Processing payroll and calculating Mississippi payroll taxes is a straightforward process. Mississippi does not have local taxes and only has one state payroll form. The Magnolia State (Mississippi) is one of the easiest states in which to run your company’s payroll.
You can make running your Mississippi payroll even easier by using an all-in-one payroll service like Gusto. Gusto helps you onboard new employees (all electronically), provide them the right forms, make direct deposit payments, and file Mississippi payroll taxes, all while helping you avoid penalties and fees from being late or submitting inaccurate payroll tax numbers. Sign up today for a 30-day free trial.
Step-by-Step Guide to Running Payroll in Mississippi
Mississippi makes payroll easy for businesses by generally following federal guidelines. However, attempting to calculate Mississippi payroll taxes or Mississippi withholding tax by hand could result in costly mistakes. Here are the basic steps you should follow to run payroll in Mississippi.
Step 1: Set up your business as an employer. New companies may need to access the federal Electronic Federal Tax Payment System (EFTPS) to create a new Federal Employer Identification Number (FEIN). Your FEIN is required to pay federal taxes.
Step 2: Register your business with the State of Mississippi. If your business is new, you need to register on the Mississippi Secretary of State’s website. Any company that pays employees in Mississippi must also register with the Mississippi Department of Revenue.
Step 3: Create your payroll process. This entails deciding how often you’ll be paying employees and when, as well as what method you plan to use to issue their paychecks (paper checks vs direct deposit), how onboarding will work, etc. You can opt to process payroll by hand (not recommended), set up an Excel payroll template, or sign up for a payroll service to help you handle your Mississippi payroll.
Step 4: Have employees fill out relevant forms. Every company that hires employees in Mississippi must collect certain forms during the onboarding process. They must complete I-9 verification and have a completed W-4 on file, and specifically, the state version of the W-4, called Mississippi Employee’s Withholding Exemption Certificate.
Step 5: Review and approve time sheets. Processing your company’s payroll will begin several days before your payroll is due. During this time, you need to collect and review documented work time from hourly and nonexempt employees so you can speak with anyone who might have made mistakes. There are numerous ways to track employee time—some of which are free.
Step 6: Calculate employee gross pay and taxes. Using pen and paper or a spreadsheet for this step can be complicated since Mississippi has a graduated tax rate. Because the top tax rate income level is low, most employees will pay the top tax rate on the majority of their income. Learn more about how to calculate payroll if you need assistance.
Taxable income for all employees
Step 7: Pay employee wages, benefits, and taxes. Most companies today pay all employees through direct deposit. But cash (not the best way) and paper check are also options. Mississippi does not have a state minimum wage, so make sure that you are paying your employees at least the federal minimum wage of $7.25 per hour. You can pay your federal and Mississippi state taxes online. If you use a benefits provider, it should work with you to make deductions simple, automatic, and electronic.
Step 8: Save your payroll records. Keeping your company business records is good practice. Mississippi, however, does not require any business to keep employment-related documents. The Fair Labor Standards Act (FLSA) requires that employers keep certain records for at least three years, so you will need to keep employee files for the federally mandated amount of time.
Step 9: File payroll taxes with the federal and state government. All Mississippi state taxes need to be paid to the applicable state agency on the schedule provided, usually quarterly, which you can do online at the Mississippi Department of Revenue website. To pay federal taxes, you can make those payments online using the EFTPS on one of the following two schedules:
- Monthly: When the IRS assigns you a monthly schedule, you need to deposit employment taxes on payments made during a calendar month by the 15th of the following month.
- Semiweekly: When the IRS assigns you a semiweekly schedule, you must deposit employment taxes for payments made Wednesday, Thursday, and Friday by the following Wednesday, and for payments made Saturday, Sunday, Monday, and Tuesday, by the following Friday.
Please note that reporting schedules and depositing employment taxes are different. Regardless of the payment schedule you are on, you only report taxes quarterly on Form 941 or annually on Form 944.
Step 10: Complete year-end payroll reports.
Learn more about doing payroll yourself in our guide on how to do payroll. It has a free checklist you can download to make sure you don’t miss any steps.
