Hiring your first employee in Mississippi

What do you have to register for before your first payroll?

One Department of Revenue portal, Taxpayer Access Point at tap.dor.ms.gov, opens every tax the Department administers, so withholding and sales or use tax are registered in the same place and neither costs anything. They are still separate accounts with separate account numbers, separate returns and separate closing procedures, so treat this as one front door rather than one account. Everything else is somewhere else entirely. Unemployment tax is registered with the Mississippi Department of Employment Security on Form UI-1. Workers compensation is not a state account at all because you buy the policy from a private insurer or get Commission approval to self insure. New hire reporting goes to a fourth system at ms-newhire.com run for the Department of Human Services, and a fifth thing exists to confuse you: MDES runs its own separate voluntary new hire program that does not replace the Human Services filing and says so on its own page. Budget for four agencies.

Does Mississippi require income tax withholding?

Yes. You register with the Mississippi Department of Revenue, Withholding Tax, Income and Franchise Tax Bureau, before your first mississippi payroll, online through tap. the department asks you to allow up to 10 business days for the withholding account registration to complete..

The trigger is wide and catches employers who have never set foot in the state. The Department's own wording is that every employer engaged in business, licensed to do business, or transacting business in Mississippi, or who pays wages to a Mississippi resident regardless of where the services are performed, or who pays wages to a non-resident for services performed in Mississippi, must register for a withholding tax account. One remote Mississippi worker opens the account. Your filing frequency is assigned to you rather than chosen: an employer whose average liability is $300 or more per month files monthly, smaller employers file quarterly, and either way the return is due the 15th day of the month following the period. A return is due for every period even when no tax is owed. Liability of $20,000 or more for any reporting period must be filed and paid electronically, and any employer issuing 10 or more W-2s or 1099s must file them electronically, with a penalty of $25 for the first instance of non-compliance and $500 for each one after. W-2s are due to the Department by January 31; paper 1099s go with the Annual Information Return, Form 89-140, by February 28. Two things trip up out-of-state payroll teams. First, the rate moves every year: for tax year 2026 the Department's employer publication sets withholding at 0% on the first $10,000 of taxable income and 4.0% above that, down from prior years, so last year's tables are wrong. Second, a non-resident working in Mississippi is withheld on unless their Mississippi earnings for the year will be below their standard deduction, while a Mississippi resident working in another state should have the other state's tax withheld, not Mississippi's. Domestic help in the home is exempt from withholding, and Section 125 cafeteria plan amounts are not subject to it.

What unemployment insurance does Mississippi charge a new employer?

A new Mississippi employer pays 1% on the first $14,000 each employee earns, so roughly $140 per employee in the first year. Mississippi is one of the gentlest new employer rates in the country and it climbs on a fixed ladder rather than sitting still: 1.00% in your first year of liability, 1.10% in the second, and 1.20% in the third and subsequent years until you have enough history for a modified rate. Experience rated employers run 0.0% to 5.4%. The taxable wage base is the first $14,000 of each employee's wages per calendar year, which MDES states on its employer FAQ and prints on the face of the quarterly Form UI-2/3. The number recorded here is not the whole bill, and MDES says so twice on its own rates page: these rates do not include the Workforce Investment and Training contribution that might be applicable for the rate year. That contribution is set by Miss. Code Ann. 71-5-353 at twenty one-hundredths of one percent, 0.0020, made up of 0.0015 Workforce Enhancement Training, 0.0001 State Workforce Investment and 0.0004 Mississippi Works, and the statute says it is in addition to the general experience rate plus the individual experience rate of all employers. The Mississippi Works slice only runs in years when the adjusted general experience rate would otherwise fall below 0.2%, and the whole training contribution suspends if the insured unemployment rate averages above 5.5% for the three months before a rate year, reactivating only once that average drops below 4.5%. So a first year employer should plan on roughly 1.2% in total, not 1.0%, but the exact add-on for any given year is not published on the MDES site. No rate year is recorded in the year field because MDES labels none of these figures with a year anywhere on its public pages, and it tells you to contact your local UI Tax Field Representative to get your own rate for the current year. Liability itself is easy to reach: an ordinary commercial employer becomes liable on paying $1,500 in wages in a calendar quarter, or on having at least one worker performing services in some part of a day in each of 20 different calendar weeks in a year. Household employers cross at $1,000 in a quarter, agricultural at $20,000 in a quarter or 10 workers in 20 weeks, and a 501(c)(3) at 4 workers in 20 weeks. Once you are liable you stay liable for the whole calendar year.

