Description
Within this particular file about entrepreneurs tool kit most asked questions.
entrepreneur’ s tool ki t
Table of Contents
Section 1. Top Twenty Most Asked Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
Section 2. A Guideline for Preparing a Business Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
I. Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
II. The Industry, the Company, and it’s Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
III. Business Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
IV. Market Research and Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16
V. Competitor Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19
VI. Operating Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20
VII. Management Team . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21
VIII. The Financial Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21
Section 3. Reporting Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35
How to Use This Chapter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35
Federal Tax and Regulatory Forms Discussed in this Publication . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35
Federal Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .36
Initial Federal Reports and Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .36
Monthly Federal Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .37
Quarterly Federal Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .37
Annual Federal Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .38
Other Federal Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .42
State Tax and Regulatory Forms Discussed in this Publication . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .43
State Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .43
Initial State Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .43
Monthly State Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .44
Quarterly State Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .45
Annual State Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .45
Other State Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .46
City and County Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .46
Special Licenses, Permits and Other Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .47
Section 4. Selective Business Financing Available . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .49
Grants
Community Development Block Grant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .51
Development Infrastructure Grant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .51
Economic Development Highway Grant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .52
Industrial Access Road Grant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .54
Freight Rail Service Grant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .55
Job Protection Grant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .55
Rural Impact Fund Grant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .56
Small Municipal & Limited Population Counties Grant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .56
Loans
Agribusiness Enterprise Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .58
Airport Revitalization Revolving Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .58
Port Revitalization Revolving Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .59
Business Incubator Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .59
Energy Investment Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .60
Existing Industry Productivity Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .61
Freight Rail Service Revolving Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .62
Job Protection Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .62
Capital Improvements Revolving Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .63
Minority Business Enterprise Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .64
Minority Business Micro Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .64
Table of Contents, continued
Minority Surety Bond Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .65
Capital Access Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .66
Mississippi Business Investment Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .66
Major Economic Impact Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .67
Research and Development Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .68
Rural Impact Fund Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .69
Other
Appalachian Regional Commission (ARC) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .70
Delta Regional Authority (DRA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .70
Mississippi Business Finance Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .71
Local Industrial Development Revenue Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .72
General Obligation Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .72
Small Business Assistance Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .73
Section 5. Business Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .75
Section 6. Appendices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .89
most asked questions
The Top Twenty
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top 20 most asked questions
7
Should I go into business?
Only you can answer this question, but you should begin
the process with an honest, objective appraisal of your own
strengths and weaknesses. Are you a self starter? Do you
make decisions well? Do you have what it takes to operate
a business? Are you willing to give up other opportunities
in order to be a business owner? These are just a few of
the questions you will need to consider before starting a
new venture.
What type of business should I go into?
What do you like to do? What are your talents? What type
of business does your area need? How much money do
you have to put into your project? Answers to these ques-
tions will give a strong indication of what business(es)
you should consider.
Do I need a business plan?
YES! There are two basic reasons for preparing a business
plan. First, it requires the entrepreneur to thoroughly inves-
tigate the factors that will have an impact on the success of
the business. Second, it will enhance the ability of the
entrepreneur to secure financing by providing an organized
overview of the venture for lenders and investors.
Refer to section “A Guideline for Preparing a Business Plan”
in this book.
Do I have to incorporate before I
start my business?
No. The legal structure of your business can be a sole
proprietorship, partnership, corporation, or LLC.
Contact: An attorney or the Secretary of State’s Office
(Business Services Division) at (601) 359-1350 or
www.sos.state.ms.us.
If I do want to incorporate, how do I go about
getting the forms?
Your attorney should be able to help you, or you can order
the forms from the Secretary of State’s Office (Business
Services Division) at (601) 359-1350 or
www.sos.state.ms.us.
At what point do I need to involve an
attorney and/or accountant in my business?
At the very beginning. Many small business owners consider
legal and accounting services only when their firms are in
trouble. They fail to realize that legal and accounting prob-
lems can be reduced or avoided by a program of consultation
which is carried out on a continuing basis.
How do I find a good attorney or CPA?
Ask for referrals from friends or associates who are currently
in business. Meet with the attorney or CPA first to see what
services they can offer you and to determine if you are com-
patible. Generally, initial meetings are at no charge to
you, but be sure this is understood before you meet. Contact
the Mississippi Bar at 601-948-4471 or www.msbar.org for
public resources on choosing an attorney. Contact the
Mississippi State Board of Public Accountancy at 601-354-
7320 or www.msbpa.state.ms.us
What local permits do I need to go into
business?
Permit and zoning requirements vary from location to location.
Check with your City Hall to see which requirements apply to
you. Refer to section “Reporting Requirements for Mississippi
Small Business” in this book.
What if my business is in the county and not in
a town?
The County Courthouse will be able to give you the county
requirements for doing business. Refer to section “Reporting
Requirements for Mississippi Small Business” in this book.
How do I get a tax number for my
business?
Contact the Mississippi State Tax Commission at
(601) 923-7000 or www.mstc.state.ms.us and the Internal
Revenue Service at 1-800-829-1040 or www.irs.gov.
Refer to section “Reporting Requirements for Mississippi
Small Business” in this book.
The questions in this section are some that are asked most often by potential entrepreneurs. The Mississippi Development Authority
has attempted to answer these important questions you need answered before you go into business. However, you should consider
each question and answer carefully and do not hesitate contacting the Mississippi Development Authority or its regional offices before
going into business.
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9
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top 20 most asked questions
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Do I have to collect sales tax?
Yes, if you are a retailer. If you are not a retailer, the
Mississippi State Tax Commission will give you the require-
ments for all other types of businesses.
NOTE: See #10 above for information on how to contact the
Mississippi State Tax Commission.
Refer to section “Reporting Requirements for Mississippi
Small Business” in this book.
How do I get a loan for my business?
The first step is to develop a business plan. The cash flow
projection will indicate the amount of money you will need for
working capital. Meet with your local banker and discuss the
bank’s requirements along with your business plan. If the
bank turns your loan down, ask about other options such as
guaranteed loans from the Small Business Administration
(SBA) or the Mississippi Development Authority (MDA). Other
options may include loans available through your local plan-
ning and development district. For a list of planning and
development offices, please refer to section “Resources for
Small Business”. Also refer to sections “A Guideline for
Preparing a Business Plan” and “Selected Business Financing
Available in Mississippi” in this book.
Can I get 100% financing for my business?
No. Your banker and the SBA expect you to contribute some
equity. As a general rule, they will expect you to put down 25
to 30 percent of the total project cost.
Where can I get information on a specific type
of business?
Business information constantly changes. Begin the process
by talking with your local economic development office,
chamber of commerce, Mississippi Main Street, library, com-
munity college, university, business support organization, or
the Internet. Trade association publications and journals such
as RMA ANNUAL STATEMENT STUDIES published by Robert
Morris Associates and the RAB (RADIO ADVERTISING BUREAU)
INSTANT BACKGROUND are often good sources of general
information on many business types.
How do I find the best location for my
business? What should I look for in
selecting it?
The following are some items to consider:
1.) Location of your customers
2.) Location of your competitors
3.) Other businesses in the area that complement your business
4.) Freight and shipping costs of your suppliers
5.) The labor market
How do I find my market? How big
should it be? Who do I target for my
customer(s)? How do I define my
market population?
For most businesses, determining the correct “target
market” and finding a way to reach that market will
be the most important aspect of determining the suc-
cess of your business. As a business owner, you must
understand that no business will reach the entire mar-
ket population. Therefore, it is essential that you find
your “market niche”, the target group of customers
that will both want and be able to purchase your prod-
uct (s)/service(s). Consider a market with which you
are familiar. You may wish to consider a geographic
location close by that allows you to monitor progress.
Research your market to see which market segment
you want to seek, and how much of that target market
you can afford to tackle at one time. Contact your
local economic development office, chamber of com-
merce, Mississippi Main Street, library, community
college, university, business support organization, or
the Internet. Refer to section “A Guideline for
Preparing a Business Plan” in this book.
Do I really have to spend money on adver-
tising; and, if so, how do I decide how
much to spend and what media to use?
YES! As part of your overall marketing program you
will need to both reach potential new customers and
remind current customers of your presence in busi-
ness. To get started, look at what media your compe-
tition uses and consider how it is beneficial to them.
Remember that the key to advertising is to find your
target customer. Every media type has it advantages
and disadvantages. Research the type of media and
determine if it is best for your type of business. Look
to industry associations and publications for informa-
tion on what the general budget for advertising is
within the industry. Contact your local economic
development office, chamber of commerce,
Mississippi Main Street, library, community college,
university, business support organization, or the
Internet. Refer to section “A Guideline for Preparing a
Business Plan” in this book.
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16
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top 20 most asked questions
9
If I’m just beginning in business, how can I esti-
mate revenues and expenditures two years into
the future?
To determine your starting point, figure how much of your mar-
ket you can capture initially, and investigate your start-up
expenses, as well as your monthly expenses. From these fig-
ures, a cash flow analysis can be formulated. For an example
of a cash flow, refer to the section “A Guideline for Preparing A
Business Plan”.
How do I figure out what to charge for my prod-
uct or service? Is there a formula that I should
use?
It is not necessarily a question of how much you CAN charge
but of how much you MUST charge. Determine what it will
cost to operate your business and produce your product. This
will tell you what your minimum price must be. Then decide if
that price is competitive. Refer to section “A Guideline for
Preparing a Business Plan” in this book.
I’m confused. Where should I start?
While starting a new venture can be intimidating, there is help.
There are many good resources in Mississippi. However, a
good place to start is the Mississippi Development Authority
(MDA). Our professional team has worked with hundreds of
Mississippi businesses and we are here to assist you too, at no
charge. Simply call 601-359-3593 or email us at
[email protected]
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preparing a business plan
A guideline for
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guideline for preparing a business plan
13
Reading the entire text of this document is the first step in preparing your business plan
There are two basic reasons for preparing an extensive business plan. First, it requires the entrepreneur to thoroughly investigate the
factors that will have a bearing on the success of the business. Second, it will enhance the ability of the entrepreneur to secure
financing by providing an organized overview of the venture for lenders and investors. It also provides insight into the entrepreneur’s
ability to define and develop strategies for critical areas of the business.
The following outline has been prepared to help the entrepreneur assemble the facts that are essential to good business planning.
Complete your business plan using the accompanying outline to ensure that the necessary details are included. Keep in mind that
thoroughness, clarity and rationality of the plan are all factors that will play key roles in successful financing, starting and operating
your business.
Because these guidelines were written to cover a variety of businesses, rigid adherence to them is not possible or even desirable for all
businesses. Not all parts of all sections will be necessary for each individual’s business plan.
I. Executive Summary
An executive summary should be written to summarize the important components of the business plan. Ironically, this is the first sec-
tion of the business plan, but is the last section written. Its purpose is to convey to the potential financial lender or investor, in two
pages or less, the relevant points of the business venture. Therefore, it is written after the entire business plan has been prepared.
The executive summary is a written version of a one to two minute pitch. In other words, imagine that you are “pitching” your idea to
a potential investor and only have one to two minutes of their time. To convince the potential investor this is a good investment, you
must condense your message into a package of key points about the business.
The executive summary must capture the reader’s attention. If you cannot capture the investor’s attention within the first two pages,
then the chances of the remainder of the business plan being read are not very good. The following information should be included in
the executive summary:
• Company name, address, and phone number
• Brief description of the business
• Brief description of your target market
• Brief description of your strategy to make the business a success
• Brief description of the owners and key people, including names, addresses, phone numbers, and
managerial/technical experience
• Brief analysis of the financial needs of the business, including the planned use of any borrowed/invested funds
guideline for preparing a business plan
14
The Detailed Business Plan
II. The Industry, The Company, Its Vision, and Its Products
The purpose of this section is to assist you in describing your business venture in a detailed but concise manner. You must clearly
present the nature of the industry, the business you are in, the vision for the company, and the product you will offer.
A. The Industry
Present a brief description of the background of the industry, the current status and the outlook for the future in which the business
will operate. Discuss new products and developments, new markets and customers, and any other new trends that could affect the
business. Identify all sources of information used to describe these trends.
B. The Company and Its Vision
Briefly describe the business area your company is in, or intends to enter, and your company’s overall mission; also known as the mis-
sion statement. This section should discuss your general business goals and objectives. Goals address the question of “Why am I in
business?” and objectives are the specific targets aimed at obtaining those goals. Next, briefly describe what makes your business
unique, including any factors that will distinguish your company from others in the same industry. This section should also discuss the
ownership and legal form of the company. Consult an attorney for the form (such as sole proprietorship, partnership, corporation, or
LLC) that is best for your business.
C. The Products or Services
1. Description: Describe in detail the products or services to be sold including all features. This section should also describe how
customers will use your product or service, as well as what benefit it will provide or need it will fulfill. Emphasize any unique features
of your product or service and highlight differences between what is currently on the market and what you will offer. Define the cur-
rent state of development of the product or service; include a photograph if applicable.
If you will be manufacturing a product, describe the production process, raw materials required, and the amount of time required to
manufacture the product. You should also describe the plant layout and how the overall manufacturing process will flow from raw
materials to finished product.
2. Proprietary Position: Describe patents, trade secrets, or other proprietary features. Discuss any advantage that you might have
that would enable you to achieve a favorable position in your industry.
guideline for preparing a business plan
15
III. Business Analysis
The purpose of this section is to guide you through the process of analyzing your business as compared to the competition. In Section
II, you discussed why you are in business. This section should discuss “How to get there.”
A. SWOT Analysis
In order to compare your business to the competition, you must analyze the business internally and externally. You must determine
your Strengths, Weaknesses, Opportunities, and Threats.
Strengths are positive internal factors a company might possess that can be used to help accomplish the overall mission, goals, and
objectives. Examples include a strong sales force, specialized skills or knowledge, etc.
Weaknesses are negative internal factors that might interfere with the accomplishment of the overall mission, goals, or objectives.
Examples might include a weak sales force, lack of capital, poor management skills, and lack of knowledge.
Opportunities are positive external forces that can help a company’s ability to achieve its mission, goals, and objectives. Examples
include a niche in the market, trends in the market, etc.
Threats are negative external forces that interfere with a company’s ability to achieve its mission, goals, and objectives. Examples
include an economic recession, rising interest rates, government regulations, etc.
B. Marketing Positioning and Image
Briefly describe the company’s position in the overall market place. In other words, determine how your business will capture its place
in the market and compete effectively. Some things to consider might be price and quality. This section should also describe the
image your company plans to project. Will you be a low cost, discount store, a high-end upscale store, or somewhere in the middle?
C. Business Strategy
This section describes how a business will gain a competitive edge in the market place, and what distinguishes the business from the
competition. In other words, determine what will make you unique according to your potential customers. This section should also
describe “How” to obtain the goals and objectives described in Section II. For example, if one of your goals is to be a low cost leader
with your specific product or business, this section should describe how you are going to reach that goal.
guideline for preparing a business plan
16
IV. Market Research and Analysis
The purpose of this section of the business plan is to present enough facts to determine if your product or service has a substantial
market in a growing industry and can achieve sales despite a competitive market. This section is one of the most challenging to pre-
pare and also one of the most important. Almost all subsequent sections of the business plan depend on sales estimates that are
developed in this section. The sales levels you project, based on the market research and analysis, directly influence the size of the
operation, the marketing plan, and the amount of debt and equity capital required. Market research defines the need for the product,
aids in predicting market share, identifies competition, provides direction for efficient use of advertising and promotional dollars, identi-
fies problems and opportunities, and establishes benchmarks by which to measure progress and success.
Basic research need not be expensive. Examples of primary (non-published) sources include personal focus group interviews, cus-
tomer surveys and questionnaires, telephone surveys, traffic counts, and daily transaction reports (example includes information on
personal checks that you receive in your business). Examples of secondary (published) research sources include business directories,
advertising media, demographic data, census data, local government sales tax data, chamber of commerce information, and forecasts.
The three main types of information that you will need to collect include geographic (such as where are my customers located); demo-
graphic (such as the characteristics of your potential customers, i.e. age, education levels, income, gender, marital status); and psy-
chographic (such as what makes my customers buy a product, and what are they looking for i.e. price, quality, location, convenience,
status).
Because of the importance of market analysis and the dependence of other parts of the plan on the sales projections, you may want to
prepare this section of the business plan before you do any other. Allow enough time to do extensive research and analysis and check
all sources of market data. As already mentioned, this is a challenging section to prepare, but a good place to start is your local eco-
nomic development office, chamber of commerce, Mississippi Main Street, library, community college, university, business support
organization, or the Internet.
A. Target Market
One of the main objectives of market research is to identify the small business’ target market, which is the group of customers whom
the company plans to market its product to. Who and where are the major purchasers? What is the basis for their purchase decision:
price, quality, service, personal contact, or some combination of these factors? Are you trying to target a specific age group or status
of customer? Basically, who is going to buy your product?
B. Market Size, Makeup, and Trends
Describe the primary market for your product in terms of total potential sales volume. In other words, how many customers does the
market contain, and what are their potential annual purchases? Also, describe the seasonal fluctuations and the potential annual
growth of the total market for your product or service, and discuss the major factors affecting the growth (industry trends, economic
trends, government policy, population shifts). Is this a one-time purchase or a product that is repurchased on a regular basis?
C. Market Share and Sales
Summarize what it is about your product or service that will make it saleable in the face of current and potential competition. Identify
major customers who are willing to make purchase commitments and if possible attach their commitment letters to your plan.
Discuss which customers would be major purchasers in the future and why. Based upon your assessment of the advantages of your
product or service, market size and trends, customers, the competition and their product, and the sales trend in prior years, estimate
your share of the market and your sales in units and dollars for a minimum of two years. Be sure to state any assumptions upon
which your projections are based.
guideline for preparing a business plan
17
D. Pricing
The pricing policy is one of the most important decisions you will have to make. The price must be right to penetrate the market,
maintain market position, and produce profits.
To determine price, calculate production cost and add a percentage for profit. Consider overhead, promotional and advertising expens-
es, and delivery cost. Remember that inherent price limitations in the marketplace, as well as variations of internal costs, weigh heavi-
ly in determining price. Pricing must be in line with that of major competitors offering similar products and services.
There is a distinct difference between value and price. While some customers do not look beyond a price tag, others also consider
service, dependability, and convenience. You must know what motivates the customer to buy before determining what he is willing to
pay for merchandise or services.
Finally, when determining price, decide what image you want to project. Describe if you will have a low end priced product, high end
product or somewhere in the middle.
E. Sales Tactics/Distribution
Describe the methods that will be used to make sales and distribute the product or service. Analyze the effectiveness of everything
available within the sales system. Traditional channels include salespeople, agents, distributors, direct mail services, and dealers.
Additional distribution methods involve warehouse clubs, electronic shopping, telemarketing, trade shows, temporary space in shop-
ping malls, vending machines, franchising, or large volume sample sales to hotels for free distribution to guests. Offering discounts to
wholesalers or dealers who assist in distribution is also an effective channel.
Each distribution method must be evaluated as it relates to cost, coverage, and performance.
Many of these channels are geared only to large or very small volume, or lend themselves only to specialized merchandise. Choose
what works best for your particular business and maintain an awareness of developing sales methods.
Selective distribution is the key to effective distribution. Most start-up businesses are most successful when operating out of one loca-
tion or geographic area, even though they may employ several sales techniques.
F. Advertising and Promotion
Describe approaches the company will use to bring its product to the attention of prospective purchasers. The schedule and cost for
advertising and promotion should be presented. If advertising and promotion will be a significant expense item, an exhibit of how and
when these costs will be incurred should be included.
Though distinctly different functions, advertising and promotion work hand-in-hand to generate sales. Both are communication strate-
gies designed to affect buyer’s behavior patterns and habits. Advertising concentrates on delivering a message through print and elec-
tronic media, while promotion relies on direct customer involvement and response. In both advertising and promotion, it is important to
narrow the target audience, concentrating as specifically as possible on the group most likely to purchase the product or service
advertised or promoted.
The key to a large return from a small advertising budget lies in the media chosen. Cost varies according to locale and competition
among media sources. For example, a 30-second radio spot may cost $25 on one station and $50 at another station in the same
town. The same size ad might cost three or four times as much in one newspaper as another. Rates for cable television and inde-
pendent stations might be affordable for small businesses that cannot buy expanded network programming. Each advertising situation
is different, and rates vary from town to town and from region to region.
guideline for preparing a business plan
18 18
To select the best media for the business and to effectively negotiate rates, it is important to examine the advantages and disadvan-
tages of each type. Selection should never be based on price alone, but on what the media can do for your business image and
sales. A more expensive station or newspaper might very well hit your target customer exactly and be well worth the investment. On
the other hand, some businesses do quite well with strong customer service, and little purchased advertising. The needs of each
business are unique.
NOTE: See Appendix A for the advantages and disadvantages of each type of media.
Bartering and cooperative advertising are effective methods of stretching an advertising budget. Bartering is often called “trade out”.
For example, a small business may be able to trade some of its goods or services to a radio station in exchange for an equal amount
of air time. All media will not barter, but if your goods are useful to them, it is worth a try. Cooperative advertising refers to sharing
expenses. Two or more businesses may share the cost of advertising or one of your company’s vendors may supply advertising dol-
lars as well as camera ready copy to which you only need to add your company logo. This not only increases the advertising place-
ment budget, but decreases or even eliminates production cost. As advertising costs grow, it is important that small business owners
be creative with cooperative and bartering techniques.
Some businesses have discovered that setting up an in-house ad agency will save 15 percent of media cost. This is a simple proce-
dure and can save substantial amounts, but the small business person needs to consider the extra time spent in dealing with adver-
tising salespeople and additional paperwork.
Any event held to increase sales and traffic is a promotion. Promotional efforts include coupons, contests, sampling, point-of-pur-
chase merchandising, visual displays, gift-with-purchase incentives, seasonal sales, special events, trade shows, imprinted specialty
items and demonstrations.
Creativity and originality are the keys to successful promotional efforts and there are many low-cost and effective ways to do it. For
example, a well known pizza chain has developed a technique called “banner-shaking” which involves one or two employees stand-
ing near major intersections during evening rush-hour “shaking” painted banners at traffic. These banners highlight a special price
on pizza immediately ready for take-out. The promotion costs nothing but the price of the banner and the results are great because it
targets working people, tired after a long day and provides an immediate solution for dinner with no cooking. Creativity is the most
effective way of promoting any business.
Promotional activity should always be based on recognizing customer needs and making them feel special. Providing exceptional
service, using friendly words and smiles, using their names, giving them advance sales information and sending them your business
newsletter are just a few low-cost or no-cost promotions to use. Superior store or office appearance, cleanliness, business reputation
and even good landscaping and signage are all important promotional tools that sell. Promotions are not just sales events, but any-
thing that adds to the image of the business.
Another form of advertising is publicity. Publicity, often referred to as “free advertising”, means getting the company’s name, product,
or service in the media at no charge. Publicity is especially important for entrepreneurs with limited advertising and promotional
budgets.
Press releases are effective only if they are genuinely newsworthy and should be accompanied by a photograph if possible. Company
newsletters, sponsorships of local athletic teams, donations of gifts for charitable functions and participation in civic organizations are
all good sources of positive publicity. Capitalize upon every opportunity to get your company’s name in front of the public at no
charge.
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19
G. Packaging
Describe how the product will be packaged. Packing refers to the presentation of goods or services. Proper packaging attracts the
customer, effectively communicates product attributes, identifies the brand and seller, lists ingredients, and makes the product easier
to handle. Effective package design decreases costs associated with storage, labor, shipping and pilferage. Poor packaging, however,
creates an impression of inferiority and significantly lessens sales.
H. External Market Influences
Describe how each of the following external forces impacts your ability to sale your product.
1. Economic Factors
Economic analysis requires data on employment levels, inflation, interest rates, recession, and high or low unemployment. Free
sources of this information include libraries, banks, educational institutions, investment houses, government agencies, newspapers,
business publications and trade associations. Compare and contrast several sources before drawing conclusions or implications.
2. Political and Social Factors
Depending upon the nature of the business, operations may be affected by local, state, regional, national and world political situations.
National deregulations, tax increases, or elimination of trade barriers, for example, can have a profound impact. At the state or local
level, the acceptance or rejection of bond issues, election of new officials, or renovation plans might affect a company’s marketing phi-
losophy. The media, periodicals, trade journals and general business publications are good references.
Social analysis includes a study of the demographics of the customer base. Important factors include the age groupings, income level,
type of employment, mobility, marital status and leisure habits of customers, as well as the number of women and teenagers in the
local work force. Chambers of commerce are helpful in gathering local information.
3. Technological Factors
Technology is growing and changing at an alarming rate. The World Wide Web has enabled small company’s to advertise their product,
and compete effectively with the larger companies. Describe the impact the Internet will have on the sales of your product. Also,
describe if you will use the Internet to order your products for resale, or raw materials for manufacturing.
V. Competitor Analysis
Describe who your current competitors are, and why customers buy from them. Compare your own product to that of your competition
on the basis of price, performance, service, warranties, and other pertinent features.. Know the similarities, the differences, and the
ways in which your product is unique. Develop reasons why customers should choose your product over that of another company.
An effective marketing strategy cannot be developed without a thorough knowledge of the competition. Read all annual reports, news-
paper articles, advertising, company literature and published statistics related to the competition. Question suppliers and attend trade
shows and business fairs. Continually seek information on competitors’ products, research and development activities, production
methods and costs, organizational designs, financial status, marketing strategies and general strengths and weaknesses. If the busi-
ness is a retail establishment, remember that location is a prime consideration.
Use information about the competition as a tool for bettering your own business. Look for trends in their advertising, pricing, or promo-
tion and for variances from the usual, which could indicate new strategies or test marketing. Do not overreact to a change in opera-
tions by the competition, but always be prepared to make adjustments based on their actions if necessary.
guideline for preparing a business plan
20
VI. Operating Plan
The operating plan should describe facilities, location, space requirements, capital equipment, and labor force that are required to pro-
vide the company’s product or service.
The discussion guidelines given below are general enough to cover different businesses. Only those that are relevant to your particular
business should be addressed in your business plan.
A. Location
Describe the planned location of the business and discuss the advantages and disadvantages of the site in terms of wage rates; labor
availability; proximity to customers and suppliers; access to wholesalers, distributors and transportation; state and local taxes and
laws; utilities; and zoning.
B. Facilities and Improvements
If yours is an existing business, describe the facilities currently used. If your firm is new, describe how and when the facilities to start
business will be acquired. Discuss how and when space and equipment will be expanded to the capacity required for future sales pro-
jections. Discuss any plans to add to or improve existing space. Explain future equipment needs and indicate the cost and timing of
such acquisitions.
C. Strategy and Plans
Describe the process involved in production of your product or service. Also present a plan that shows cost-volume information at var-
ious sales levels of operation with a breakdown of material, labor, purchased components, and overhead. Manufacturers should briefly
describe their approach to quality control, production control, and inventory control. Explain the quality control and inspection proce-
dures the company will use to minimize service problems and ensure customer satisfaction.
D. Labor Force
Exclusive of management functions, does the local force have the necessary skills, in sufficient quantity and quality, to produce the
product? If their skills are inadequate, describe the training that you would use to upgrade them.
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21
VII. The Management Team
The management team is the key to turning a good idea into a successful business. Bankers and investors look for a committed
management team with a balance of technical, managerial, and business skills. The proposal should include a description of the
organizational structure, key management personnel and their primary duties, and the board of directors, if applicable.
A. Organization
In a table, present the key management roles in the company and the individual who will fill each position. Discuss any current or
past situations where the management personnel have worked together and indicate how their skills complement each other and
result in an effective management team.
B. Key Personnel
Describe the exact duties and responsibilities of each key member of the management team. For each individual, include a brief
statement of career highlights that focuses on his or her ability to perform the assigned role. A complete resume for each member
should be included as an exhibit to the business plan.
C. Management Compensation and Ownership
State the salary that is to be paid to each member. Set forth stock ownership planned for key personnel, the amount of their equity
investment, and any performance-dependent stock options or bonus plans that are contemplated.
D. Board of Directors
Discuss the company’s philosophy as to the size and composition of a board of directors. Identify proposed board members and
include a short statement about each member’s background.
VIII. The Financial Plan
Developing financial pro-formas or projections is a vital aspect of your business plan. It is important that you take the time to thor-
oughly research your projections so that they will be as realistic as possible. Be liberal with your expenses and conservative with your
revenues. It is much better if your financial surprises are pleasant ones.
Too often people try to determine their start-up costs without considering their costs of operation after the business has opened. In
order to finance the business properly, determine whether you will need additional cash at the outset to support periods of operating
losses that often occur during the early months of operation. With that thought in mind, start the pro-forma with the cash flow state-
ment.
A cash flow statement is nothing more than a presentation of the monthly cash receipts and cash disbursements that you expect to
incur while operating your business. It is important to address this on a monthly basis because many businesses pay for their goods
and expenses in one month but do not collect the money until the following month, or longer. Numerous businesses fall into this cash
flow trap. Also, many of your expenses are going to be fixed expenses; those expenses that stay the same regardless of your sales
level. Fixed expenses might be rent, insurance, salaries or contract obligations.
guideline for preparing a business plan
22
A. The Cash Flow Worksheet
While some businesses may generate “unearned” revenues such as rents, interests, or similar incomes, we will deal with the primary
concern of most small businesses, which is sales.
1. Sales – Sales revenue is income your business receives by selling its goods and services to others. Your business may sell more
than one type of goods and services, so you should keep your sales figures separated by product or service. Notice on the worksheet
(Table 1) how sales are typically lower during the early months of operation. It will take time to develop a customer base for your busi-
ness, so it will be necessary to borrow enough at the outset to carry the business through this building period. Your first step is to post
your projected monthly revenues to your cash flow statement.
2. Cash Receipts – Cash receipts reflect when you actually receive the cash for the goods that you sold. Some of your sales may be
for cash, meaning that you received those funds at the time of sale. However, some of your sales may be on credit and you may be
required to mail invoices for your sales. If this is true, then you have to “carry” the outstanding cash as accounts receivable. Some of
this cash may be received in 30 days, some in 60 days, some longer; some of your accounts receivable may never be collected. All of
those considerations must be brought into play when preparing the cash receipts section of your cash flow statement. It is the actual
receipt of the cash that determines whether your have the cash on hand to pay your bills.
3. Disbursements – Next, identify the payments you will have to make each month for your expenses. Be careful and realistic while
considering these disbursements. The cash flow example on the following page identifies some of the more common expense cate-
gories, but each business will experience its own specific expenses.
In our example, “material purchases” is the amount that will be paid to suppliers to replace the goods that were sold. It is based upon
“sales” and the cost of those sales. Your research should have identified a “cost of goods sold” percentage for you. If that percentage
was 50 percent, for example, then your cost of goods sold will be exactly one-half of your gross sales. If your cost was 25 percent,
then your cost of goods sold will be one-fourth of your gross sales.
Be sure to remember that an increase in sales may bring about an increase in certain disbursements. Sales increases may mean a
need to hire additional labor, thus creating higher wages and benefits; it may also mean higher utility costs, higher material costs and
increases in other variable costs.
