Table of Contents
Mississippi is one of the few states that doesn’t have a state income tax. This means that Mississippi employers need to pay their employees with cash, checks, or credit cards. The employer account number is used to identify an individual’s employer in order to make payroll deductions.
Payroll processing and computing Mississippi payroll taxes is a simple procedure. There are no municipal taxes in Mississippi, and there is just one state payroll form. Mississippi is one of the most straightforward states in which to administer your company’s payroll.
Using an all-in-one payroll solution like Gusto may make handling your Mississippi payroll even simpler. Gusto assists you with onboarding new workers (all online), providing them with the necessary papers, making direct deposit payments, and filing Mississippi payroll taxes, all while avoiding fines and costs associated with being late or submitting incorrect payroll tax figures.
A Step-by-Step Guide to Payroll Processing in Mississippi
Mississippi makes payroll simple for companies by adhering to federal requirements in general. Attempting to compute Mississippi payroll taxes or Mississippi withholding tax by hand, on the other hand, might lead to significant errors. The following are the fundamental stages of running payroll in Mississippi.
Step 1: Register your company as an employer. To get a new Federal Employer Identification Number (FEIN), new businesses may need to use the federal Electronic Federal Tax Payment System (EFTPS) (FEIN). To pay federal taxes, you’ll need your FEIN.
Step 2: Register your company with the Mississippi Department of Commerce. If your company is brand new, you must create an account on the Mississippi Secretary of State’s website. The Mississippi Department of Revenue requires every firm that pays workers in Mississippi to register.
Step 3: Set up your payroll system. This includes selecting how frequently and when you’ll pay workers, as well as how you’ll issue their paychecks (paper checks versus direct deposit), how onboarding will operate, and so on. To assist you to manage your Mississippi payroll, you may process payroll manually (not advised), create an Excel payroll template, or use a payroll provider.
Step 4: Have staff complete the necessary paperwork. During the onboarding process, every firm that recruits workers in Mississippi are required to gather specific paperwork. They must complete I-9 verification and have a completed W-4 on file, especially the Mississippi Employee’s Withholding Exemption Certificate, which is the state equivalent of the W-4.
Step 5: Go through the timesheets and approve them. Paycheck processing will begin many days before your company’s payroll is due. You must gather and evaluate recorded work hours from hourly and nonexempt workers during this period in order to talk with anybody who may have committed a mistake. There are a variety of methods for keeping track of employee time, some of which are free.
Step 6: Work out the gross compensation and taxes for each employee. Because Mississippi has a progressive tax rate, using pen and paper or a spreadsheet for this stage might be difficult. Most workers will pay the highest tax rate on the bulk of their income since the top tax rate income threshold is low. If you need additional information, look into how to calculate payroll.
Step 7: Reimburse employees for their salary, benefits, and taxes. The majority of businesses now pay all workers through direct deposit. However, you may pay with cash (which isn’t the greatest choice) or a paper check. Because there is no state minimum wage in Mississippi, make sure you pay your workers at least the federal minimum wage of $7.25 per hour. You may pay your federal and state taxes online in Mississippi. If you utilize a benefits provider, they should collaborate with you to make deductions as straightforward, automated, and electronic as possible.
Step 8: Make a backup of your payroll data. It’s a good idea to keep track of your company’s finances. However, no firm in Mississippi is required to preserve employment-related paperwork. Because the Fair Labor Standards Act (FLSA) requires employers to preserve certain documents for at least three years, you’ll need to keep employee files for the required time period.
Step 9: Register with the federal and state governments to file payroll taxes. All Mississippi state taxes must be paid on the due date, which is generally quarterly, to the appropriate state agency, which you may do online at the Mississippi Department of Revenue website. You may pay your federal taxes online using the EFTPS on one of the two schedules shown below:
- When the IRS sets you a monthly schedule, you must deposit employment taxes on payments received during that calendar month by the 15th of the next month.
- When the IRS gives you a semiweekly schedule, you must deposit employment taxes by the following Wednesday for payments made Wednesday, Thursday, and Friday, and by the following Friday for payments made Saturday, Sunday, Monday, and Tuesday.
Please keep in mind that the reporting and depositing of employment taxes are two separate things. You must submit taxes quarterly on Form 941 or yearly on Form 944, regardless of your payment schedule.
