax and Mississippi sales tax.
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How Your Mississippi LLC Will Be Taxed
The profits of a Mississippi LLC are not taxed at the business level, like those of C Corporations. Instead, tax for a Mississippi LLC works as follows:
- Mississippi LLC owners pay self-employment tax on business profits
- Mississippi LLC owners pay MS state tax on any profits, less state allowances or deductions
- All LLC owners pay federal income tax on any profits less federal allowances or deductions
- Some MS LLCs pay Mississippi sales tax on products
- Employers pay payroll tax on any salaries they pay to employees
- Employees pay federal, state and payroll tax on their earnings
Items 1, 2 and 3 are taxed as “pass-through” income for any LLC owners, managers or members who receive profits from the business. Any profits are reported on federal and Mississippi personal tax returns, and that’s where you will pay those taxes.
Mississippi Sales Tax, State Tax and Other Taxes for Your MS LLC
There are two main types of tax that you will pay to the Mississippi Department of Revenue: Mississippi state income tax and Mississippi state sales tax.
Mississippi State Tax on Your LLC Earnings
As a Mississippi business owner, you will need to pay MS state tax on any money you pay to yourself. These earnings flow through to your personal tax return, which is where you will pay Mississippi income tax. You will be taxed at the standard rates for Mississippi state taxes, and you will also get to apply regular allowances and deductions.
Any salaried employees will also need to pay personal Mississippi state taxes.
The graduated Mississippi state income tax rate is:
- 3 percent on the first $5,000 of taxable income
- 4 percent on the next $5,000 of taxable income
- 5 percent on all taxable income over $10,000
If filing a combined return, each spouse can calculate their tax liability separately and add the results.
Get details of the Mississippi state tax online here.
Mississippi Sales Taxes on LLC Sales
If you sell physical products or certain types of services, you may need to collect sales tax (also known as sales and use tax) and then pay it to the MS Department of Revenue. Mississippi sales tax is collected at the point of purchase. Mississippi sales tax rates do vary depending on the region, county or city where you are located.
You will typically need to collect Mississippi sales tax on:
- Tangible, personal property and goods that you sell like furniture, cars, electronics, appliances, books, raw materials, etc.
- Certain services that your Mississippi business might provide
Most states do not levy sales tax on goods that are considered necessities, like food, medications, clothing or gas.
Get more details on Mississippi sales tax from the MS SOS website.
Mississippi Sales Tax Rates
Sales tax rates do vary between states, counties and cities. Typically, the state will set a base sales tax rate, then specific counties and cities may levy small additional sales tax amounts on top of that. Here are the sales tax rates for the major cities in Mississippi:
- Jackson, MS sales tax rate is 8 percent
- Gulfport, MS sales tax rate is 7 percent
- Southaven, MS sales tax rate is 7 percent
- Hattiesburg, MS sales tax rate is 7 percent
Federal Taxes for Your Mississippi LLC: Self-Employment and Income Taxes
There are a couple different federal taxes that every LLC will need to pay, including Mississippi LLCs. These are self-employment tax and federal income tax, which are taxed as “pass-through” income via your tax return forms.
Mississippi LLC Federal Self-Employment Tax
All Mississippi LLC business members or managers who take profits out of the LLC will need to pay self-employment tax. This tax is also known as FICA, Social Security or Medicare tax. It applies to all the earnings you withdraw from your Mississippi business. The current self-employment tax rate is 15.3 percent.
You will be able to deduct your business expenses from your income when working out how much self-employment tax you owe. Here are some examples of how much self-employment tax you may need to pay, depending on your earnings:
- On profits of $10,000, you would pay self-employment tax of $1,530
- On profits of $40,000, you would pay self-employment tax of $6,120
- On profits of $70,000, you would pay self-employment tax of $10,710
- On profits of $90,000, you would pay self-employment tax of $13,770
Pay Less Self-Employment Tax by Treating Your Mississippi LLC as an S Corporation
The Internal Revenue Service allows LLCs to ask to be treated as an S Corporation for tax purposes. This can help you reduce the amount of self-employment tax that you pay by declaring some of your income as salary and other income as distributions or withdrawals.
You can do this by making an “S Corporation Tax Election” with the IRS using a form known as Form 2553. We can file your Form 2553 with the IRS on your behalf.
Speak to your accountant for more information on reducing your Mississippi LLC self-employment tax through an S Corporation tax election.
Mississippi LLC Federal Income Tax
You must also pay regular federal income tax on any earnings you take out of your Mississippi LLC. The amount of income tax you pay depends on your earnings, current income tax brackets, deductions and how you file.
You only pay federal income tax on your Mississippi LLC profits that you take out of the business, less certain deductions and allowances. This includes your tax-free amount, plus LLC business expenses and other deductions for areas such as healthcare and some retirement plans. Speak to your accountant for more information.
You can find details of federal income tax brackets and tax calculators online.
Employer and Employee Taxes for Your Mississippi LLC
If you pay employees, there are some slightly different tax implications. Speak to your accountant to get clear guidance for your own unique situation.
Mississippi LLC Employer Payroll Tax Withholding
All employers must collect and withhold payroll tax from their employees when they receive their salaries. You would normally withhold 7.65 percent of the taxable salary that you pay to your employees.
Employer Federal and State Tax Withholding for Your Mississippi LLC
You may also choose to withhold federal and Mississippi state income tax on the wages you pay to employees. Speak to your accountant for more information.
Employees May Need to File Tax Returns
Regardless of whether you withhold federal and Mississippi state income tax, your employees may need to file their own tax returns.
Mississippi LLC Employee Insurance and Other Requirements
You may also need to pay insurance for any employees, like employee compensation insurance or unemployment tax. There will also be other requirements you have for employees.
Get more requirements from the Mississippi Department of Employment Security website.
Other Taxes and Duties for Your Mississippi LLC
Depending on the industry you are in, your Mississippi LLC may be liable for certain other taxes and duties. For example, if you sell gasoline you may need to pay a tax on any fuel you sell. Likewise, if you import or export goods you may need to pay certain duties. Speak to your accountant about any other taxes you may need to withhold or pay.
Estimated Taxes for Your Mississippi LLC
Most Mississippi LLCs will need to pay estimated taxes throughout the year, depending on the amount of income and profit you expect to make. The most common types of estimated tax are:
- Federal income tax
- Federal self-employment tax
- Mississippi state tax
Most Mississippi LLCs will pay estimated taxes four times a year. Speak to your accountant for more information.
FAQs on Mississippi LLC Business Taxes
Does Mississippi Have Sales Tax?
Yes. Mississippi does have a sales tax, which may vary among cities and counties. You can find more information above.
Does Mississippi Have a State Tax?
Yes. Mississippi does have a general state income tax. You can find more information above.
What Is the Sales Tax Rate in Mississippi?
We have listed common sales tax rates in Mississippi cities above.
Do I Need to Pay Estimated Taxes?
Yes. In most cases you must pay estimated taxes on your Mississippi tax, federal income tax and self-employment tax. Speak to your accountant for more information.