4. Net and Cumulative – Net cash flow reflects the difference between receipts and disbursements, positive or negative, for the cur-
rent month. The cumulative cash flow, or current position, is determined by adding the present month’s cash flow to that of the previ-
ous months.
An example of a cash flow statement is shown on the next page. Note that the numbers in the narrative match the numbers on the
worksheet. For example, “Disbursements,” number three in the text is also number three on the worksheet. (See Table 1).
Table 1
Cash flow Worksheet
guideline for preparing a business plan
Table 1
Cash flow Worksheet
guideline for preparing a business plan
24
#1
#2
#3
#4
Month 1 2 3 4 5
Sales #1
Sales #2
Sales #3
Less returns
0-30 days
30-60 days
Over 60 days
Equity proceeds
Loan proceeds
Material purchases
Labor
Management
Payroll tax
Benefits
Advertising
Truck/auto expense
Contributions
Charge card
Dues & subscriptions
Freight
Insurance
Legal & accounting
Office supplies
Shop supplies
Travel
Phone
Utilities
Repairs
Tax/license
Rent/lease
Miscellaneous
Principal payment
Interest payment
Land and building
Machinery and equipment
Furniture and fixtures
Additional inventory
Utility deposits
Other assets
Income taxes
$ 10,000
5,000
$15,000
$11,250
0
100,000
300,000
$411,250
$6,250
3,500
1,800
636
250
500
25
126
275
100
35
45
150
450
55
150
671
2,792
325,000
35,000
10,000
10,000
2,500
1,500
0
$401,810
$9,440
$9,440
Sales
Total Sales
Cash Receipts
Total Receipts
Disbursements
Total
Net Cash Flow
Cumulative Cash Flow
$ 11,000
5,500
$16,500
$12,375
3,750
0
0
$16,125
$6,875
3,500
1,800
636
250
500
25
126
275
100
35
45
150
450
0
150
678
2,785
0
0
0
0
0
0
0
$18,380
($2,255)
$7,185
$ 11,500
5,775
$17,275
$12,956
4,125
0
0
$17,081
$7,194
3,500
1,800
636
250
500
25
126
275
100
35
45
150
450
0
150
684
2,779
0
0
0
0
0
0
0
$18,699
($1,618)
$5,567
$12,000
6,000
$18,000
$13,500
4,319
0
0
$17,819
$7,500
3,500
1,800
636
250
500
25
126
275
100
35
45
150
450
0
150
691
2,772
0
0
0
0
0
0
0
$19,005
($1,186)
$4,381
$12,500
6,200
$18,700
$14,025
4,500
0
0
$18,525
$7,800
3,500
1,800
636
250
500
25
126
275
100
35
45
150
450
0
150
698
2,765
0
0
0
0
0
0
0
$19,305
($780)
$3,601
not applicable to this worksheet but could apply to your business.
Table 1: Cash Flow Worksheet Anywhere, Mississippi
guideline for preparing a business plan
25
6 7 8 9 10 11 12
$ 13,000
6,500
$19,500
$14,625
4,675
0
0
$19,300
$8,125
3,500
1,800
636
250
500
25
126
275
100
35
45
150
450
0
150
704
2,759
0
0
0
0
0
0
0
$19,630
($330)
$3,271
$ 15,000
7,500
$22,500
$16,875
4,875
0
0
$21,750
$9,375
4,700
1,800
780
250
750
25
200
275
100
50
65
200
525
0
200
711
2,752
0
0
0
0
0
0
0
$22,758
($1,008)
$2,263
$ 17,500
8,500
$26,000
$19,500
5,625
0
0
$25,125
$10,875
4,700
1,800
780
250
750
25
200
275
100
50
65
200
525
0
200
718
2,745
0
0
0
0
0
0
0
$24,258
$867
$3,130
$19,000
9,500
$28,500
$21,375
6,500
0
0
$27,875
$11,875
4,700
1,800
780
250
750
25
200
275
100
50
65
200
525
0
200
725
2,738
0
0
0
0
0
0
750
$26,008
$1,867
$4,997
$21,500
10,500
$31,500
$23,625
7,125
0
0
$30,750
$13,125
4,700
1,800
780
250
750
25
200
275
100
50
65
200
525
0
200
732
2,731
0
0
0
0
0
0
0
$26,508
$4,242
$9,239
$23,000
11,500
$34,500
$25,875
7,875
0
0
$33,750
$14,375
4,700
1,800
780
250
750
25
200
275
100
50
65
200
525
0
200
739
2,724
0
0
0
0
0
0
0
$27,758
$5,992
$15,231
$25,000
12,500
$37,500
$28,125
8,625
0
0
$36,750
$15,625
4,700
1,800
780
250
750
25
200
275
100
50
65
200
525
0
200
746
2,717
0
0
0
0
0
0
1,000
$30,008
$6,742
$21,973
guideline for preparing a business plan
26
B. Sources and Uses of Funds
Having completed your cash flow worksheet, you now have some idea of what your sales and operating expenses might be and you
can determine how much financing you will need.
5. Sources of Funds – After you have identified your financing needs, address where the funds must come from. Either the investor
or investors must provide the necessary capital, or the business must make arrangements to borrow the funds. In most cases, you will
use both sources of funds. Our example (Table 2) shows that the entrepreneur has injected $100,000 of his own funds. That is 25
percent of the entire project cost, which is approximately what a bank would require. The remaining 75 percent or $300,000 was
arranged through two separate loans: one long-term loan for the land and building and a second, shorter-term loan for the equipment,
machinery, and fixtures.
6. Use of Funds – Make a list of what you will need to purchase in order to begin operation and determine the cost of each item. The
Sources and Uses of Funds Statement shown in Table 2 gives some of the more common items that you must have before you start
operation. Bids need to be secured for any construction, while pricing lists should be provided for equipment, machinery, and invento-
ry. Be sure to ask your local utility company if any deposits are required. Also, refer to your cash flow statement to see if you must
prepare for a period of cash shortage.
7. Cash Balance – (Working Capital) – Obviously, the funds remaining after the initial purchases represent your working capital. As
shown by the cash flow statement, this additional capital is necessary as a cushion to absorb the negative operating cash flow you
have in months 2 - 7 of operation (according to the examples in Table 1).
guideline for preparing a business plan
27
Owner’s funds . . . . . . . . . . . . . . . . . . . . . . . . . . $100,000
Loan #1 . . . . . . . . . . . . . . . . . . . . . . . . . . 250,000
Loan #2 . . . . . . . . . . . . . . . . . . . . . . . . 50,000
$400,000
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $75,000
Building . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 250,000
Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,000
Machinery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25,000
Renovations . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,000
Furniture and fixtures . . . . . . . . . . . . . . . . . . . . 10,000
Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,500
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,500
$384,000
(Working capital) . . . . . . . . . . . . . . . . . . . . . . . . $16,000
#5
#6
#7
Funds Available
Total . . . . . . . . . . . . . . . . . . . . . . . . . . .
Uses of Funds
Total . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash Balance
Table 2: Sources and Uses of Funds Statement
Anywhere, Mississippi
guideline for preparing a business plan
28
C. The Income Statement (Profit and Loss Statement)
With the cash flow worksheet completed, the income statement is easy to compile (see Table 3).
8. Sales – Total your monthly sales for each category as shown on your cash flow statement. This figure reflects your total pro-
jected annual gross sales. From this figure, deduct any refunds that you gave to customers for returned merchandise. This sum
represents your total net sales.
9. Cost Of Goods Sold – This is the cost of the products you sold to your customers. Your beginning inventory ($10,000) is
added to any purchases you made during the report period ($118,994) to identify the amount of goods available for sale.
Suppose you did not sell everything you had available for sale. At the end of this period you counted your inventory on hand and
found that you still had $10,000 of inventory on the date that you prepared this report. Your goods available for sale minus your
ending inventory produces the total cost of goods sold (total material costs). In the example, that amounts to $118,994
($128,994 minus $10,000 of ending inventory).
10. General and Administrative Expenses – These are the annual totals of the expenses as listed on the cash flow statement.
Note that there are some changes. Payment of the principal portion of your notes is not considered an expense. It will be
accounted for later on your balance sheet but does not appear on the income statement. Also, note the addition of an expense
category termed “depreciation”. This is not considered on your cash flow statement because you don’t write a check to depreci-
ation. The purpose of depreciation is to account for the fact that your assets will begin to wear out as you use them. A certain
piece of equipment may be expected to last for 10 years, for example. If that equipment cost you $1,000 at purchase and will be
worn out or worthless in 10 years, it is said to “depreciate” $100 per year. In our example the building, equipment, machinery,
etc., is depreciated by $11,400 per year. You don’t actually write a check for the $11,400, but your assets have devalued by that
amount.
11. Net Income (Pre-Tax) – Net sales minus material costs and operating costs gives us the net income of the business.
However, this amount does not include the payment of taxes on the profit made.
12. Taxes – If you have made a profit operating your business, you will be expected to pay both state and federal income taxes.
This aspect of your business should be discussed thoroughly with your accountant.
13. Net Income (After Tax) – After taxes have been paid, the remaining profit belongs to your business in the form of retained
earnings.
guideline for preparing a business plan
29
Sales #1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $190,500 66.73%
Sales #2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94,975 33.27%
Sales #3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 0.00%
Gross sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $285,475
Less returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 0.00%
$285,475 100.00%
Beginning inventory . . . . . . . . . . . . . . . . . . . . . . . $10,000
Material purchases . . . . . . . . . . . . . . . . . . . . . . . . 118,994
Goods available . . . . . . . . . . . . . . . . . . . . . . . . . . 128,994
Less ending inventory . . . . . . . . . . . . . . . . . . . . . (10,000)
$118,994 41.68%
Labor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $49,200 17.23%
Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,600 7.57%
Payroll tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,496 2.98%
Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,000 1.05%
Advertising . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,500 2.63%
Truck/auto expense . . . . . . . . . . . . . . . . . . . . . . . . 0 0.00%
Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 0.00%
Charge card . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 0.00%
Dues & subscriptions . . . . . . . . . . . . . . . . . . . . . . . 300 0.11%
Freight . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,956 0.69%
Insurance expense . . . . . . . . . . . . . . . . . . . . . . . . 3,300 1.16%
Legal & accounting . . . . . . . . . . . . . . . . . . . . . . . . 1,200 0.42%
Office supplies . . . . . . . . . . . . . . . . . . . . . . . . . . . 510 0.18%
Shop supplies . . . . . . . . . . . . . . . . . . . . . . . . . . . . 660 0.23%
Travel expense . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 0.00%
Phone expense . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,100 0.74%
Utility expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,850 2.05%
Repairs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 0.00%
Tax/license . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55 0.02%
Rent/lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 0.00%
Other expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,100 0.74%
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . 33,059 11.58%
Depreciation expense . . . . . . . . . . . . . . . . . . . . . . 11,400 3.99%
$152,286 53.34%
$14,195 4.97%
Federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,500
State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $250
$1,750 0.61%
$12,445 4.36%
#8
#9
#10
#11
#12
#13
Sales
Net Sales . . . . . . . . . . . . . . . . . . . . . .
Table 3: Projected Income Statement
Anywhere, Mississippi
Cost of Goods Sold
Total Material Cost . . . . . . . . . . . . . .
G&A Expenses
Total G&A . . . . . . . . . . . . . . . . . . . . . .
Net Income (pre-tax) . . . . . . . . . . . . . . . .
Income Tax
Total Tax . . . . . . . . . . . . . . . . . . . . . .
Net Income . . . . . . . . . . . . . . . . . . . . . . . . .
Year 1
guideline for preparing a business plan
30
D. The Balance Sheet
The balance sheet is a comparison of the assets, liabilities, and equity of your business. The one shown in Table 4 is a very basic
example of a small business balance sheet.
Assets
14. Current Assets – These are assets that are considered to be liquid or easily converted into cash. The cumulative cash of the busi-
ness (#4) is listed along with the ending inventory (#9) and accounts receivable – as well as other similar assets – to form the current
assets portion. The ending inventory is a listing of the goods held for sale at the end of your accounting period and the accounts
receivable is a listing of what is owed to you by your customers for previous purchases.
15. Fixed Assets – The second category of assets is fixed assets. This is a listing of the assets that are long-term in nature (brick-
and-mortar-type assets). It is these assets that depreciate in value over a longer period. Depreciation ($11,400) for past periods is
therefore deducted from the sum of these assets and shown on the balance sheet as accumulated depreciation.
16. Other Assets – This is a catchall section for other assets such as deposits held by utility companies.
17. Total Assets – This is simply the sum of current, fixed, and other assets (categories 14, 15 and 16).
Liabilities
Under the liabilities sections, you are dealing with what your business owes to others.
18. Current Liabilities – Current liabilities are bills and accounts that you must pay within the next year. (Short-term notes or
accounts payable are examples). Also considered to be a current liability is that portion of any long-term note that must be paid during
the upcoming year. This figure can be provided by your banker, accountant, or your amortization schedule of notes payable.
19. Long-Term Liabilities – Long-term liabilities are the long-term financial commitments your business has made to the bank or
other debt holders. If additional debt is not incurred, the “loans payable” section will decrease each year by the amount of principal
payments made during the period. In the example in Table 4, the original debt of $300,000 – as shown in the Sources and Uses of
Funds Section – is now reduced to a balance due of $291,503. Therefore, $8,497 in principal was paid during that first year of opera-
tion ($300,000 minus $291,501). Also, note that $9,447 is deducted and shown as less current portion. That is because it is the por-
tion of long-term principal that will be paid during the upcoming year and it is therefore considered to be a current liability and is listed
under that category.
20. Total Liabilities – This is the sum of long-term liabilities.
Equity
21. Equity – The equity section reflects your original investment (#5) as well as the accumulation of profits (#13) of the business
(retained earnings).
22. Total Liabilities & Equity – The sum of your liabilities and equity when added together should equal your assets. Do they bal-
ance? If not, you have an error in one of your sections.
guideline for preparing a business plan
31
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $21,973
Ending inventory . . . . . . . . . . . . . . . . . . . . . . . . . . 10,000
Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . 9,375
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
$41,348
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75,000
Building . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 250,000
Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,000
Machinery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25,000
Renovations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Furniture & fixtures . . . . . . . . . . . . . . . . . . . . . . . . 10,000
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
$370,000
Less accumulated depreciation . . . . . . . . . . 11,400
$358,600
Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,500
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,500
$4,000
$403,948
Notes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . $0
C/P long-term debt . . . . . . . . . . . . . . . . . . . . . . . . 9,447
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
$9,447
Loans payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . $291,503
Less current principal . . . . . . . . . . . . . . . . . . . . . . (9,447)
$282,056
$291,503
Owner’s funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . $100,000
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . 12,445
$112,445
$403,948
#14
#15
#16
#17
#18
#19
#20
#21
#22
Current Assets
Total Current Assets . . . . . . . . . . . . .
Table 4: Projected Balance Sheet
Anywhere, Mississippi
Fixed Assets
Total Fixed Assets . . . . . . . . . . . . . . .
Total Equity . . . . . . . . . . . . . . . . . . . .
Year 1
ASSETS
Net Fixed Assets . . . . . . . . . . . . . . . .
Other Assets
Total Other Assets . . . . . . . . . . . . . .
Total Assets . . . . . . . . . . . . . . . . . . . . . . . .
Current Liabilities
LIABILITIES
Total Current Liabilities . . . . . . . . . .
Long-Term Liabilities
Total Long-Term Debt . . . . . . . . . . . .
Total Liabilities . . . . . . . . . . . . . . . . . . . . .
EQUITY
Total Liabilities & Equity . . . . . . . . . . . . . .
requirements
Reporting
Special Note
It should be noted that the tax forms discussed in this publication are subject to change without
notice. Check with the appropriate government office for the form currently in use.
33
Reporting Requirements
35
Introduction
Reporting Requirements for Mississippi Small Businesses provides a handy summary of regulations governing the establishment and
operation of businesses in Mississippi. Reporting Requirements consists of three sections: (a) federal regulations; (b) state regulations;
and (c) city and county regulations.
How to Use This Chapter
This publication presents the regulations business operators should follow to begin or maintain a business. For example, the owner or
operator of a new business should note the sections named “Initial Federal Regulations” and “Initial State Regulations.” The owner or
operator of an existing business will focus attention on the tax forms and regulations reported on an annual, quarterly and monthly
basis as well.
This publication is designed to take the reader through the details of filing business tax forms and other elements of “paperwork.”
While care has been taken to assure that rules and regulations in this publication are correctly interpreted, each agency mentioned is
the final authority and should be consulted for detailed information and possible changes in regulations. This publication is not intend-
ed to be an all-source guide for starting a business. For additional information, contact the Internal Revenue Service, the Office of the
Secretary of State, the State Tax Commission or the Mississippi Development Authority. You may also want to consult with an attorney
or accountant on paperwork required to start a business, as well as required monthly and annual reports.
Federal Tax and Regulatory Forms Discussed in this Chapter
1. SS-4 Application for Employer Identification Number
2. W-4 Employee’s Withholding Allowance Certificate
3. W-5 Earned Income Credit Advance Payment Certificate
4. 8109-B Preprinted Tax Deposit Coupons
5. 941 Employer’s Quarterly Federal Tax Return
6. 940 Employer’s Annual Federal Unemployment (FUTA) Tax Return
7. 945 Annual Return of Withheld Federal Income Tax
8. W-2 Federal Wage and Tax Statement
9. W-3 Transmittal of Wage and Tax Statements
10. 1096 and 1099 Miscellaneous Income
11. 1040 Federal Individual Income Tax Return
12. 1040-SE Federal Self-Employment Tax
13. 1040-ES Estimated Tax for Individuals
14. 1065 U.S. Partnership Return of Income
15. K Partner’s Shares of Income, Credits, Deductions, etc.
16. K-1 Individual Partner’s Share of Income, Credits, Deductions, etc.
17. 1120 U.S. Corporation Income Tax Return
18. 1120S U.S. Income Tax Return for an S Corporation
19. OSHA 300 Log of Work-related Injuries and Illnesses
20. OSHA 300A Summary of Work-related Injuries and Illnesses
21. OSHA 301 Injury and Illness Incident Report
Reporting Requirements
36
Initial Federal Reports and Regulations
A number of federal regulations apply when a business is started or new employees are hired. These regulations are discussed as
follows:
APPLICATION FOR EMPLOYER IDENTIFICATION NUMBER (FORM SS-4)
In many cases, a new business owner must obtain an employer identification number (EIN), especially if the business is a corporation
or partnership or hires employees. The EIN is a nine-digit number issued by the IRS and can be obtained by calling 1-800-829-4933
between 7:00 a.m. to 10:00 p.m. or by completing Form SS-4. The EIN is used to identify the tax accounts of employers, corporations,
partnerships, and certain other taxpayers with no employees. The EIN should be used on all items sent to the IRS and the Social
Security Administration (SSA). For more information, obtain Publication 1635, “Understanding Your EIN.”
CONTACT: Internal Revenue Service
EMPLOYEE’S WITHHOLDING ALLOWANCE CERTIFICATE (FORM W-4)
An employee must fill out and give this form to his employer when he begins his employment. This form guides the employer in deter-
mining how much federal income tax to withhold from wages. Internal Revenue Service’s Publication 15 “Employer’s Tax Guide,
Circular E” provides federal income tax withholding tables.
CONTACT: Internal Revenue Service
EARNED INCOME TAX CREDIT ADVANCE PAYMENT CERTIFICATE
(FORM W-5)
The advance payment of the Earned Income Tax Credit (EITC) provides a means for eligible employees to receive additional income at
each pay period instead of waiting to file for a refund when their annual federal income tax returns are prepared and filed. An employ-
er must make Form W-5 available to his employees. It is then the responsibility of eligible employees who wish to receive advance
EITC payments to give their employer a completed form W-5 each year. The employer must then include these payments with wages
paid to such eligible employees. Generally, the employer pays the amount of the advance EITC payments from withheld income and
social security taxes. The employer deducts the amount of the advance EITC from taxes due on Form 941, Employer’s Quarterly
Federal Tax Return. Advance EITC is also reported in Block 9 of Form W-2. The Internal Revenue Service’s “Employee Tax Guide,
Circular E” provides further information on this program and notice for employers to post.
CONTACT: Internal Revenue Service
SOCIAL SECURITY TAXES
An employer must deduct the employee’s portion of social security and Medicare taxes from wages paid to employees. The employer
pays its portion of social security and Medicare taxes and remits both its portion and the employee’s portion to the Internal Revenue
Service by making federal tax deposits using Form 8109 or EFTPS. The total amount of social security and Medicare taxes is reported
quarterly on Form 941. Employers should obtain IRS Publication 15 “Circular E, Employer’s Tax Guide” for further information.
CONTACT: Internal Revenue Service
WAGE AND HOUR REGULATIONS
Most businesses must follow federal standards concerning minimum wage, maximum hours, overtime pay and child labor. A new
business owner should check to see if his business must meet these standards.
CONTACT: Wage and Hour Division, United States Department of Labor
Reporting Requirements
37
EQUAL EMPLOYMENT REGULATIONS
Equal treatment of all employees, as well as equal pay, is regulated and enforced by the United States Equal Employment Opportunity
Commission (EEOC). EEOC prohibits employment discrimination on the basis of age, race, color, religion, sex or national origin.
CONTACT: United States Equal Employment Opportunity Commission
*IMPORTANT INFORMATION CONCERNING FEDERAL REPORTS
If you receive a tax form, but your business has not had activity, which would generate the tax covered by the form, the form must still
be completed and returned. Zeros (0) are to be used in the appropriate spaces, the form signed and returned. You will avoid unneces-
sary problems by using this method.
Monthly Federal Reports
Monthly reports are required for some businesses. These reports are discussed below.
FEDERAL TAX DEPOSIT OF WITHHELD INCOME AND FICA TAXES (FORM 8109 AND 8109-B)
In general, employers must deposit income tax withheld and both the employer’s portion and employee’s portion of social security and
Medicare taxes by mailing or delivering a check, money order, or cash to an authorized financial institution or Federal Reserve Bank.
However, some taxpayers are required to deposit using the Electronic Federal Tax Payment System (EFTPS).
Payment with return. An employer may make a payment with Form 941 instead of depositing if:
• The employer accumulates less than a $2,500 tax liability (reduced by any advanced earned income credit) during the quarter
(line 13 of Form 941). However, if the employer is unsure that total accumulations will be less than $2,500, deposit under the
appropriate rules so that failure to deposit penalties will not be imposed.
• The employer is a monthly schedule depositor and makes payments in accordance with the Accuracy of Deposits rule.
Separate deposit requirements for non payroll (Form 945) tax liabilities.
• Separate deposits are required for nonpayroll income tax withholding. Do not combine deposits for Forms 941 and 945
tax liabilities.
When to Deposit
• There are two deposit schedules-monthly and semiweekly-for determining when an employer deposits social security,
Medicare and withheld income taxes. Prior to the beginning of each calendar year, an employer must determine which of the
two deposit schedules the IRS requires. The deposit schedule to be used is based on the total tax liability report on Form 941
during a four-quarter lookback period. The deposit schedule is not determined by how often the employer pays the employees
or makes deposits. Rules regarding deposit requirements can be found in Publication 15, “Employer’s Tax Guide.”
CONTACT: Internal Revenue Service
Quarterly Federal Reports
Quarterly reports are required for some businesses. These reports are discussed below.
EMPLOYER’S QUARTERLY FEDERAL TAX RETURN (FORM 941 AND 8109)
When an employer withholds income, Social Security, and Medicare taxes from an employee’s wages and pays the employer’s portion
of social security and Medicare taxes, a quarterly return (Form 941) must be filed with the Internal Revenue Service. Form 941 may
also be filed electronically. This return is due by the last day of the month following the end of each calendar quarter. If these taxes
are less than $2,500 for any quarter, payment may be made with Form 941 using Form 941-V. Quarterly due dates for Form 941 are
Reporting Requirements
38
April 30, July 31, October 31, and January 31. If the employer’s net tax liability for the return period (line 13 of Form 941) is greater
than $2,500, then taxes must be deposited with an authorized bank or paid using EFTPS. For deposit rules, refer to Publication 15,
“Circular E, Employer’s Tax Guide.”
CONTACT: Internal Revenue Service
FEDERAL TAX DEPOSIT OF UNEMPLOYMENT TAXES (FORM 8109)
For deposit purposes, Federal Unemployment Tax (FUTA) should be computed quarterly by multiplying the amount of wages paid dur-
ing the quarter by 0.8% (.008). FUTA tax only has to be deposited on the first $7,000 of wages per employee for a calendar year.
However, if any part of the wages subject to FUTA are exempt from state unemployment tax, the employer may have to deposit a high-
er percentage amount. FUTA tax is paid by the employer, not the employee.
If the FUTA tax liability for a quarter is $500 or less, the employer should add the liability to the amount of taxes to be deposited for
the next quarter. If this cumulative total is not more than $500, this same process should be repeated until the cumulative total is
more than $500. If the cumulative FUTA tax liability for any calendar quarter is more than $500, the employer is required to deposit
the tax in an authorized bank, or by electronic funds transfer (EFTPS) using Form 8109 (Federal Tax Deposit Coupon). See Publication
15 for more information on depositing FUTA tax.
CONTACT: Internal Revenue Service
NOTE: Also see Estimated Tax for Individuals (Form 1040-ES) described later.
Annual Federal Reports
Every business is required to file certain annual reports. These reports are discussed below.
EMPLOYER’S ANNUAL FEDERAL UNEMPLOYMENT (FUTA) TAX RETURN (FORM 940 AND 8109)
The Federal Unemployment Tax Act (FUTA), along with state unemployment systems, provides for payments of unemployment com-
pensation to workers who have lost their jobs. Most employers pay both a Federal and State unemployment tax. Certain tests must
be met to determine whether an employer must pay FUTA tax. Each test applies to a different category of employee, and each is
independent of the others. Every employer subject to unemployment tax must file Form 940 or 940EZ and pay undeposited taxes
before January 31st of each year. See Publication 15, Circular E, Employer’s Tax Guide, for more information on meeting the test crite-
ria and computing FUTA tax.
CONTACT: Internal Revenue Service
ANNUAL RETURN OF WITHHELD FEDERAL INCOME TAX (FORM 945)
Businesses who withhold income tax from nonpayroll payments must file Form 945. Nonpayroll payments include pensions, annuities,
IRA’s, military retirement, gambling winnings, and backup withholding. Backup withholding is required when the business does not
obtain a social security number or employer identification number before paying the contractor. Businesses must obtain the SSN or
EIN of an independent contractor in order to complete Form 1099-MISC. A business is not required to file Form 945 for those years in
which they do not have a nonpayroll tax liability.
CONTACT: Internal Revenue Service
Reporting Requirements
39
FEDERAL WAGE AND TAX STATEMENT (FORM W-2)
Every employer must fill out and give to each employee by the last day of January a wage and tax statement showing earnings and
deductions for the preceding calendar year. Form W-2, a six-copy statement of the amount of wages paid and the amount of money
withheld for a variety of purposes, provides a means for giving this information. If any employee stops working and is not expected to
return to work in the current calendar year, he may request the form earlier. If the request is made, he must be given FormW-2 within
30 days of the request or of the last payment, whichever is later.
CONTACT: Internal Revenue Service
TRANSMITTAL OF WAGE AND TAX STATEMENT (FORM W-3)
Every employer must send to the Social Security Administration copies of employees’ Form W-2, Wage and Tax Statement, by the last
day of February. Internal Revenue Service Form W-3, Transmittal of Wage and Tax Statement, is used to send the W-2 forms to the
proper Social Security Administration Office.
CONTACT: Internal Revenue Service
MISCELLANEOUS INCOME (FORM 1099-MISC)
This form is used to report payments of: 1) $600 or more for services performed for a business by people not classified as employees,
such as subcontractors, attorneys, accountants or directors; 2) rents of $600 or more, other than rents paid to real estate agents; 3)
prizes and awards of $600 or more; 4) royalties of at least $10, and; 5) monies to certain crew members by operators of fishing boats.
In addition, this form should be used to report sales of at least $5,000 of consumer goods to a buyer for resale anywhere other than in
a permanent retail establishment.
CONTACT: Internal Revenue Service
ANNUAL SUMMARY AND TRANSMITTAL OF U.S. INFORMATION RETURNS
File Form 1096 with Forms 1099, 1098, 5498, or W-2G by February 28 of each year.
FEDERAL INDIVIDUAL INCOME TAX RETURNS
(FORMS 1040, 1040A, AND 1040-EZ)
Both state and federal individual income tax returns are due by April 15 of each year. Profits or losses from sole proprietorships are
reported on individual tax returns (Form 1040) by attaching Schedule C to the return and reporting the profit from Schedule C on line
12 of Form 1040. Partnerships file Form 1065, which is also due April 15. Corporations file Form 1120, and S corporations file Form
1120S, and these returns are due by the 15th day of the third (3rd) month after the close of the tax year. Partners in partnerships and
shareholders in S corporations report their portion of income from the partnership or S corporation by attaching Schedule E to their
Form 1040 and reporting the total income from Schedule E on line 17 of Form 1040. Sole proprietors, partners, and S corporation
shareholders generally pay their tax liabilities by making estimated payments using Form 1040-ES (see below).
CONTACT: Internal Revenue Service
FEDERAL SELF-EMPLOYMENT TAX (FORM 1040-SE)
An individual who operates a business as a sole proprietor or as a member of a partnership is usually required to pay a federal self-
employment tax. This tax helps finance social security benefits, which are payable to self-employed persons as well as to wage earn-
ers. It is computed as a percentage of net profits from self-employment up to certain limits and is payable along with payment of per-
sonal federal income taxes.
CONTACT: Internal Revenue Service and/or an Accountant
Reporting Requirements
40
ESTIMATED TAX FOR INDIVIDUALS (FORM 1040-ES)
Individuals must make estimated tax payments if they expect to owe at least $1,000 in tax, after subtracting withholding and credits,
and they expect withholding and credits to be less than the smaller of 1.) 90% of the tax shown on the current year tax return or 2.)
100% of the tax shown on the prior year tax return. The estimated payments are due in equal installments on or before April 15, June
15, September 15 and January 15 of the following year. Individuals may pay estimated tax payments by using EFTPS. Farmers, fish-
ermen, and higher income individuals should review Publication 505, “Tax Withholding and Estimated Tax,” for exceptions.
CONTACT: Internal Revenue Service
U.S. PARTNERSHIP RETURN OF INCOME AND PARTNER’S SHARE OF INCOME (FORM 1065 AND SCHEDULES K AND K-1)
A partnership, which is defined as an unincorporated association of two or more persons united to carry on a trade or business, is
required to file Form 1065, U.S. Partnership Return of Income, by the 15th day of the fourth (4th) month following the date its tax year
ended (usually April 15). The purpose of Form 1065 is to serve as an information return used to report the income, deductions, gains
and losses from the operation of the partnership. However, the partnership does not pay tax on income. The profits or losses are
divided between each partner based on their partnership agreement, and are reported on their individual tax returns (Form 1040).