Do you need workers compensation insurance in Mississippi?

Yes, once you reach 5 employees. Below that Mississippi does not require it, but read the counting rules before assuming you are under the line, because who counts is rarely obvious.

• every person, firm and private corporation, including a public service corporation, that has in service five or more workmen or operatives regularly in the same business or in or about the same establishment under any contract of hire
• state agencies, counties, municipalities, school districts and other political subdivisions, all of which are brought under the law regardless of headcount

This is Mississippi's biggest divergence from the states around it and it runs the opposite way from the usual surprise. Most states start coverage at the first, second or third employee. Mississippi exempts you outright below five. The Commission's own FAQ says generally any employer with 5 or more employees should have insurance, and Miss. Code Ann. 71-3-5 reaches only employers that have in service five or more workmen or operatives regularly in the same business or in or about the same establishment. The word doing the work is regularly, so a business that spikes to six for a fortnight is not obviously in, and one that runs five all year plainly is. On top of the headcount, whole categories sit outside the law however many people they employ: nonprofit charitable, fraternal, cultural and religious corporations and associations are excluded by the text of 71-3-5 itself, and the Commission adds domestic and farm labour, work performed under an independent or subcontract, and employment covered by federal law such as maritime work. Two cautions. Mississippi publishes no counting rule on its site for whether part-timers, corporate officers or owners count toward the five, so unlike Alabama and Tennessee no such rule is quoted here; ask the Commission before you rely on being at four. And the exemption is not permanent policy: House Bill 405 of 2019 would have struck the five workmen rule and required coverage from one employee. It died in committee, so five is still the law, but this is a live legislative target. The Commission does not publish, on any page reachable without its claims system, the penalty for an employer that should have carried coverage and did not, so no penalty figure is quoted.

There is no opt-out and no form for an employer below five. The statute simply does not reach you, so an employer that regularly has fewer than five workers is outside the law by default with nothing to file. Going the other way costs you a filing: an exempt employer that chooses to buy coverage voluntarily comes under the Act, and every employer subject to the law must give the Commission proof of coverage, which under the Commission's General Rule 1.3 normally arrives through the insurer's filing with the National Council on Compensation Insurance rather than from you directly.

How quickly must you report a new hire in Mississippi?

Within 15 days of the employee's hire or rehire date; employers reporting magnetically or electronically may instead send two transmissions a month, not less than 12 nor more than 16 days apart. Reports go to the Mississippi State Directory of New Hires, operated for the Mississippi Department of Human Services.

Fifteen days is tighter than the federal 20 day floor, so a habit carried in from a 20 day state will be late in Mississippi. The obligation sits on all employers under Miss. Code Ann. 43-19-46 and 93-11-101 together with the federal PRWORA, and it covers everyone who lives or works in Mississippi that you expect to pay, including someone who works a single day and leaves. A returning worker is a rehire and must be reported again once they have been separated, laid off, furloughed or on unpaid leave for at least 60 consecutive days. Mississippi differs from Texas and Florida in one useful way: the Directory accepts independent contractor reports but does not require them by law. The penalty is small, up to $25 per newly hired employee, rising to $500 where the state finds a conspiracy between employer and employee not to report. The real trap is which agency you are dealing with. The Department of Employment Security runs its own new hire program to catch people who have gone back to work while claiming benefits, and its page is explicit that this is voluntary and does not relieve you of the responsibility to continue reporting to the State Directory of New Hires administered by the Department of Human Services. Filing with MDES is not filing with the Directory. The Directory itself is reached at ms-newhire.com and its mailing address is a processing centre in Norwell, Massachusetts, which is normal and not a sign you are on the wrong site.

