How to set up an LLC for your rental property in Mississippi

If you’re a landlord or real estate investor in Mississippi, you’ve probably heard that forming an LLC (limited liability company) for your rental property can be a smart move. But how exactly do you set up an LLC for a rental property in Mississippi? What does it cost? How long does it take? And what protections does an LLC really offer you as a landlord?

This guide will walk you through everything you need to know about setting up an LLC in Mississippi specifically for your rental property investments. We’ll cover the basics of LLCs, the Mississippi-specific steps and fees, ongoing requirements, and how an LLC compares to other options like S corps or umbrella insurance. By the end, you’ll have a clearer picture of whether an LLC is right for you and how to get started.

Why landlords in Mississippi consider an LLC for rental property

Many landlords in Mississippi consider forming an LLC to hold their rental properties because it can provide a layer of personal liability protection. Essentially, an LLC may provide a layer of personal asset protection—potentially helping to shield your personal assets like your home, savings, or car from lawsuits related to your rental property. This is especially important if you have multiple properties or tenants, since risks can add up.

Besides liability protection, an LLC can make managing your rental business easier in terms of accounting and separating your personal and business finances. But an LLC isn’t a magic shield. It won’t protect you from everything, like personal negligence or certain tax liabilities. Knowing what an LLC can and can’t do is key before you dive in.

If you want a general overview of whether landlords should use an LLC, Steadily has a helpful article on should landlords use an LLC that’s worth checking out.

What an LLC is and what it can (and cannot) protect you from as a landlord

An LLC is a type of business structure that combines features of corporations and partnerships. For landlords, the main benefit is limited liability protection. This means that if a tenant sues you or your property faces a liability claim (like a slip-and-fall), your personal assets are generally shielded. The LLC’s assets—your rental property and any funds inside the LLC—are what’s at risk, not your personal bank accounts or other properties held outside the LLC.

However, it’s important to realize that an LLC doesn’t protect you from everything. For example, if you personally cause harm through negligence, fraud, or illegal activity, you could still be personally liable. Also, an LLC doesn’t replace insurance. You’ll still want to carry proper landlord insurance in Mississippi to cover damages, liability, and other risks.

For a detailed look at how LLCs stack up against insurance options, check out LLC vs umbrella insurance.

Step-by-step: how to set up an LLC for a rental property in Mississippi

Setting up an LLC in Mississippi is a straightforward process, but it involves several important steps:

1. Choose a name for your LLC

Your LLC’s name must be unique and distinguishable from other businesses registered in Mississippi. It also must include “Limited Liability Company,” “LLC,” or “L.L.C.” at the end. You can check name availability on the Mississippi Secretary of State’s business name search page.

2. Designate a registered agent

Mississippi requires every LLC to have a registered agent with a physical address in the state. This person or business accepts official mail and legal documents on behalf of your LLC.

3. File articles of organization

The articles of organization officially create your LLC. These include basic info like the LLC’s name, registered agent, and whether the LLC will be member-managed or manager-managed.

4. Pay the LLC filing fee

According to LLC University, the state filing fee in Mississippi is $50, and the ongoing annual or biennial fee is $0, making the Magnolia State one of the most affordable places to create an LLC. However, like most other states,  an information report must be filed every year.

You’ll need to pay a filing fee when submitting your articles of organization to the Mississippi Secretary of State.

5. Create an operating agreement (optional but recommended)

Mississippi doesn’t require an operating agreement, but it’s a good idea to have one that outlines how your LLC will be managed and how profits and losses are shared.

6. Get an EIN from the IRS

An Employer Identification Number (EIN) is like a Social Security number for your business. You’ll generally need it to open a bank account, file taxes, and hire employees if you ever do. Requirements may vary, so it’s a good idea to verify what applies to your situation.

7. Comply with any additional licenses or permits

Depending on your location and property type, you may need local permits.

How much it costs to set up an LLC in Mississippi

One of the top questions landlords have is: how much does it cost to set up an LLC in Mississippi?

• The LLC filing fee to file your articles of organization is currently $50 if you file online or by mail with the Mississippi Secretary of State.
• There is no state franchise tax or annual fee for LLCs in Mississippi. However, Mississippi requires LLCs to file an annual report.
• You may also incur costs if you use a registered agent service, which can range from $100 to $300 per year.
• If you hire a lawyer or use a formation service, that will add to your cost.

So overall, initial costs are fairly low—often under $100 if you DIY. Ongoing costs are limited mostly to the annual report and registered agent fees.

For the latest fee details, visit the Mississippi Secretary of State’s LLC filing page.