In addition, the partnership is also required to complete Schedules K and K-1. Schedule K is a summary schedule of all of the part-
ner’s shares of income, losses, credits, deductions, etc., as well as rental activity income (loss) and portfolio income. Schedule K-1
shows each partner’s separate share of income, losses, credits, deductions, etc. Schedule K-1 is filed by the partnership along with
Schedule K and Form 1065 with the IRS. A copy of Schedule K-1 is also sent to each partner. The partner keeps the schedule for his
records and is not required to file it with his personal tax return.
See Publication 541, “Partnerships,” for more information.
CONTACT: Internal Revenue Service
U.S. CORPORATION INCOME TAX RETURN (FORM 1120)
All domestic corporations must file Form 1120, U.S. Corporation Income Tax Return, and Form 1120-A, U.S. Corporation Short-Form
Income Tax Return, to report the income, gains, losses, deductions and credits, and to figure the income tax liability of the corporation.
Unlike a partnership and an S Corporation, a regular corporation must pay its own taxes, separate from the shareholders. Form 1120
is due by the 15th day of the third (3rd) month after the end of the tax year (March 15, if the corporation uses a calendar year).
See Publication 542, “Corporations,” for more information.
CONTACT: Internal Revenue Service
U.S. INCOME TAX RETURN FOR AN S CORPORATION AND SHAREHOLDERS SHARE OF INCOME (FORM 1120S AND SCHEDULES K
AND K-1)
All domestic corporations that have filed Form 2553, Election by a Small Business Corporation, met all of the tests to become an S
Corporation, and the IRS has accepted the election, must file Form 1120S which reports the income, deductions, gains, losses, etc., for
the tax year. This form is due by the 15th day of the third (3rd) month following the date the S Corporation’s tax year ended (March 15
for calendar year corporations). Generally, Form 1120S serves as an information return for the IRS and therefore, the S Corporation
does not pay taxes (certain exceptions apply). Instead, the income (losses) passes through to each shareholder and is reported on his
personal tax return.
Reporting Requirements
41
In addition, the S Corporation, like a partnership must file Schedules K and K-1. (See description of these two schedules under part-
nerships above.)
CONTACT: Internal Revenue Service
PREPRINTED TAX DEPOSIT COUPONS (FORM 8109)
8109 preprinted tax deposit coupons are used to make deposits for the following types of taxes:
940 Federal unemployment tax (FUTA)
941 Withheld income and social security taxes
943 Agricultural withheld income and social security taxes
944 Employer’s Annual Federal Tax Return (includes Forms 944-PR and 944-SS)
945 Annual Return of Withheld Federal Income Tax
720 Excise Tax
CT-1 Railroad retirement and railroad unemployment repayment taxes
990-PF Excise tax on private foundation net investment income
Schedule A Backup withholding (reported on Forms 941 and 941-E)
1120 Corporation Income Tax
990-T Exempt Organization Business Income Tax
990-C Farmer’s Cooperative Association Income Tax
1042 Annual Withholding Tax Return for U.S. Source Income of Foreign Persons
NOTE: See instructions to Tax Forms 940, 941, 943, 944, 945, 720, CT-1, 990-PF, Schedule A, 1120, 990-T, 990-C and 1042 for
explanation of use and for determining the proper tax period. Contact the Internal Revenue Service to obtain these forms.
EFTPS (ELECTRONIC FEDERAL TAX PAYMENT SYSTEM)
EFTPS is a tax payment and reporting system provided free by the U.S. Department of Treasury, designed with busy taxpayers in mind.
You can pay your federal taxes electronically, either on-line or by phone, 24/7. Businesses and individuals can use EFTPS to make all
of their federal tax payments, including income, employment, estimated, and excise taxes. .
ETTPS offers you the convenience and flexibility of making your tax payments through the Internet, or by phone. By 8:00 P.M.(ET) at
least one calendar day in advance of the due date, you can access EFTPS directly to report your tax information. You will instruct
EFTPS to move the funds from your account to the Treasury’s account for payment of your federal taxes. Funds will not move from
your account until the date you indicate. You receive an immediate acknowledge of your payment instructions, and your bank state-
ment will confirm the payment was made.
You can initiate your tax payment 24 hours a day, seven days a week. As an added convenience, EFTPS allows taxpayers to schedule
tax payments in advance. Businesses can schedule payments up to 120 days in advance of their tax due date, and individuals can
schedule payments up to 365 days in advance of their tax due date. EFTPS will automatically make your payments for you on the due
date you indicate.
To use EFTPS you must first enroll. To enroll or for more information online visit www.EFTPS.gov or to receive an enrollment form, call
EFTPS Customer Service at 1-800-555-4477.
Reporting Requirements
42
HOW TO GET MORE INFORMATION FROM INTERNAL REVENUE SERVICE
Internet. The IRS’s web site is www.irs.gov. Taxpayers can download or order forms and publications from this website. In addition,
small businesses can obtain helpful information at the Small Business section at www.irs.gov/smallbiz.
Telephone. Many services are available by phone. Order forms, instructions, and publications by calling 1-800-829-3676. Ask tax
questions by calling 1-800-829-1040. If using TTY/TDD equipment, call 1-800-829-4059. To listen to prerecorded messages covering
various topics, call 1-800-829-4477.
Other Federal Reports
RECORDING AND REPORTING OCCUPATIONAL INJURIES AND ILLNESSES
With few exceptions, employers must maintain the OSHA 301, 300 and 300A forms or equivalent forms. Samples of the federal forms
mentioned below may be found and printed directly from the Occupational Safety and Health Administration (OSHA) web page at
www.osha.gov along with directions and other OSHA information.
LOG OF WORK-RELATED INJURIES AND ILLNESSES (OSHA FORM 300)
The OSHA 300 Log of Work Related Injuries and Illnesses is used to classify work-related injuries and illnesses and to note the extent
and severity of each case and to record specific details about what happened and how it happened. Like the 301 form, this form must
be maintained five years, unlike the 301 and the 300A, the log must be updated during the storage period to include newly discovered
cases, changes in the classification of previously recorded cases and changes to descriptions and outcomes of cases.
SUMMARY OF WORK-RELATED INJURIES AND ILLNESSES (OSHA FORM 300A)
All employers who must keep OSHA records must complete the Summary page, even if no work-related injuries or illnesses occurred
during this year. THE OSHA 300A must be posted from February 1 to April 30 of the year following the year covered by the form.
INJURY AND ILLNESS INCIDENT REPORT (OSHA FORM 301)
Employers must complete OSHA 301 within 7 calendar days of receiving information that a recordable injury or illness has occurred.
This form is not submitted to OSHA unless you are specifically asked to do so, but must be maintained for five years following the end
of the calendar year that these records cover.
SAFETY AND HEALTH STANDARDS
The Occupational Safety and Health Administration of the Department of Labor enforces compliance with safety and health standards
that apply to industry and business with one or more employees. Employers are required to report to OSHA within eight (8) hours all
fatal business related accidents and illnesses as well as all non-fatal incidents that result in the hospitalization of three (3) or more
employees. These reports may be made directly to the OSHA office during normal working hours or to 1-800-321-OSHA at any time.
Reporting Requirements
43
State Regulations
State Tax and Regulatory Forms Discussed in this Publication
1. 70-001 Registration Application
2. 89-350 Employee Withholding Exemption Certificate
3. 89-105 Employer’s Monthly Withholding Tax Return
4. 72-001/72-010 Sales Tax Returns
5. 72-110 Use Tax Return
6. UI-1 MESC Registration Form
7. UI-2/UI-3 Employer’s Quarterly Contribution/Wage Report
8. 89-140 Annual Information Return
9. 73-033 Assessment of Personal Property
10. 83-105 Corporate Income and Franchise Tax Return
Initial State Regulations
A number of state regulations apply when a business is started or new employees are hired. The required state forms are discussed
below.
REGISTRATION APPLICATION (FORM 70-001)
This form is used to establish an account with the Mississippi Tax Commission. This combined form allows several registrations to be
made with the same form. This form may be downloaded from the MSTC website at www.mstc.state.ms.us under the caption
Register a Business for Taxes.
CONTACT: Mississippi State Tax Commission or District Office of the Commission
EMPLOYEES WITHHOLDING EXEMPTION CERTIFICATE (FORM 89-350)
Each employee must fill out and give to his employer at the beginning of his employment a withholding exemption certificate. This
document shows the employer how much state income tax to withhold from wages. This form may be downloaded from the MSTC
website at www.mstc.state.ms.us under Withholding Tax.
CONTACT: Mississippi State Tax Commission or District Office of the Commission
INCORPORATION
In order to be incorporated, the applicant must file the articles of incorporation with the Office of the Secretary of the State of
Mississippi. A business owner who wants to incorporate his business should consider employing an attorney familiar with Mississippi
corporate law.
CONTACT: Mississippi Secretary of State’s Office and/or an Attorney
IMPORTANT INFORMATION CONCERNING STATE REPORTS
If you receive a tax form, but your business has not had activity, which would generate the tax covered by the form, the form must still
be completed and returned. Zeros (0) are to be used in the appropriate spaces, and the form should be signed and returned. You will
avoid unnecessary problems by using this method.
Reporting Requirements
44
When you file your return, you must use an original official state form or a return prepared and printed using a software package that
has been approved by the Mississippi Tax Commission.
Do not use photocopies of documents.
Monthly State Reports
Monthly reports are required for some businesses. The required monthly forms are discussed below.
EMPLOYER’S WITHHOLDING TAX RETURN (FORM 89-105)
All employers are required to file Form 89-105 monthly and remit monies if the amount of state income taxes required to be withheld
exceeds $300 per month. Returns must be filed and the taxes paid on or before the fifteenth (15th) day of the month (following the
month for which the tax was withheld). If the monthly amount is less than $300 and the quarterly total is less than $900, the withheld
tax may, with the approval of the Commissioner, be reported quarterly. When an employer becomes liable for filing a return under a
particular filing period (monthly or quarterly), he must continue on that basis until permission to change has been granted by the
Mississippi State Tax Commission.
Employers who have headquarters outside Mississippi and who do business in the state on a temporary basis must file Form 89-105
and pay withheld income taxes each month. Such temporary, out-of-state employers are defined as those who cannot reasonably be
expected to continue doing business in the state for as long as 18 consecutive months.
CONTACT: Mississippi State Tax Commission or District Office of the Commission
SALES TAX RETURN (FORMS 72-001 AND 72-010)
State law requires reporting and paying sales tax collected. Most small retail businesses use the short form, 72-001, which is for
those who use only one sales tax rate. Businesses which collect sales tax at more than one rate use the long form, 72-010. The
Mississippi State Tax Commission allows owners of retail businesses a discount amounting to two percent (2%) of the amount of sales
tax remitted. The discount is available only to those who file the report and pay sales taxes by the twentieth (20th) of the following
month. The discount is limited to a maximum of $50 per report, but no more than $600 per year.
A taxpayer is required to file his sales tax return either annually, quarterly or monthly based on his average monthly liability for the
prior year as follows:
Less than $50 Annually
Less than $300 but greater than $50 Quarterly
More than $300 Monthly
CONTACT: Mississippi State Tax Commission or District Office of the Commission
USE TAX RETURN (FORM 72-110)
Use tax is imposed on purchases made outside the state, which may be used, stored or consumed within the state. Use tax is also
applied to purchases on which sales or use tax has not been paid to another state at a rate equal to or greater than the Mississippi
rate. The Mississippi State Tax Commission allows a discount of two percent on the amount of tax being remitted by owners of retail
businesses. The discount is available only to those who file the report and pay these taxes by the twentieth (20th) of the following
month. The discount is limited to a maximum of $50 per report, but no more than $600 per year.
CONTACT: Mississippi State Tax Commission or District Office of the Commission
Reporting Requirements
45
Quarterly State Reports
Quarterly reports are required for some businesses. The required quarterly forms are discussed below.
APPLICATION FOR MISSISSIPPI UNEMPLOYMENT TAX IDENTIFICATION (UI-1)
Generally, all entities employing one or more individuals during some part of twenty weeks in a calendar year, or paying wages of
$1,500 or more in any calendar quarter, are liable for unemployment taxes. Form UI-1 must be completed and submitted to the
Mississippi Department of Employment Security for registration if either of the above criteria is met.
CONTACT: Mississippi Department of Employment Security or District Office of the Commission
MISSISSIPPI UNEMPLOYMENT TAX AND WAGE REPORT (FORMS UI-2 AND UI-3)
Each employer liable for unemployment taxes must file a wage and contribution report quarterly. Payment is required at the time the
report is filed. Reports and payment are required by the last day of the month following the close of the calendar quarter. Late pay-
ment or reporting may result in assessment of interest and penalties. The tax rate must be obtained from the Mississippi Department
of Employment Security and may change each calendar year.
CONTACT: Mississippi Department of Employment Security or District Office of the Commission
Annual State Reports
Every business is required to file certain annual reports. The required annual state reports are discussed below.
ANNUAL INFORMATION RETURN (FORM 89-140)
An employer must file this form on or before January 31 of each year or within 30 days after business operations end. The appropriate
copies of Federal Wage and Tax Statement (Form W-2) must be attached along with W2C, 1099, and 1042. [NOTE: In lieu of paper
copies of Form W-2, an employer may be required to file on magnetic media, depending on the size of the business and the number of
employees.]
This form may be downloaded from the MSTC website at www.mstc.state.ms.us under Withholding Tax.
CONTACT: Mississippi State Tax Commission or District Office of the Commission
ASSESSMENT OF PERSONAL PROPERTY (FORM 73-033)
No later than April 1 of each year, every business owner must state on special forms the value of merchandise, equipment and other
taxable property owned as of January 1st. This information is used by local tax assessors in establishing the amount of tax a business
must pay on personal property.
CONTACT: County Tax Assessor
MISSISSIPPI COMBINATION INCOME AND FRANCHISE TAX RETURN
(FORM 83-105)
Every corporation doing business in the state, whether chartered in Mississippi or another state, must file an annual return and pay
both franchise and income taxes. The combination return (Form 83-105) and payments are due by the fifteenth (15th) of the third (3rd)
month after the end of the corporation’s accounting year. For example, if the corporation’s accounting period ends October 31, the
return and payment are due by January 15. Generally, a corporation must make state estimated income tax payments if it has a liabili-
ty of over $200 in the taxable period. The due dates for state estimated income taxes are April 15, June 15, September 15 and
December 15.
CONTACT: Mississippi State Tax Commission or District Office of the Commission
Reporting Requirements
46
STATE PERSONAL INCOME TAX RETURNS
Both state and federal income tax returns are due by April 15 of each year. Profits or losses from sole proprietorships, partnerships, S-
corporations and limited liability companies are reported on individual or joint income tax returns. Generally, a sole proprietor or an
individual who has an interest in a partnership, S-corporation or a limited liability company files state and federal declarations of esti-
mated income. The state and federal government have somewhat different rules governing individual estimated income taxes.
However, the installment due dates are the same which are April 15, June 15, September 15 and January 15. Self-employment taxes
are imposed at the federal level and can be paid to the Internal Revenue Service when an individual files his annual income tax return
for the past year.
CONTACT: Internal Revenue Service; Mississippi State Tax Commission; an Accountant
Other State Reports
WORKER’S COMPENSATION
The workers’ compensation program provides income to employees who are injured on the job and pays medical expenses resulting
from work-oriented injury. It also pays benefits to the employee’s dependents in the event an employee is killed in the course and
scope of his employment. Every business with five or more employees must have workers’ compensation insurance. Any business,
however, may carry this type of insurance.
CONTACT: Mississippi Workers’ Compensation Commission
FOREIGN CORPORATIONS LICENSE
Foreign corporations locating in Mississippi must apply for a Certificate of Authorization to operate in the state unless they are exempt.
CONTACT: Mississippi Secretary of State’s Office
FREE PORT WAREHOUSE LICENSE
All public and private warehouses and storage facilities in the state engaged in storage and handling in transit to a final destination
outside the state shall be eligible for licensing.
CONTACT: Local Tax Assessor’s Office
City and County Regulations
CITY ZONING REGULATIONS
If a business is to be located within city limits, the business owner should check to be sure that the location is zoned for business
usage.
CONTACT: City Zoning Department
COUNTY ZONING REGULATIONS
Most Mississippi counties do not have zoning ordinances, but the owner of a new business should check with officials to see if there
are zoning requirements.
CONTACT: County Zoning Department or Planning Commission
CITY BUILDING PERMIT
If a business is to be located in a new or remodeled building inside the corporate limits of a city, the owner must get a city building
permit before he begins construction or remodeling.
CONTACT: City Permit Department
Reporting Requirements
47
COUNTY BUILDING PERMIT
If a business is to be located in a new or remodeled building outside the corporate limits of a city, the owner should check to see if a
county building permit is required before he begins construction or remodeling. Some Mississippi counties require building permits.
CONTACT: County Permit Department or Chancery Clerk
CITY BUSINESS LICENSE
An owner of a new business must get a city license from the city tax collector if the business is located within a city’s corporate limits.
CONTACT: City Tax Collector
COUNTY BUSINESS LICENSE
An owner of a new business must obtain a county license from the county tax collector if the business is located outside a city’s corpo-
rate limits.
CONTACT: County Tax Collector
Special Licenses, Permits and Other Regulations
Some businesses require special licenses and permits, or must meet additional regulations. Ventures which entail the handling and/or
processing of foods must meet sanitary standards of the Mississippi State Board of Health; an owner of this type of business should
contact the county health department. Stove ventilation systems in restaurants must conform with local fire prevention codes; a
restaurant owner should contact the local fire department for guidance. Businesses which sell alcoholic beverages, tobacco, firearms
or ammunition should contact the following agencies which have control over the sale of these items: United States Treasury
Department’s Bureau of Alcohol, Tobacco and Firearms and the Mississippi State Tax Commission’s Alcoholic Beverage Control Bureau
(ABC). The ABC not only grants or denies licenses for the sale of alcoholic beverages, but it is the state’s only wholesaler of wines and
liquors.
The Office of the Secretary of State can direct businesses to state agencies, which may require special licenses, permits, examinations
and other types of certification. The Secretary’s office compiles the Mississippi Official and Statistical Register, which provide informa-
tion on such groups as the Board of Barber Examiners, the Board of Public Accountancy and the Commission on Health Care.
CONTACT: City or county fire department; county health department; United States Treasury Department, Mississippi State Tax
Commission; Office of the Secretary of State of Mississippi
financing available
Selected Business
49
business financing
51
GRANTS
Community Development Block Grant Program (CDBG)
The Community Development Block Grant program (CDBG) helps communities realize their potential by providing funds necessary to
ensure decent housing, basic community services, environmental quality and economic opportunities for their residents. The State
CDBG Program makes funds available to incorporated municipalities and county governments that show a genuine need for specific
projects and can meet the program's state and federal eligibility requirements. In accordance with the Community Development Act of
1974, as amended, project activities must meet at least one of the following national objectives:
• Benefit low- and moderate-income persons;
• Aid in the prevention or elimination of slums or blight;
• Meet urgent needs because existing conditions pose a serious and immediate threat to the health or
welfare of the community and other financial resources are not available to meet such needs.
A local unit of government may apply for CDBG funds in the Public Facilities, Economic Development and Mississippi Micro-Enterprises
Development Demonstration categories.
The Public Facilities category provides funding for public improvements such as water, wastewater, drainage, streets, and certain pub-
lic buildings. This category includes a Regular Competition for funds as well as a Small Government and Emergency Set Asides, and
Community Self-Help Program. Some Public Facilities projects may be funded under the stringent Urgent Needs/Emergencies national
objective. An Urgent Needs/Emergencies project must prove a particular urgency because existing conditions pose a serious and
immediate threat to the health or welfare of the community and meet other criteria such as the date of occurrence of the emergency
condition.
The Economic Development category provides funding to local units of governments for eligible infrastructure improvements in the
support of business start-ups and expansions. Job creation is the key to CDBG-assisted economic development. Economic
Development Public Improvements subcategory provides grants to local governments on behalf of businesses for the provision of
needs such as water, sewer, and access roads. Economic Development Loans may be used for capital improvements, equipment or
working capital at the discretion of the Community Services Division
The Self-Help Category provides funding for public improvements such as water, wastewater, downtown improvements and recreation-
al improvements.
The Mississippi Micro-Enterprises Development Demonstration category provides funding in support of Micro-Enterprise business
endeavors. Grants are awarded to eligible units of local government that are then loaned to specific for-profit businesses, or local units
of government may contract with an eligible non-profit organization that is directly involved with Micro-Enterprise development.
For more information contact:
Community Services Division
Telephone: 601.359.3179
Fax: 601.359.9311
[email protected]
Development Infrastructure Grant Program (DIP)
The Mississippi Development Infrastructure Program (DIP), administered by the Mississippi Development Authority (MDA), is designed
for making grants to counties or municipalities (Local Sponsors) to finance small infrastructure projects to promote economic growth in
the State of Mississippi. Counties and municipalities are encouraged to use these funds in connection with other state and federal pro-
grams.
business financing
52
Eligible Applicants
Local governing authorities of counties or municipalities are eligible to apply for the DIP program.
Eligible Projects
Projects must be directly related to the construction, renovation, or expansion of a new or expanded industry.
Eligible projects financed with DIP funds must be publicly owned. Examples of eligible types of projects include:
• Drainage systems
• Energy facilities (power generation and distribution)
• Sewer systems (pipe treatment)
• Transportation facilities directly affecting the site, including roads, bridges, rail lines, or pipelines
• Water supply systems (storage, treatment, and distribution)
• Marine structures
• Land improvements
Eligible Industries
• Manufacturing and processing
• Large distribution facility
• Service support to agriculture, aquaculture, and mariculture
• Service support to manufacturing and processing
• Telecommunications and data processing
• Corporate headquarters and operations centers
• Research and development
Exclusions
DIP funds may not be used for working capital or to provide facilities for utilization by a gaming enterprise.
Terms: 1 year from date of executed grant agreement to request reimbursement.
Amount: Maximum GRANT amount: $150,000
Funding: Funding is derived from the issuance of state general obligation bonds.
To apply for this program, the eligible entity should contact MDA for program information.
Statute: Section 57-61-36, Ms Code 1972, Annotated
Economic Development Highway Grant Program (EDH)
The Economic Development Highway Act, administered by the Mississippi Development Authority (MDA), is designed to assist political
subdivisions with Highway Projects, which encourage private companies to engage in “high economic benefit” projects within their
area.
The purpose of this program is to promote industrial and other significant development in the State of Mississippi through the construc-
tion and/or improvement of highways in areas that demonstrate actual and immediate potential for the creation, or expansion of major
industries or other significant development. The highway or highway segment to be constructed must be necessary to ensure ade-
quate and appropriate access to a proposed company project for the purpose of encouraging its location within a political subdivision.
Eligible Applicants
• One or more counties or incorporated municipalities in the state
• A state-owned port located in a county bordering the Gulf of Mexico
business financing
53
Eligible Projects
An eligible project must meet one of the following criteria established in Ms Code 1972, Annotated, Section 65-4-5, paragraph (C)(i).
1. Any new investment by a private company with capital investments in land, building, depreciable fixed assets and improvements of
at least $50,000,000.
2. Any new investment by a private company with capital investments in land, building, depreciable fixed assets and of at least
$20,000,000 by a private company having capital investments in this state in land, building, depreciable fixes assets and improve-
ments of at least $1,000,000,000 in the aggregate.
3. Public investment of at least $100,000,000 to take place over a specified period of time and in accordance with a master plan duly
adopted by the controlling political subdivision.
4. Any new investments in land, buildings, depreciable fixed assets and improvements by 2 private companies upon land that is adja-
cent whenever the new investments in both companies are at least $60,000,000 in the aggregate, and such new investment by both
private companies provide for the employment of at least 500 employees in the aggregate.
5. Any project which would benefit from the construction of any highway bypass which would aid in economic development and would
provide an alternate route to avoid an existing route which underpasses a railroad and which would aid in existing or proposed indus-
try.
6. Any master planned community (refer to Statute Section 19-5-10).
7. Any new investments in land, buildings, depreciable fixed assets and improvements by not more than 3 private companies physically
located within one-half (1/2) mile radius of each other whenever the new investments by such companies are at least $60,000,000 in
the aggregate, and such new investments by such companies provide for the employment of at least 300 new employees in the aggre-
gate.
8. Any new investments in land, buildings, depreciable fixed assets and improvements by 2 or more private companies upon lands
originally adjacent, but now divided by a four-land state highway and bordered by a two-lane state highway, and the new investments
of the companies is at least $50,000,000 in the aggregate, and a portion of such new investment will be utilized for the construction of
a hospital.
9. Any new investments in land, buildings, depreciable fixed assets and improvements of at least $50,000,000 in the aggregate, in any
county having a population greater than 70,000 according to the latest federal decennial census, and in which the population of such
county, according to the latest federal decennial census, increased by at least 10% above the population in the preceding federal
decennial census, and a portion of such new investment will be used in the construction of a hospital for which a certificate of need
has been issued by the State Department of Health. (This criteria stands repealed after July 1, 2007.)
Eligible Industries
Private companies, which are eligible for assistance under the EDH Program include:
• Agricultural Enterprises
• Air Transportation/Maintenance Facilities
• Aquaculture Enterprises
• Distribution Facilities
• Hospitals
• Industrial Enterprises
• Large Hotels or Resorts
• Manufacturing Enterprises
• Maricultural Enterprises
• Movie Industry Studios
• Processing Enterprises
• Regional Shopping Malls
• Research and Development Enterprises
• Warehousing Facilities
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Amount: Grant amount will be based on MDOT estimates and must be approved by the MDA Executive Director.
Funding: Funding is derived from the issuance of state general obligation bonds.
To apply for this program, the eligible entity should contact MDA for additional program information.
Statute: Section 65-4-1 et seq, Ms Code 1972, Annotated
Industrial Access Road Grant Program
The Mississippi Industrial Access Road Program, administered by the Mississippi Development Authority (MDA) and the Mississippi
Department of Transportation (MDOT), is designed to encourage and promote industrial growth by providing access roads to industrial
developments.
Under this program, MDA and MDOT assist local governmental entities in the construction of links to highways or roads necessary to
connect new & existing industrial sites to adequate road facilities. MDA and MDOT will designate the “industrial site” for purposes
intended for the Industrial Access Road Program.
An “industrial site” is generally defined as the property holdings, an area around a building site containing parking facilities, and circu-
lation roadways. Connections that would normally be considered as driveways from a public road to adjacent property or roads built for
internal circulation within an industry’s boundaries will not be eligible for assistance.
Once the project has been approved and selected, MDA shall issue a certificate of public convenience and necessity to the effect that
such designated and selected link of highway or road should be constructed in order to encourage and promote economic development
and file this certificate with the Director of MDOT.
MDA will not select and designate any such link of road or highway until satisfactory evidence that an industry desires and intends to
locate on the selected site and that the location of the industry and the construction of such road or highway is economically feasible.
Construction of any such road shall not begin until the location and construction of such industry is assured and contracts have been
made between the industry and the local authority.
Eligible Applicants
Local governmental authorities of the county or municipality with a need for access roads to new and existing industrial sites are eligi-
ble to apply for this program.
Eligible Projects
Industrial development of any port or harbor area or other industrial site in which it is necessary to connect selected sites to adequate
road or highways is eligible to apply for the program.
Amount: Grant amount will be based on MDOT State Aid standards and must be approved by the MDA Executive Director.
Funding: Any highway or public road approved under this program will be constructed from
highway funds of the highway district, in which the highway or road is located through MDOT.
To apply for this program, the eligible entity should contact MDA for additional program information.
Statute: Section 65-1-41, Ms Code 1972, Annotated
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Freight Rail Service Grant Program (RAIL)
The Freight Rail Service Grant Program, administered by MDA, is designed for the purpose of making grants to counties and munici-
palities to defraying expenses related to upgrading railroad grade crossings. Only projects approved by the Mississippi Department of
Transportation (MDOT) shall be eligible for RAIL grants. The project approval process will be initiated by MDOT via a third party agree-
ment.
Municipalities and counties are encouraged to use these grants in connection with other state and federal programs.
Eligible Applicants
Counties with projects approved by MDOT are eligible to apply for the grant program.
Eligible Projects
Counties may receive grants for Freight Rail Service projects relating to the upgrading of rail grade crossings. Only projects approved
by MDOT will be eligible for RAIL grants.
Amount: Maximum GRANT amount: $250,000 per project.
Funding: Funding is derived from the issuance of state general obligation bonds.
To apply for this program, the eligible entity should contact MDA for additional program information.
Statute: Section 57-44-1, Ms Code 1972, Annotated
Job Protection Grant Program
The Mississippi Job Protection Act, administered by the Mississippi Development Authority, provides grants to ‘at risk’ industries that
have been operating in the state for at least 3 years that have lost jobs or are at risk to lose jobs because such jobs have been out-
sourced.
"Outsource" means to send out work or jobs of a certain provider or manufacturer in Mississippi to a provider or manufacturer located
outside the boundaries of the United States or any territory of the United States.
Eligible Applicants
‘At Risk’ industries that have been operating in the state for at least 3 consecutive years and have lost jobs or are at risk of losing
jobs due to outsourcing.
Applicants are required to submit project information, financial information, and credit information on owners with 20% or greater
ownership. MDA will conduct a financial analysis of the business requesting the grant prior to approval.
Eligible Projects
The recipient must use the grant for job retention and to improve productivity and competitiveness. The industry cannot reduce
employment by more than 20% if a Job Protection Grant is received.
Job Protection Grant and Loan funds cannot exceed 50% of the total cost of the project. Job Protection Grants must be used in con-
junction with Job Protection Loans.
Amount: Maximum GRANT amount: $200,000.
Funding: Funding is derived from the issuance of state general obligation bonds.
To apply for this program, the eligible entity should contact MDA for additional program information.
Statute: Section 57-95-1 Ms Code 1972, Annotated
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Rural Impact Fund Grant Program
The Mississippi Rural Impact Fund Grant Program (RIF), administered by the Mississippi Development Authority (MDA), is designed to
assist and promote businesses and economic development in rural areas by providing grants to rural communities (Local Entities).
Eligible Applicants
Rural Community – a municipality with a population of 10,000 or less, according to the most recent federal decennial census, at the
time the application is submitted by the municipality; or, a county with a population of 30,000 or less, according to the most recent fed-
eral decennial census, at the time the application is submitted by the county.
Rural Business – means a new or existing business located or to be located in a rural community; or, a business or industry located or
to be located within five miles of a rural community.
Eligible Projects
Eligible grant projects financed with RIF must be publicly owned. All contracts and purchases must be made in accordance with normal
bid and purchase laws of a municipality or county.
• Construction, rehabilitation or repair of building
• Sewer systems and transportation directly affecting the site of the proposed rural business; Sewer facilities
• Acquisition of real property, development to real property, improvements to real property
• Any other project approved by MDA
Eligible Projects must have a direct connection in creating jobs. All projects funded should create a minimum of ten (10) net new full-
time jobs. The program intent is to stimulate job creation and economic development in rural communities in the State.
