PRC Business Start-Up Guide

This guide was developed during the 2022 Leadership Pearl River County Class, sponsored by the Greater Picayune Area Chamber of Commerce.

Leadership Pearl River County is a six-month program designed to inspire local professionals on the importance of team, community engagement, economic development, and leadership. The program will meet at various locations throughout the county and hear from local and regional professionals to discuss issues, strategies, and educate about our resources and opportunities for our future. The applicants will also be required to engage in local non-profits and complete a class report about recommendations to improve our county. The program also offers applicants an opportunity to build a stronger network professionally.

Our class project objective was to offer a streamlined and effective resource for potential business owners in Picayune and Pearl River County to ease the process of opening a business.

10 Steps to Start Your Business

Starting a business involves planning, making key financial decisions, and completing a series of legal activities. Scroll down to learn about each step.

This guide has been adapted from both the SBA’s 10-step guide found here and Startup Savant’s guide found here.

1. Conduct Market Research

Market research will tell you if there’s an opportunity to turn your idea into a successful business. It’s a way to gather information about potential customers and businesses already operating in your area. Use that information to find a competitive advantage for your business.

The first step to start is finding the right business idea. If you’re having trouble coming up with startup ideas, here are a few tips from Startup Savant’s guide on How to Come up With Startup Ideas:

• • Identify and solve a problem
  • Focus on what you’re passionate about
  • Get creative
  • Conduct a brainstorming session

Fortunately, with a bunch of startup ideas to explore, finding the right startup idea can be less challenging than you might think. Not to mention, there are free tools such as this free business idea generator that make choosing the right startup idea easier than ever.

Having an in-depth, concrete understanding of your market is essential to the success of your startup in Mississippi. The best way to identify your competitors and target market is to conduct market research. Here are a few ways to conduct thorough market research:

• • Conduct a survey.
  • Hold a focus group.
  • Do search engine optimization (SEO) research.
  • Use existing research such as customer reviews.

The goal of this research is to develop an understanding of who your business will market to and how your business stands out from the competition. All of this research will inform your business strategy and improve your chances of success.

2. Write Your Business Plan

Your business plan is the foundation of your business. It’s a roadmap for how to structure, run, and grow your new business. You’ll use it to convince people that working with you — or investing in your company — is a smart choice.

A well-crafted business plan is important for many reasons, such as securing funding, managing cash flow, and tracking your progress as your business grows.

There are a few things to include when writing your business plan:

• • Pitch: A quick, one-page summary of your plan that succinctly covers all the key points below (and more).
  • Unique Selling Proposition (USP): A short phrase that captures the core mission of your business. For example, our USP at Startup Savant is “Entrepreneurship Simplified.”
  • Target Market: Who you’re selling to and where to find them. It’s essential that you define your target demographic and the most effective ways to communicate with them.
  • Marketing Plan: How are you planning to market your business? Establish a primary marketing strategy and decide how much you’re able to spend.
  • Milestones: Where do you see your business in six months? A year? Five years? Setting up some initial goals is a great way to stay focused and track your business’s performance over time.

3. Fund Your Business

Your business plan will help you figure out how much money you’ll need to start your business. If you don’t have that amount on hand, you’ll need to either raise or borrow the capital. Fortunately, there are more ways than ever to find the capital you need.

What Are Startup Costs?
First, it’s important to be familiar with the type of costs you can expect to accrue as a startup. Startup costs range from payments that are repeated and unchanging to costs that vary based on your business’s sales volume — these are called fixed and variable expenses.

Fixed Expenses: Your startup’s fixed expenses are unchanging, repeated costs that you can expect to pay monthly or annually. A few examples of fixed expenses for startups include:

• • Monthly rent
  • Utilities
  • Insurance and administrative costs

Variable Expenses: Comparatively, variable expenses are costs that will change depending on a few factors such as sales, the state of the market, and circumstances outside your control. A few examples of variable expenses for startups include:

