Last updated on January 15th, 2025 at 12:31 am
Starting a new business of any type requires making many decisions and the location is right at the top of the priority list. One primary reason why location is important even for a home-based internet business is how much your state and community permit you to retain after paying taxes. Some areas have multiple layers of taxes that can include a city tax, county tax, state tax, and lots of fees for permits, etc.
This article will open your eyes to the Mississippi Gulf Coast as a possible location for your business. Read our series on starting your business after retirement, this is part two.
Consider the Mississippi Gulf Coast as a great location for your business. Start with state income tax at a maximum of 4.4% which is one of the lowest in the nation and going down to 4% in 2026. State law permits you to deduct almost everything that is deductible at the federal level which means that the actual taxes you pay can be as low as zero after deductions. This article by the Tax Foundation compares all of the states for corporate income tax brackets.
Buy a vehicle in Mississippi pay a 5% sales tax
The state sales tax rate is 7% (national average 6.44%) but there are mitigating factors. If you buy a vehicle your tax rate will be even lower at 5%. When you consider the lower vehicle, boat, and RV tax rates the general rate is not bad. Factor in the low state income tax rate and the balance comes out well for the state.
It’s also important to note that employees will not pay income taxes on retirement income when they reach the eligible age. This includes not only Social Security but also IRA and 401k withdrawals. Capital gains on state taxable income are 4%, lower than in many other states.
Mississippi is ranked number 5 (that’s good) when it comes to unemployment insurance costs. Compare this to Texas at 16 or dare I say California at #45. Mississippi is rated #13 for corporate tax. Compare this to Texas at #47 or Illinois at #36.
No city sales tax just a small business license fee
Some cities on the Mississippi Gulf Coast have an annual “privilege tax” which is similar to a business license tax in other states. The amounts are low and based on revenue and other factors.
The property tax rates in Mississippi are also near the lowest in the nation for two reasons. The first is that tax rates can only be adjusted every four years which is great, it permits you to adjust your income to any potential increase, and second, the rate charged on a property is reasonable to start with. I came from California where there is an automatic 2% increase in property taxes every year.
The only time that would change is if property values fell substantially. So an effective increase over four years of 8% in California. I have not seen taxes, in general, go up 8% from period to period along the Mississippi Gulf Coast although it is possible and there is no guarantee that they will not.
The last thing I want to cover regarding taxes is that Mississippi is a conservative state and elected officials at all levels are loathed to increase taxes. In fact, a few years ago the state of Mississippi lowered its tax rates. Yes, they lowered the rates. The state also gives deductions for seniors over 65 on their personal residence. The credit is substantial.
The state reduced the income tax rate to 4.4% (4% in 2026)
I have advised in other articles that the “tax climate” is important to assess. If your business is located in a state that is constantly looking for revenue from businesses e.g. California, Illinois, New York, and others, your taxes will probably continue to rise in the short term.
There is also as of the date I am writing this, a movement in this country to tax businesses to death as a source to fund large spending projects. I am not going to get into the politics of this as any intelligent person knows that businesses obtain funds to pay taxes from the public.
The point that I am trying to make it in their rush to tax large businesses, there is usually fallout even for medium and small businesses. The last thing you want to do is start a business in a state or locality that is jumping on this tax business bandwagon.
The Mississippi Gulf Coast is where you want to be
I wish I could speak for the entire state of Mississippi regarding business opportunities. I know the Gulf Coast so I will speak about the Gulf Coast because as with many other states, there are differences between regions. The Gulf Coast has a vibrant business community that is growing.
People are moving here from all around the country for our great climate, the beaches, and of course our casinos. Shipbuilding, oil refining, and the port all add to employment opportunities with good salaries.
This brings me to the cost of living and some myths about Mississippi in general. I moved here from California and you can read my story in this blog article. Since I have been here, I have been reading much that has been written about Mississippi by people who live in faraway cities.
Frankly, almost all articles are about cities and then about the largest cities or even mid-sized cities. This is understandable because most people in this country live in cities. I have learned that life does actually exist outside of cities (our cities are smaller).