Amount: Maximum GRANT amount: $150,000
Funding: Funding is derived from the issuance of state general obligation bonds.
The local entity defined as a rural community should contact MDA Community Services for an application for this program.
For more information contact:
Mississippi Development Authority
Rural Impact Program
Community Services Division
Post Office Box 849
Jackson, Mississippi 39205
Telephone: (601) 359-3179
Statute: Section 57-85-1, Ms Code 1972, Annotated
Small Municipalities & Limited Population Counties Grant Program
The Mississippi Small Municipalities and Limited Population Counties Grant Program, administered by the Mississippi Development
Authority (MDA), is designed for making grants to small municipalities and limited population counties or natural gas districts to finance
projects to promote economic growth in the State of Mississippi.
Eligible Applicants
• Small Municipality – a municipality with a population of 10,000 or less, according to the most recent federal decennial census, at
the time the application is submitted by the municipality.
• Limited Population County – a county with a population of 30,000 or less, according to the most recent federal decennial census, at
the time the application is submitted.
• Natural Gas District – districts created by law and meeting the same requirements as small municipalities.
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Eligible Projects
Eligible projects must be publicly owned. All contracts and purchases must be made in accordance with normal bid and purchase
laws of a municipality or county.
Program funds may not be used for working capital, for general expenditures, which would normally be covered under a local sponsor
general operation budget, or for administrative expenses. Professional services (engineering/architectural cost) will be limited to
10% of the grant award amount.
Examples of eligible projects include, but are not limited to:
• Drainage systems;
• Utilities such as water supply systems and gas supply systems;
• Sewer systems (pipe treatment);
• Transportation facilities directly affecting the site, including roads, bridges, rail lines, or pipelines;
• Marine structures;
• Land purchases and improvements;
• Airfield and Airport improvements;
• Acquisition and improvements of buildings
Terms: Grant agreement must be signed within 6 months of the Grant Award Date and Requests for Reimbursement must
be submitted to MDA within one year from date the Grant Agreement is signed.
Amount: Maximum GRANT amount: $150,000 per local sponsor per calendar year.
Rate: N/A
Funding: Funding for grants to Local Sponsors is derived from appropriations or funds otherwise made available by the
State Legislature.
To apply for this program, the eligible entity should contact MDA for an application.
Statute: Section 57-1-18, Ms Code 1972, Annotated
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Loan Programs
Agribusiness Enterprise Loan Program (ABE)
The Agribusiness Enterprise Loan Program (ABE), administered by Mississippi Development Authority (MDA), is a loan program
designed to encourage the extension of conventional financing and the issuance of letters of credit by private lending institutions to
agribusiness enterprises in the State of Mississippi.
Eligible Applicants
To qualify for the Agribusiness Enterprise Loan Program, eligible entities must be directly involved with:
• Aquaculture
• Horticulture
• An agriculture related industry
• Manufacturing, research and development, or processing of agribusiness related goods and services.
Eligible Projects
Agribusiness loans can be used to finance of buildings and equipment, as well as costs associated with the purchase of land
(appraisals, title searches, etc.). Proceeds cannot be used to purchase land, pay off existing debt, or to provide working capital.
Terms: Maximum term: 15 years, equal to term set by financial institution.
Amount: Maximum loan amount: 20% of total project cost or $200,000, whichever is less. Excluding purchase of land.
Fees: MDA requires 1% servicing fee on State’s portion of loan, plus guarantee fees (2% SBA or 1% Farm Service
Agency), if applicable.
Rate: 0% on State’s portion of loan.
Funding: Funding is derived from the issuance of state general obligation bonds.
To apply for this program, eligible agribusinesses should contact a financial lending institution to originate the ABE loan application.
Statute: Section 69-2-13, Ms Code 1972, Annotated
Airport Revitalization Revolving Loan Program
The Mississippi Airport Revitalization Revolving Loan Program, administered by the Mississippi Development Authority (MDA), is
designed for making loans to airport authorities for the construction and/or the improvement of airport facilities located in Mississippi.
Eligible Applicants
Eligible entities include county and municipal airport authorities authorized to operate in the State of Mississippi.
Eligible Projects
Projects must be directly related to the airport facility and are limited to construction, expansion, improvements, rehabilitation, or repair
of airport facility.
Examples of projects may include:
• Drainage systems
• Energy facilities (power generation and distribution)
• Sewer systems (pipe treatment)
• Transportation facilities directly affecting the site, including roads, sidewalks, bridges, rail lines, rivers, pipelines, or runways
• Buildings
• Water supply systems (storage, treatment, and distribution)
• Equipment necessary for airport operation
• Land improvements
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Terms: Maximum term: 10 years
Amount: Maximum loan amount: $750,000 per project.
Rate: 3% Per Annum
Funding: Funding is derived from the issuance of state general obligation bonds.
To apply for this program, the eligible entity should contact MDA for additional program information.
Statute: Section 57-61-41, Ms Code 1972, Annotated
Port Revitalization Revolving Loan Program
The Mississippi Port Revitalization Revolving Loan Program, administered by the Mississippi Development Authority (MDA), is designed
for making loans to state, county, or municipal port authorities for the improvement of port facilities to promote commerce and eco-
nomic growth in the State of Mississippi.
Eligible Applicants
State, county, and municipal ports authorized to operate in Mississippi can apply for this program.
Eligible Projects
Eligible projects must be directly related to the port facility and are limited to construction, expansion, improvements, rehabilitation, &
repair of:
• Dock and channel sites to include dredging
• Drainage systems
• Energy facilities (power generation and distribution)
• Sewer systems (pipe treatment)
• Transportation facilities directly affecting the site, including roads, sidewalks, bridges, rail lines, rivers, or pipelines
• Building
• Water supply systems (storage, treatment, and distribution)
• Marine structures
• Equipment necessary for port operation
• Land improvements
Loan funds may not be used for working capital by the port facility, or to provide facilities for utilization by a gambling vessel.
Terms: Maximum term: 10 years
Amount: Maximum loan amount: $750,000 per project.
Rate: Interest rate of 3% Per Annum.
Funding: Funding is derived from the issuance of state general obligation bonds.
To apply for this program, the eligible entity should contact MDA for additional program information.
Statute: Section 57-61-41, Ms Code 1972, Annotated
Business Incubator Loan Program
The Mississippi Business Incubator Loan Program (Incubator Loan Program), administered by the Mississippi Development Authority
(MDA), is designed to assist local governments in the establishment of business incubator facilities in the State of Mississippi.
A business incubator is any existing or to be constructed facility, housing an enterprise support network, that contains shared services
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and equipment. The purpose of the facility is to enhance the process of local economic development through the creation of jobs and
the fostering of an environment that is conducive to business start-ups.
• The facility must be for multi-tenant commercial or light industrial usage
• The facility must be dedicated to the development of an identified market of entrepreneurial activity. A feasibility study identifying
that market is required.
Eligible Applicants
Municipalities or private companies may qualify to receive an Incubator Loan. Local governments are defined as any county, incorpo-
rated city or town.
The private company must commit to minimum job creation and investment amounts, and other program requirements as determined
by MDA.
Eligible Projects
Loan proceeds may be used for financing all project costs associated with the development of an incubator. Eligible expenditures
include fixed assets, professional fees related to the construction of the project, and the purchase of machinery and equipment.
Terms: Maximum term: 20 years for land and building and 10 years for machinery, equipment, and all other eligible
expenditures.
Amount: Maximum Loan amount: $500,000.
Rate: Interest rate: 3.0% Fixed
Funding: Funding is derived from the issuance of state general obligation bonds.
To apply for this program, the eligible entity should contact MDA for additional program information.
Statute: Section 57-61-34, Ms Code 1972, Annotated
Energy Investment Loan Program
The Mississippi Energy Investment Program ("Energy Investment Program"), administered by the Mississippi Development Authority
(MDA), is designed for making loans to qualified borrowers to promote development and demonstration of efficient, environmentally
acceptable, and commercially feasible technologies, techniques and processes. The program also promotes effectively utilizing the
state's existing alternative and conventional energy resources to foster economic and social growth.
Eligible Applicants
In order to obtain assistance under the Energy Investment Program, the applicant must be declared financially sound and capable of
repaying the loan and must belong to one of the following categories:
• Corporation
• Partnership
• Hospitals (public and private "non-profit")
• Institutions of higher learning
• Community colleges
• Schools (public or private)
• Local government entities
Eligible Projects
Eligible projects include retrofits and energy design process developments. The improvement must promote the development and
demonstration of efficient, environmentally acceptable and commercially feasible technology and processes, and must also utilize
Mississippi’s existing energy resources, public utilities and/or developing resources that foster economic growth.
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In order for the project to be eligible to receive assistance, the project must qualify pursuant to the 2-phase eligibility requirements
provided below:
• Phase 1 - Structural Eligibility
• Phase 2 – Eligible Retrofit Measures
Terms: Maximum term: 10 years or estimated life of project, whichever is less.
Amount: Minimum LOAN amount: $15,000 per project.
Maximum LOAN amount: $300,000 per project.
Fees: MDA requires 1% good faith deposit on projects involving real estate pledged as collateral.
Rate: Fixed-rate 3% below Prime Rate will be set upon loan approval.
Funding: Funding for the loans to the Borrower are derived from the appropriated funds; a part of the Petroleum Violation
Escrow Fund, M.D.L. 378 Oil Overcharge Funds.
To apply for this program, the eligible entity should contact MDA for additional program information.
Statute: Section 57-39-39, Ms Code 1972, Annotated
Existing Industry Productivity Loan Program
The Mississippi Existing Industry Productivity Loan Program, administered by the Mississippi Development Authority (MDA), is designed
for making loans to deploy long-term fixed assets that through new technology will improve productivity and competitiveness.
Eligible Applicants
Existing manufacturing industries that have been operating in the state for at least 2 years and meet minimum criteria established by
MDA are eligible for this program.
A manufacturing enterprise is one that is exclusively or predominately engaged in activities of an industrial or commercial nature
wherein labor or skill is applied by hand or machinery, to materials belonging to the manufacturer so that a new, different, or more
useful article is produced for sale.
Eligible Projects
Loan funds are to be used to finance long-term fixed assets. These are assets that, through new technology, will improve productivity
and competitiveness of the company. The benefits of such asset must be documented.
An existing industry that accepts a loan under this program shall not reduce employment by more than 20% through the use of the
long-term fixed assets for which the loan is granted. MDA will conduct a financial analysis of the business or industry requesting the
loan. Guarantees will be required on all persons or entities with 20% or greater interest in the company.
Terms: Maximum term: 10 years or estimated useful life of Fixed Assets, whichever is less.
Amount: Minimum loan amount: $250,000
Maximum loan amount: 50% of total project cost or $500,000, whichever is less.
Rate: Interest rate on the most recent issue of 20-year state general obligation bonds occurring prior to the date the loan
is made.
Funding: Funding is derived from the issuance of state general obligation bonds.
To apply for this program, the eligible entity should contact MDA for additional program information.
Statute: Section 57-93-1, Ms Code 1972, Annotated
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Freight Rail Service Revolving Loan Program
The Mississippi Freight Rail Service Projects Revolving Loan Program (RAIL), administered by the Mississippi Development Authority
(MDA), is designed for making loans to municipalities and/or counties to finance freight rail service projects in the State of Mississippi.
Counties and municipalities are encouraged to use these funds in connection with other state and federal programs.
Eligible Applicants
The governing authority of a municipality or county is eligible to apply for this program.
Eligible Projects
A project, which involves the acquisition, construction, installation, operation, modification, renovation or rehabilitation of any freight
rail service facilities, is eligible for this program. Projects may include any fixtures, machinery or equipment, used in conjunction with
any freight rail service facilities.
Construction costs, including reasonable and customary site work for buildings, right of ways, easements, etc are eligible project costs.
Additionally, up to 8% of the principal loan amount may be used for design work, i.e. engineer or architect. Engineering and/or archi-
tectural costs above 8% must be paid from other funding sources.
Terms: Maximum term: 15 years or estimated life of project, whichever is less.
Amount: Cumulative maximum loan amount: $1,000,000 per project per calendar year.
Rate: Interest rate shall be 1% below the Federal Reserve Discount Rate at the time of loan approval.
Funding: Funding is derived from the issuance of state general obligation bonds.
To apply for this program, the eligible entity should contact MDA for additional program information.
Statute: Section 57-44-1 et seq. Ms Code 1972, Annotated
Job Protection Loan Program
The Mississippi Job Protection Act, administered by the Mississippi Development Authority, provides loans to ‘at risk’ industries that
have been operating in the state for at least 3 years that have lost jobs or are at risk to lose jobs because such jobs have been out-
sourced.
"Outsource" means to send out work or jobs of a certain provider or manufacturer in Mississippi to a provider or manufacturer located
outside the boundaries of the United States or any territory of the United States.
Eligible Applicants
‘At Risk’ industries that have been operating in the state for at least 3 consecutive years and have lost jobs or are at risk of losing
jobs due to outsourcing.
Applicants are required to submit project information, financial information, and credit information on owners with 20% or greater
ownership. MDA will conduct a financial analysis of the business requesting the grant prior to approval.
Eligible Projects
The recipient must use the loan proceeds for job retention and to improve productivity and competitiveness. The industry cannot
reduce employment by more than 20% if a Job Protection Loan is received.
Loan funds may be used for land, building, and depreciable fixed assets. Loan proceeds may not be used for working capitol, debt
refinancing or rolling stock.
Job Protection Grant and Loan funds cannot exceed 50% of the total cost of the project.
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Terms: Maximum: 10 years or the determined useful life of the project to be financed.
Amount: Minimum loan amount: $200,000
Maximum loan amount: $750,000
Rate: Interest rate shall be on the most recent issue of 20-year state general obligation bonds occurring prior to the date
the loan is made.
Funding: Funding is derived from the issuance of state general obligation bonds.
To apply for this program, the eligible entity should contact MDA for additional program information.
Statute: Section 57-95-1, Ms Code 1972, Annotated
Local Governments Capital Improvements Revolving Loan Program (CAP)
The Local Government Capital Improvements Revolving Loan Program is designed for making loans to counties or municipalities to
finance capital improvements in Mississippi. Counties and municipalities are encouraged to use these loans in connection with state
and federal programs.
Eligible Applicants
Counties or Municipalities are eligible to apply for this program.
Eligible Projects
• Construction or repair of water and sewer facilities.
• Construction or repair of drainage systems for industrial development.
• Improvements in fire protection.
• Construction of new buildings for economic development.
• Renovation or repair of existing buildings for economic development purposes.
• Construction or repair of access roads for industrial development;
• Purchase of buildings for economic development purposes.
• Construction or repair of railroad spurs for industrial development;
• Construction of any county or municipally-owned health care facilities, excluding any county health departments;
• Construction, purchase, renovation or repair of any building to be utilized as an auditorium or convention center;
• Construction of multipurpose facilities for tourism development;
• Loans to a county to aid in retiring interest-bearing loans utilized for the purchase of a motion picture sound stage;
• Construction, repair and renovation of parks, swimming pools and recreational and athletic facilities; or
• Remediation of brownfield agreement sites in accordance with Sections 49-35-1et al.
Terms: Maximum term: 20 years
Amount: MAXIMUM loan amount: $1,000,000 per local entity per calendar year.
MINIMUM loan amount: $30,000 per project.
The Maximum CAP loan Indebtedness allowed per applicant is $2,500,000 outstanding principal balance. Loans
for the construction, repair and renovation of parks, swimming pools and recreational and athletic facilities shall not
exceed $250,000 per project. Loans for remediation of brownfield agreement sites in accordance with Sections
49-35-1 through 47-35-25.
Rate: Tax-exempt Rate: 2% per Annum / Taxable Rate: 3% per Annum
Funding: Funding is derived from the issuance of state general obligation bonds.
To apply for this program, the eligible entity should contact MDA for additional program information.
Statute: Section 57-1-301, Ms Code 1972, Annotated
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Minority Business Enterprise Loan Program (MBE)
The Minority Business Enterprise Loan Program (MBE), administered by the Mississippi Development Authority (MDA), combines state
and private lending sources to assist new and existing minority businesses in gaining access to needed capital in the form of direct
low-interest loans. The program is designed to provide loans to socially and economically disadvantaged minority and women owed
businesses.
Eligible Applicants
A minority business enterprise means a socially and economically disadvantaged small business concern, organized for profit, perform-
ing a commercially useful function which is owned and controlled by one or more minorities or minority business enterprises certified
by the Mississippi Development Authority, at least 50% of whom are MS resident citizens. Eligible businesses are required to obtain
certification as a Minority Business Enterprise by the Minority Business Enterprise Division prior to consideration for the loan. (As
defined by the SBA (15 USCS, Section 637(a)).
The following entities are qualified to assist minority businesses in obtaining loans:
• Mississippi Planning and Development Districts ("PDDs")
• Small Business Investment Corporations
• Community Development Corporations
• Other appropriate entities
Eligible Projects
A minority business enterprise loan may be used for working capital, machinery, equipment, land, and/or buildings used in the minority
business.
Terms: 7 years - working capital
10 years - machinery and equipment
15 years - land and building.
Amount: Maximum loan amount: 50% of total project or $250,000, whichever is less.
Minimum total project considered: $25,001
Rate: Minimum interest rate: 2.0% below the Federal Reserve Discount Rate.
Maximum interest rate: 2.0% above the Federal Reserve Discount Rate.
Funding: Funding is derived from the issuance of state general obligation bonds.
To apply for this program, eligible minority businesses should contact the local Planning and Development District (PDD) to apply for
program. Go to www.mapdd.org for contact information.
Statute: Section 69-2-13(4), Ms Code 1972, Annotated
Minority Business Micro Loan Program
The Minority Business Micro Loan Program, administered by the Mississippi Development Authority, provides a funding source for
minority businesses needing financing for small projects.
Eligible Applicants
A minority business is a socially and economically disadvantaged small business concern organized for profit as defined under the
Small Business Act, 15 U.S.C.S., Section 637[a]), and performing a commercially useful function. The business must have one or more
minority or female owners with controlling interest.
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A business is required to obtain certification as a Minority Business Enterprise by the Minority Business Enterprise Division prior to
consideration for the loan.
Eligible Projects
• Purchase of fixed assets such as machinery and equipment,
• Use as working capital
• Inventory Purchase
Terms: Maximum term: 7 years
Amount: Minimum loan amount: $2,000
Maximum loan amount: $35,000
Rate: Fixed Interest rate: 4.0% over the Federal Reserve Discount Rate.
Funding: Funding is derived from the issuance of state general obligation bonds.
To apply for this program, eligible minority businesses should contact the local Planning and Development District (PDD) to apply for
program. See Mississippi Planning and Development Districts in the Business Resources section of this book (page 81.)
Statute: Section 69-2-13, Ms Code 1972, Annotated
Minority Surety Bond Guaranty Program
The Mississippi Minority Surety Bond Guaranty Program, administered by Mississippi Development Authority (MDA), strives to increase
minority participation in construction and building trade contracts with federal, state, and local units of government, and their sub-
sidiaries.
Often minority firms are unable to compete for this business because they cannot obtain the bid, performance, and payment bonds
required by government contracts. The Minority Surety Bond Guaranty Program assists these firms through surety bond guaranties and
technical assistance in internal management.
Eligible Applicants
• Be in the construction or building trade business;
• Be a certified Minority Business Enterprise through the Minority Business Enterprise Division of the MDA;
• Have been in business at least one year prior to application;
• Have its principal place of business located in Mississippi;
• Meet experience and financial standards appropriate to the contract;
• Agree to subcontract no more than 75% of a qualified contract;
• Show reasonable evidence of inability to secure bonding under normal market conditions.
Eligible Projects
Construction contracts with Federal, State and Local Units of Government.
Terms: Set by Financial Institution.
Amount: Maximum GUARANTY amount: 75% of contract bond amount or $175,000, whichever is less for the 1st year,
increasing up to $250,000 for 2nd year.
Maximum percentage (%) guaranty for any bond is 90%.
Rate: Set by Financial Institution.
To apply for this program, eligible minority businesses should contact the local Planning and Development District (PDD) to apply for
program. See Mississippi Planning and Development Districts in the Business Resources section of this book (page 81.)
Statute: Section 69-2-13(5), Ms Code 1972, Annotated
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Capital Access Loan Program (MS CAP)
The Mississippi Capital Access Program (MS CAP), administered by the Mississippi Development Authority (MDA), is designed to
increase the availability of financing for borrowers who, for various reasons, might have difficulty in obtaining conventional loans.
MDA may establish loss reserve accounts at financial institutions that participate in the program, and require payments by the financial
institution and the borrower to such loss reserve accounts. Under the capital access program, a participating financial institution may
make a loan to any borrower the MDA determines to be qualified under rules and regulations adopted by the authority and be protect-
ed against losses from such loans as provided in the program. Contributions established by MDA in such loss reserve accounts shall
be used in the event of a loan default.
Eligible Applicants
Business entities as defined by Section 8(d) of the Small Business Act, including:
• A Small Business
• A Small Disadvantaged Business
• A Minority Business (minority or woman owned business)
Eligible Projects
Projects directly relating to the creation or expansion of a small business may include the following:
• Fixed assets
• Working capital
• Start-up costs
• Rental payments
• Interest expense during construction
• Professional fees
• Repair, renovation & building improvements
Funds cannot be used to pay off existing debt and/or creditors; consolidation purposes; construction or purchase of residential housing;
or real property that is held primarily for sale or investment.
Terms: Set by Financial Institution.
Amount: Maximum loan amount: $150,000 per borrower.
MDA will match amount deposited in loss reserve account at financial institution and require payments by the
financial institution. Payments made by the borrower into the loss reserve account will have a maximum payment
being 7%.
Rate: Minimum interest rate: 1.5%.
Funding: Funding is derived from the issuance of state general obligation bonds.
To apply for this program, the eligible entity should contact MDA for additional program information.
Statute: Section 57-61-36(5) Ms Code 1972, Annotated
Mississippi Business Investment Program (MBI)
The Mississippi Business Investment Act Program (MBI), administered by the Mississippi Development Authority (MDA), is a program
designed for making loans to local governmental entities, acting individually or jointly, in order to finance authorized improvements for
projects necessary to compliment investments by private companies.
Projects should increase domestic and international commerce and create and maintain new full-time jobs in Mississippi.
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Eligible Applicants
Counties and incorporated municipalities, acting individually or jointly, to compliment private investments that will create and maintain
new, full-time jobs in Mississippi are eligible to apply for this program.
Eligible Projects
Projects directly relating to the creation or expansion of the following industries:
• Agricultural Enterprises
• Industrial Enterprises
• Manufacturing Enterprises
• Research and Development Enterprises
• Tourism Enterprises
• Maricultural Enterprises
• Aquacultural Enterprises
• Regional Shopping Malls
• Service Enterprises
Use of loan funds must be directly related to a Private Company's facilities and is limited to construction, expansion, improvement, reha-
bilitation or repair infrastructure needs as outlined in the MBI Guidelines.
Job creation requirement: $15,000 for each new job created and maintained.
Private match: $3.00 for every $1.00 of MBI assistance.
Terms: Maximum term: 10 years or estimated life of project, whichever is less.
Amount: Minimum loan amount: $500,000 per project.
Rate: Negotiable by MDA Executive Director
Funding: Funding is derived from the issuance of state general obligation bonds.
To apply for this program, the eligible entity should contact MDA for additional program information.
Statute: Section 57-61-25, Ms Code 1972, Annotated
Major Economic Impact Authority (MMEIA)
The Mississippi Major Economic Impact Authority (MMEIA), administered by the Mississippi Development Authority (MDA) and the State
Bond Commission, is designed to allow the state to assist local communities in meeting the development requirements inherent in large
capital projects, thereby generating an investment in the quality of life in such communities.
Eligible Applicants
All units of local government are eligible with projects that offer a minimum investment of $300 million by the private sector.
Eligible Projects
• New projects or expansions of existing facilities, which have a minimum initial investment of $300 million by the private sector or
the U.S. Government.
• Eligible projects include industrial or commercial projects, research and development, warehousing, distribution, transportation, pro-
cessing, mining establishments, U.S. Government projects, and tourism facilities.
• Employers may also qualify if they have a capital investment of $150 million from private sector or US Government sources together
and create 1000 net new jobs or if they create 1000 net new jobs that pay 125% of the annual wage rate of the state. Ancillary devel-
opments that occur as a result of certain enterprises may also be eligible.
• Other projects may qualify based on individual legislation.
business financing
68
Terms: Maximum loan term shall not exceed 20 years.
Rate: The loan will bear interest rate determined by the authority.
Funding: Funding is derived from the issuance of state general obligation bonds.
To apply for this program, the eligible entity should contact MDA for additional program information.
Statute: Section 57-75-5, Ms Code 1972, Annotated
Research and Development Loan Program
The Mississippi Research and Development Program (R&D Loan Program), administered by the Mississippi Development Authority
(MDA), is designed for making loans to private companies to aid in the creation of new and expanding research and development and
technology-based businesses and industries.
Eligible Applicants
Private companies that meet the requirements of a Research and Development or Technology intensive enterprise may qualify for this
program.
Research and Development
A business engaged in laboratory, scientific or experimental testing and development related to new products, new uses for existing
products, or improving existing products. Research and Development does not include any business engaged in efficiency surveys,
management studies, consumer surveys, economic surveys, advertising, promotion, or research in connection with literary, historical or
similar projects.
Technology
The enterprise shall manufacture plastics, automobiles, aircraft, computers or electronics, or be a computer design or software pub-
lishing facility with at least 10% of the workforce being scientists, engineers or computer specialists. The average wage of all workers
employed shall be at least 150% percent of the state average annual wage. A basic health care plan must be provided to all employ-
ees.
Additionally, the following requirements must be met:
• Employ at least 10 persons in full time positions
• Inject a minimum of 10% equity into the project.
• Present evidence that the company can repay the debt, and must not have defaulted on any previous loan from the State or
Federal Government.
Eligible Projects
Proceeds may be used to finance land, building and depreciable fixed assets (“R&D Project”). Loan proceeds may not be used for
working capital, debt refinancing or rolling stock. Other state finance programs including Community Development Block Grants may
not be used to finance the remaining cost of the R&D Project.
Terms: Maximum term: 10 years or estimated useful life of the project, whichever is less.
Amount: Maximum loan amount: 50% of total project cost up to $750,000 per project.
Minimum loan amount: $250,000.
Rate: Interest rate on the most recent 20-year general obligation bonds occurring prior to the date the loan is made.
Funding: Funding is derived from the issuance of state general obligation bonds.
To apply for this program, the eligible entity should contact MDA for additional program information.
Statute: Section 57-61-34, Ms Code 1972, Annotated
business financing
69
Rural Impact Fund Loan Program (RIF)
The Mississippi Rural Impact Fund Program (RIF), administered by the Mississippi Development Authority (MDA), is designed to assist
and promote businesses and economic development in rural areas by providing loans to rural communities (Local Entities) and loan
guarantees to rural businesses (Businesses).
Eligible Applicants
Rural Community – a municipality with a population of 10,000 or less, according to the most recent federal decennial census, at the
time the application is submitted by the municipality; or, a county with a population of 30,000 or less, according to the most recent fed-
eral decennial census, at the time the application is submitted by the county.
Rural Business – means a new or existing business located or to be located in a rural community; or, a business or industry located or
to be located within five miles of a rural community.
Eligible Projects
Eligible projects financed with RIF must be publicly owned with the exception of loan guarantees to rural businesses. Eligible projects
include, but are not limited to:
• Construction, rehabilitation or repair of building;
• Sewer systems and transportation directly affecting the site of the proposed rural business; Sewer facilities;
• Acquisition of real property, development to real property, improvements to real property;
• Any other project approved by MDA, and
• Loan guarantees to financially sound Rural Businesses not to exceed eighty percent (80%) of the principal loan amount.
Eligible Projects must have a direct connection in creating jobs. All projects funded should create a minimum of ten (10) net new full-
time jobs. The program intent is to stimulate job creation and economic development in rural communities in the State.
Amount: Maximum LOAN amount: $200,000 for rural community
Maximum LOAN guarantee: $200,000 on 80% loan guarantees
Funding: Funding is derived from the issuance of state general obligation bonds.
To apply for this program, the eligible entity should contact MDA for additional information.
MDA Rural Impact Program
Post Office Box 849
Jackson, Mississippi 39205
Telephone: (601) 359-3179
Statute: Section 57-85-1, Ms Code 1972, Annotated
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70
Other Finance Programs
Appalachian Regional Commission (ARC)
Mississippi participates in the Appalachian Regional Commission (ARC). ARC is a partnership of federal, state and local governments that
serves portions of 13 states. The Mississippi Appalachian Regional Office (ARO) is located in the Mississippi Development Authority's
Regional Office in Tupelo, and its staff works to fulfill the mission of the ARC program, the Governor's state ARC plan, and the economic
development goals and objectives of MDA.
The Mississippi ARO works in a collaborative manner with local planning and development districts (PDDs), economic development organ-
izations, local communities, and other state agencies in the development of eligible projects to address the needs in the 24 Mississippi
ARC counties. ARC supports counties in the northeast and east central portion of the state; approximately 616,000 of Mississippi’s 2.8
million residents live in this rural corner of Mississippi.
Mississippi Appalachian Development Plan
ARC provides matching funds for projects in numerous areas under two broad themes:
1. Increase private sector and high wage jobs across the MS Appalachian Region.
2. Develop sustainable communities with high quality of life throughout the Mississippi Appalachian Region.
ARC also has funding available for a special regional initiative in Asset Development.
The Mississippi counties served by ARC are Alcorn, Benton, Calhoun, Chickasaw, Choctaw, Clay, Itawamba, Kemper, Lee, Lowndes,
Marshall, Monroe, Montgomery, Noxubee, Oktibbeha, Panola, Pontotoc, Prentiss, Tishomingo, Tippah, Union, Webster, Winston, and
Yalobusha.
The Mississippi ARO will write each Mississippi Appalachian Local Development District (PDD) in May of each year and solicit project
applications for review and consideration. The invitation letter will list funding limitations, project criteria, and any other relevant material
to be used in consideration for that particular year’s annual cycle. All project applications are due at the ARO in Tupelo by September 1 of
each year. Additional information on the application process can be found athttp://www.mississippi.org/content.aspx?url=/page/3019&.
Projects identified as priority will be submitted to ARC-Washington for funding purposes. PDD’s will be notified of the projects included in
the submission to ARC-Washington.
ARC participation costs will be limited to 50% of project costs, with the following exceptions:
For projects located in ARC designated distressed counties, the maximum grant will be 80% of project costs.
ARC assistance for multi-county projects in which at least half the counties are distressed may be increased to as much as 80% of proj-
ect costs; if at least one, but less than half, of the counties area distressed, ARC assistance is limited to the higher of 50% or the average
percentage applicable to the counties in the project.
For additional program information contact the MDA Asset Development Group, Appalachian Regional Office by phone at 662.844.5413
Delta Regional Authority (DRA)
The Delta Regional Authority is a federal-state partnership serving a 240 county/parish area in an eight-state region. Mississippi
Development Authority's (MDA) Office of Strategic Initiatives coordinates Mississippi activities and grants in Mississippi's 45 DRA counties.