• • Inventory
  • Shipping costs
  • Sales commissions

Common Startup Costs

• • Formation Fees: Startup formation fees vary based on your chosen business structure. There are four common business structures: sole proprietorship, limited liability company (LLC), corporation, and partnership. Each structure includes different fees and requirements to qualify. For example, forming an LLC costs between $50 and $500, while forming a sole proprietorship costs nothing but offers fewer benefits than the former.
  • Market Research: Effective market research is an integral part of developing a strong foundation for your startup. Whether it’s focus groups or market surveys, investing in market research can be a costly but invaluable tool for any startup looking to build consumer-friendly products and an effective marketing strategy.
  • Legal Fees: Hiring legal help can mitigate the risk of negative legal repercussions during the formation and operation of your startup. Typically, attorneys charge by the hour and vary greatly in cost. You can also opt to keep attorneys on retainer if their services will be used actively.
  • Insurance: The type of insurance your startup needs will vary depending on where you’re located, what type of business you’re operating, and more. The most common insurance types that startups need are general liability insurance, professional liability insurance, and workers’ compensation insurance.
  • Payroll or Self-Employment Taxes: Paying your employees is one of the biggest expenses your startup needs to prepare for — making up between 25% and 50% of most businesses’ budgets. This can include net pay, paid time off, benefits, and any additional expenses such as commissions. In addition to this, you should factor in self-employment taxes if applicable, which is a tax rate of 15.3% to cover Social Security and Medicare.
  • Rent and Utilities: Rent and utilities are fixed expenses that will vary based on your location and type of space. Generally, you can expect to pay around $2 per square foot for utilities; however, this is dependent on location and the type of business you’re operating.
  • Supplies and Equipment: All the materials you’ll need to launch and operate your business fall into this category. Depending on your business type, this can be a hefty percentage of your starting costs. Variable expenses for supplies and equipment will be maintaining, repairing, or replacing your equipment.
  • Inventory: A variable cost, inventory expenses will typically depend on the number of sales your startup is making. A few factors that can affect the number of inventory costs you can expect are the time of year, state of the economy, and state of the market, such as its saturation level.
  • Marketing: Marketing is essential to the success of any startup; however, it doesn’t have to take up your entire budget. Your startup’s marketing costs should account for roughly 0% to 10% of your budget. Fortunately, with social media and online marketing available for free, a strong online marketing strategy can bring in customers without draining your budget.
  • Technology (Website, Software, etc.): It’s no secret that technology is an invaluable tool for startups. Whether it’s software to manage and operate your business or developing and maintaining your startup’s website, this is an important fraction of your budget in an increasingly technological world.

How to Calculate Startup Costs

Research and Determine Expenses: Startup costs vary greatly depending on several factors, including location and industry. Research is pertinent to identifying what your expenses are and how to budget for them. This includes the necessary expenses to operate your business as well as state and federal requirements such as fees, taxes, and insurance expenses. The latter is especially important to avoid fines and citations when launching your startup company.

• • Add Up Total Expenses: Once you’ve identified the expenses that apply to your startup, create a list with corresponding estimates to establish a total that you can plan your budget around. It’s a good idea to overestimate the amount of money you’ll need (unless there is a flat, unchanging cost) to provide your startup with a financial cushion.

Explore Business Funding Options

• • Bootstrapping: Most startups are funded by the owner’s personal savings also referred to as bootstrapping. This funding method requires good money management and self-restraint. However, since you aren’t borrowing money from another source, you will have more money to invest back into your startup.
  • Friends and Family: Funding your startup through friends and family loans is a great way to get capital from a trusted source, especially if you are having trouble securing funding from other lenders. If you plan to use this type of funding, it is important to make sure you have a written agreement and repayment plan.
  • Small Business Grants: Believe it or not, small business grants are essentially money for your business that you don’t have to pay back. Many grants are industry-specific or geared toward women, veterans, and minority business owners. An important thing to keep in mind, while you do not have to repay grants, they often come with specific rules and requirements for how the funding is spent.
  • Small Business Loans: Unlike small business grants, small business loans require repayment; however, they also provide an excellent source of capital for your business if you don’t have the money to fund it yourself. Small business loans are typically granted by banks or other lending institutions.
  • Crowdfunding: Why have just one funding source when you can generate funding from a variety of people? Crowdfunding is just that – your business generates the funding it needs by several investors contributing money to actualize your business goal either for a return on investment or to simply support your entrepreneurial goals.
  • Venture Capital (VC) Firms: VC firms are investors seeking investment opportunities with rapid expected growth in order to achieve the highest return on investment possible. This funding source is best suited to tech startups and other startups that are poised for high, fast growth.
  • Angel Investors: An angel investor is similar to venture capital firms in that they both seek investment opportunities that will yield a high ROI. Comparatively, angel investors are typically individuals with money to spare that are willing to bank on riskier investments or startups that may have trouble finding funding elsewhere.