Compare starting a business in Mississippi to California
1. Filing Fees for LLCs
- Mississippi: LLC formation requires a one-time fee of $50, one of the lowest in the country.
- California: The initial LLC filing fee is $70, and there’s an annual LLC tax of $800, regardless of revenue.
2. Corporate Tax Rates
- Mississippi: A flat corporate tax rate of 5%, which is competitive.
- California: Corporate tax is 8.84% (general corporations) and 6.65% for S-corporations. This is significantly higher than Mississippi’s rate.
3. Cost of Living and Operating Expenses
- Mississippi: The overall cost of living is ~20% below the national average, making labor, utilities, and real estate much cheaper.
- California: The cost of living is ~49% above the national average, with extremely high real estate costs and wages, especially in urban areas like San Francisco and Los Angeles.
4. Business Incentives
- Mississippi: Offers numerous incentives, including loans, grants, and tax breaks, especially for small businesses and minority-owned businesses.
- California: While California offers robust grants and venture capital opportunities, the state has fewer tax relief programs for small businesses. Regulatory compliance can also be costlier.
5. Tax Burden
- Mississippi: Known for its low overall tax burden for businesses.
- California: Businesses face a higher tax burden due to sales, income, and property taxes.
6. Regulatory Environment
- Mississippi: Offers a business-friendly regulatory environment with simpler processes.
- California: Known for stringent regulations and complex compliance requirements, especially for labor and environmental laws.
Conclusion
Mississippi is significantly more cost-effective for startups and small businesses than California, primarily due to lower filing fees, taxes, and operating costs. However, California provides greater access to venture capital and innovation hubs, which might benefit tech startups or businesses requiring large-scale funding. Entrepreneurs should weigh these factors based on their industry and goals.
Using California may be overkill since it is the most expensive state. I have compared Texas to Mississippi and while it’s close, Mississippi as you can see has lower costs than Texas.
Compare Texas to Mississippi for starting a new business
1. Ports and Trade
- Mississippi Gulf Coast:
- Home to Port of Gulfport, a significant deep-water port that handles international and domestic shipping.
- Proximity to the Gulf of Mexico provides direct access to global shipping routes.
- Its location makes it a strategic gateway for goods moving to and from the southeastern U.S., one of the fastest-growing regions in the country.
- Texas:
- Hosts several major ports, including the Port of Houston, Port of Galveston, and Port of Corpus Christi, which are among the busiest in the U.S.
- Texas ports handle a larger volume of global trade, especially related to oil, gas, and petrochemicals, but are further away from some major U.S. markets.
2. Interstates and Infrastructure
- Mississippi Gulf Coast:
- Connected by Interstates 10 and 59, providing efficient east-west and north-south access.
- Its location along I-10 places it closer to major markets such as Atlanta, Miami, and the Eastern Seaboard, giving it a logistical advantage for companies targeting these regions.
- Texas:
- Has a more extensive network of interstates, including I-10, I-35, and I-45, connecting major cities like Dallas, Houston, and Austin.
- While Texas interstates are extensive, businesses serving markets in the Midwest and East Coast may find Mississippi’s Gulf Coast more conveniently positioned.
3. Proximity to Major U.S. Markets
- Mississippi Gulf Coast:
- Strategically located closer to the largest U.S. markets in the East Coast (New York, Washington D.C.) and the Midwest (Chicago, Detroit).
- Businesses in Mississippi can reach nearly 70% of the U.S. population within a day’s drive, a key advantage for logistics and distribution.
- Texas:
- Positioned further west, it is ideal for businesses serving the western U.S. and Mexico.
- While Texas provides strong access to its local markets and the Southwest, it is geographically farther from many of the most densely populated regions in the U.S.
4. Cost of Doing Business
- Mississippi Gulf Coast:
- Offers lower operational costs, including real estate, utilities, and taxes, which can make it more attractive for small to mid-sized businesses.
- Labor costs are also generally lower.
