How to Do Payroll in Mississippi: What Every Employer Needs to Know
Charlette has over 10 years of experience in accounting and finance and 2 years of partnering with HR leaders on freelance projects. She uses this extensive experience to answer your questions about payroll.
Heather is a staff writer and payroll specialist with several years of experience working directly with small business owners. Her expertise allows her to deliver the best answers to your questions about payroll.
This article is part of a larger series on How to Do Payroll.
Processing payroll and calculating Mississippi payroll taxes is a straightforward process. Mississippi does not have local taxes and only has one state payroll form. It 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 QuickBooks Payroll. QuickBooks Payroll 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 and get 50% off for three months.
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. If you work for an established business, you may already have a payroll process. It could be worth your time to revisit that process and make necessary updates, especially as laws change. Working for a new business may mean you need to create a payroll process from scratch. 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. Your business must have every employee complete payroll forms during their onboarding process. Every employee must complete I-9 verification no later than their first day on the job. New employees must also have a completed W-4 on file, along with Mississippi’s Form 89-350.
Step 5: Review and approve time sheets. One of the most crucial pieces of your payroll process includes collecting and reviewing time sheets before your payroll due date. Reviewing the time sheets from your nonexempt employees before the day your payroll is due gives you time to speak with anyone who might have made mistakes. There are many ways to track employee time—some of which are free.
Step 6: Calculate employee gross pay and taxes. Calculating Mississippi payroll by hand is not recommended. With a progressive income tax and business taxes, including unemployment, these calculations can be complex. Even innocent mistakes can cause costly fines and penalties. Learn more about how to calculate payroll if you need help.
Tax rate | Taxable Income |
|---|---|
0% | Up to $4,000 |
3% | $4,001–$5,000 |
4% | $5,001–$10,000 |
5% | Over $10,000 |
Step 7: Pay employee wages, benefits, and taxes. The best way to pay your employees is through direct deposit. But cash (not the best way) and paper check are also options. Mississippi does not have a state minimum wage, so the federal minimum wage of $7.25 per hour applies. You can pay your federal and Mississippi business 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, even though Mississippi doesn’t require any record retention. We recommend following the Fair Labor Standards Act (FLSA) and keeping your payroll records for at least three years.
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 Tax Department’s 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. Doing payroll in Mississippi requires more than just paying employees on a regular schedule. Every year, you will need to complete payroll reports, including all W-2 Forms and 1099 Forms. You must provide these forms to employees no later than Jan. 31 of the following year.
Download our free checklist to help you stay on track while you’re working through these steps:
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Mississippi Payroll Laws, Taxes, and Regulations
Doing payroll in Mississippi will require that you calculate Mississippi payroll taxes and ensure compliance with all federal and state employment laws. To help you maintain compliance with payroll regulations, review Mississippi’s relevant regulations 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.
Want to calculate your employee’s gross pay, plus the FICA and FUTA taxes due?
Use our free calculators below to help you out:
Mississippi 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 0.0% to 5.4%. New Mississippi businesses will pay a rate of 1.0% for their first year, 1.1% for the 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.
Workers’ Compensation
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 fewer 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.
Income Taxes
Mississippi has a progressive income tax that you will need to calculate and withhold from every paycheck. Here are the four tax brackets which apply to all Mississippi employees, regardless of filing status:
Tax rate | Taxable Income |
|---|---|
0% | Up to $4,000 |
3% | $4,001–$5,000 |
4% | $5,001–$10,000 |
5% | Over $10,000 |
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.
Calculating Overtime
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.
Need help calculating overtime?
Use our free overtime calculator below to help:
Paying Employees
There is no Mississippi law mandating 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. While there is no law mandating when you pay employees (outside the exception noted), make sure you remain consistent and do not arbitrarily change your pay schedule.
Mississippi does not specify how to pay employees, so you’re free to consider any of the following methods:
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 employers to provide a pay stub to employees. If you wish to provide one and don’t use a payroll service, download one of our free pay stub templates to help you get started.
Mississippi Paycheck Deductions
Mississippi has no law limiting what deductions an employer can make from an employee’s paycheck, which likely means you’re free to deduct the following items:
- Cash shortages
- Damage to company property
- Required uniforms or tools
- 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 for that pay period.
Terminated Employee’s Final Paychecks
Mississippi has no law mandating when an employee no longer employed with your company must receive their final paycheck. Because there’s no law, it would be a best practice to pay the final paycheck on the 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 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 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 (Form 89-350): 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 non-employee 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.
Bottom Line
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.