Learn how to plan, raise, and manage your funds by visiting this comprehensive guide to Small Business Finance. Additionally, here are a couple of Mississippi resources to consider:

• Mississippi SBDC
• Mississippi Development Authority

4. Pick Your Business Location

Your business location is one of the most important decisions you’ll make. Whether you’re setting up a brick-and-mortar business or launching an online store, the choices you make could affect your taxes, legal requirements, and revenue.

5. Choose a Business Structure

The legal structure you choose for your business will impact your business registration requirements, how much you pay in taxes, and your personal liability.

• • Sole Proprietorship – Involves one individual who owns and operates the business.
  • General Partnership – Partners manage the company and assume responsibility for debts and other obligations.
  • Limited Partnership (LP) – Contains both general and limited partners. General partners own and operate the business and assume liability. Limited partners serve as investors only and have no control over the company.
  • Limited Liability Company (LLC) – A hybrid structure, including features of partnerships and corporations. May be owned by one or more persons.
  • Corporation – An independent legal entity, separate from its owners.
  • Non-Profit Corporation – A group organized for purposes other than generating profit.

Start an LLC

LLCs are the easiest business structure to form and maintain, requiring little paperwork and five easy steps that you can do yourself or with the help of a professional service. Just be sure to submit your Certificate of Formation for an LLC in Mississippi online along with the $50 filing fee. Here is how to form an LLC in Mississippi:

1. 1. Name Your Mississippi LLC
   2. Choose a Registered Agent
   3. File Your LLC With the State
   4. Create an LLC Operating Agreement
   5. Get an EIN

Form a Corporation

Forming a corporation is a little more complicated than other business structures such as LLCs. However, for businesses that are well suited to this business structure, the benefits are immense. If you’re ready to form a corporation, file your Articles of Incorporation for a Mississippi corporation online along with a $50 filing fee. Here are the four steps to forming a corporation in Mississippi:

1. 1. Create a Name for Your Mississippi Corporation
   2. Choose a Mississippi Registered Agent
   3. Choose Your Mississippi Corporation’s Initial Directors
   4. File the Articles of Incorporation

Form a Nonprofit

Finally, forming a nonprofit requires more legwork than corporations or LLCs, including drafting bylaws, selecting board members, and (if you choose to do so) applying for tax exemption. Once you’ve done so, submit the Articles of Incorporation for a Mississippi nonprofit online along with the $50 filing fee. Here are the necessary steps you need to take in order to form a Mississippi nonprofit:

1. 1. Name Your Mississippi Nonprofit
   2. Appoint a Registered Agent
   3. Select Your Board Members and Officers
   4. File the Mississippi Articles of Incorporation
   5. Draft Bylaws and Conflict of Interest Policy
   6. Conduct an Organizational Meeting
   7. Get an EIN
   8.  Apply for Exemption from Federal (501(c)(3) status) and State Taxes

6. Choose Your Business Name

It’s not easy to pick the perfect name. You’ll want one that reflects your brand and captures your spirit. You’ll also want to make sure your business name isn’t already being used by someone else.

Mississippi Secretary of State Business Name Search

7. Register Your Business

Once you’ve picked the perfect business name, it’s time to make it legal and protect your brand. If you’re doing business under a name different than your own, you’ll need to register with the federal government and you will need to register with the MS Secretary of State’s Office.

Mississippi Secretary of State Business Services (Formation & Filing)

Mississippi Secretary of State Filing Fees

Pearl River County Specific Registrations

Required Business Documents

Pearl River County Contact Information

Planning & Zoning/Code Enforcement
601-798-9777
http://www.picayune.ms.us/departments/planning-zoning-code-enforcement/
Change Of Occupancy, Privilege License, Permits

Utilities (City Hall)
601-799-9776
http://www.picayune.ms.us/departments/utility-billing/

E-911
Existing commercial buildings call 601-403-2206.
New construction must go to 917 Goodyear Boulevard for E911 addressing.

ELECTRICITY

Coast Electric
601-889-5151
https://coastepa.com/

Mississippi Power
1-800-532-150
https://www.mississippipower.com/

BUSINESS RESOURCES

Picayune Chamber Of Commerce
601-798-3122
https://greaterpicayunechamber.org/

Picayune Main Street
601-799-3070
https://picayunemainstreet.com/

Pearl River County Economic Development District
601-749-7780
https://www.prcedd.com/

Small Business Administration (SBA)
800-827-5722
https://www.sba.gov/

8. Get Federal and State Tax IDs

You’ll use your employer identification number (EIN) for important steps to start and grow your business, like opening a bank account and paying taxes. It’s like a social security number for your business. Some — but not all — states require you to get a tax ID as well.