How long does it take to set up an LLC in Mississippi?

Processing times vary but generally:

• Online filings are processed within 3 to 5 business days.
• Mail filings can take 1 to 2 weeks.

Online filing generally offers faster processing times, but you should consider your own needs and circumstances. The Secretary of State’s website will also post any updates on processing speed.

Articles of organization: what they are and how to file them in Mississippi

Articles of organization are the foundational documents that officially form your LLC. They include:

• The LLC’s name
• Registered agent’s name and address
• Whether the LLC is managed by members or managers
• The organizer’s name and signature

In Mississippi, you file these articles with the Secretary of State either online or by mail. You can find the forms and instructions on the Mississippi Secretary of State business services page.

Filing online is faster and more convenient, and the $50 fee applies whether you file online or on paper.

Do you need a lawyer to start an LLC in Mississippi?

Many landlords successfully form LLCs on their own using the Secretary of State’s online portal and available instructions. However, consulting a lawyer can be helpful if:

• You have multiple owners or complex ownership structures
• You want help drafting an operating agreement
• You have questions about asset protection or tax implications

For more complex situations, professional advice may be valuable.

How to get an EIN for an LLC that owns rental property

After forming your LLC, you’ll generally need to get an Employer Identification Number (EIN) from the IRS. This number is often required to:

• Open a bank account for your LLC
• File taxes for your rental property business
• Hire employees (if applicable)

Getting an EIN is free and fast. You can apply online through the IRS website at the IRS EIN application page.

You’ll need your LLC’s formation details handy, but the application itself takes just a few minutes.

Do LLCs need annual reports and other ongoing compliance in Mississippi?

Yes, Mississippi LLCs must file an annual report each year with the Secretary of State. The key points:

• The annual report is due by April 15th each year.
• The filing fee is $25.
• You can file the report online.
• Filing the annual report is important to maintain your LLC’s good standing. For details on consequences of non-filing, consult official sources or a professional.

Besides the annual report, keep in mind that you should:

• Maintain accurate financial records
• Renew any local business licenses or permits
• Keep your registered agent information up to date

S corp vs LLC for landlords in Mississippi

Many landlords wonder about the difference between an LLC and an S corporation for holding rental property.

• An LLC is simpler to set up and maintain, offers flexible management, and provides liability protection.
• An S corp is a tax status that can be elected by an LLC or corporation. It may provide tax benefits in certain situations, such as potentially reducing self-employment taxes on profits.
• However, S corps involve more paperwork, stricter ownership rules, and may not suit all landlords.

Since tax situations vary widely, it’s best to talk with a tax professional before choosing S corp status for your rental LLC.

LLC vs umbrella insurance for rental property risk management

An LLC may help protect your personal assets by separating liability, but it doesn’t replace insurance. Landlord insurance covers property damage, liability claims, lost rent, and more.

An umbrella policy provides an extra layer of liability protection above your landlord insurance and can cover multiple properties or LLCs.

Together, an LLC and proper insurance form a strong risk management strategy. For a deeper dive, see Steadily’s article on LLC vs umbrella insurance.

When an LLC makes sense for landlords in Mississippi and when it may not

An LLC is often a good choice if:

• You own multiple rental properties
• You want to separate your personal and business assets
• You want some liability protection from tenant lawsuits or property claims

An LLC may be less helpful or unnecessary if:

• You own just one rental property and have minimal risk
• You’re comfortable with your existing insurance coverage and personal liability limits
• The cost and administrative work of an LLC outweigh the benefits for your situation

Always remember that forming an LLC is just one piece of the puzzle. You should also have solid landlord insurance in Mississippi and consult professionals on your individual risks.

Next steps: review your setup and insurance

If you’re considering how to set up an LLC for a rental property in Mississippi, hopefully, this guide has clarified the process and what to expect.

Remember:

• Filing your LLC with Mississippi’s Secretary of State costs $50 and takes a few days online.
• You must file annual reports with a $25 fee.
• An LLC may help protect your personal assets but does not replace landlord insurance.
• Getting an EIN from the IRS is a quick, free step.
• You don’t need a lawyer, but professional help can be valuable for complex situations.

For more detailed info on LLCs for rental properties, check out Steadily’s article on should landlords use an LLC.

And to make sure your rental properties have the right coverage, explore options for landlord insurance in Mississippi.

Forming an LLC can be a smart move for Mississippi landlords, but it’s just one part of protecting your investment and managing your rental business effectively. Take the time to understand your options, comply with state requirements, and keep your insurance up to date for peace of mind.