- Texas:
- Although Texas lacks an income tax and has a business-friendly environment, costs in urban centers like Austin and Houston can be significantly higher, especially for real estate and labor.
5. Industry Opportunities
- Mississippi Gulf Coast:
- Strong focus on industries such as shipping, manufacturing, tourism, and seafood processing.
- A growing hub for distribution and logistics due to its location and infrastructure.
- Texas:
- A diverse economy with major industries like energy, technology, healthcare, and agriculture.
- Greater access to venture capital and innovation hubs in cities like Austin.
Conclusion
The Mississippi Gulf Coast offers a strategic advantage for businesses targeting the largest markets in the U.S., with excellent infrastructure and proximity to major population centers. Its lower costs make it particularly attractive for small to mid-sized businesses in logistics, manufacturing, and shipping.
Texas, while offering extensive infrastructure and a thriving economy, is better suited for businesses looking to scale and access southwestern or international markets like Mexico. For companies prioritizing access to the Eastern Seaboard and Midwest, the Mississippi Gulf Coast is better positioned geographically.
School ratings on the Gulf Coast are high
Many articles if not most compare Mississippi to other states or cities and constantly rank Mississippi at the bottom for education etc. Have you considered their metrics?
The metrics are based upon “city bias”. When a city has lots of money to throw at education that is often but not always reflected in higher test scores. Mississippi as a state has the lowest cost of living in the nation.
So why would you look at the income earned in Mississippi and say that it is very low? Compared to what?
Because the cost to live here is between 35-70% lower than most areas in the country would you not expect that the income is perhaps lower? That’s the fact that makes Mississippi and in particular the Mississippi Gulf Coast a great place to start a business.
You can afford to hire American workers
Wages are lower here than in most other areas of the country, particularly the big cities. This means that you can afford to hire Americans to do the work that some large corporations send offshore.
I sold a house to a client for less than $45,000 in a very nice area. Yes, it was a fixer but the fixed value would not have exceeded $85,000. Compare this to a house in Orange County, CA at $800,000. People along the Gulf Coast can work at McDonald’s and afford to buy a house.
People in Orange County, CA who work at McDonald’s have to combine their income with a half dozen family members to afford a house. This means there is an opportunity here to hire Americans to work at your business.
Because the tax rates that I discussed above are reasonable, people you would hire at or near the minimum wage for example will probably pay little or no state taxes. Again, this is a great opportunity for someone to start a business that requires employees.
Good roads and infrastructure
Let’s talk about the infrastructure. I am impressed at how well the roads are maintained here. I recall driving to the office every day over a rutted interstate in California that was responsible for many millions of dollars in suspension and tire damage.
We do not have a traffic problem here, people live close to work another plus. Not to mention that the cost of fuel in Mississippi is nearly the lowest in the country. Great for people living on our local wage structure.
Rent for commercial and business buildings is tied to the local economy. The cost per square foot is low compared to rents in larger cities. There are lots of properties available and land to build more. There is a building boom here for both commercial and residential properties.
Utility costs are low compared to other states
The Mississippi Gulf Coast electricity rates are lower than surrounding states and far lower than in California. Did you know that Mississippi generates more electricity than it consumes so it sells the excess power to other states?
Water rates are also low and there is plenty of water. Natural gas is available in most areas at reasonable rates. If your business requires lots of utility consumption this is the place to be. You can cook on gas stoves at your restaurant, unlike some other states that are banning everything.
Permits are required for many businesses, this is not the wild west. Permits are a good thing because they require compliance with zoning so that people are not permitted to park an RV next to a million-dollar house. Unlike obtaining permits in some larger metros, permits here can be obtained without lots of “red tape”.
Average Residential Electricity Rates by State (¢/kWh)
Zoning is still a thing here, but not so much in California
It has been my experience interacting with planning and zoning departments in several areas where the employees are pleasant to work with and prompt with delivery.
I think that the permitting process is another key if you plan to build a building or locate an existing business here. Working with planning and zoning employees in large metros has sometimes been quite a challenge. In fact, when I would visit those departments in other states, I would always tell them what I was going to do and wait for a response.