MDA works collaboratively with local planning and development districts (PDDs), economic development organizations, local communities,
and other state agencies in the development of eligible projects to address the needs in the 45 Mississippi DRA counties. The PDD’s play
an active and essential part by preparing applications that are consistent with the DRA Code, guidelines, and plans.
business financing
71
Mississippi Delta Region Development Plan
1. Increase private sector and high wage jobs across the Mississippi DRA Region.
2. Develop sustainable communities with high quality of life throughout the Missisiippi Delta Region.
Under federal law, at least 75 percent of the funds must be invested in distressed counties and parishes and pockets of poverty, with
50 percent of the funds earmarked for transportation and basic infrastructure improvements. Participating DRA States are Alabama,
Arkansas, Illinois, Kentucky, Louisiana, Mississippi, Missouri, and Tennessee.
MDA ensures that these federal funds are used to economic and community development on the following activities:
• Basic public infrastructure in distressed counties and isolated areas of distress.
• Transportation infrastructure for the purpose of facilitating economic development in the region.
• Business development, with emphasis on entreprenuership.
• Job Training or employment related education, with emphasis on use of existing public educational institutions located in the
region.
Mississippi Counties served by DRA are Adams, Amite, Attala, Benton, Bolivar, Carroll, Claiborne, Coahoma, Copiah, Covington, DeSoto,
Franklin, Grenada, Hinds, Holmes, Humphreys, Issaquena, Jefferson, Jefferson Davis, Lafayette, Lawrence, Leflore, Lincoln, Madison,
Marion, Marshall, Montgomery, Panola, Pike, Quitman, Rankin, Sharkey, Simpson, Sunflower, Tallahatchie, Tate, Tippah, Tunica, Union,
Walthall, Warren, Washington, Wilkinson, Yalobusha, and Yazoo.
For further information on the Mississippi Delta Regional Plan go tohttp://www.mississippi.org/content.aspx?url=/page/DRA&
Mississippi Business Finance Corporation (MBFC)
The Mississippi Business Finance Corporation (MBFC) administers a variety of finance programs designed to assist businesses in locat-
ing or expanding in the state. MBFC provides companies an opportunity to review all financial programs through one source.
MBFC works with other public entities and the private sector to coordinate efforts to stimulate both commercial and industrial develop-
ment. The following information is provided as an overview of the finance programs available through MBFC, MDA, and local units of
government.
Programs available through the Mississippi Business Finance Corporation:
• Industrial Development Revenue Bond Program
• Small Enterprise Development Program
• Rural Economic Development Assistance Program
Industrial Development Revenue Bond Program
The Industrial Development Revenue Bond Program reduces the interest costs of financing projects for companies through the issuance
of both taxable and tax-exempt bonds. Additionally, ad valorem and sales tax exemptions are granted in conjunction with this type of
public financing.
Most types of commercial businesses are eligible for IRB financing. Proceeds of the bond issue may be used for the acquisition and
construction of real property, machinery and equipment, capitalized interest and limited bond issuance expenses.
The bonds must be secured by an irrevocable, direct-pay letter of credit or other credit enhancement acceptable to MBFC.
The proceeds of a bond issue may be used for the acquisition and construction of real property, machinery and equipment, capitalized
interest, reserve funds, and a limited amount of the cost of issuance in accordance with provisions of the Internal Revenue Code.
business financing
72
Although there is no restriction on the amount of taxable debt that may be incurred, there is a $10 million cap on tax-exempt financ-
ing. The maximum term of a bond issue will be equal to 120% of the average life of the financed assets or thirty years, whichever is
less. The bond purchaser will determine the interest rate. The borrower will pay the costs of issuance and any other applicable fees.
Small Enterprise Development Program
The issuance of state general obligation bonds provides funds for manufacturing and processing companies to finance fixed assets,
i.e. land, buildings, new machinery and new equipment at below market interest rates for terms of up to fifteen years.
Although a company may qualify for more than one loan under this program, the aggregate amount loaned to any company cannot
exceed $2 million. Interest rates on these loans are equal to the net interest rate on the bonds issued by the State plus a servicing
fee. The borrower will pay the costs of issuance and any other applicable fees.
A project must create a minimum of ten jobs, and loans cannot exceed 90% of the market value of the financed assets. Companies
participating in the program will be required to obtain a bank letter of credit guaranteeing the loan.
Rural Economic Development Assistance Program
Companies financing projects through the Small Enterprise Development or Industrial Revenue Bond Programs, which are adminis-
tered by MBFC, may be eligible to participate in the Rural Economic Development Assistance Program. The program allows eligible
companies to receive credits on Mississippi corporate income taxes.
Mississippi corporate income tax credits will be granted at the end of a company's fiscal year and will be based on the Mississippi tax
liability at that time. The amount a company will be required to pay in Mississippi income tax could be reduced by an amount up to
the debt service paid during the tax year.
The total amount of tax credits earned may not exceed the annual debt service on the bond issue. These credits may be used to offset
up to 80% of the company's state corporate income tax liability.
For more information, go tohttp://www.msbusinessfinance.com/
Local Industrial Development Revenue Bonds
Local political entities in Mississippi, including counties, supervisors' districts, incorporated cities and towns, have the authority to
issue tax-exempt and taxable industrial development revenue bonds to finance new or expanding industrial enterprises. There is no
election approval required unless 20% or more of the entity's electors object to the bond issuance in writing. Ownership of a bond-
financed facility is retained by the issuing political entity, which leases it to a company for rental sufficient to pay the annual principal
and interest on bonds.
Industrial development revenue bonds can finance up to 100% of total project costs, including land, buildings, fixtures, new equip-
ment, new machinery and professional fees.
Facilities financed by such bonds are allowed up to a ten-year property tax exemption, in addition to being exempt from most sales
and use taxes on project related purchases during construction.
General Obligation Bonds
Local political entities have the authority to issue general obligation bonds for the purpose of acquiring sites and constructing facilities
for lease to new or expanding industries with rentals sufficient to amortize the debt service on the bonds.
General obligation bonds carry the full faith and credit of the issuing political entity. As title to the property remains with the political
entity issuing the bonds, no taxes, except school taxes, are assessed on the improvements made with the proceeds of such bonds. An
agreement is negotiated between the industry and the political entity covering the details of the issuance of the bonds and the lease.
business financing
73
Small Business Assistance Program (SBA)
The Mississippi Small Business Assistance Program was established for the purpose of providing funds to qualified entities to establish
revolving loan funds to assist small businesses.
Eligible Applicants
Qualified entities are defined as Mississippi Planning and Development Districts (PDDs), Small Business Investment Corporations,
Community Development Corporations, and other similar entities. These entities must provide loans to assist small businesses.
A small business is defined as any for-profit commercial enterprise with fewer than 100 full-time employees, less than $2 Million in
net worth or less than $350,000 in net annual profit after taxes during two of the last three years. Eligible industries include:
• Manufacturers
• Processors
• Distributors
• Wholesalers
• Retailers
• Service Providers
Eligible Projects
Qualified entities may provide loans to finance land, buildings, machinery, equipment, working capital, inventory, or other needs as
negotiated with the borrower.
Terms: 15 years - Land/Building
10 years - Machinery/Equipment
5 years - Working Capital
3 years - Purchase of Inventory
Collateral negotiable
Amount: Maximum loan amount: 50% of project or $100,000, whichever is less.
Fees: MDA requires a 1% servicing fee on State’s portion of loan.
Rate: Interest rate: 5% minimum per annum or more than 4% above Federal Reserve discount rate plus service fees.
Funding: Funding is funneled through MDA as a revolving loan to PDDs.
To apply for this program, small businesses should contact their local PDD, Small Business Investment Corporations, Community
Development Corporations, or other similar entities for additional information on Small Business Assistance Loan Programs.
Statute: 57-10-507; 57-10-511, Ms Code 1972, Annotated
Resources
Business
75
Business Resources
77
Mississippi Development Authority Regional Offices
1 - North Delta Region
The North Delta Regional Office
Post Office Box 641 • Senatobia, MS 38668
Phone: (662) 562-0410 • Fax (662) 562-0407
Street address:
910 E. F. Hale Drive • Senatobia, MS 38668
2 - Northeast Region
The Northeast Regional Office
Post Office Box 1606 • Tupelo, MS 38802
Phone: (662) 844-5413 • Fax (662) 842-3667
Street address:
330 West Jefferson • Tupelo, MS 38804
3 - Northwest Region
The Northwest Regional Office
Post Office Box 32 • Greenwood, MS 38935-0032
Phone: (662) 455-4508 • Fax (662) 455-7903
Street address:
522 West Park Village, Suite 0
Greenwood, MS 38930
4 - East Central Region
The East Central Regional Office
Post Office Box 4398 • Meridian, MS 39304
Phone: (601) 692-2006 • Fax (601) 484-2532
Street address:
2401 11th Street • Meridian, MS 39301
5 - West Central Region
The West Central Regional Office
Post Office Box 849 • Jackson, MS 39205-0849
Phone: (601) 359-2457 • Fax (601) 359-5042
Street address:
501 North West Street, Suite 428
Jackson, MS 39201
6 - Southwest Region
The Southwest Regional Office
Post Office Box 728 • Summit, MS 39666-0728
Phone: (601) 276-3089 • Fax (601) 276-3870
Street address:
Southwest Mississippi Community College
Brumfield Building • Summit, MS 39666
7 - Southeast Region
The Southeast Regional Office
Post Office Box 1287 • Hattiesburg, MS 39403-1287
Phone: (601) 545-4001 • Fax (601) 545-4006
Street address:
420 West Pine Street • Hattiesburg, MS 39403
8 - Gulf Coast Region
The Gulf Coast Regional Office
1141 Bayview Avenue, Suite 401 • Biloxi, MS 39530
Phone: (228) 523-4034 • Fax (228) 374-2973
4
8
2
Meridian
1
6
7
Gulfport
5
Jackson
3
Greenwood
Tupelo
Hattiesburg
Senatobia
Summit
TISHOMINGO ALCORN
TIPPAH
PRENTISS
BENTON
UNION
LEE
ITAWAMBA
PONTOTOC
LAFAYETTE
MARSHALL
DESOTO
TATE
PANOLA
TUNICA
COAHOMA
QUITMAN
TALLAHATCHIE
YALOBUSHA
GRENADA
SUNFLOWER
BOLIVAR
WASHINGTON
HUMPHREYS
HOLMES
LEFLORE
CARROLL
MONTGOMERY
WEBSTER
CALHOUN
CHOCTAW
ATTALA
WINSTON
NOXUBEE
KEMPER NESHOBA LEAKE
SCOTT
MADISON
RANKIN HINDS
JEFFERSON
ADAMS
FRANKLIN
WILKINSON AMITE PIKE WALTHALL
LINCOLN
LAWRENCE
JEFFERSON DAVIS
MARION
LAMAR
COVINGTON
SIMPSON
SMITH
JASPER
JONES
FORREST
STONE
PEARL RIVER
GREENE
GEORGE
JACKSON
HARRISON
HANCOCK
PERRY
WAYNE
COPIAH
CLAIBORNE
YAZOO
SHARKEY
ISSAQUENA
WARREN
NEWTON
CLARKE
LAUDERDALE
OKTIBBEHA
CLAY
LOWNDES
MONROE
CHICKASAW
Business Resources
78
Mississippi Procurement Technical
Assistance Program
South Mississippi Contract
Procurement Center, Inc.
1141 Bayview Avenue, Suite 401
Biloxi, Mississippi 39530
Phone: (228) 374-2970 • Fax: (228) 374-2973
www.mscpc.com
Delta Contract Procurement
Center, Inc.
Post Office Box 1179 • Greenville, MS 38702
Street address:
Washington County Courthouse, 2nd Floor
900 Washington Avenue • Greenville, Mississippi 38702
Phone: (662) 334-2656 • Fax: (662) 334-2709
www.mscpc.com
East Central Contract
Procurement Center, Inc.
c/o Meridian Community College
910 Highway 19 North • Meridian, Mississippi 39307
Phone: (601) 482-7445 • Fax: (601) 482-5803
www.mscpc.com
Central Mississippi Contract
Procurement Center, Inc.
Post Office Box 849 • Jackson, MS 39205-0849
Street address:
Woolfolk Building, 6th floor
501 Northwest Street • Jackson, Mississippi 39201
Phone: (601) 359-3485 • Fax: (601) 359-5290
www.mscpc.com
Northeast Mississippi Contract
Procurement Center, Inc.
Post Office Box 1805
Columbus, Mississippi 39705-1805
Street address:
318 7th Street North • Columbus, MS 39703
Phone: (662) 329-1077 • Fax: (662) 327-6600
www.mscpc.com
Business Resources
79
Northeast Mississippi Business Incubation System
Ripley Facility
401 CR 565
Ripley, MS 38663
Phone: (662) 287-4369 • Fax: (662) 287-1214
Corinth Facility
1828 Proper Street
Corinth, MS 38834
Phone: (662) 287-4369 • Fax: (662) 287-1214
Iuka Facility
2021 Seago Road
Iuka, MS 38852
Phone: (662) 287-4369 • Fax: (662) 287-1214
North Mississippi Enterprise Initiative
Batesville Enterprise Center
275 Nosef Drive
Batesville, MS 38606-2729
Phone: (662) 563-3126
Oxford Enterprise Center
9 Industrial Park Drive
Oxford, MS 38655-5343
Phone: (662) 234-4651 • Fax: (662) 561-0790
www.northmiss.org
Grenada Enterprise Center
500 Enterprise Drive
Grenada, MS 38901-9544
Phone: (662) 226-2571
Coahoma County Business Development Center
Post Office Box 160
Clarksdale, MS 38614
Phone: (662) 627-7337 • Fax: (662) 627-1313
Columbus-Lowndes Business Development Center
118 South McCrary Road
Columbus, MS 39702
Phone: (662) 328-8369 • Fax: (662) 328-9888
www.cldlink.org
Mississippi Business Incubator Program
Business Incubation is a dynamic process of business enterprise development. Incubators nurture young firms, helping them to sur-
vive and grow during the startup period when they are most vulnerable. Incubators provide hands on management assistance, access
to financing and orchestrated exposure to critical business or technical support services. They also offer entrepreneurial firms shared
office services, access to equipment, flexible leases and expandable space – all under one roof. Listed below are the incubator loca-
tions around the State of Mississippi.
Golden Triangle Enterprise Center
1 Research Boulevard
Suite 204
Starkville, MS 39759
Phone: (662) 323-3322 • Fax: (662) 320-3999
www.gtec.org
Winston County Economic Development District
Post Office Box 551
Louisville, MS 39339
Phone: (662) 773-8719 • Fax: (662) 773-8719
www.winstoncounty.com
Kemper County Industrial Incubator Center, Inc.
102 Industrial Park Drive
DeKalb, MS 39328
Phone: (601) 743-2754 • Fax: (601) 743-2760
Mississippi Technology Alliance Innovation Center
1230 Raymond Road, Box 600
Jackson, MS 39204
Phone: (601) 965-0352 • Fax: (601) 965-0362
www.innovationcenter.ms
Alcorn State University Technology Incubator
101 North Wall Street
Post Office Box 982
Natchez, MS 39121
Phone: (601) 442-0202
Gulf Coast Business Technology Center
1636 Popps Ferry Road
Biloxi, MS 39532
Phone: (228) 392-9741 • Fax: (228) 392-9743
www.gcbtc.org
Mississippi Enterprise for Technology
Building 1103
Suite 143
Stennis Space Center, MS 39529
Phone: (228) 688-2083 • Fax: (228) 688-1064
www.mset.org
Business Resources
80
ALCORN
DESOTO
MARSHALL
BENTON
PRENTISS
ITAWAMBA
MONROE
TATE
TUNICA
PANOLA
YALOBUSHA
CARROLL
QUITMAN
COAHOMA
WASHINGTON
YAZOO
NOXUBEE
JEFFERSON
PEARL RIVER
ADAMS
WILKINSON
AMITE
FRANKLIN
PIKE
WALTHALL
CLAIBORNE
COPIAH
JASPER CLARKE
WAYNE
JONES
JACKSON
STONE
HARRISON
KEMPER
WARREN
HINDS
RANKIN
LAUDERDALE
MARION
LAMAR
PERRY GREENE
GEORGE
TALLAHATCHIE
LEFLORE
LINCOLN
ISSAQUENA
HOLMES
HUMPHREYS
GRENADA
LOWNDES
LAFAYETTE
LEE
MADISON
SHARKEY
LAWRENCE
HANCOCK
TIPPAH
UNION
PONTOTOC
CALHOUN
CLAY
WEBSTER
CHOCTAW
WINSTON
LEAKE
OKTIBBEHA
NEWTON
SIMPSON
SMITH
COVINGTON
JEFFERSON
DAVIS
NESHOBA
SCOTT
FORREST
ATTALA
CHICKASAW
MONTGOMERY
SUNFLOWER
BOLIVAR
TISHOMINGO
Mississippi Incubator Facilities
Ripley
Corinth
Iuka
Clarksdale
Starkville
Columbus
DeKalb
Jackson
Stennis
Space
Center
Biloxi
Batesville
Oxford
Grenada
Louisville
Natchez
Mississippi
Business
Incubators
Business Resources
81
Mississippi Planning and Development Districts
1 -North Delta Planning and Development District
Post Office Box 1488 • Batesville, Mississippi 38606
Phone: (662) 561-4100 • Fax: (662) 561-4112
www.ndpdd.com
2 - South Delta Planning and Development District
124 South Broadway
Post Office Box 1776 • Greenville, Mississippi 38702
Phone
662) 378-3831
www.southdeltapdd.com
3 - North Central Planning and Development District
711 South Applegate • Winona, Mississippi 38967
Phone: (662) 283-2675
4 - Central Mississippi Planning and Development District
1170 Lakeland Drive
Post Office Box 4935 • Jackson, Mississippi 39296-4935
Phone: (601) 981-1511 • Fax: (601) 981-1515
www.cmpdd.com
5 - Southwest Mississippi Planning and Development District
100 South Wall Street • Natchez, Mississippi 39120
Phone: (601) 446-6044
www.swmpdd.com
6 - Southern Mississippi Planning and Development District
SMPDD Gulfport Office
9229 Highway 49 • Gulfport, Mississippi 39503
Phone: (228) 868-2311
www.smpdd.com
SMPDD Hattiesburg Office
700 Hardy Street • Hattiesburg, MS 39401
Phone: (601) 545-2137
www.smpdd.com
7 - East Central Planning and Development District
280 Commercial Drive
Post Office Box 499 • Newton, Mississippi 39345
Phone: (601) 683-2007
Email: [email protected]
8 -Golden Triangle Planning and Development District
Post Office Box 828
106 Miley Road • Starkville, Mississippi 39760-0828
Phone: (662) 324-7860 • Fax: (662) 324-7328
www.gtpdd.com
9 - Three Rivers Planning and Development District
75 South Main Street
Post Office Box 690 • Pontotoc, Mississippi 38863
Phone: (662) 489-2415
www.trpdd.com
10 - Northeast Mississippi Planning and Development District
Post Office Box 600 • Booneville, Mississippi 38829
Phone: (662) 728-6248 • Fax: (662) 728-2417
www.nempdd.com
7
9
Meridian
1
5
6
Gulfport
4
Jackson
3
Greenwood
Tupelo
Hattiesburg
Senatobia
Summit
TISHOMINGO ALCORN
TIPPAH
PRENTISS
BENTON
UNION
LEE
ITAWAMBA
PONTOTOC
LAFAYETTE
MARSHALL
DESOTO
TATE
PANOLA
TUNICA
COAHOMA
QUITMAN
TALLAHATCHIE
YALOBUSHA
GRENADA
SUNFLOWER
BOLIVAR
WASHINGTON
HUMPHREYS
HOLMES
LEFLORE
CARROLL
MONTGOMERY
WEBSTER
CALHOUN
CHOCTAW
ATTALA
WINSTON
NOXUBEE
KEMPER NESHOBA LEAKE
SCOTT
MADISON
RANKIN HINDS
JEFFERSON
ADAMS
FRANKLIN
WILKINSON AMITE PIKE WALTHALL
LINCOLN
LAWRENCE
JEFFERSON DAVIS
MARION
LAMAR
COVINGTON
SIMPSON
SMITH
JASPER
JONES
FORREST
STONE
PEARL RIVER
GREENE
GEORGE
JACKSON
HARRISON
HANCOCK
PERRY
WAYNE
COPIAH
CLAIBORNE
YAZOO
SHARKEY
ISSAQUENA
WARREN
NEWTON
CLARKE
LAUDERDALE
OKTIBBEHA
CLAY
LOWNDES
MONROE
CHICKASAW
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Business Resources
82
State
Mississippi Development Authority (MDA)
501 North West Street
Post Office Box 849
Jackson, Mississippi 39205
Phone: (601) 359-3593 • Fax: (601) 359-2832
www.mississippi.org
Mississippi Department of Employment Security (MDES)
1235 Echelon Parkway
Post Office Box 1699
Jackson, Mississippi 39213-1699
Phone: (601) 321-6000
www.mdes.ms.gov
Mississippi Secretary of State
700 North Street
Post Office Box 136
Jackson, Mississippi 39205-0136
Phone: (601) 359-1350 • Fax: (601) 359-1499
www.sos.state.ms.us/
Mississippi Small Business Development Centers (SBDC)
Post Office Box 1848
University, Mississippi 38677-1848
Phone: (662) 915-5001 or 800-725-7232 • Fax (662) 915-5850
Email: [email protected]
www.olemiss.edu/depts/mssbdc/
Mississippi State Board of Health
570 East Woodrow Wilson Drive
Post Office Box 1700
Jackson, Mississippi 39215-1700
Phone: (601) 576-7400 • Fax: (601) 576-7948
www.msdh.state.ms.us/
Mississippi State Tax Commission (MSTC)
Post Office Box 1033
Jackson, Mississippi 39215
Phone: (601) 923-7000 • Fax: (601) 923-7039
www.mstc.state.ms.us/
Mississippi Workers’ Compensation Commission
1428 Lakeland Drive
Post Office Box 5300
Jackson, Mississippi 39296-5300
Phone: (601) 987-4200
www.mwcc.state.ms.us/
FEDERAL AND STATE AGENCIES
Federal
Small Business Administration Offices (SBA)
Mississippi District Office
210 East Capitol, Suite 900
Jackson, Mississippi 39201
Phone: (601) 965-4378 • Fax: (601) 965-4294
www.sba.gov
Gulfport Branch Office
Gulf Coast Business Technology Center
1636 Popps Ferry Road, Suite 203
Biloxi, MS 39532
Phone: (228) 863-4449 • Fax: (228) 864-0179
www.sba.gov
United States Department of Labor
Occupational Safety and Health Division (OSHA)
3780 I-55 North, Suite 210
Jackson, Mississippi 39211
Phone: (601) 965-4606 • Fax: (601) 965-4610
www.osha.gov
United States Department of Labor
Wage and Hour Division
100 West Capitol Street, Suite 608
Jackson, Mississippi 39269
Phone: (601) 965-4347
www.dol.gov
United States Equal Employment Opportunity Commission (EEOC)
100 West Capitol Street, Suite 207
Jackson, Mississippi 39269
Phone: (601) 948-8400 • Fax: (601) 948-8401
www.eeoc.gov
United States Internal Revenue Service (IRS)
Federal Building
100 West Capitol Street
Jackson, Mississippi 39269
Phone: 1-800-829-1040
www.irs.ustreas.gov
United States Treasury Department
Bureau of Alcohol, Tobacco and Firearms
100 West Capitol Street, Suite 335
Jackson, Mississippi 39269
Phone: (601) 292-4000
www.atf.treas.gov
Business Resources
83
Terms of Business/Glossary
Advertising
A paid form of communicating a message by the use of
various media. It is persuasive, informative, and designed to
influence purchasing behavior or thought patterns.
Amortize
To pay a debt gradually through scheduled periodic payments;
the process of writing off against expenses the cost of an
intangible asset over the period of its economic usefulness.
Assets
The items on a balance sheet showing book value of a
business.
Balance Sheet
A listing of the assets, liabilities and equity of a business.
Balloon Payment
The final bulk payment that retires a loan when minimal
previous payments have not fully amortized it.
Barterting
A system of trading goods and services for advertising time or
space. For example, a hotel might trade-out the value of one
or two nights stay to the newspaper in return for the same
value in advertising space.
Benchmarks
Standards or averages by which similar items can be
compared.
Book Value
The value of something as shown on bookkeeping records as
distinguished from market value; the value of an asset equal
to cost less depreciation.
Business Support Organization
Federal, state, county, city, and community organizations
which assist small business people. Examples: Small
Business Administration (SBA), Small Business Development
Centers (SBDC), Mississippi Development Authority (MDA),
chambers of commerce, economic development foundations
and groups, junior and senior colleges, city hall, county court-
house, etc.
Capital
Net worth of the individual or business; also, the excess of
total assets over total liabilities; the funds used to start a
business.
Cash Flow Statement
A listing of cash receipts and cash disbursements that
occur over a specific period of time. Note that non-cash
expense items such as depreciation are not included.
Collateral (Security)
Personal or real property possessions that the borrower
assigns to the lender to help ensure debt payment. If the
borrower does not repay the loan, the lender may take
ownership of the collateral to pay the loan balance.
Cooperative Advertising (Co-Op advertising)
An arrangement between manufacturer and retailer to
reimburse the retailer in full or in part for local placement
of manufacturer-produced ads and commercials. These
ads would include the addition of the retailer’s name in the
copy. Co-op advertising might also mean a joint effort
between two or more businesses to pool advertising money
for more buying power. The ads would feature both com-
pany names and benefits.
CPT (Cost Per Thousand)
Divides the cost of an advertising medium by the number of
persons in the target audience who are reached by the
medium.
Cumulative Cash Flow
The balance in your checking account at the end of each
accounting period.
Debenture
A corporate security other than an equity security bond; a
bond backed by the general credit of the issuer rather than
a specific lien on particular assets.
Demographics
The statistical study of populations, particularly as it relates
to the age, race, sex, income, and other pertinent socioeco-
nomic factors of a specific area.
Depreciation
The process of writing off against income the decrease in
value of a fixed asset over its useful life.
Entrepreneur
One who organizes and assumes the risk of business.
Equity
The money value of property or of an interest in a property
in excess of claims or liens against it; a risk interest or
ownership right in property.
Business Resources
84
Gross Margin
The percentage difference between the cost and the selling price
of goods (e.g., an item purchased for $1.00 and sold for $1.25
has a gross margin of 20 percent).
Gross Profit
The monetary difference between the sale price and the actual
cost of the item sold.
Logo
A unique symbol or design that represents a company. Also
called a trademark.
MDA
Mississippi Development Authority.
Market
The demand for one’s goods. Available customer base.
Market Niche
The unique advantage or benefit a product or service offers a
particular group of customers. Marketing success is dependent
upon establishing how a product stands out from similar ones.
Market Research and Analysis
The determination of the following: the size of your market, who
your customers are, who your competitors are and what their
pricing policies are, what their promotional activities are, and an
analysis of their product.
Market Activities
Includes identifying unmet needs; producing products and serv-
ices to meet those needs: and pricing, distributing, and promot-
ing those products and services to produce a profit.
Marketing Mix
Includes a combination of product, packaging, price, channels of
distribution, advertising, promoting, and personal selling to get
the product in the hands of the customer.
Markup
The percent of increase from the cost to the selling price of
goods (e.g., an item purchased for $1.00 and then sold for $1.25
has a markup of 20 percent).
Media
The print (newspaper, magazine, etc.) and electronic (radio and
television) communication devices used for advertising.
Media Frequency
The number of times the target audience is exposed to an
advertising message.
Media Reach
The percentage of a target audience that is exposed to an
advertising medium.
Mississippi Mainstreet
A statewide program to provide member communities in
Mississippi with information and services to help them accom-
plish their downtown development and revitalization goals.
MSA (Metropolitan Statistical Area)
The U.S. Bureau of Census’ term for an area consisting of one
or more counties around a central urban area with 50,000 or
more inhabitants and with minimal agricultural employment.
Net Cash Flow
Gross receipts minus gross expenditures as stated on a
monthly basis.
“Objective and Task” Budgeting
The determination of the desired advertising result, the costs
of the tasks to be done, and determining the amount required
to achieve those results.
“Percent of Sales” Budgeting
One of the easiest and most commonly used methods of
determining an advertising budget total. Percentages vary, by
three to five percent of past sales or a forecast of future sales
is a general rule of thumb to use. The assigned percentage
may be even higher for a grand opening, introduction of a new
product, or other very special promotional reasons. An exam-
ple of “percent of sales” budgeting would be a firm planning
to do $100,000 worth of business next year and allocating five
percent of sales or $5,000 for the annual advertising budget.
Per-Unit Budgeting
Determines the size of the marketing or advertising budget
and allocates it for specific products or services. With this
method, each product or service has its own individual budget.
Positioning
The attempt to control the public’s perception of a product or
service as it relates to competitive products.
Business Resources
85
Prime Rate
An interest formally announced by a bank to be the lowest available at
a particular time to its most credit-worthy customers.
Pro-Forma
Projected; provided in advance to prescribe form or describe items
(e.g., pro-forma balance sheet).
Psychographics
Personal and mental concepts that are measured in terms of atti-
tudes, beliefs, opinion, perceived benefits, self-concepts, and
lifestyles.
Public Relations
A form of communication primarily directed toward gaining public
understanding and acceptance. Public relations usually deal with
issues rather than products or services and is used to build goodwill
with the public or employees. Examples of public relations are
employee training, support of charitable events, or a news release
about some positive community participation.
Purchase Cycles
The time periods between purchases of a product, which is important
in estimating product or service demand.
SBA
Small Business Administration.
S Corporation
A corporation that elects, by unanimous consent of its shareholders,
not to pay any corporate tax on its income (except capital gains, cer-
tain passive investment income and certain investment credit recap-
ture) and, instead, to have the shareholders pay taxes on it, even
though such income is not distributed.
Segmentation
The process of directing all marketing efforts at a particular group of
potential customers. For example, Rolex directs the marketing of its
watches to upscale customers who are very brand conscious.
Target Market
The specific group of customers that a company aims to capture.
They have been identified as people with needs or wants that can be
met with the products or services from this company.
Test Marketing
A limited introduction of a product or service to test public reaction for
a full market strategy. Giving the public a small sample of what is to
be offered is a form of test marketing.
Business Resources
86
Resources for Marketing Research
Annual Statement Studies
Philadelphia: Risk Management Association.
Current and historical financial ratios for manufacturers,
wholesalers, retailers, service ventures, and contractors.
Published annually. Known as the RMA. www.rmahq.org
County Business Patterns
U.S. Bureau of the Census. Washington: U.S.
Government Printing Office.
Set of statistical publications covering employment, payroll,
and a number of establishments by county and business
type on national, state, and county levels. Published annu-
ally. www.census.gov/epcd/cbp/view/cbpview.html
County and City Data Book
U.S. Department of Commerce, Bureau of the Census.