Mississippi Payroll Laws, Taxes, and Regulations
Understanding how to calculate Mississippi payroll taxes and apply the related laws is vital to ensuring accurate payroll. To help you maintain compliance with payroll regulations, review the specific laws and regulations for doing payroll in Mississippi below.
With few exceptions, most employers in the US must pay Federal Insurance Contributions Act (FICA) taxes. The current FICA tax rate for Social Security is 6.2% and 1.45% for Medicare. Both the employer and the employee will pay these taxes, each paying 7.65% for the combined Social Security and Medicare taxes.
Like most states, Mississippi has certain taxes that companies must pay. Mississippi does not levy local taxes, however, so you only need to be concerned with state taxes.
Employer Unemployment Taxes
All businesses in Mississippi must pay State Unemployment Tax Act (SUTA) taxes. The current wage base is $14,000 and rates range from 0% to 5.4%. All new employers in Mississippi will pay a SUTA rate of 1.0% for their first year, 1.1% for their second year, and 1.2% for their third year. Businesses that pay SUTA in full and on time can claim a tax credit of up to 5.4% on their Federal Unemployment Tax Act (FUTA) taxes.
To learn more about FUTA requirements, check out our guide on FUTA and Form 940.
Mississippi businesses with five or more employees must carry workers’ compensation insurance. Workers’ compensation 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 covers 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 workers’ compensation insurance:
- Domestic workers
- Agricultural workers
- Employees of nonprofit, charitable, religious, or cultural organizations
Employers in Mississippi are not required to provide workers’ compensation coverage if they have less than five employees or meet one of the above exemptions. Companies may choose to offer workers’ compensation insurance, however, if they want to do so.
To learn more about workers’ comp requirements in Mississippi, check out our Mississippi Workers’ Compensation guide.
Mississippi does not have tax reciprocity with any other state. This means employees who work and pay taxes in Mississippi but live in a neighboring state may end up paying double tax.
Mississippi Minimum Wage
Mississippi adheres to the federal minimum wage. At $7.25 per hour, the minimum wage was last raised in Mississippi in 2009. Businesses must pay tipped employees at least $2.13 per hour, provided that their tips get them to the hourly minimum wage. If not, the company must make up the difference.
Mississippi overtime rules follow the Fair Labor Standards Act requirements. Under the FLSA, all employers must pay employees 1.5 times their regular hourly wage for hours worked over 40 in a workweek.
To help ensure your overtime calculations are accurate, use our overtime calculator to verify.
Mississippi law does not require that employers pay employees on a regular basis, except for employees in manufacturing who work for companies with at least 50 employees. These businesses must pay workers at least once every two weeks and within 10 days of the end of the pay period. There is no federal law stating how often an employee must be paid; however, federal law does state that whatever pay frequency you choose, you must stick to it and not change randomly.
Mississippi also does not specify how employees must be paid. The most common ways to pay your employees include:
If you need help keeping track of your payroll periods, use one of our free pay period calendars.
Pay Stub Laws
Mississippi has no law requiring companies to provide a pay stub to employees. However, if you wish to provide a pay stub, which we recommend, and don’t use a payroll service, download one of our free pay stub templates to help you get started.
Mississippi Paycheck Deductions
Mississippi does not have any law limiting what deductions an employer can make from an employee’s paycheck. Because there is no law prohibiting employer deductions, it likely means that you can deduct the following items:
- Cash shortage
- Damaged, destroyed, or stolen company property
- Uniform costs
- Other equipment costs
- Other items necessary for the employee’s job
Please note that, according to the Department of Labor, a company cannot make deductions to an employee’s pay if those deductions would cause the employee to earn less than the federal minimum wage ($7.25 per hour) for that pay period.
Terminated Employee’s Final Paychecks
Mississippi has no law mandating when an employee who is no longer employed with a company must receive their final paycheck. Because there is no law, it would be a best practice to pay the final paycheck on the next regular payroll run. This would apply to employees who are terminated and quit.
If you need to pay an employee right away and aren’t currently using a service, use one of our recommended ways to print a free payroll check.