Does Mississippi have paid family leave or state disability insurance?

No. Mississippi runs no state paid family leave fund and no state disability insurance, so there is no payroll deduction of that kind and no extra account to open.

Mississippi runs no state disability insurance and no state paid family and medical leave programme, so there is no payroll deduction of that kind and nothing extra to register for. The Department of Revenue's 2026 employer withholding publication describes income tax withholding and nothing else, and the only other state payroll levy anyone administers here is the unemployment contribution and the Workforce Investment and Training contribution that rides on top of it at MDES. Mississippi also has no state department of labour running wage and hour or leave mandates, which is why there is no third agency to check. If you already run payroll in California, New York, New Jersey, Washington, Colorado or Delaware, do not carry that deduction across to a Mississippi employee. Recorded at S rather than P because this is an absence, established from what the state's own employer publications cover rather than from a page that says the programme does not exist.

Do you need a sales tax permit in Mississippi?

The permit is free, and this is the one number worth being careful about because Mississippi is widely reported as charging $50. The Department answers it directly and in its own words: no, there is no fee to obtain a sales tax permit, and the sales tax number represents a permit issued to the applicant for the privilege of operating a business in Mississippi. The $50 that circulates is a different figure entirely: it is the cap on the vendor's discount for paying on time, which is 2% of the tax due, not to exceed $50. Where the discount belongs to you, the fee does not exist. Three mechanics matter more than the price. Permits are location specific, so a single legal entity gets one account number but each separate physical location must be registered for its own permit, and moving even across the street requires an amended application. The permit does not expire and needs no renewal while you stay in the same business at the same location, which is a real saving next to Alabama's annual November renewal. And every permittee must file a return for every period on its assigned frequency even when no tax was collected, with returns due the 20th of the month following. Allow about two weeks for the permit to arrive. Anyone doing non-residential construction should also read the contractor's tax entry in the gross receipts section, because that is a separate 3.5% levy with a prepayment rule aimed squarely at out-of-state contractors.

Security deposits. There is no deposit at registration as a matter of course, but the Department reserves an open-ended bond. Its wording is that depending upon the nature of the business, or past history of the applicant, a bond may be required to be posted before a permit is issued, and separately that if you or other owners, partners, officers, members or trustees have a history of filing or paying sales tax late, you must pay the outstanding liabilities and post a bond before receiving a new licence. No amount or formula is published, so treat the size as unknown.

Does a marketplace like Amazon or Etsy handle the tax for you?

House Bill 379 of the 2020 regular session created the Mississippi Marketplace Facilitator Act of 2020. From 1 July 2020 a marketplace facilitator that facilitates sales into Mississippi exceeding $250,000 in any consecutive twelve month period must register for a Mississippi use tax account and collect and remit use tax on Mississippi sales of taxable services, tangible personal property and specified digital products. A facilitator is defined broadly: anyone who lists or advertises a retailer's taxable goods, services or digital goods in any forum and who, directly or through third party arrangements, collects payment from the customer and transmits it to the retailer, whether or not it is paid for doing so. The detail that changes the arithmetic for a small seller is that a sale made through a marketplace facilitator counts as the facilitator's sale rather than the seller's when working out whether anyone has crossed $250,000, so platform sales do not push you over the line on your own account. Sales through your own website or any other channel still do, and those remain yours to register for and remit. One carve-out worth knowing: sales facilitated by third party food delivery services that bring food from an unrelated restaurant to a customer are not treated as retail sales, and those services pay sales tax to the restaurant on the cost of the food rather than charging the customer on delivery.

If your sales drop, when can you stop collecting?