To open up a bank account for your business in Mississippi, you’ll need to obtain an EIN (Employer Identification Number). You’ll use your EIN in place of your social security number so that this account is completely separate from your personal finances. After this, start doing your research on various business bank accounts. Local options and national banks, like Chase, both have their perks.

 Online EIN Application

9. Apply for Licenses and Permits

Keep your business running smoothly by staying legally compliant. The licenses and permits you need for your business will vary by industry, state, location, and other factors.

Depending on the nature of your business, you may require a variety of different licenses and permits to legally operate in Mississippi. Here are a few resources for you to check out to ensure your business is compliant:

• • Federal: The Small Business Administration (SBA) website is where you’ll find all the information you need about federal licenses and permits.
  • State: Find licensing departments for your industry on the Mississippi Agency Directory webpage.
  • Local: Reach out to your local chamber of commerce for municipal requirements in your area.

10. Set up Business Banking, Credit Cards, and Accounting

Using a dedicated business banking account and business credit card is essential for maintaining personal asset protection. Once you register your Mississippi business, you’ll need to take steps to protect your personal assets and establish your business as its own entity. When your personal and business accounts are mixed, your personal assets (including your home, your car, and other valuables) are at risk in the event someone sues your business. In business law, this is referred to as piercing the corporate veil.

You can go a long way in protecting your assets with these four steps:

1. Open a Business Bank Account

A business bank account separates your personal assets from your company’s assets, which is necessary for personal asset protection. A designated business bank account also makes accounting and tax filing easier. The following are approved Opening Request Documents by Business Type/Category:

Corporations

• • Corporation: Operating Agreement or Articles of Incorporation, MS SOS certificate of good standing, Minutes from the last board meeting, Corporate Resolution, TIN verification
  • LLC: LLC Operating Agreement, MS SOS certificate of good standing, TIN verification (If members are other entities, INC, Trust, Estate, or other LLCs, documentation must be obtained for those entities as well.)
  • Non-Profit Organization: Operating Agreement or Articles of Incorporation, MS SOS certificate of good standing, Minutes from the last board meeting, Corporate resolution, TIN verification

Partnerships

• • Partnership: Partnership agreement, TIN verification
  • Limited Partnership:  Partnership agreement, TIN verification, MS SOS certificate of good standing

Trusts (must be approved by the bank’s legal department)

• • Trust: Certificate of Trust, Affidavit of Trust, Front and back page of the trust agreement, TIN verification

Associations

• • Association: Letter of Authorization from Association, Meeting Minutes, TIN verification

2. Get a Business Credit Card

A business credit card helps you separate personal and business expenses. A business credit card will also help build your Mississippi company’s credit history, which in turn will help you raise capital later on.

3. Set up Business Accounting

Accurate accounting and bookkeeping are essential to the financial wellness and success of any startup. From preparing and filing taxes to issuing payroll and even managing business expenses — every business can benefit from hiring a business accounting service. Talk to a business accountant today to find out how much time and money your business could save.

If you aren’t sure hiring a business accountant is the right choice for you, business accounting software tools are a good alternative. However, you run the risk of misfiling and overpaying taxes — especially if you don’t have experience in accounting or bookkeeping.

4. Get Insured

The next step is to protect your startup in Mississippi by getting business insurance. Depending on the type of business you’re operating, your insurance requirements and needs may vary. So, what is business insurance exactly? Business insurance protects your business’s assets from losses that can happen naturally while doing business, such as property damage or lawsuits. Here are the types of business insurance to consider:

• • General Liability Insurance — this protects your business in the event that it faces a lawsuit.
  • Professional Liability Insurance — this is typically used by business service providers such as accountants or consultants to protect you in the event of malpractice claims or other business errors.
  • Workers’ Compensation Insurance — this protects you in the event that one of your workers is injured on the job.

To learn more about the exact type of business insurance your startup will need, reach out to a local insurance provider.

A small business checking account can help you handle legal, tax, and day-to-day issues. The good news is it’s easy to set one up if you have the right registrations and paperwork ready.

Open Shop

Congratulations! It’s time to cut the big ribbon. Your business is officially open. Now, focus on managing and growing your business.