Washington: U.S. Government Printing Office.
A compilation of statistics on states, counties, and cities of
25,000 or more, and places of 2,500 and more. Subjects
include population, education, housing, labor force, busi-
ness types, etc. Published irregularly.
www.census.gov/statab/www/ccdb.html
Directory of Department Stores
New York: Business Guides, Inc.
Nationwide listing of department stores, corporate address-
es, executives, and buyers. Published annually. Check with
your local library.
Directory of Leading Chain Stores in the United States
New York: Business Guides, Inc. List of U.S. chain stores in
retailing and food service industries. Published annually.
Directory of Manufacturers’ Agents National
Association
Irvine, California:
Manufacturers’ Agents National Association (MANA).
Comprehensive directory of the members of MANA listed
alphabetically by state location and product line.
www.manaonline.org
Economic Census
U.S. Bureau of Census. Washington: U.S. Government
Printing Office. Geographic Area Series.
Number of establishments, sales, payrolls, and selected
ratios by type of business. Separate publications every five
years in the categories of retail trade, service industries
wholesale trade, transportation, manufacturers, mineral
industries, and construction industries.
www.census.gov/epcd/www/econ97.html
Encyclopedia of Associations
Detroit Michigan:
Gale Research Company.
Comprehensive list of all types of professional and trade
associations. Includes purpose, number of members, staff,
headquarters’ address and services offered.
Published annually.
www.gale.com
Mississippi Business Directory
Omaha, Nebraska: American Directory Publishing Company.
Statewide business listing by yellow page category and city;
manufacturers by city and product. Published annually.
Check with your local library.
Mississippi City Traffic Maps, Average Daily Traffic
Jackson, Mississippi:
Mississippi State Highway Department.
City maps depicting average daily traffic passing at specific
points on city streets. Revised periodically.
www.gomdot.com/maps/city_maps.asp
Mississippi County Traffic Maps, Average Daily Traffic
Jackson, Mississippi:
Mississippi State Highway Department.
County maps depicting average daily traffic passing at spe-
cific points on county roads. Published annually. www.gom-
dot.com/maps/county_maps.asp
Mississippi Manufacturers Directory
Jackson, Mississippi: Mississippi Manufacturers
Association.
Identifies manufacturers within the state by city, by SIC code
and in alphabetical order. Indicates number of employees.
Published annually. www.mma-web.org/directory.aspx?
Occupational Outlook Handbook
Washington: Bureau of Labor Statistics, U.S. Department of
Labor.
Outlook on various industries and professions as they relate
to the job market. www.bls.gov/oco/
Progressive Grocer’s Guide
Stamford, Connecticut: Progressive Grocer’s Trade
Dimensions.
Published Annually.
Comprehensive data concerning the supermarket industry.
www.progressivegrocer.com
Business Resources
87
Small Business Sourcebook
Detroit, Michigan: Gale Research Company.
Prime reference tool with information sources for 100 (mostly
trade and service) small businesses. Also contains general
resources. Updated regularly. www.gale.com
Standard Directory of Advertising Agencies
Wilmette, Illinois: National Register
Publishing Company.
Nationwide listing for major advertising firms, number of
employees, years in business, names of large accounts, names
of account objectives. www.nationalregisterpub.com
Survey of Buying Power
New York: Sales and Marketing Management.
Current estimates of effective buying income, population by
age, and retail sales by broad groupings. Arranged geographi-
cally by states and countries. Published annually. www.sale-
sandmarketing.com/smm/index.jsp
The Sourcebook of Demographics and Buying Power for
Every County in the USA
Fairfax, Virginia: CACI, Inc.
Provides basic demographic, socioeconomic characteristics,
and purchasing potential of market areas. Published annually.
Check with your local library.
The Sourcebook of Demographics and Buying Power for
Every Zip Code in the USA
Fairfax, Virginia: CACI, Inc.
Contains the same kinds of information for zip codes as
described for the publication above.
Check with your local library.
Thomas Register of American Manufacturers and Thomas
Catalog File
New York:
Thomas Publishing Company.
Multi-volume directory of manufacturers and suppliers arranged
alphabetically by products, address, and location of sales
offices. Published annually. www.thomasnet.com
Thomas Grocery Register
New York: Thomas Publishing Company.
The official buyer’s and seller’s guide of the food industry.
Published annually. www.thomasnet.com
Trade Shows Worldwide
Detroit, Michigan: Gale Research Company.
An international directory to events, facilities and suppliers.
www.gale.com
U.S. Industrial Outlook
U.S. Department of Commerce, International Trade
Administration.
Washington: U.S. Government Printing Office.
An overview of numerous U.S. industries including recent
trends and future outlooks. Statistics on changes in supply
and demand for industries. Published annually.
www.ita.doc.gov/td/industry/otea/outlook/index.html
appendices
89
Appendices
91
MEDIA ADVANTAGES DISADVANTAGES
Newspaper Broad market coverage Inconsistent reproduction
Immediacy One-day life span
Short lead time Limited demographic selection
Flexible ad size “Lost in the crowd” placement
Visibility of product Lack of movement and sound
Color
Use of coupons to measure direct results
People believe what they read
Radio Demographic selection Restrictive message length
High frequency Need for repetition
Immediacy Short recall factor
Sound reinforcement Cluttered placement
Quick flexibility
Television Use of sight, sound, motion, color Short exposure
Mass coverage Expensive production
Immediacy Expensive air time
Demographic selection Cluttered placement
Viewing time drops as income rises
Direct Mail Demographic selection Expensive
Unlimited message length Difficulty in obtaining “pure” mailing lists
Consistent reproduction Long lead time
Direct response by order form or coupon Negative reaction to “junk” mail
Outdoor Reaches large audience Limited message length
Long-term exposure Expensive to produce and place
Color and graphics Difficulty in obtaining the best locations
Forms include billboards, posters, Legal restrictions for use
illuminated signs, moving vehicle signs,
bench ads
Appendix A - Media Types and Advantages/Disadvantages
Appendices
92
Appendix B - Preparing the Marketing Budget
Initial budgets are difficult to prepare without a previous record or guide, but it is imperative that adequate money be set aside for
marketing. There are several methods of determining budget dollars: “percentage of sales”, “objective and task” and “per unit”.
Each is appropriate for certain types of business. All are defined in the Glossary section. Choose the one that best suits your
company’s needs.
A. Initial Preparation
The easiest budget method and the one that most commonly used by small business is “percentage of sales”.
Calculate projected sales and set aside a percentage of the total figure for marketing expenses, keeping in mind that three percent of
sales is an average figure for advertising and promotional costs alone. Higher percentage allowances generally produce greater
results if dollars are wisely used. The marketing fund must also cover general administrative expenses, travel, supplies, postage,
resource development training, sales force expenses, marketing research, subscriptions, and professional memberships. Although the
budget must be flexible enough to allow for miscellaneous expenditures, it is necessary to live as closely as possible within the con-
fines of the predetermined allowance.
The market budget may be prepared monthly or quarterly, depending upon the individual business. Begin by planning a monthly
budget. After a year of operation, you may determine that a quarterly breakdown is adequate.
B. Annual Revision
The marketing budget is only effective when implemented around annual business and development objectives, and may be increased
or decreased each year depending upon sales and changing needs. Developing subsequent marketing plans is a far simpler process
with a previous plan available as a measuring stick. Good marketing requires research, commitment and the ability to be flexible as
the market changes. The written plan must be a constant business tool, not constructed then shelved until the next year. Use market-
ing to make things happen for your business.
Appendices
93
SAMPLE MARKETING BUDGET OUTLINE*
Quarter I Quarter II Quarter III Quarter IV
Percent Percent Percent Percent
Marketing Marketing Marketing Marketing Marketing
Expenditures $ Budget $ Budget $ Budget $ Budget
Advertising
Newspaper
Magazines
Trade Publications
Radio
Outdoor
Television
Specialty Items
Direct Mail
Point of Purchase
Co-op Ads
Production/Creative
Sales Promotion
Brochures/Flyers
Trade Shows
Newsletters
Customer Services
Décor/Display
Community Events
Clerical
Managerial
Secretarial
Telephone
Travel
Postage
Supplies
Sales Force Expenditure
Motivation Program
Recruiting
Salaries and Benefits
Telephone
Training Program
Travel
Professional Membership
Subscriptions
Appendices
94
SAMPLE MARKETING BUDGET OUTLINE continued
Quarter I Quarter II Quarter III Quarter IV
Percent Percent Percent Percent
Marketing Marketing Marketing Marketing Marketing
Expenditures $ Budget $ Budget $ Budget $ Budget
Marketing Research
Computer Time
Salaries and Benefits
Supplies
Telephone
Travel
Miscellaneous
Total Budget
* NOTE: Many specific items in the sample will not be necessary for all businesses. Some businesses will require even more
items in the budget.
Appendices
95
Appendix C - Sample Financial Pro-Forma Statements
The financial plan is basic to the evaluation of a business opportunity and should represent your best estimate of future operations. It
can also serve as an operating plan for your management team.
In developing a financial plan, several basic forecasts must be prepared. Many decisions will be based on what you present here. At
the appropriate time, your advisors may recommend some changes, but it is vitally important that you apply your best effort in formu-
lating these forecasts.
A. SOURCES AND USES OF FUNDS
Please refer to Exhibit VI-A.
B. PRO-FORMA CASH FLOW ANALYSIS
Please refer to Exhibit VI-B.
C. PROFIT AND LOSS FORECASTS
Please refer to Exhibit VI-C.
D. PROFORMA BALANCE SHEET
Please refer to Exhibit VI-D.
For an existing business, balance sheets and income statements for the current and previous three years should be provided. After you
have completed preparation of the financial exhibits, briefly highlight the important conclusions that can be drawn. Finally, explain all
of your assumptions and the sources of your data.
Appendices
96
EXHIBIT VI-A - Sources and Uses of Funds
FUNDS AVAILABLE:
Owner’s funds
Other equity
Loan No. 1
Loan No. 2
Total
USES OF FUNDS:
Land
Building
Equipment
Machinery
Renovations
Prepaid insurance
Promotions
Inventory
Furniture and fixtures
Deposits
Other
Total
CASH BALANCE:
(Or working capital)
Appendices
97
Exhibit VI-B
Appendices
98
Sales # 1
Sales #2
Less returns
0-30 days
31-60 days
Over 60 days
Material cost
Labor
Management
Payroll tax
Benefits
Advertising
Auto expense
Contributions
Charge cards
Dues
Freight
Insurance
Legal/acct.
Office supplies
Shop supplies
Travel
Telephone
Utilities
Repairs
Tax/license
Rent/lease
Other expense
Principal pmt.
Interest pmt.
Add. inventory
Equipment
Fixtures
Utility deposits
Other assets
Income taxes
NET CASH FLOW
CUMULATIVE
Month: 1 2 3 4 5 6 7 8 9 10
Sales:
EXHIBIT VI-B
TOTAL SALES
Cash Receipts:
Total
Disbursements:
Total
Appendices
99
11 12 13 14 15 16 17 18 19 20 21 22 23 24
Appendices
100
Sales #1
Sales #2
Gross Sales
Less returns
Cost of goods sold:
Beginning inventory
Purchases
Additional inventory
Goods available
Less ending inventory
Labor
Management
Payroll tax
Benefits
Advertising
Truck/auto expense
Contributions
Charge cards
Dues & subscriptions
Freight
Insurance
Legal & accounting
Office supplies
Shop supplies
Travel
Telephone expense
Utilities
Repairs
Taxes/licenses
Rent/lease
Other expenses
Interest payments
Depreciation
Income tax:
Federal
State
Total taxes
Sales:
EXHIBIT VI-C - Profit and Loss Forecast
Net Sales:
Total Material Cost
G&A Expenses
Total G&A Expenses
Net income (pre-tax)
NET INCOME
Year 1 Year 2
Amount % of Net Amount % of net
100% 100%
Appendices
101
Cash
Ending inventory
Accounts receivable
Other
Total current assets
Land
Building
Equipment
Machinery
Renovations
Furniture & fixtures
Other
Total fixed assets
Less accum. depreciation
Net fixed assets
Deposits
Other
Total other assets
Notes payable
Current portion
long-term debt
Other
Total current liabilities
Loans payable
Less current portion
Total long-term debt
Owners’ funds
Retained earnings
Current Assets:
EXHIBIT VI-D - Pro-Forma Balance Sheet
Year 1 Year 2
Fixed Assets:
Other Assets:
Total Assets:
Current Liabilities:
Long-Term Liabilities:
Total Liabilities:
Total Equity
Total Liabilities
And Equity
ASSETS
LIABILITIES
EQUITY
entrepreneur’s toolkit
102
NOTES
entrepreneur’s toolkit
103
NOTES
entrepreneur’s toolkit
104
NOTES
doc_668735351.pdf
Within this particular file about entrepreneurs tool kit most asked questions.
entrepreneur’ s tool ki t
Table of Contents
Section 1. Top Twenty Most Asked Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
Section 2. A Guideline for Preparing a Business Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
I. Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
II. The Industry, the Company, and it’s Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
III. Business Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
IV. Market Research and Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16
V. Competitor Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19
VI. Operating Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20
VII. Management Team . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21
VIII. The Financial Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21
Section 3. Reporting Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35
How to Use This Chapter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35
Federal Tax and Regulatory Forms Discussed in this Publication . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35
Federal Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .36
Initial Federal Reports and Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .36
Monthly Federal Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .37
Quarterly Federal Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .37
Annual Federal Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .38
Other Federal Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .42
State Tax and Regulatory Forms Discussed in this Publication . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .43
State Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .43
Initial State Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .43
Monthly State Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .44
Quarterly State Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .45
Annual State Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .45
Other State Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .46
City and County Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .46
Special Licenses, Permits and Other Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .47
Section 4. Selective Business Financing Available . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .49
Grants
Community Development Block Grant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .51
Development Infrastructure Grant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .51
Economic Development Highway Grant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .52
Industrial Access Road Grant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .54
Freight Rail Service Grant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .55
Job Protection Grant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .55
Rural Impact Fund Grant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .56
Small Municipal & Limited Population Counties Grant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .56
Loans
Agribusiness Enterprise Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .58
Airport Revitalization Revolving Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .58
Port Revitalization Revolving Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .59
Business Incubator Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .59
Energy Investment Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .60
Existing Industry Productivity Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .61
Freight Rail Service Revolving Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .62
Job Protection Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .62
Capital Improvements Revolving Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .63
Minority Business Enterprise Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .64
Minority Business Micro Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .64
Table of Contents, continued
Minority Surety Bond Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .65
Capital Access Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .66
Mississippi Business Investment Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .66
Major Economic Impact Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .67
Research and Development Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .68
Rural Impact Fund Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .69
Other
Appalachian Regional Commission (ARC) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .70
Delta Regional Authority (DRA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .70
Mississippi Business Finance Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .71
Local Industrial Development Revenue Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .72
General Obligation Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .72
Small Business Assistance Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .73
Section 5. Business Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .75
Section 6. Appendices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .89
most asked questions
The Top Twenty
5
top 20 most asked questions
7
Should I go into business?
Only you can answer this question, but you should begin
the process with an honest, objective appraisal of your own
strengths and weaknesses. Are you a self starter? Do you
make decisions well? Do you have what it takes to operate
a business? Are you willing to give up other opportunities
in order to be a business owner? These are just a few of
the questions you will need to consider before starting a
new venture.
What type of business should I go into?
What do you like to do? What are your talents? What type
of business does your area need? How much money do
you have to put into your project? Answers to these ques-
tions will give a strong indication of what business(es)
you should consider.
Do I need a business plan?
YES! There are two basic reasons for preparing a business
plan. First, it requires the entrepreneur to thoroughly inves-
tigate the factors that will have an impact on the success of
the business. Second, it will enhance the ability of the
entrepreneur to secure financing by providing an organized
overview of the venture for lenders and investors.
Refer to section “A Guideline for Preparing a Business Plan”
in this book.
Do I have to incorporate before I
start my business?
No. The legal structure of your business can be a sole
proprietorship, partnership, corporation, or LLC.
Contact: An attorney or the Secretary of State’s Office
(Business Services Division) at (601) 359-1350 or
www.sos.state.ms.us.
If I do want to incorporate, how do I go about
getting the forms?
Your attorney should be able to help you, or you can order
the forms from the Secretary of State’s Office (Business
Services Division) at (601) 359-1350 or
www.sos.state.ms.us.
At what point do I need to involve an
attorney and/or accountant in my business?
At the very beginning. Many small business owners consider
legal and accounting services only when their firms are in
trouble. They fail to realize that legal and accounting prob-
lems can be reduced or avoided by a program of consultation
which is carried out on a continuing basis.
How do I find a good attorney or CPA?
Ask for referrals from friends or associates who are currently
in business. Meet with the attorney or CPA first to see what
services they can offer you and to determine if you are com-
patible. Generally, initial meetings are at no charge to
you, but be sure this is understood before you meet. Contact
the Mississippi Bar at 601-948-4471 or www.msbar.org for
public resources on choosing an attorney. Contact the
Mississippi State Board of Public Accountancy at 601-354-
7320 or www.msbpa.state.ms.us
What local permits do I need to go into
business?
Permit and zoning requirements vary from location to location.
Check with your City Hall to see which requirements apply to
you. Refer to section “Reporting Requirements for Mississippi
Small Business” in this book.
What if my business is in the county and not in
a town?
The County Courthouse will be able to give you the county
requirements for doing business. Refer to section “Reporting
Requirements for Mississippi Small Business” in this book.
How do I get a tax number for my
business?
Contact the Mississippi State Tax Commission at
(601) 923-7000 or www.mstc.state.ms.us and the Internal
Revenue Service at 1-800-829-1040 or www.irs.gov.
Refer to section “Reporting Requirements for Mississippi
Small Business” in this book.
The questions in this section are some that are asked most often by potential entrepreneurs. The Mississippi Development Authority
has attempted to answer these important questions you need answered before you go into business. However, you should consider
each question and answer carefully and do not hesitate contacting the Mississippi Development Authority or its regional offices before
going into business.
1
2
3
4
5
6
7
8
9
10
top 20 most asked questions
8
Do I have to collect sales tax?
Yes, if you are a retailer. If you are not a retailer, the
Mississippi State Tax Commission will give you the require-
ments for all other types of businesses.
NOTE: See #10 above for information on how to contact the
Mississippi State Tax Commission.
Refer to section “Reporting Requirements for Mississippi
Small Business” in this book.
How do I get a loan for my business?
The first step is to develop a business plan. The cash flow
projection will indicate the amount of money you will need for
working capital. Meet with your local banker and discuss the
bank’s requirements along with your business plan. If the
bank turns your loan down, ask about other options such as
guaranteed loans from the Small Business Administration
(SBA) or the Mississippi Development Authority (MDA). Other
options may include loans available through your local plan-
ning and development district. For a list of planning and
development offices, please refer to section “Resources for
Small Business”. Also refer to sections “A Guideline for
Preparing a Business Plan” and “Selected Business Financing
Available in Mississippi” in this book.
Can I get 100% financing for my business?
No. Your banker and the SBA expect you to contribute some
equity. As a general rule, they will expect you to put down 25
to 30 percent of the total project cost.
Where can I get information on a specific type
of business?
Business information constantly changes. Begin the process
by talking with your local economic development office,
chamber of commerce, Mississippi Main Street, library, com-
munity college, university, business support organization, or
the Internet. Trade association publications and journals such
as RMA ANNUAL STATEMENT STUDIES published by Robert
Morris Associates and the RAB (RADIO ADVERTISING BUREAU)
INSTANT BACKGROUND are often good sources of general
information on many business types.
How do I find the best location for my
business? What should I look for in
selecting it?
The following are some items to consider:
1.) Location of your customers
2.) Location of your competitors
3.) Other businesses in the area that complement your business
4.) Freight and shipping costs of your suppliers
5.) The labor market
How do I find my market? How big
should it be? Who do I target for my
customer(s)? How do I define my
market population?
For most businesses, determining the correct “target
market” and finding a way to reach that market will
be the most important aspect of determining the suc-
cess of your business. As a business owner, you must
understand that no business will reach the entire mar-
ket population. Therefore, it is essential that you find
your “market niche”, the target group of customers
that will both want and be able to purchase your prod-
uct (s)/service(s). Consider a market with which you
are familiar. You may wish to consider a geographic
location close by that allows you to monitor progress.
Research your market to see which market segment
you want to seek, and how much of that target market
you can afford to tackle at one time. Contact your
local economic development office, chamber of com-
merce, Mississippi Main Street, library, community
college, university, business support organization, or
the Internet. Refer to section “A Guideline for
Preparing a Business Plan” in this book.
Do I really have to spend money on adver-
tising; and, if so, how do I decide how
much to spend and what media to use?
YES! As part of your overall marketing program you
will need to both reach potential new customers and
remind current customers of your presence in busi-
ness. To get started, look at what media your compe-
tition uses and consider how it is beneficial to them.
Remember that the key to advertising is to find your
target customer. Every media type has it advantages
and disadvantages. Research the type of media and
determine if it is best for your type of business. Look
to industry associations and publications for informa-
tion on what the general budget for advertising is
within the industry. Contact your local economic
development office, chamber of commerce,
Mississippi Main Street, library, community college,
university, business support organization, or the
Internet. Refer to section “A Guideline for Preparing a
Business Plan” in this book.
11
12
13
14
15
16
17
top 20 most asked questions
9
If I’m just beginning in business, how can I esti-
mate revenues and expenditures two years into
the future?
To determine your starting point, figure how much of your mar-
ket you can capture initially, and investigate your start-up
expenses, as well as your monthly expenses. From these fig-
ures, a cash flow analysis can be formulated. For an example
of a cash flow, refer to the section “A Guideline for Preparing A
Business Plan”.
How do I figure out what to charge for my prod-
uct or service? Is there a formula that I should
use?
It is not necessarily a question of how much you CAN charge
but of how much you MUST charge. Determine what it will
cost to operate your business and produce your product. This
will tell you what your minimum price must be. Then decide if
that price is competitive. Refer to section “A Guideline for
Preparing a Business Plan” in this book.
I’m confused. Where should I start?
While starting a new venture can be intimidating, there is help.
There are many good resources in Mississippi. However, a
good place to start is the Mississippi Development Authority
(MDA). Our professional team has worked with hundreds of
Mississippi businesses and we are here to assist you too, at no
charge. Simply call 601-359-3593 or email us at
[email protected]
18
19
20
preparing a business plan
A guideline for
11
guideline for preparing a business plan
13
Reading the entire text of this document is the first step in preparing your business plan
There are two basic reasons for preparing an extensive business plan. First, it requires the entrepreneur to thoroughly investigate the
factors that will have a bearing on the success of the business. Second, it will enhance the ability of the entrepreneur to secure
financing by providing an organized overview of the venture for lenders and investors. It also provides insight into the entrepreneur’s
ability to define and develop strategies for critical areas of the business.
The following outline has been prepared to help the entrepreneur assemble the facts that are essential to good business planning.
Complete your business plan using the accompanying outline to ensure that the necessary details are included. Keep in mind that
thoroughness, clarity and rationality of the plan are all factors that will play key roles in successful financing, starting and operating
your business.
Because these guidelines were written to cover a variety of businesses, rigid adherence to them is not possible or even desirable for all
businesses. Not all parts of all sections will be necessary for each individual’s business plan.
I. Executive Summary
An executive summary should be written to summarize the important components of the business plan. Ironically, this is the first sec-
tion of the business plan, but is the last section written. Its purpose is to convey to the potential financial lender or investor, in two
pages or less, the relevant points of the business venture. Therefore, it is written after the entire business plan has been prepared.
The executive summary is a written version of a one to two minute pitch. In other words, imagine that you are “pitching” your idea to
a potential investor and only have one to two minutes of their time. To convince the potential investor this is a good investment, you
must condense your message into a package of key points about the business.
The executive summary must capture the reader’s attention. If you cannot capture the investor’s attention within the first two pages,
then the chances of the remainder of the business plan being read are not very good. The following information should be included in
the executive summary:
• Company name, address, and phone number
• Brief description of the business
• Brief description of your target market
• Brief description of your strategy to make the business a success
• Brief description of the owners and key people, including names, addresses, phone numbers, and
managerial/technical experience
• Brief analysis of the financial needs of the business, including the planned use of any borrowed/invested funds
guideline for preparing a business plan
14
The Detailed Business Plan
II. The Industry, The Company, Its Vision, and Its Products
The purpose of this section is to assist you in describing your business venture in a detailed but concise manner. You must clearly
present the nature of the industry, the business you are in, the vision for the company, and the product you will offer.
A. The Industry
Present a brief description of the background of the industry, the current status and the outlook for the future in which the business
will operate. Discuss new products and developments, new markets and customers, and any other new trends that could affect the
business. Identify all sources of information used to describe these trends.
B. The Company and Its Vision
Briefly describe the business area your company is in, or intends to enter, and your company’s overall mission; also known as the mis-
sion statement. This section should discuss your general business goals and objectives. Goals address the question of “Why am I in
business?” and objectives are the specific targets aimed at obtaining those goals. Next, briefly describe what makes your business
unique, including any factors that will distinguish your company from others in the same industry. This section should also discuss the
ownership and legal form of the company. Consult an attorney for the form (such as sole proprietorship, partnership, corporation, or
LLC) that is best for your business.
C. The Products or Services
1. Description: Describe in detail the products or services to be sold including all features. This section should also describe how
customers will use your product or service, as well as what benefit it will provide or need it will fulfill. Emphasize any unique features
of your product or service and highlight differences between what is currently on the market and what you will offer. Define the cur-
rent state of development of the product or service; include a photograph if applicable.
If you will be manufacturing a product, describe the production process, raw materials required, and the amount of time required to
manufacture the product. You should also describe the plant layout and how the overall manufacturing process will flow from raw
materials to finished product.
2. Proprietary Position: Describe patents, trade secrets, or other proprietary features. Discuss any advantage that you might have
that would enable you to achieve a favorable position in your industry.
guideline for preparing a business plan
15
III. Business Analysis
The purpose of this section is to guide you through the process of analyzing your business as compared to the competition. In Section
II, you discussed why you are in business. This section should discuss “How to get there.”
A. SWOT Analysis
In order to compare your business to the competition, you must analyze the business internally and externally. You must determine
your Strengths, Weaknesses, Opportunities, and Threats.
Strengths are positive internal factors a company might possess that can be used to help accomplish the overall mission, goals, and
objectives. Examples include a strong sales force, specialized skills or knowledge, etc.
Weaknesses are negative internal factors that might interfere with the accomplishment of the overall mission, goals, or objectives.
Examples might include a weak sales force, lack of capital, poor management skills, and lack of knowledge.
Opportunities are positive external forces that can help a company’s ability to achieve its mission, goals, and objectives. Examples
include a niche in the market, trends in the market, etc.
Threats are negative external forces that interfere with a company’s ability to achieve its mission, goals, and objectives. Examples
include an economic recession, rising interest rates, government regulations, etc.
B. Marketing Positioning and Image
Briefly describe the company’s position in the overall market place. In other words, determine how your business will capture its place
in the market and compete effectively. Some things to consider might be price and quality. This section should also describe the
image your company plans to project. Will you be a low cost, discount store, a high-end upscale store, or somewhere in the middle?
C. Business Strategy
This section describes how a business will gain a competitive edge in the market place, and what distinguishes the business from the
competition. In other words, determine what will make you unique according to your potential customers. This section should also
describe “How” to obtain the goals and objectives described in Section II. For example, if one of your goals is to be a low cost leader
with your specific product or business, this section should describe how you are going to reach that goal.
guideline for preparing a business plan
16
IV. Market Research and Analysis
The purpose of this section of the business plan is to present enough facts to determine if your product or service has a substantial
market in a growing industry and can achieve sales despite a competitive market. This section is one of the most challenging to pre-
pare and also one of the most important. Almost all subsequent sections of the business plan depend on sales estimates that are
developed in this section. The sales levels you project, based on the market research and analysis, directly influence the size of the
operation, the marketing plan, and the amount of debt and equity capital required. Market research defines the need for the product,
aids in predicting market share, identifies competition, provides direction for efficient use of advertising and promotional dollars, identi-
fies problems and opportunities, and establishes benchmarks by which to measure progress and success.
Basic research need not be expensive. Examples of primary (non-published) sources include personal focus group interviews, cus-
tomer surveys and questionnaires, telephone surveys, traffic counts, and daily transaction reports (example includes information on
personal checks that you receive in your business). Examples of secondary (published) research sources include business directories,
advertising media, demographic data, census data, local government sales tax data, chamber of commerce information, and forecasts.
The three main types of information that you will need to collect include geographic (such as where are my customers located); demo-
graphic (such as the characteristics of your potential customers, i.e. age, education levels, income, gender, marital status); and psy-
chographic (such as what makes my customers buy a product, and what are they looking for i.e. price, quality, location, convenience,
status).
Because of the importance of market analysis and the dependence of other parts of the plan on the sales projections, you may want to
prepare this section of the business plan before you do any other. Allow enough time to do extensive research and analysis and check
all sources of market data. As already mentioned, this is a challenging section to prepare, but a good place to start is your local eco-
nomic development office, chamber of commerce, Mississippi Main Street, library, community college, university, business support
organization, or the Internet.
A. Target Market
One of the main objectives of market research is to identify the small business’ target market, which is the group of customers whom
the company plans to market its product to. Who and where are the major purchasers? What is the basis for their purchase decision:
price, quality, service, personal contact, or some combination of these factors? Are you trying to target a specific age group or status
of customer? Basically, who is going to buy your product?
B. Market Size, Makeup, and Trends
Describe the primary market for your product in terms of total potential sales volume. In other words, how many customers does the
market contain, and what are their potential annual purchases? Also, describe the seasonal fluctuations and the potential annual
growth of the total market for your product or service, and discuss the major factors affecting the growth (industry trends, economic
trends, government policy, population shifts). Is this a one-time purchase or a product that is repurchased on a regular basis?
C. Market Share and Sales
Summarize what it is about your product or service that will make it saleable in the face of current and potential competition. Identify
major customers who are willing to make purchase commitments and if possible attach their commitment letters to your plan.
Discuss which customers would be major purchasers in the future and why. Based upon your assessment of the advantages of your
product or service, market size and trends, customers, the competition and their product, and the sales trend in prior years, estimate
your share of the market and your sales in units and dollars for a minimum of two years. Be sure to state any assumptions upon
which your projections are based.
guideline for preparing a business plan
17
D. Pricing
The pricing policy is one of the most important decisions you will have to make. The price must be right to penetrate the market,
maintain market position, and produce profits.
To determine price, calculate production cost and add a percentage for profit. Consider overhead, promotional and advertising expens-
es, and delivery cost. Remember that inherent price limitations in the marketplace, as well as variations of internal costs, weigh heavi-
ly in determining price. Pricing must be in line with that of major competitors offering similar products and services.
There is a distinct difference between value and price. While some customers do not look beyond a price tag, others also consider
service, dependability, and convenience. You must know what motivates the customer to buy before determining what he is willing to
pay for merchandise or services.