Step 10: Finish your payroll reports for the year.
You’ll need to file payroll reports every year, including all W-2 and 1099 forms. These forms must be sent to workers by January 31 of the following year.
Payroll Laws, Taxes, and Regulations in Mississippi
It’s critical to know how to compute Mississippi payroll taxes and how to apply the relevant rules to ensure correct payroll. Review the relevant rules and requirements for making payroll in Mississippi below to help you stay in compliance with payroll regulations.
Most employers in the United States are required to pay Federal Insurance Contributions Act (FICA) taxes, with a few exceptions. FICA tax rates for Social Security and Medicare are now 6.2 percent and 1.45 percent, respectively. These taxes will be paid by both the employer and the employee, with each contributing 7.65% of the total Social Security and Medicare taxes.
Taxes in Mississippi
Mississippi, like other states, has specific taxes that businesses must pay. Mississippi, on the other hand, does not impose municipal taxes, so you just have to worry about state taxes.
Unemployment Taxes for Employers
In Mississippi, all companies are required to pay State Unemployment Tax Act (SUTA) taxes. The current salary base is $14,000, with interest rates ranging from 0% to 5.4 percent. For the first year, all new employers in Mississippi will pay a SUTA rate of 1.0 percent, 1.1 percent for the second year, and 1.2 percent for the third year. Businesses may receive a tax credit of up to 5.4 percent on their Federal Unemployment Tax Act (FUTA) payments if they pay SUTA in full and on schedule.
Compensation for Employees
Mississippi businesses with five or more employees must carry Compensation for Employees insurance. Compensation for Employees insurance provides benefits to employees who suffer on-the-job injuries. These benefits usually begin to be paid a week or two after a worker is out of work due to their injuries and only cover their lost income and medical bills. There are, however, exceptions to this requirement. If your company employs workers who fall into one of the following categories, you may not need to carry Compensation for Employees insurance:
- Workers at the home
- Agricultural employees
- Employees of organizations that are nonprofit, benevolent, religious, or cultural
Employers in Mississippi are not required to provide Compensation for Employees coverage if they have less than five employees or meet one of the above exemptions. Companies may choose to offer Compensation for Employees insurance, however, if they want to do so.
Taxes on income
Mississippi has no tax reciprocity agreements with other states. Employees who work and pay taxes in Mississippi but reside in another state may be subject to double taxation.
Minimum Wage in Mississippi
Mississippi pays the same minimum wage as the rest of the country. Mississippi’s minimum wage was last increased in 2009, to $7.25 per hour. Tipped workers must be paid at least $2.13 per hour if their gratuities bring them up to the hourly minimum wage. If this is not the case, the corporation will be required to make up for the shortfall.
Overtime Calculation
Mississippi overtime regulations adhere to the provisions of the Fair Labor Standards Act. For hours worked beyond 40 in a workweek, all businesses are required under the FLSA to pay workers 1.5 times their usual hourly rate.
Employee Remuneration
Except for workers in manufacturing who work for organizations with at least 50 employees, Mississippi law does not compel employers to pay employees on a regular basis. Workers must be paid at least once every two weeks and within 10 days after the end of the pay period in these firms. There is no federal regulation that specifies how often an employee must be paid; but, federal law does stipulate that whatever pay frequency you pick, you must adhere to it and not modify it at random.
Mississippi also has no provisions for how workers must be compensated. The following are some of the most prevalent methods to pay your employees:
Pay Stub Regulations
There is no legislation in Mississippi that requires employers to disclose pay stubs to workers.
Paycheck Deductions in Mississippi
There is no legislation in Mississippi that restricts an employer’s ability to make money from an employee’s paycheck. Because there is no rule preventing employer deductions, the following things are likely to be deductible:
- A cash crunch
- Company property that has been damaged, destroyed, or stolen
- Costs of additional equipment
- Other goods required for the employee’s position
Please keep in mind that, according to the Department of Labor, a corporation cannot deduct from an employee’s salary if doing so would result in the person earning less than the federal minimum wage ($7.25 per hour) for the pay period.
Final Paychecks of Terminated Employees
There is no rule in Mississippi that specifies when an employee who has left a firm must get their last paycheck. Due to the lack of a rule, it is advisable to pay the last salary on the following normal payroll run. This would apply to workers who have been fired and have resigned.