Mississippi HR Laws That Affect Payroll
Mississippi does not have many state-specific HR laws. That doesn’t mean you can ignore the following sections, however, because you will still need to ensure that you are following the federal guidelines, which Mississippi law mostly follows.
Mississippi New Hire Reporting
Every employer in Mississippi must report new hires and any rehired employees to the Mississippi State Directory of New Hires. This report is used to enforce child support orders and must include the employee’s name, address, and Social Security number. You’ll have to submit the form shortly after each employee is hired to avoid penalties.
Meals and Breaks
Mississippi does not require companies to provide workers with a meal period or a break. But employers are free to provide paid and unpaid breaks to employees. Generally, any break of 20 minutes or less should be paid.
Mississippi Child Labor Laws
Mississippi law has no working restrictions on children 16 or older. Children under age 16 cannot work more than three hours on a school day (Monday through Friday) or a total of 18 hours in a school week. Children under 16 also cannot work in a factory, mill, cannery, or workshop.
Federal law has more specific guidelines. Check out our guide to hiring minors for more insight.
Time Off and Leave Requirements
Mississippi follows the Family and Medical Leave Act (FMLA), which requires that all eligible employers provide up to 12 weeks of unpaid leave for employees who fall under a covered disability. This can include pregnancy and caring for an ill family member. The FMLA does not require that companies pay employees for this time out of work, but it does require that employers keep the employee’s job, or a substantially similar one, available for them when they return. Mississippi does not provide for any additional leave under state law.
Mississippi has no laws requiring employers to provide employees with paid time off (PTO). Companies in Mississippi are free to create PTO policies and may include whether they pay out accrued and unused PTO when an employee leaves. Mississippi does not require that companies do, so it’s a good practice to have this clearly defined in your company policy. The important thing is to follow the guidelines in your policy, or you can be held liable.
If you offer PTO and need help calculating employees’ PTO accrual, use our free PTO calculator.
Mississippi does not have any law requiring private companies to pay employees for holidays or an increased rate for working a holiday. A company may choose to do so and must comply with the FLSA.
Mississippi has no law requiring employers to provide employees with sick leave, either paid or unpaid. Employers are free to create a sick leave policy.
Mississippi has no requirement that employers provide employees time to vote.
An employer in Mississippi is not required to pay an employee for time spent serving on a jury. However, under Mississippi law, an employer cannot require an employee to use PTO for time in jury duty and cannot attempt to persuade an employee to not serve on a jury or terminate or threaten the employee for jury duty service.
There is no requirement in Mississippi for businesses to provide employees with bereavement leave. Companies are free to create a policy if they choose and must abide by it.
Mississippi Payroll Forms
Payroll forms can vary from state to state, and some have their own W-4, like Mississippi. Fortunately, that’s the only one:
- Employee’s Withholding Exemption Certificate: Employee withholding form; should be completed upon hire
Federal Payroll Forms
Here is a complete list and location of all the federal payroll forms you should need.
- W-4 Form: Provides information on employee withholdings so you can properly calculate and withhold federal and state income taxes
- W-2 Form: Used to report total annual wages for each employee
- W-3 Form: Used to report total annual wages for all employees; summary form of W2
- Form 940: To calculate and report unemployment taxes due to the IRS
- Form 941: Used to file quarterly income tax
- Form 944: Used to file annual income tax
- 1099 Forms: Provides information for nonemployee contract work
For a more detailed discussion of federal forms, check out our guide on the federal payroll forms you may need.
Mississippi Payroll Tax Resources
- Mississippi Department of Revenue provides many forms, information on the latest laws and regulations, and other employer-specific information.
- Mississippi Department of Employment Security offers support and resources to help businesses ensure compliance with unemployment and workers’ compensation plus other labor laws.
Running payroll in Mississippi is one of the most straightforward of any state. There is only one state-specific payroll form and no local taxes to calculate.
However, although it is one of the easiest states in which to run payroll, mistakes can happen. You can prevent these mistakes by using a payroll software like Gusto that walks you through Mississippi payroll every time. Consider Gusto to help you file accurately and on time. It even pays employees with direct deposit for free. Sign up for its 30-day free trial.