I would never ask for their opinion unless I wanted to thank the project. Along the Mississippi Gulf Coast, it is the opposite, I ask their opinion about how I can accomplish what I want to do. They actually help. Wow!
The Mississippi Gulf Coast is located on Interstate 10 and U.S. Highway 90 with several excellent state highways that lead north. You can get to Alabama and Florida in just over an hour. New Orleans is located about an hour to the West. It’s an ideal location to serve the entire Gulf Coast. Even a drive to Houston is not difficult.
Business creation is a one-time modest fee. CA wants $800 per year
The Mississippi Secretary of State will permit you to go online and open your business for less than $60. Compare that to California at over $800 and Nevada with taxes over $300. There is no annual renewal fee in Mississippi compared to other states that charge the same fee every year e.g. California even if you earned no income.
The Secretary of State site is easy to navigate and you can conduct all of your business there e.g. obtain a certificate of good standing. Another reason why the Mississippi Gulf Coast is a great place to do business.
Supplies and other costs are generally lower along the Mississippi Gulf Coast and you can obtain just about anything you need here. If you can not find it along the Gulf Coast, you can obtain it from Mobile or New Orleans both about an hour from the area. Finally, there is also an order by mail which many of us do for that one item you can’t find anywhere.
An example of a young entrepreneur
One of the great things about the Mississippi Gulf Coast is that the small business people that I work with have either started their own businesses or are part of a family legacy. The person who maintains the air conditioning and heating at my properties is dependable and is a real expert.
He charges a fraction of what I had to pay in California and yet, he makes a good living. The same is true of the person who does my electrical work and other tasks. All of these individuals come from long-time Gulf Coast families. They are Americans doing work that is often left to new immigrants in the big cities because “Americans will not do these things”.
If you want to start a plumbing, electrical, or other trade business, this is the place to do it. The state of Mississippi just passed a bill that will recognize licenses from other states a great idea. This means that if you are a licensed electrician in another state you can come here and obtain a license without additional requirements, just apply for a license here.
Excellent colleges
The Mississippi Gulf Coast has excellent high schools in the area that send a large percentage of their graduates to college. This means that we have a pool of talented people who are computer-literate and can work in the technology field.
Combine that with students who learn the trades and you will find we have a balanced economy here. The Mississippi Gulf Coast is not particularly dependent on any one segment of the economy. There are thousands of retired people here who receive retirement income which keeps the economy going even in hard times.
Certificate and intern programs
The local community colleges offer certificate programs in all of the typical trades including nursing and the medical field. Young people here will actually consider learning a trade by working with their hands. If you need workers, contact one of the colleges that have intern programs.
Finally, I want to say that the Governor of Mississippi made some excellent decisions concerning the COVID crisis. Mississippi’s list of important jobs was extensive. For all practical purposes for a short time, the state did not shut down as others did. Children went to school and life was fairly normal. Thousands of people flocked to the beaches to get away from horrendous lockdowns in California and other states.
Our infection rate was about the same as others yet most people kept working. The casinos were shut down for a short time and yes, restaurants (inside eating) were too. Our economy opened well before many others.
COVID escapees came by the tens of thousands to get away
Tourists came here to escape the big city lockdowns. The Gulf Coast experienced one of the busiest summers this year in history. Our beaches were wide open and not full of crowds as in Florida. The mask mandate was also lifted many months before other areas.
I mention all of this about the COVID thing because if it happens again, you will find that Mississippi is committed to moderation and ensuring that people do not lose their livelihood because of political decisions.
Since moving from California to the Mississippi Gulf Coast, I often tell people that the key here is that this is not a nanny state. You are treated as an adult and expected to make decisions as an adult and take responsibility. The government is not here to make decisions for you. That said, the local and state governments in my opinion are very helpful to small businesses and will go to great lengths to bring business to the area.
Read our series about creating a Business after Retirement.
If you would like to learn more about the area, please visit my real estate site at Logan & Anderson, Gulf Coastal Realtors
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