HR Laws in Mississippi That Affect Payroll
There aren’t many state-specific HR legislation in Mississippi. That doesn’t mean you can skip over the portions below; you’ll still need to make sure you’re following federal requirements, which Mississippi law usually follows.
Reporting of New Hires in Mississippi
In Mississippi, all new hires and rehired workers must be reported to the Mississippi State Directory of New Hires. This report, which must contain the employee’s name, address, and Social Security number, is used to enforce child support obligations. To avoid fines, you must complete the form as soon as each person is employed.
Breaks and Meals
Companies in Mississippi are not required to offer employees a lunch period or a break. Employers, on the other hand, are free to arrange paid and unpaid breaks for their workers. Any break lasting less than 20 minutes should be compensated.
Child Labor Laws in Mississippi
Children aged 16 and above are not restricted from working under Mississippi law. Children under the age of 16 are not allowed to work more than three hours every school day (Monday through Friday) or 18 hours per week. Children under the age of 16 are likewise prohibited from working in a factory, mill, cannery, or workshop.
Requirements for time off and leave
Mississippi adheres to the Family and Medical Leave Act (FMLA), which mandates that all qualified companies offer workers with a covered disability with up to 12 weeks of unpaid leave. Pregnancy and caring for a sick family member are examples of this. The FMLA does not compel businesses to pay workers for time off, but it does require employers to maintain the employee’s position or one that is substantially comparable, open when they return. Mississippi’s state legislation does not allow for any further leave.
Mississippi has no legislation mandating companies to give paid time off to their workers (PTO). Companies in Mississippi have the freedom to design their own PTO rules, which may include whether or not they pay out accumulated and unused PTO when an employee quits. Because organizations in Mississippi are not required to do so, it’s a good idea to have this clearly outlined in your company policy. The most crucial thing is to follow your policy’s restrictions, otherwise, you might be held accountable.
Use our free PTO calculator if you provide paid time off and need assistance calculating your workers’ PTO accumulation.
There is no regulation in Mississippi that requires private enterprises to pay workers for holidays or to pay them a higher rate for working on a holiday. A business may choose to do so, but it must abide by the FLSA.
Mississippi has no legislation mandating companies to give paid or unpaid sick leave to their workers. Employers may set their own sick leave policies.
Employers in Mississippi are not required to provide their workers time to vote.
In Mississippi, an employer is not compelled to compensate an employee for time spent on a jury. Under Mississippi law, however, an employer cannot force an employee to use PTO for jury duty time, nor may an employer try to convince an employee not to serve on a jury, nor can an employer fire or threaten an employee for jury duty service.
Businesses in Mississippi are not required to give bereavement leave to their workers. Companies are free to set a policy and must follow it if they do so.
Payroll Forms in Mississippi
Payroll forms differ by state, and some, like Mississippi, have their own W-4. Thankfully, it is the only one:
Forms for Federal Payroll
Here is a complete list and location of all the Forms for Federal Payroll you should need.
- W-4 Form: Provides information on employee withholdings so you can properly calculate and withhold federal and state taxes on income
- W-2 Form: This form is used to record each employee’s total yearly pay.
- W-3 Version: A summary form of the W2 that is used to report total yearly salaries for all workers.
- Form 940; is used to compute and submit unpaid unemployment taxes to the Internal Revenue Service (IRS).
- Form 941; is used to submit quarterly income tax returns.
- Form 944; is used to submit yearly income tax returns.
- 1099 Forms: Provides details for contract work performed by non-employees.
Conclusion
Payroll processing in Mississippi is one of the simplest in the country. There is just one state-specific payroll form to fill out, and there are no municipal taxes to figure out.
Despite the fact that it is one of the simplest states to conduct payroll in, errors can happen. You can avoid these blunders by utilizing payroll software like Gusto, which guides you through Mississippi payroll step by step.
Frequently Asked Questions
What information do employers need for payroll?
Employers need three pieces of information for payroll purposes. They must know your Social Security number, the company’s federal tax identification number (EIN), and their state or local business license numbers.
How do I do payroll in Mississippi?
If you are interested in doing payroll for your Mississippi employees, then the best solution is to find suitable accounting software. The most popular of these is Quickbooks which can be picked up at many stores that sell accounting and business-related supplies including Amazon.