Finally, when determining price, decide what image you want to project. Describe if you will have a low end priced product, high end
product or somewhere in the middle.
E. Sales Tactics/Distribution
Describe the methods that will be used to make sales and distribute the product or service. Analyze the effectiveness of everything
available within the sales system. Traditional channels include salespeople, agents, distributors, direct mail services, and dealers.
Additional distribution methods involve warehouse clubs, electronic shopping, telemarketing, trade shows, temporary space in shop-
ping malls, vending machines, franchising, or large volume sample sales to hotels for free distribution to guests. Offering discounts to
wholesalers or dealers who assist in distribution is also an effective channel.
Each distribution method must be evaluated as it relates to cost, coverage, and performance.
Many of these channels are geared only to large or very small volume, or lend themselves only to specialized merchandise. Choose
what works best for your particular business and maintain an awareness of developing sales methods.
Selective distribution is the key to effective distribution. Most start-up businesses are most successful when operating out of one loca-
tion or geographic area, even though they may employ several sales techniques.
F. Advertising and Promotion
Describe approaches the company will use to bring its product to the attention of prospective purchasers. The schedule and cost for
advertising and promotion should be presented. If advertising and promotion will be a significant expense item, an exhibit of how and
when these costs will be incurred should be included.
Though distinctly different functions, advertising and promotion work hand-in-hand to generate sales. Both are communication strate-
gies designed to affect buyer’s behavior patterns and habits. Advertising concentrates on delivering a message through print and elec-
tronic media, while promotion relies on direct customer involvement and response. In both advertising and promotion, it is important to
narrow the target audience, concentrating as specifically as possible on the group most likely to purchase the product or service
advertised or promoted.
The key to a large return from a small advertising budget lies in the media chosen. Cost varies according to locale and competition
among media sources. For example, a 30-second radio spot may cost $25 on one station and $50 at another station in the same
town. The same size ad might cost three or four times as much in one newspaper as another. Rates for cable television and inde-
pendent stations might be affordable for small businesses that cannot buy expanded network programming. Each advertising situation
is different, and rates vary from town to town and from region to region.
guideline for preparing a business plan
18 18
To select the best media for the business and to effectively negotiate rates, it is important to examine the advantages and disadvan-
tages of each type. Selection should never be based on price alone, but on what the media can do for your business image and
sales. A more expensive station or newspaper might very well hit your target customer exactly and be well worth the investment. On
the other hand, some businesses do quite well with strong customer service, and little purchased advertising. The needs of each
business are unique.
NOTE: See Appendix A for the advantages and disadvantages of each type of media.
Bartering and cooperative advertising are effective methods of stretching an advertising budget. Bartering is often called “trade out”.
For example, a small business may be able to trade some of its goods or services to a radio station in exchange for an equal amount
of air time. All media will not barter, but if your goods are useful to them, it is worth a try. Cooperative advertising refers to sharing
expenses. Two or more businesses may share the cost of advertising or one of your company’s vendors may supply advertising dol-
lars as well as camera ready copy to which you only need to add your company logo. This not only increases the advertising place-
ment budget, but decreases or even eliminates production cost. As advertising costs grow, it is important that small business owners
be creative with cooperative and bartering techniques.
Some businesses have discovered that setting up an in-house ad agency will save 15 percent of media cost. This is a simple proce-
dure and can save substantial amounts, but the small business person needs to consider the extra time spent in dealing with adver-
tising salespeople and additional paperwork.
Any event held to increase sales and traffic is a promotion. Promotional efforts include coupons, contests, sampling, point-of-pur-
chase merchandising, visual displays, gift-with-purchase incentives, seasonal sales, special events, trade shows, imprinted specialty
items and demonstrations.
Creativity and originality are the keys to successful promotional efforts and there are many low-cost and effective ways to do it. For
example, a well known pizza chain has developed a technique called “banner-shaking” which involves one or two employees stand-
ing near major intersections during evening rush-hour “shaking” painted banners at traffic. These banners highlight a special price
on pizza immediately ready for take-out. The promotion costs nothing but the price of the banner and the results are great because it
targets working people, tired after a long day and provides an immediate solution for dinner with no cooking. Creativity is the most
effective way of promoting any business.
Promotional activity should always be based on recognizing customer needs and making them feel special. Providing exceptional
service, using friendly words and smiles, using their names, giving them advance sales information and sending them your business
newsletter are just a few low-cost or no-cost promotions to use. Superior store or office appearance, cleanliness, business reputation
and even good landscaping and signage are all important promotional tools that sell. Promotions are not just sales events, but any-
thing that adds to the image of the business.
Another form of advertising is publicity. Publicity, often referred to as “free advertising”, means getting the company’s name, product,
or service in the media at no charge. Publicity is especially important for entrepreneurs with limited advertising and promotional
budgets.
Press releases are effective only if they are genuinely newsworthy and should be accompanied by a photograph if possible. Company
newsletters, sponsorships of local athletic teams, donations of gifts for charitable functions and participation in civic organizations are
all good sources of positive publicity. Capitalize upon every opportunity to get your company’s name in front of the public at no
charge.
guideline for preparing a business plan
19
G. Packaging
Describe how the product will be packaged. Packing refers to the presentation of goods or services. Proper packaging attracts the
customer, effectively communicates product attributes, identifies the brand and seller, lists ingredients, and makes the product easier
to handle. Effective package design decreases costs associated with storage, labor, shipping and pilferage. Poor packaging, however,
creates an impression of inferiority and significantly lessens sales.
H. External Market Influences
Describe how each of the following external forces impacts your ability to sale your product.
1. Economic Factors
Economic analysis requires data on employment levels, inflation, interest rates, recession, and high or low unemployment. Free
sources of this information include libraries, banks, educational institutions, investment houses, government agencies, newspapers,
business publications and trade associations. Compare and contrast several sources before drawing conclusions or implications.
2. Political and Social Factors
Depending upon the nature of the business, operations may be affected by local, state, regional, national and world political situations.
National deregulations, tax increases, or elimination of trade barriers, for example, can have a profound impact. At the state or local
level, the acceptance or rejection of bond issues, election of new officials, or renovation plans might affect a company’s marketing phi-
losophy. The media, periodicals, trade journals and general business publications are good references.
Social analysis includes a study of the demographics of the customer base. Important factors include the age groupings, income level,
type of employment, mobility, marital status and leisure habits of customers, as well as the number of women and teenagers in the
local work force. Chambers of commerce are helpful in gathering local information.
3. Technological Factors
Technology is growing and changing at an alarming rate. The World Wide Web has enabled small company’s to advertise their product,
and compete effectively with the larger companies. Describe the impact the Internet will have on the sales of your product. Also,
describe if you will use the Internet to order your products for resale, or raw materials for manufacturing.
V. Competitor Analysis
Describe who your current competitors are, and why customers buy from them. Compare your own product to that of your competition
on the basis of price, performance, service, warranties, and other pertinent features.. Know the similarities, the differences, and the
ways in which your product is unique. Develop reasons why customers should choose your product over that of another company.
An effective marketing strategy cannot be developed without a thorough knowledge of the competition. Read all annual reports, news-
paper articles, advertising, company literature and published statistics related to the competition. Question suppliers and attend trade
shows and business fairs. Continually seek information on competitors’ products, research and development activities, production
methods and costs, organizational designs, financial status, marketing strategies and general strengths and weaknesses. If the busi-
ness is a retail establishment, remember that location is a prime consideration.
Use information about the competition as a tool for bettering your own business. Look for trends in their advertising, pricing, or promo-
tion and for variances from the usual, which could indicate new strategies or test marketing. Do not overreact to a change in opera-
tions by the competition, but always be prepared to make adjustments based on their actions if necessary.
guideline for preparing a business plan
20
VI. Operating Plan
The operating plan should describe facilities, location, space requirements, capital equipment, and labor force that are required to pro-
vide the company’s product or service.
The discussion guidelines given below are general enough to cover different businesses. Only those that are relevant to your particular
business should be addressed in your business plan.
A. Location
Describe the planned location of the business and discuss the advantages and disadvantages of the site in terms of wage rates; labor
availability; proximity to customers and suppliers; access to wholesalers, distributors and transportation; state and local taxes and
laws; utilities; and zoning.
B. Facilities and Improvements
If yours is an existing business, describe the facilities currently used. If your firm is new, describe how and when the facilities to start
business will be acquired. Discuss how and when space and equipment will be expanded to the capacity required for future sales pro-
jections. Discuss any plans to add to or improve existing space. Explain future equipment needs and indicate the cost and timing of
such acquisitions.
C. Strategy and Plans
Describe the process involved in production of your product or service. Also present a plan that shows cost-volume information at var-
ious sales levels of operation with a breakdown of material, labor, purchased components, and overhead. Manufacturers should briefly
describe their approach to quality control, production control, and inventory control. Explain the quality control and inspection proce-
dures the company will use to minimize service problems and ensure customer satisfaction.
D. Labor Force
Exclusive of management functions, does the local force have the necessary skills, in sufficient quantity and quality, to produce the
product? If their skills are inadequate, describe the training that you would use to upgrade them.
guideline for preparing a business plan
21
VII. The Management Team
The management team is the key to turning a good idea into a successful business. Bankers and investors look for a committed
management team with a balance of technical, managerial, and business skills. The proposal should include a description of the
organizational structure, key management personnel and their primary duties, and the board of directors, if applicable.
A. Organization
In a table, present the key management roles in the company and the individual who will fill each position. Discuss any current or
past situations where the management personnel have worked together and indicate how their skills complement each other and
result in an effective management team.
B. Key Personnel
Describe the exact duties and responsibilities of each key member of the management team. For each individual, include a brief
statement of career highlights that focuses on his or her ability to perform the assigned role. A complete resume for each member
should be included as an exhibit to the business plan.
C. Management Compensation and Ownership
State the salary that is to be paid to each member. Set forth stock ownership planned for key personnel, the amount of their equity
investment, and any performance-dependent stock options or bonus plans that are contemplated.
D. Board of Directors
Discuss the company’s philosophy as to the size and composition of a board of directors. Identify proposed board members and
include a short statement about each member’s background.
VIII. The Financial Plan
Developing financial pro-formas or projections is a vital aspect of your business plan. It is important that you take the time to thor-
oughly research your projections so that they will be as realistic as possible. Be liberal with your expenses and conservative with your
revenues. It is much better if your financial surprises are pleasant ones.
Too often people try to determine their start-up costs without considering their costs of operation after the business has opened. In
order to finance the business properly, determine whether you will need additional cash at the outset to support periods of operating
losses that often occur during the early months of operation. With that thought in mind, start the pro-forma with the cash flow state-
ment.
A cash flow statement is nothing more than a presentation of the monthly cash receipts and cash disbursements that you expect to
incur while operating your business. It is important to address this on a monthly basis because many businesses pay for their goods
and expenses in one month but do not collect the money until the following month, or longer. Numerous businesses fall into this cash
flow trap. Also, many of your expenses are going to be fixed expenses; those expenses that stay the same regardless of your sales
level. Fixed expenses might be rent, insurance, salaries or contract obligations.
guideline for preparing a business plan
22
A. The Cash Flow Worksheet
While some businesses may generate “unearned” revenues such as rents, interests, or similar incomes, we will deal with the primary
concern of most small businesses, which is sales.
1. Sales – Sales revenue is income your business receives by selling its goods and services to others. Your business may sell more
than one type of goods and services, so you should keep your sales figures separated by product or service. Notice on the worksheet
(Table 1) how sales are typically lower during the early months of operation. It will take time to develop a customer base for your busi-
ness, so it will be necessary to borrow enough at the outset to carry the business through this building period. Your first step is to post
your projected monthly revenues to your cash flow statement.
2. Cash Receipts – Cash receipts reflect when you actually receive the cash for the goods that you sold. Some of your sales may be
for cash, meaning that you received those funds at the time of sale. However, some of your sales may be on credit and you may be
required to mail invoices for your sales. If this is true, then you have to “carry” the outstanding cash as accounts receivable. Some of
this cash may be received in 30 days, some in 60 days, some longer; some of your accounts receivable may never be collected. All of
those considerations must be brought into play when preparing the cash receipts section of your cash flow statement. It is the actual
receipt of the cash that determines whether your have the cash on hand to pay your bills.
3. Disbursements – Next, identify the payments you will have to make each month for your expenses. Be careful and realistic while
considering these disbursements. The cash flow example on the following page identifies some of the more common expense cate-
gories, but each business will experience its own specific expenses.
In our example, “material purchases” is the amount that will be paid to suppliers to replace the goods that were sold. It is based upon
“sales” and the cost of those sales. Your research should have identified a “cost of goods sold” percentage for you. If that percentage
was 50 percent, for example, then your cost of goods sold will be exactly one-half of your gross sales. If your cost was 25 percent,
then your cost of goods sold will be one-fourth of your gross sales.
Be sure to remember that an increase in sales may bring about an increase in certain disbursements. Sales increases may mean a
need to hire additional labor, thus creating higher wages and benefits; it may also mean higher utility costs, higher material costs and
increases in other variable costs.
4. Net and Cumulative – Net cash flow reflects the difference between receipts and disbursements, positive or negative, for the cur-
rent month. The cumulative cash flow, or current position, is determined by adding the present month’s cash flow to that of the previ-
ous months.
An example of a cash flow statement is shown on the next page. Note that the numbers in the narrative match the numbers on the
worksheet. For example, “Disbursements,” number three in the text is also number three on the worksheet. (See Table 1).
Table 1
Cash flow Worksheet
guideline for preparing a business plan
Table 1
Cash flow Worksheet
guideline for preparing a business plan
24
#1
#2
#3
#4
Month 1 2 3 4 5
Sales #1
Sales #2
Sales #3
Less returns
0-30 days
30-60 days
Over 60 days
Equity proceeds
Loan proceeds
Material purchases
Labor
Management
Payroll tax
Benefits
Advertising
Truck/auto expense
Contributions
Charge card
Dues & subscriptions
Freight
Insurance
Legal & accounting
Office supplies
Shop supplies
Travel
Phone
Utilities
Repairs
Tax/license
Rent/lease
Miscellaneous
Principal payment
Interest payment
Land and building
Machinery and equipment
Furniture and fixtures
Additional inventory
Utility deposits
Other assets
Income taxes
$ 10,000
5,000
$15,000
$11,250
0
100,000
300,000
$411,250
$6,250
3,500
1,800
636
250
500
25
126
275
100
35
45
150
450
55
150
671
2,792
325,000
35,000
10,000
10,000
2,500
1,500
0
$401,810
$9,440
$9,440
Sales
Total Sales
Cash Receipts
Total Receipts
Disbursements
Total
Net Cash Flow
Cumulative Cash Flow
$ 11,000
5,500
$16,500
$12,375
3,750
0
0
$16,125
$6,875
3,500
1,800
636
250
500
25
126
275
100
35
45
150
450
0
150
678
2,785
0
0
0
0
0
0
0
$18,380
($2,255)
$7,185
$ 11,500
5,775
$17,275
$12,956
4,125
0
0
$17,081
$7,194
3,500
1,800
636
250
500
25
126
275
100
35
45
150
450
0
150
684
2,779
0
0
0
0
0
0
0
$18,699
($1,618)
$5,567
$12,000
6,000
$18,000
$13,500
4,319
0
0
$17,819
$7,500
3,500
1,800
636
250
500
25
126
275
100
35
45
150
450
0
150
691
2,772
0
0
0
0
0
0
0
$19,005
($1,186)
$4,381
$12,500
6,200
$18,700
$14,025
4,500
0
0
$18,525
$7,800
3,500
1,800
636
250
500
25
126
275
100
35
45
150
450
0
150
698
2,765
0
0
0
0
0
0
0
$19,305
($780)
$3,601
not applicable to this worksheet but could apply to your business.
Table 1: Cash Flow Worksheet Anywhere, Mississippi
guideline for preparing a business plan
25
6 7 8 9 10 11 12
$ 13,000
6,500
$19,500
$14,625
4,675
0
0
$19,300
$8,125
3,500
1,800
636
250
500
25
126
275
100
35
45
150
450
0
150
704
2,759
0
0
0
0
0
0
0
$19,630
($330)
$3,271
$ 15,000
7,500
$22,500
$16,875
4,875
0
0
$21,750
$9,375
4,700
1,800
780
250
750
25
200
275
100
50
65
200
525
0
200
711
2,752
0
0
0
0
0
0
0
$22,758
($1,008)
$2,263
$ 17,500
8,500
$26,000
$19,500
5,625
0
0
$25,125
$10,875
4,700
1,800
780
250
750
25
200
275
100
50
65
200
525
0
200
718
2,745
0
0
0
0
0
0
0
$24,258
$867
$3,130
$19,000
9,500
$28,500
$21,375
6,500
0
0
$27,875
$11,875
4,700
1,800
780
250
750
25
200
275
100
50
65
200
525
0
200
725
2,738
0
0
0
0
0
0
750
$26,008
$1,867
$4,997
$21,500
10,500
$31,500
$23,625
7,125
0
0
$30,750
$13,125
4,700
1,800
780
250
750
25
200
275
100
50
65
200
525
0
200
732
2,731
0
0
0
0
0
0
0
$26,508
$4,242
$9,239
$23,000
11,500
$34,500
$25,875
7,875
0
0
$33,750
$14,375
4,700
1,800
780
250
750
25
200
275
100
50
65
200
525
0
200
739
2,724
0
0
0
0
0
0
0
$27,758
$5,992
$15,231
$25,000
12,500
$37,500
$28,125
8,625
0
0
$36,750
$15,625
4,700
1,800
780
250
750
25
200
275
100
50
65
200
525
0
200
746
2,717
0
0
0
0
0
0
1,000
$30,008
$6,742
$21,973
guideline for preparing a business plan
26
B. Sources and Uses of Funds
Having completed your cash flow worksheet, you now have some idea of what your sales and operating expenses might be and you
can determine how much financing you will need.
5. Sources of Funds – After you have identified your financing needs, address where the funds must come from. Either the investor
or investors must provide the necessary capital, or the business must make arrangements to borrow the funds. In most cases, you will
use both sources of funds. Our example (Table 2) shows that the entrepreneur has injected $100,000 of his own funds. That is 25
percent of the entire project cost, which is approximately what a bank would require. The remaining 75 percent or $300,000 was
arranged through two separate loans: one long-term loan for the land and building and a second, shorter-term loan for the equipment,
machinery, and fixtures.
6. Use of Funds – Make a list of what you will need to purchase in order to begin operation and determine the cost of each item. The
Sources and Uses of Funds Statement shown in Table 2 gives some of the more common items that you must have before you start
operation. Bids need to be secured for any construction, while pricing lists should be provided for equipment, machinery, and invento-
ry. Be sure to ask your local utility company if any deposits are required. Also, refer to your cash flow statement to see if you must
prepare for a period of cash shortage.
7. Cash Balance – (Working Capital) – Obviously, the funds remaining after the initial purchases represent your working capital. As
shown by the cash flow statement, this additional capital is necessary as a cushion to absorb the negative operating cash flow you
have in months 2 - 7 of operation (according to the examples in Table 1).
guideline for preparing a business plan
27
Owner’s funds . . . . . . . . . . . . . . . . . . . . . . . . . . $100,000
Loan #1 . . . . . . . . . . . . . . . . . . . . . . . . . . 250,000
Loan #2 . . . . . . . . . . . . . . . . . . . . . . . . 50,000
$400,000
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $75,000
Building . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 250,000
Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,000
Machinery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25,000
Renovations . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,000
Furniture and fixtures . . . . . . . . . . . . . . . . . . . . 10,000
Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,500
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,500
$384,000
(Working capital) . . . . . . . . . . . . . . . . . . . . . . . . $16,000
#5
#6
#7
Funds Available
Total . . . . . . . . . . . . . . . . . . . . . . . . . . .
Uses of Funds
Total . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash Balance
Table 2: Sources and Uses of Funds Statement
Anywhere, Mississippi
guideline for preparing a business plan
28
C. The Income Statement (Profit and Loss Statement)
With the cash flow worksheet completed, the income statement is easy to compile (see Table 3).
8. Sales – Total your monthly sales for each category as shown on your cash flow statement. This figure reflects your total pro-
jected annual gross sales. From this figure, deduct any refunds that you gave to customers for returned merchandise. This sum
represents your total net sales.
9. Cost Of Goods Sold – This is the cost of the products you sold to your customers. Your beginning inventory ($10,000) is
added to any purchases you made during the report period ($118,994) to identify the amount of goods available for sale.
Suppose you did not sell everything you had available for sale. At the end of this period you counted your inventory on hand and
found that you still had $10,000 of inventory on the date that you prepared this report. Your goods available for sale minus your
ending inventory produces the total cost of goods sold (total material costs). In the example, that amounts to $118,994
($128,994 minus $10,000 of ending inventory).
10. General and Administrative Expenses – These are the annual totals of the expenses as listed on the cash flow statement.
Note that there are some changes. Payment of the principal portion of your notes is not considered an expense. It will be
accounted for later on your balance sheet but does not appear on the income statement. Also, note the addition of an expense
category termed “depreciation”. This is not considered on your cash flow statement because you don’t write a check to depreci-
ation. The purpose of depreciation is to account for the fact that your assets will begin to wear out as you use them. A certain
piece of equipment may be expected to last for 10 years, for example. If that equipment cost you $1,000 at purchase and will be
worn out or worthless in 10 years, it is said to “depreciate” $100 per year. In our example the building, equipment, machinery,
etc., is depreciated by $11,400 per year. You don’t actually write a check for the $11,400, but your assets have devalued by that
amount.
11. Net Income (Pre-Tax) – Net sales minus material costs and operating costs gives us the net income of the business.
However, this amount does not include the payment of taxes on the profit made.
12. Taxes – If you have made a profit operating your business, you will be expected to pay both state and federal income taxes.
This aspect of your business should be discussed thoroughly with your accountant.
13. Net Income (After Tax) – After taxes have been paid, the remaining profit belongs to your business in the form of retained
earnings.
guideline for preparing a business plan
29
Sales #1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $190,500 66.73%
Sales #2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94,975 33.27%
Sales #3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 0.00%
Gross sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $285,475
Less returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 0.00%
$285,475 100.00%
Beginning inventory . . . . . . . . . . . . . . . . . . . . . . . $10,000
Material purchases . . . . . . . . . . . . . . . . . . . . . . . . 118,994
Goods available . . . . . . . . . . . . . . . . . . . . . . . . . . 128,994
Less ending inventory . . . . . . . . . . . . . . . . . . . . . (10,000)
$118,994 41.68%
Labor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $49,200 17.23%
Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,600 7.57%
Payroll tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,496 2.98%
Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,000 1.05%
Advertising . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,500 2.63%
Truck/auto expense . . . . . . . . . . . . . . . . . . . . . . . . 0 0.00%
Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 0.00%
Charge card . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 0.00%
Dues & subscriptions . . . . . . . . . . . . . . . . . . . . . . . 300 0.11%
Freight . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,956 0.69%
Insurance expense . . . . . . . . . . . . . . . . . . . . . . . . 3,300 1.16%
Legal & accounting . . . . . . . . . . . . . . . . . . . . . . . . 1,200 0.42%
Office supplies . . . . . . . . . . . . . . . . . . . . . . . . . . . 510 0.18%
Shop supplies . . . . . . . . . . . . . . . . . . . . . . . . . . . . 660 0.23%
Travel expense . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 0.00%
Phone expense . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,100 0.74%
Utility expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,850 2.05%
Repairs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 0.00%
Tax/license . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55 0.02%
Rent/lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 0.00%
Other expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,100 0.74%
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . 33,059 11.58%
Depreciation expense . . . . . . . . . . . . . . . . . . . . . . 11,400 3.99%
$152,286 53.34%
$14,195 4.97%
Federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,500
State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $250
$1,750 0.61%
$12,445 4.36%
#8
#9
#10
#11
#12
#13
Sales
Net Sales . . . . . . . . . . . . . . . . . . . . . .
Table 3: Projected Income Statement
Anywhere, Mississippi
Cost of Goods Sold
Total Material Cost . . . . . . . . . . . . . .
G&A Expenses
Total G&A . . . . . . . . . . . . . . . . . . . . . .
Net Income (pre-tax) . . . . . . . . . . . . . . . .
Income Tax
Total Tax . . . . . . . . . . . . . . . . . . . . . .
Net Income . . . . . . . . . . . . . . . . . . . . . . . . .
Year 1
guideline for preparing a business plan
30
D. The Balance Sheet
The balance sheet is a comparison of the assets, liabilities, and equity of your business. The one shown in Table 4 is a very basic
example of a small business balance sheet.
Assets
14. Current Assets – These are assets that are considered to be liquid or easily converted into cash. The cumulative cash of the busi-
ness (#4) is listed along with the ending inventory (#9) and accounts receivable – as well as other similar assets – to form the current
assets portion. The ending inventory is a listing of the goods held for sale at the end of your accounting period and the accounts
receivable is a listing of what is owed to you by your customers for previous purchases.
15. Fixed Assets – The second category of assets is fixed assets. This is a listing of the assets that are long-term in nature (brick-
and-mortar-type assets). It is these assets that depreciate in value over a longer period. Depreciation ($11,400) for past periods is
therefore deducted from the sum of these assets and shown on the balance sheet as accumulated depreciation.
16. Other Assets – This is a catchall section for other assets such as deposits held by utility companies.
17. Total Assets – This is simply the sum of current, fixed, and other assets (categories 14, 15 and 16).
Liabilities
Under the liabilities sections, you are dealing with what your business owes to others.
18. Current Liabilities – Current liabilities are bills and accounts that you must pay within the next year. (Short-term notes or
accounts payable are examples). Also considered to be a current liability is that portion of any long-term note that must be paid during
the upcoming year. This figure can be provided by your banker, accountant, or your amortization schedule of notes payable.
19. Long-Term Liabilities – Long-term liabilities are the long-term financial commitments your business has made to the bank or
other debt holders. If additional debt is not incurred, the “loans payable” section will decrease each year by the amount of principal
payments made during the period. In the example in Table 4, the original debt of $300,000 – as shown in the Sources and Uses of
Funds Section – is now reduced to a balance due of $291,503. Therefore, $8,497 in principal was paid during that first year of opera-
tion ($300,000 minus $291,501). Also, note that $9,447 is deducted and shown as less current portion. That is because it is the por-
tion of long-term principal that will be paid during the upcoming year and it is therefore considered to be a current liability and is listed
under that category.
20. Total Liabilities – This is the sum of long-term liabilities.
Equity
21. Equity – The equity section reflects your original investment (#5) as well as the accumulation of profits (#13) of the business
(retained earnings).
22. Total Liabilities & Equity – The sum of your liabilities and equity when added together should equal your assets. Do they bal-
ance? If not, you have an error in one of your sections.
guideline for preparing a business plan
31
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $21,973
Ending inventory . . . . . . . . . . . . . . . . . . . . . . . . . . 10,000
Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . 9,375
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
$41,348
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75,000
Building . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 250,000
Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,000
Machinery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25,000
Renovations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Furniture & fixtures . . . . . . . . . . . . . . . . . . . . . . . . 10,000
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
$370,000
Less accumulated depreciation . . . . . . . . . . 11,400
$358,600
Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,500
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,500
$4,000
$403,948
Notes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . $0
C/P long-term debt . . . . . . . . . . . . . . . . . . . . . . . . 9,447
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
$9,447
Loans payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . $291,503
Less current principal . . . . . . . . . . . . . . . . . . . . . . (9,447)
$282,056
$291,503
Owner’s funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . $100,000
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . 12,445
$112,445
$403,948
#14
#15
#16
#17
#18
#19
#20
#21
#22
Current Assets
Total Current Assets . . . . . . . . . . . . .
Table 4: Projected Balance Sheet
Anywhere, Mississippi
Fixed Assets
Total Fixed Assets . . . . . . . . . . . . . . .
Total Equity . . . . . . . . . . . . . . . . . . . .
Year 1
ASSETS
Net Fixed Assets . . . . . . . . . . . . . . . .
Other Assets
Total Other Assets . . . . . . . . . . . . . .
Total Assets . . . . . . . . . . . . . . . . . . . . . . . .
Current Liabilities
LIABILITIES
Total Current Liabilities . . . . . . . . . .
Long-Term Liabilities
Total Long-Term Debt . . . . . . . . . . . .
Total Liabilities . . . . . . . . . . . . . . . . . . . . .
EQUITY
Total Liabilities & Equity . . . . . . . . . . . . . .
requirements
Reporting
Special Note
It should be noted that the tax forms discussed in this publication are subject to change without
notice. Check with the appropriate government office for the form currently in use.
33
Reporting Requirements
35
Introduction
Reporting Requirements for Mississippi Small Businesses provides a handy summary of regulations governing the establishment and
operation of businesses in Mississippi. Reporting Requirements consists of three sections: (a) federal regulations; (b) state regulations;
and (c) city and county regulations.
How to Use This Chapter
This publication presents the regulations business operators should follow to begin or maintain a business. For example, the owner or
operator of a new business should note the sections named “Initial Federal Regulations” and “Initial State Regulations.” The owner or
operator of an existing business will focus attention on the tax forms and regulations reported on an annual, quarterly and monthly
basis as well.
This publication is designed to take the reader through the details of filing business tax forms and other elements of “paperwork.”
While care has been taken to assure that rules and regulations in this publication are correctly interpreted, each agency mentioned is
the final authority and should be consulted for detailed information and possible changes in regulations. This publication is not intend-
ed to be an all-source guide for starting a business. For additional information, contact the Internal Revenue Service, the Office of the
Secretary of State, the State Tax Commission or the Mississippi Development Authority. You may also want to consult with an attorney
or accountant on paperwork required to start a business, as well as required monthly and annual reports.
Federal Tax and Regulatory Forms Discussed in this Chapter
1. SS-4 Application for Employer Identification Number
2. W-4 Employee’s Withholding Allowance Certificate
3. W-5 Earned Income Credit Advance Payment Certificate
4. 8109-B Preprinted Tax Deposit Coupons
5. 941 Employer’s Quarterly Federal Tax Return
6. 940 Employer’s Annual Federal Unemployment (FUTA) Tax Return
7. 945 Annual Return of Withheld Federal Income Tax
8. W-2 Federal Wage and Tax Statement
9. W-3 Transmittal of Wage and Tax Statements
10. 1096 and 1099 Miscellaneous Income
11. 1040 Federal Individual Income Tax Return
12. 1040-SE Federal Self-Employment Tax
13. 1040-ES Estimated Tax for Individuals
14. 1065 U.S. Partnership Return of Income
15. K Partner’s Shares of Income, Credits, Deductions, etc.
16. K-1 Individual Partner’s Share of Income, Credits, Deductions, etc.
17. 1120 U.S. Corporation Income Tax Return
18. 1120S U.S. Income Tax Return for an S Corporation
19. OSHA 300 Log of Work-related Injuries and Illnesses
20. OSHA 300A Summary of Work-related Injuries and Illnesses
21. OSHA 301 Injury and Illness Incident Report
Reporting Requirements
36
Initial Federal Reports and Regulations
A number of federal regulations apply when a business is started or new employees are hired. These regulations are discussed as
follows:
APPLICATION FOR EMPLOYER IDENTIFICATION NUMBER (FORM SS-4)
In many cases, a new business owner must obtain an employer identification number (EIN), especially if the business is a corporation
or partnership or hires employees. The EIN is a nine-digit number issued by the IRS and can be obtained by calling 1-800-829-4933
between 7:00 a.m. to 10:00 p.m. or by completing Form SS-4. The EIN is used to identify the tax accounts of employers, corporations,
partnerships, and certain other taxpayers with no employees. The EIN should be used on all items sent to the IRS and the Social
Security Administration (SSA). For more information, obtain Publication 1635, “Understanding Your EIN.”