Mississippi publishes no trailing nexus rule and no wind-down procedure for a remote seller whose sales fall back under $250,000, so this is recorded as unknown rather than guessed. What the Department does publish points the same way in practice: the threshold is measured over any consecutive twelve month period rather than a calendar year, so a dip below it does not cleanly end anything, and while your account stays open you owe a return for every period whether or not you collected a cent. The only documented way out is to close the account, which means filing a final return and submitting an account closure request through TAP. The Department describes that procedure explicitly for withholding accounts and not for sales or use tax accounts, so telephone the Sales and Use Tax Bureau on 601-923-7015 before you simply stop filing. Going quiet on an open Mississippi account produces delinquency assessments, not a lapse.

Does Mississippi charge a tax on revenue rather than profit?

Mississippi levies nothing resembling Washington's B&O or Ohio's CAT, so there is no revenue-based tax to plan around. Two other things catch out-of-state businesses. The first is the contractor's tax, which lives inside the Sales Tax Law rather than the income tax and is the single most expensive thing a visiting contractor can miss. It is 3.5% on all construction, renovation or repair of non-residential real property where the total contract price or compensation received exceeds $10,000, and the timing rule is aimed at you specifically: if the contract exceeds $75,000 in scope, or if the contractor is from another state, the contractor's tax must be paid before work begins. Filing a surety bond with the Department to guarantee payment relieves you of prepaying; otherwise it is cash up front. Bonded contracts and those not required to prepay can report the tax monthly on the ordinary sales tax return. The second is the corporation franchise tax, levied on capital, surplus, undivided profits and true reserves employed in Mississippi above $100,000, with a $25 minimum. Senate Bill 2858 of 2016 put it on a nine-year glide path and the Department's current corporate instructions print the whole schedule: $1.00 per $1,000 for tax year 2024, $0.75 for 2025, $0.50 for 2026, $0.25 for 2027, and repealed effective 1 January 2028. The rate in force on this review date is the tax year 2026 figure of $0.50 per $1,000. Corporate income tax, which is separate, is 0% on the first $5,000 of taxable income, 4% on the next $5,000 and 5% above $10,000. No numeric fields are filled because none of these is a gross receipts rate.

Do you have to register your out-of-state company in Mississippi?

$250 for a foreign LLC on Form F0200, Application for Registration of Foreign Limited Liability Company. $500 for a foreign profit corporation on Form F0002, Application for Certificate of Authority; the same form is $100 for a foreign nonprofit corporation. A foreign limited partnership is also $250. Name reservation, if you need one, is $25 for an LLC and $50 for a corporation. Figures are from the Secretary of State's Services and Fees Schedule revised October 2024.

Foreign qualification here is registering an entity you formed elsewhere so it can transact business in Mississippi, which is a different filing from forming a Mississippi entity, and the fees are among the higher ones in the region. The part that actually costs money is not the entry fee but the annual one, and it is easy to miss because it inverts what Mississippi charges its own companies. A Mississippi LLC files its annual report for nothing. A foreign LLC registered here pays $250 for the same annual report, every year, forever. A foreign corporation's annual report is $25, the same as a domestic one. So the choice of entity type changes your recurring Mississippi cost by $250 a year in a way no other filing fee here does. Annual reports for profit corporations and LLCs are due by 15 April, nonprofit corporations by 15 May, and they must be filed online through the Secretary of State's portal. Failing to file can lead to administrative dissolution or revocation, and getting back is $50 for a Mississippi LLC, $100 for a foreign LLC and $100 for a foreign corporation. Withdrawing later is $25, and the Department of Revenue adds its own step: a corporation leaving the state withdraws or dissolves through the Secretary of State and must also file a final return with the Department, having first made sure the corporation holds no Mississippi assets.

Where these figures come from

Every number on this page was read on Mississippi's own agency pages, its statute, or a current-year official form, and this record was last reviewed on 2026-09-08. Where a state's explainer page disagreed with its statute or its current form, we followed the statute or the form and said so in the relevant section, because a state's consumer-facing pages are often the last thing updated when a figure changes.

Anything we could not confirm on a primary source is left blank rather than estimated. A missing figure on this page means we could not verify it, not that it is zero.

This is general information, not legal or tax advice. Rules change and your circumstances matter. Confirm anything you are about to act on with the agency named beside it.