Why form a Mississippi Corporation?
One major advantage to forming a Mississippi corporation would be to protect your personal assets. Any debts are not passed down to the shareholders, but handled by the corporation itself since legally it is its own entity.
Limit Personal Liability by Forming a Corporation
When a corporation is formed, it is a separate entity from its directors and shareholders (owners). If a Mississippi corporation is named in a lawsuit, legally the directors and shareholders are not held personally liable. Operating a business without the protection of a Corporation is risky because you are personally liable for the debts and actions of the company.
Other advantages of Incorporation are:
- Ownership of a Corporation is shown by shares of stock, which are easily transferred, should you want to sell you part in a company;
- The corporation provides liability protection for its owners and shareholders..
- Forming a corporation could have certain tax benefits for your business.
Helpful hints on naming your corporation
The name shall contain the word "corporation," "incorporated," or "limited," or shall contain an abbreviation of one these words. The corporation shall not contain a word or phrase that indicates or implies that it is incorporated for a purpose other than a legal business purpose or its articles of incorporation. The name shall be distinguishable upon the records in the Office of the Secretary of State from the name of each domestic corporation, limited partnership, limited liability partnership, and limited liability.
Who is Liable for corporate debt?
A corporation formed in Mississippi is legally a separate entity from the directors and shareholders. Unlike sole-proprietorships or partnerships, the shareholders and directors of the corporation are not personally liable for claims or debts that the corporation has come upon.
What is required in order to maintain Corporate Status?
In Mississippi, corporations have directors who run the company and shareholders that own the company, one person can hold all shares as well as serve as all titles for the corporation. Properly operating a corporation in Mississippi requires that you hold annual meetings for shareholders and directors. You must also record these meetings and keep the documents on file. To avoid any personal obligations, it is imperative that you keep your personal assets and business assets as separate as possible. When corporations fail to clearly separate business from personal you are risking being personally liable for certain things that the corporation and corporation only should be liable for.
S corporation Status
Once the corporation is established at the state of Mississippi you may elect to be taxed as an S Corporation by filing form 2553 at the IRS. There are certain conditions to filing an S Corporation
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