A limited liability company (“LLC”) is a hybrid between a corporation and a partnership. The LLC shares the limited liability benefits of a corporation but the management and tax characteristics of a partnership. These entities were designed to give small business owners protection and flexibility. Mississippi has enacted the Revised Mississippi Limited Liability Company Act to govern the formation and management of LLCs in that state.
Mississippi law requires LLCs to provide basic information to the public. Public information will include:
- the name of the LLC;
- the date of incorporation (the date the LLC was registered with the state);
- the LLC’s principal address;
- the name of the LLC’s agent (where a lawsuit would be delivered); and
- the name(s) of officer(s) and director(s).
Under Mississippi law a LLC must keep at its principal place of business the following:
- a list of the full name and last known street address of each member and manager;
- a copy of the certificate of formation, with any related copies of powers of attorney;
- copies of operating agreements; and
- a statement of the LLC’s financial and property holdings (unless contained in the certificate of formation or the operating agreement).
The LLC’s formation documents may also provide specific requirements that LLC members and managers must abide by. The LLC must also file a notice of incorporation with the state and may need to provide an Employer Identification Number (known as an “EIN” or “FEIN”).
As with most states, Mississippi law provides managers and members of LLC’s with certain liability protections. This means, for example, that when a LLC breaches a contract with a customer, when that customer sues the LLC the members and managers are not personally liable, only the assets of the LLC are vulnerable.
Disadvantages to operating a LLC include:
- restrictions on the ability to transfer or sell assets of the LLC;
- corporate governance requirements (having to communicate and collaborate with other members and managers of the LLC); and
- paperwork and filings requirements with the state.
Generally, these disadvantages are outweighed by the benefits of having limited personal liability and that members of these types of entities can file taxes in a streamlined and efficient manner.
Failing to properly start and manage an LLC can have serious financial consequences. Contact an experienced Mississippi business lawyer today to discuss your options under Mississippi law.