CONTACT: Internal Revenue Service
EMPLOYEE’S WITHHOLDING ALLOWANCE CERTIFICATE (FORM W-4)
An employee must fill out and give this form to his employer when he begins his employment. This form guides the employer in deter-
mining how much federal income tax to withhold from wages. Internal Revenue Service’s Publication 15 “Employer’s Tax Guide,
Circular E” provides federal income tax withholding tables.
CONTACT: Internal Revenue Service
EARNED INCOME TAX CREDIT ADVANCE PAYMENT CERTIFICATE
(FORM W-5)
The advance payment of the Earned Income Tax Credit (EITC) provides a means for eligible employees to receive additional income at
each pay period instead of waiting to file for a refund when their annual federal income tax returns are prepared and filed. An employ-
er must make Form W-5 available to his employees. It is then the responsibility of eligible employees who wish to receive advance
EITC payments to give their employer a completed form W-5 each year. The employer must then include these payments with wages
paid to such eligible employees. Generally, the employer pays the amount of the advance EITC payments from withheld income and
social security taxes. The employer deducts the amount of the advance EITC from taxes due on Form 941, Employer’s Quarterly
Federal Tax Return. Advance EITC is also reported in Block 9 of Form W-2. The Internal Revenue Service’s “Employee Tax Guide,
Circular E” provides further information on this program and notice for employers to post.
CONTACT: Internal Revenue Service
SOCIAL SECURITY TAXES
An employer must deduct the employee’s portion of social security and Medicare taxes from wages paid to employees. The employer
pays its portion of social security and Medicare taxes and remits both its portion and the employee’s portion to the Internal Revenue
Service by making federal tax deposits using Form 8109 or EFTPS. The total amount of social security and Medicare taxes is reported
quarterly on Form 941. Employers should obtain IRS Publication 15 “Circular E, Employer’s Tax Guide” for further information.
CONTACT: Internal Revenue Service
WAGE AND HOUR REGULATIONS
Most businesses must follow federal standards concerning minimum wage, maximum hours, overtime pay and child labor. A new
business owner should check to see if his business must meet these standards.
CONTACT: Wage and Hour Division, United States Department of Labor
Reporting Requirements
37
EQUAL EMPLOYMENT REGULATIONS
Equal treatment of all employees, as well as equal pay, is regulated and enforced by the United States Equal Employment Opportunity
Commission (EEOC). EEOC prohibits employment discrimination on the basis of age, race, color, religion, sex or national origin.
CONTACT: United States Equal Employment Opportunity Commission
*IMPORTANT INFORMATION CONCERNING FEDERAL REPORTS
If you receive a tax form, but your business has not had activity, which would generate the tax covered by the form, the form must still
be completed and returned. Zeros (0) are to be used in the appropriate spaces, the form signed and returned. You will avoid unneces-
sary problems by using this method.
Monthly Federal Reports
Monthly reports are required for some businesses. These reports are discussed below.
FEDERAL TAX DEPOSIT OF WITHHELD INCOME AND FICA TAXES (FORM 8109 AND 8109-B)
In general, employers must deposit income tax withheld and both the employer’s portion and employee’s portion of social security and
Medicare taxes by mailing or delivering a check, money order, or cash to an authorized financial institution or Federal Reserve Bank.
However, some taxpayers are required to deposit using the Electronic Federal Tax Payment System (EFTPS).
Payment with return. An employer may make a payment with Form 941 instead of depositing if:
• The employer accumulates less than a $2,500 tax liability (reduced by any advanced earned income credit) during the quarter
(line 13 of Form 941). However, if the employer is unsure that total accumulations will be less than $2,500, deposit under the
appropriate rules so that failure to deposit penalties will not be imposed.
• The employer is a monthly schedule depositor and makes payments in accordance with the Accuracy of Deposits rule.
Separate deposit requirements for non payroll (Form 945) tax liabilities.
• Separate deposits are required for nonpayroll income tax withholding. Do not combine deposits for Forms 941 and 945
tax liabilities.
When to Deposit
• There are two deposit schedules-monthly and semiweekly-for determining when an employer deposits social security,
Medicare and withheld income taxes. Prior to the beginning of each calendar year, an employer must determine which of the
two deposit schedules the IRS requires. The deposit schedule to be used is based on the total tax liability report on Form 941
during a four-quarter lookback period. The deposit schedule is not determined by how often the employer pays the employees
or makes deposits. Rules regarding deposit requirements can be found in Publication 15, “Employer’s Tax Guide.”
CONTACT: Internal Revenue Service
Quarterly Federal Reports
Quarterly reports are required for some businesses. These reports are discussed below.
EMPLOYER’S QUARTERLY FEDERAL TAX RETURN (FORM 941 AND 8109)
When an employer withholds income, Social Security, and Medicare taxes from an employee’s wages and pays the employer’s portion
of social security and Medicare taxes, a quarterly return (Form 941) must be filed with the Internal Revenue Service. Form 941 may
also be filed electronically. This return is due by the last day of the month following the end of each calendar quarter. If these taxes
are less than $2,500 for any quarter, payment may be made with Form 941 using Form 941-V. Quarterly due dates for Form 941 are
Reporting Requirements
38
April 30, July 31, October 31, and January 31. If the employer’s net tax liability for the return period (line 13 of Form 941) is greater
than $2,500, then taxes must be deposited with an authorized bank or paid using EFTPS. For deposit rules, refer to Publication 15,
“Circular E, Employer’s Tax Guide.”
CONTACT: Internal Revenue Service
FEDERAL TAX DEPOSIT OF UNEMPLOYMENT TAXES (FORM 8109)
For deposit purposes, Federal Unemployment Tax (FUTA) should be computed quarterly by multiplying the amount of wages paid dur-
ing the quarter by 0.8% (.008). FUTA tax only has to be deposited on the first $7,000 of wages per employee for a calendar year.
However, if any part of the wages subject to FUTA are exempt from state unemployment tax, the employer may have to deposit a high-
er percentage amount. FUTA tax is paid by the employer, not the employee.
If the FUTA tax liability for a quarter is $500 or less, the employer should add the liability to the amount of taxes to be deposited for
the next quarter. If this cumulative total is not more than $500, this same process should be repeated until the cumulative total is
more than $500. If the cumulative FUTA tax liability for any calendar quarter is more than $500, the employer is required to deposit
the tax in an authorized bank, or by electronic funds transfer (EFTPS) using Form 8109 (Federal Tax Deposit Coupon). See Publication
15 for more information on depositing FUTA tax.
CONTACT: Internal Revenue Service
NOTE: Also see Estimated Tax for Individuals (Form 1040-ES) described later.
Annual Federal Reports
Every business is required to file certain annual reports. These reports are discussed below.
EMPLOYER’S ANNUAL FEDERAL UNEMPLOYMENT (FUTA) TAX RETURN (FORM 940 AND 8109)
The Federal Unemployment Tax Act (FUTA), along with state unemployment systems, provides for payments of unemployment com-
pensation to workers who have lost their jobs. Most employers pay both a Federal and State unemployment tax. Certain tests must
be met to determine whether an employer must pay FUTA tax. Each test applies to a different category of employee, and each is
independent of the others. Every employer subject to unemployment tax must file Form 940 or 940EZ and pay undeposited taxes
before January 31st of each year. See Publication 15, Circular E, Employer’s Tax Guide, for more information on meeting the test crite-
ria and computing FUTA tax.
CONTACT: Internal Revenue Service
ANNUAL RETURN OF WITHHELD FEDERAL INCOME TAX (FORM 945)
Businesses who withhold income tax from nonpayroll payments must file Form 945. Nonpayroll payments include pensions, annuities,
IRA’s, military retirement, gambling winnings, and backup withholding. Backup withholding is required when the business does not
obtain a social security number or employer identification number before paying the contractor. Businesses must obtain the SSN or
EIN of an independent contractor in order to complete Form 1099-MISC. A business is not required to file Form 945 for those years in
which they do not have a nonpayroll tax liability.
CONTACT: Internal Revenue Service
Reporting Requirements
39
FEDERAL WAGE AND TAX STATEMENT (FORM W-2)
Every employer must fill out and give to each employee by the last day of January a wage and tax statement showing earnings and
deductions for the preceding calendar year. Form W-2, a six-copy statement of the amount of wages paid and the amount of money
withheld for a variety of purposes, provides a means for giving this information. If any employee stops working and is not expected to
return to work in the current calendar year, he may request the form earlier. If the request is made, he must be given FormW-2 within
30 days of the request or of the last payment, whichever is later.
CONTACT: Internal Revenue Service
TRANSMITTAL OF WAGE AND TAX STATEMENT (FORM W-3)
Every employer must send to the Social Security Administration copies of employees’ Form W-2, Wage and Tax Statement, by the last
day of February. Internal Revenue Service Form W-3, Transmittal of Wage and Tax Statement, is used to send the W-2 forms to the
proper Social Security Administration Office.
CONTACT: Internal Revenue Service
MISCELLANEOUS INCOME (FORM 1099-MISC)
This form is used to report payments of: 1) $600 or more for services performed for a business by people not classified as employees,
such as subcontractors, attorneys, accountants or directors; 2) rents of $600 or more, other than rents paid to real estate agents; 3)
prizes and awards of $600 or more; 4) royalties of at least $10, and; 5) monies to certain crew members by operators of fishing boats.
In addition, this form should be used to report sales of at least $5,000 of consumer goods to a buyer for resale anywhere other than in
a permanent retail establishment.
CONTACT: Internal Revenue Service
ANNUAL SUMMARY AND TRANSMITTAL OF U.S. INFORMATION RETURNS
File Form 1096 with Forms 1099, 1098, 5498, or W-2G by February 28 of each year.
FEDERAL INDIVIDUAL INCOME TAX RETURNS
(FORMS 1040, 1040A, AND 1040-EZ)
Both state and federal individual income tax returns are due by April 15 of each year. Profits or losses from sole proprietorships are
reported on individual tax returns (Form 1040) by attaching Schedule C to the return and reporting the profit from Schedule C on line
12 of Form 1040. Partnerships file Form 1065, which is also due April 15. Corporations file Form 1120, and S corporations file Form
1120S, and these returns are due by the 15th day of the third (3rd) month after the close of the tax year. Partners in partnerships and
shareholders in S corporations report their portion of income from the partnership or S corporation by attaching Schedule E to their
Form 1040 and reporting the total income from Schedule E on line 17 of Form 1040. Sole proprietors, partners, and S corporation
shareholders generally pay their tax liabilities by making estimated payments using Form 1040-ES (see below).
CONTACT: Internal Revenue Service
FEDERAL SELF-EMPLOYMENT TAX (FORM 1040-SE)
An individual who operates a business as a sole proprietor or as a member of a partnership is usually required to pay a federal self-
employment tax. This tax helps finance social security benefits, which are payable to self-employed persons as well as to wage earn-
ers. It is computed as a percentage of net profits from self-employment up to certain limits and is payable along with payment of per-
sonal federal income taxes.
CONTACT: Internal Revenue Service and/or an Accountant
Reporting Requirements
40
ESTIMATED TAX FOR INDIVIDUALS (FORM 1040-ES)
Individuals must make estimated tax payments if they expect to owe at least $1,000 in tax, after subtracting withholding and credits,
and they expect withholding and credits to be less than the smaller of 1.) 90% of the tax shown on the current year tax return or 2.)
100% of the tax shown on the prior year tax return. The estimated payments are due in equal installments on or before April 15, June
15, September 15 and January 15 of the following year. Individuals may pay estimated tax payments by using EFTPS. Farmers, fish-
ermen, and higher income individuals should review Publication 505, “Tax Withholding and Estimated Tax,” for exceptions.
CONTACT: Internal Revenue Service
U.S. PARTNERSHIP RETURN OF INCOME AND PARTNER’S SHARE OF INCOME (FORM 1065 AND SCHEDULES K AND K-1)
A partnership, which is defined as an unincorporated association of two or more persons united to carry on a trade or business, is
required to file Form 1065, U.S. Partnership Return of Income, by the 15th day of the fourth (4th) month following the date its tax year
ended (usually April 15). The purpose of Form 1065 is to serve as an information return used to report the income, deductions, gains
and losses from the operation of the partnership. However, the partnership does not pay tax on income. The profits or losses are
divided between each partner based on their partnership agreement, and are reported on their individual tax returns (Form 1040).
In addition, the partnership is also required to complete Schedules K and K-1. Schedule K is a summary schedule of all of the part-
ner’s shares of income, losses, credits, deductions, etc., as well as rental activity income (loss) and portfolio income. Schedule K-1
shows each partner’s separate share of income, losses, credits, deductions, etc. Schedule K-1 is filed by the partnership along with
Schedule K and Form 1065 with the IRS. A copy of Schedule K-1 is also sent to each partner. The partner keeps the schedule for his
records and is not required to file it with his personal tax return.
See Publication 541, “Partnerships,” for more information.
CONTACT: Internal Revenue Service
U.S. CORPORATION INCOME TAX RETURN (FORM 1120)
All domestic corporations must file Form 1120, U.S. Corporation Income Tax Return, and Form 1120-A, U.S. Corporation Short-Form
Income Tax Return, to report the income, gains, losses, deductions and credits, and to figure the income tax liability of the corporation.
Unlike a partnership and an S Corporation, a regular corporation must pay its own taxes, separate from the shareholders. Form 1120
is due by the 15th day of the third (3rd) month after the end of the tax year (March 15, if the corporation uses a calendar year).
See Publication 542, “Corporations,” for more information.
CONTACT: Internal Revenue Service
U.S. INCOME TAX RETURN FOR AN S CORPORATION AND SHAREHOLDERS SHARE OF INCOME (FORM 1120S AND SCHEDULES K
AND K-1)
All domestic corporations that have filed Form 2553, Election by a Small Business Corporation, met all of the tests to become an S
Corporation, and the IRS has accepted the election, must file Form 1120S which reports the income, deductions, gains, losses, etc., for
the tax year. This form is due by the 15th day of the third (3rd) month following the date the S Corporation’s tax year ended (March 15
for calendar year corporations). Generally, Form 1120S serves as an information return for the IRS and therefore, the S Corporation
does not pay taxes (certain exceptions apply). Instead, the income (losses) passes through to each shareholder and is reported on his
personal tax return.
Reporting Requirements
41
In addition, the S Corporation, like a partnership must file Schedules K and K-1. (See description of these two schedules under part-
nerships above.)
CONTACT: Internal Revenue Service
PREPRINTED TAX DEPOSIT COUPONS (FORM 8109)
8109 preprinted tax deposit coupons are used to make deposits for the following types of taxes:
940 Federal unemployment tax (FUTA)
941 Withheld income and social security taxes
943 Agricultural withheld income and social security taxes
944 Employer’s Annual Federal Tax Return (includes Forms 944-PR and 944-SS)
945 Annual Return of Withheld Federal Income Tax
720 Excise Tax
CT-1 Railroad retirement and railroad unemployment repayment taxes
990-PF Excise tax on private foundation net investment income
Schedule A Backup withholding (reported on Forms 941 and 941-E)
1120 Corporation Income Tax
990-T Exempt Organization Business Income Tax
990-C Farmer’s Cooperative Association Income Tax
1042 Annual Withholding Tax Return for U.S. Source Income of Foreign Persons
NOTE: See instructions to Tax Forms 940, 941, 943, 944, 945, 720, CT-1, 990-PF, Schedule A, 1120, 990-T, 990-C and 1042 for
explanation of use and for determining the proper tax period. Contact the Internal Revenue Service to obtain these forms.
EFTPS (ELECTRONIC FEDERAL TAX PAYMENT SYSTEM)
EFTPS is a tax payment and reporting system provided free by the U.S. Department of Treasury, designed with busy taxpayers in mind.
You can pay your federal taxes electronically, either on-line or by phone, 24/7. Businesses and individuals can use EFTPS to make all
of their federal tax payments, including income, employment, estimated, and excise taxes. .
ETTPS offers you the convenience and flexibility of making your tax payments through the Internet, or by phone. By 8:00 P.M.(ET) at
least one calendar day in advance of the due date, you can access EFTPS directly to report your tax information. You will instruct
EFTPS to move the funds from your account to the Treasury’s account for payment of your federal taxes. Funds will not move from
your account until the date you indicate. You receive an immediate acknowledge of your payment instructions, and your bank state-
ment will confirm the payment was made.
You can initiate your tax payment 24 hours a day, seven days a week. As an added convenience, EFTPS allows taxpayers to schedule
tax payments in advance. Businesses can schedule payments up to 120 days in advance of their tax due date, and individuals can
schedule payments up to 365 days in advance of their tax due date. EFTPS will automatically make your payments for you on the due
date you indicate.
To use EFTPS you must first enroll. To enroll or for more information online visit www.EFTPS.gov or to receive an enrollment form, call
EFTPS Customer Service at 1-800-555-4477.
Reporting Requirements
42
HOW TO GET MORE INFORMATION FROM INTERNAL REVENUE SERVICE
Internet. The IRS’s web site is www.irs.gov. Taxpayers can download or order forms and publications from this website. In addition,
small businesses can obtain helpful information at the Small Business section at www.irs.gov/smallbiz.
Telephone. Many services are available by phone. Order forms, instructions, and publications by calling 1-800-829-3676. Ask tax
questions by calling 1-800-829-1040. If using TTY/TDD equipment, call 1-800-829-4059. To listen to prerecorded messages covering
various topics, call 1-800-829-4477.
Other Federal Reports
RECORDING AND REPORTING OCCUPATIONAL INJURIES AND ILLNESSES
With few exceptions, employers must maintain the OSHA 301, 300 and 300A forms or equivalent forms. Samples of the federal forms
mentioned below may be found and printed directly from the Occupational Safety and Health Administration (OSHA) web page at
www.osha.gov along with directions and other OSHA information.
LOG OF WORK-RELATED INJURIES AND ILLNESSES (OSHA FORM 300)
The OSHA 300 Log of Work Related Injuries and Illnesses is used to classify work-related injuries and illnesses and to note the extent
and severity of each case and to record specific details about what happened and how it happened. Like the 301 form, this form must
be maintained five years, unlike the 301 and the 300A, the log must be updated during the storage period to include newly discovered
cases, changes in the classification of previously recorded cases and changes to descriptions and outcomes of cases.
SUMMARY OF WORK-RELATED INJURIES AND ILLNESSES (OSHA FORM 300A)
All employers who must keep OSHA records must complete the Summary page, even if no work-related injuries or illnesses occurred
during this year. THE OSHA 300A must be posted from February 1 to April 30 of the year following the year covered by the form.
INJURY AND ILLNESS INCIDENT REPORT (OSHA FORM 301)
Employers must complete OSHA 301 within 7 calendar days of receiving information that a recordable injury or illness has occurred.
This form is not submitted to OSHA unless you are specifically asked to do so, but must be maintained for five years following the end
of the calendar year that these records cover.
SAFETY AND HEALTH STANDARDS
The Occupational Safety and Health Administration of the Department of Labor enforces compliance with safety and health standards
that apply to industry and business with one or more employees. Employers are required to report to OSHA within eight (8) hours all
fatal business related accidents and illnesses as well as all non-fatal incidents that result in the hospitalization of three (3) or more
employees. These reports may be made directly to the OSHA office during normal working hours or to 1-800-321-OSHA at any time.
Reporting Requirements
43
State Regulations
State Tax and Regulatory Forms Discussed in this Publication
1. 70-001 Registration Application
2. 89-350 Employee Withholding Exemption Certificate
3. 89-105 Employer’s Monthly Withholding Tax Return
4. 72-001/72-010 Sales Tax Returns
5. 72-110 Use Tax Return
6. UI-1 MESC Registration Form
7. UI-2/UI-3 Employer’s Quarterly Contribution/Wage Report
8. 89-140 Annual Information Return
9. 73-033 Assessment of Personal Property
10. 83-105 Corporate Income and Franchise Tax Return
Initial State Regulations
A number of state regulations apply when a business is started or new employees are hired. The required state forms are discussed
below.
REGISTRATION APPLICATION (FORM 70-001)
This form is used to establish an account with the Mississippi Tax Commission. This combined form allows several registrations to be
made with the same form. This form may be downloaded from the MSTC website at www.mstc.state.ms.us under the caption
Register a Business for Taxes.
CONTACT: Mississippi State Tax Commission or District Office of the Commission
EMPLOYEES WITHHOLDING EXEMPTION CERTIFICATE (FORM 89-350)
Each employee must fill out and give to his employer at the beginning of his employment a withholding exemption certificate. This
document shows the employer how much state income tax to withhold from wages. This form may be downloaded from the MSTC
website at www.mstc.state.ms.us under Withholding Tax.
CONTACT: Mississippi State Tax Commission or District Office of the Commission
INCORPORATION
In order to be incorporated, the applicant must file the articles of incorporation with the Office of the Secretary of the State of
Mississippi. A business owner who wants to incorporate his business should consider employing an attorney familiar with Mississippi
corporate law.
CONTACT: Mississippi Secretary of State’s Office and/or an Attorney
IMPORTANT INFORMATION CONCERNING STATE REPORTS
If you receive a tax form, but your business has not had activity, which would generate the tax covered by the form, the form must still
be completed and returned. Zeros (0) are to be used in the appropriate spaces, and the form should be signed and returned. You will
avoid unnecessary problems by using this method.
Reporting Requirements
44
When you file your return, you must use an original official state form or a return prepared and printed using a software package that
has been approved by the Mississippi Tax Commission.
Do not use photocopies of documents.
Monthly State Reports
Monthly reports are required for some businesses. The required monthly forms are discussed below.
EMPLOYER’S WITHHOLDING TAX RETURN (FORM 89-105)
All employers are required to file Form 89-105 monthly and remit monies if the amount of state income taxes required to be withheld
exceeds $300 per month. Returns must be filed and the taxes paid on or before the fifteenth (15th) day of the month (following the
month for which the tax was withheld). If the monthly amount is less than $300 and the quarterly total is less than $900, the withheld
tax may, with the approval of the Commissioner, be reported quarterly. When an employer becomes liable for filing a return under a
particular filing period (monthly or quarterly), he must continue on that basis until permission to change has been granted by the
Mississippi State Tax Commission.
Employers who have headquarters outside Mississippi and who do business in the state on a temporary basis must file Form 89-105
and pay withheld income taxes each month. Such temporary, out-of-state employers are defined as those who cannot reasonably be
expected to continue doing business in the state for as long as 18 consecutive months.
CONTACT: Mississippi State Tax Commission or District Office of the Commission
SALES TAX RETURN (FORMS 72-001 AND 72-010)
State law requires reporting and paying sales tax collected. Most small retail businesses use the short form, 72-001, which is for
those who use only one sales tax rate. Businesses which collect sales tax at more than one rate use the long form, 72-010. The
Mississippi State Tax Commission allows owners of retail businesses a discount amounting to two percent (2%) of the amount of sales
tax remitted. The discount is available only to those who file the report and pay sales taxes by the twentieth (20th) of the following
month. The discount is limited to a maximum of $50 per report, but no more than $600 per year.
A taxpayer is required to file his sales tax return either annually, quarterly or monthly based on his average monthly liability for the
prior year as follows:
Less than $50 Annually
Less than $300 but greater than $50 Quarterly
More than $300 Monthly
CONTACT: Mississippi State Tax Commission or District Office of the Commission
USE TAX RETURN (FORM 72-110)
Use tax is imposed on purchases made outside the state, which may be used, stored or consumed within the state. Use tax is also
applied to purchases on which sales or use tax has not been paid to another state at a rate equal to or greater than the Mississippi
rate. The Mississippi State Tax Commission allows a discount of two percent on the amount of tax being remitted by owners of retail
businesses. The discount is available only to those who file the report and pay these taxes by the twentieth (20th) of the following
month. The discount is limited to a maximum of $50 per report, but no more than $600 per year.
CONTACT: Mississippi State Tax Commission or District Office of the Commission
Reporting Requirements
45
Quarterly State Reports
Quarterly reports are required for some businesses. The required quarterly forms are discussed below.
APPLICATION FOR MISSISSIPPI UNEMPLOYMENT TAX IDENTIFICATION (UI-1)
Generally, all entities employing one or more individuals during some part of twenty weeks in a calendar year, or paying wages of
$1,500 or more in any calendar quarter, are liable for unemployment taxes. Form UI-1 must be completed and submitted to the
Mississippi Department of Employment Security for registration if either of the above criteria is met.
CONTACT: Mississippi Department of Employment Security or District Office of the Commission
MISSISSIPPI UNEMPLOYMENT TAX AND WAGE REPORT (FORMS UI-2 AND UI-3)
Each employer liable for unemployment taxes must file a wage and contribution report quarterly. Payment is required at the time the
report is filed. Reports and payment are required by the last day of the month following the close of the calendar quarter. Late pay-
ment or reporting may result in assessment of interest and penalties. The tax rate must be obtained from the Mississippi Department
of Employment Security and may change each calendar year.
CONTACT: Mississippi Department of Employment Security or District Office of the Commission
Annual State Reports
Every business is required to file certain annual reports. The required annual state reports are discussed below.
ANNUAL INFORMATION RETURN (FORM 89-140)
An employer must file this form on or before January 31 of each year or within 30 days after business operations end. The appropriate
copies of Federal Wage and Tax Statement (Form W-2) must be attached along with W2C, 1099, and 1042. [NOTE: In lieu of paper
copies of Form W-2, an employer may be required to file on magnetic media, depending on the size of the business and the number of
employees.]
This form may be downloaded from the MSTC website at www.mstc.state.ms.us under Withholding Tax.
CONTACT: Mississippi State Tax Commission or District Office of the Commission
ASSESSMENT OF PERSONAL PROPERTY (FORM 73-033)
No later than April 1 of each year, every business owner must state on special forms the value of merchandise, equipment and other
taxable property owned as of January 1st. This information is used by local tax assessors in establishing the amount of tax a business
must pay on personal property.
CONTACT: County Tax Assessor
MISSISSIPPI COMBINATION INCOME AND FRANCHISE TAX RETURN
(FORM 83-105)
Every corporation doing business in the state, whether chartered in Mississippi or another state, must file an annual return and pay
both franchise and income taxes. The combination return (Form 83-105) and payments are due by the fifteenth (15th) of the third (3rd)
month after the end of the corporation’s accounting year. For example, if the corporation’s accounting period ends October 31, the
return and payment are due by January 15. Generally, a corporation must make state estimated income tax payments if it has a liabili-
ty of over $200 in the taxable period. The due dates for state estimated income taxes are April 15, June 15, September 15 and
December 15.
CONTACT: Mississippi State Tax Commission or District Office of the Commission
Reporting Requirements
46
STATE PERSONAL INCOME TAX RETURNS
Both state and federal income tax returns are due by April 15 of each year. Profits or losses from sole proprietorships, partnerships, S-
corporations and limited liability companies are reported on individual or joint income tax returns. Generally, a sole proprietor or an
individual who has an interest in a partnership, S-corporation or a limited liability company files state and federal declarations of esti-
mated income. The state and federal government have somewhat different rules governing individual estimated income taxes.
However, the installment due dates are the same which are April 15, June 15, September 15 and January 15. Self-employment taxes
are imposed at the federal level and can be paid to the Internal Revenue Service when an individual files his annual income tax return
for the past year.
CONTACT: Internal Revenue Service; Mississippi State Tax Commission; an Accountant
Other State Reports
WORKER’S COMPENSATION
The workers’ compensation program provides income to employees who are injured on the job and pays medical expenses resulting
from work-oriented injury. It also pays benefits to the employee’s dependents in the event an employee is killed in the course and
scope of his employment. Every business with five or more employees must have workers’ compensation insurance. Any business,
however, may carry this type of insurance.
CONTACT: Mississippi Workers’ Compensation Commission
FOREIGN CORPORATIONS LICENSE
Foreign corporations locating in Mississippi must apply for a Certificate of Authorization to operate in the state unless they are exempt.
CONTACT: Mississippi Secretary of State’s Office
FREE PORT WAREHOUSE LICENSE
All public and private warehouses and storage facilities in the state engaged in storage and handling in transit to a final destination
outside the state shall be eligible for licensing.
CONTACT: Local Tax Assessor’s Office
City and County Regulations
CITY ZONING REGULATIONS
If a business is to be located within city limits, the business owner should check to be sure that the location is zoned for business
usage.
CONTACT: City Zoning Department
COUNTY ZONING REGULATIONS
Most Mississippi counties do not have zoning ordinances, but the owner of a new business should check with officials to see if there
are zoning requirements.
CONTACT: County Zoning Department or Planning Commission
CITY BUILDING PERMIT
If a business is to be located in a new or remodeled building inside the corporate limits of a city, the owner must get a city building
permit before he begins construction or remodeling.
CONTACT: City Permit Department
Reporting Requirements
47
COUNTY BUILDING PERMIT
If a business is to be located in a new or remodeled building outside the corporate limits of a city, the owner should check to see if a
county building permit is required before he begins construction or remodeling. Some Mississippi counties require building permits.
CONTACT: County Permit Department or Chancery Clerk
CITY BUSINESS LICENSE
An owner of a new business must get a city license from the city tax collector if the business is located within a city’s corporate limits.
CONTACT: City Tax Collector
COUNTY BUSINESS LICENSE
An owner of a new business must obtain a county license from the county tax collector if the business is located outside a city’s corpo-
rate limits.
CONTACT: County Tax Collector
Special Licenses, Permits and Other Regulations
Some businesses require special licenses and permits, or must meet additional regulations. Ventures which entail the handling and/or
processing of foods must meet sanitary standards of the Mississippi State Board of Health; an owner of this type of business should
contact the county health department. Stove ventilation systems in restaurants must conform with local fire prevention codes; a
restaurant owner should contact the local fire department for guidance. Businesses which sell alcoholic beverages, tobacco, firearms
or ammunition should contact the following agencies which have control over the sale of these items: United States Treasury
Department’s Bureau of Alcohol, Tobacco and Firearms and the Mississippi State Tax Commission’s Alcoholic Beverage Control Bureau
(ABC). The ABC not only grants or denies licenses for the sale of alcoholic beverages, but it is the state’s only wholesaler of wines and
liquors.
The Office of the Secretary of State can direct businesses to state agencies, which may require special licenses, permits, examinations
and other types of certification. The Secretary’s office compiles the Mississippi Official and Statistical Register, which provide informa-
tion on such groups as the Board of Barber Examiners, the Board of Public Accountancy and the Commission on Health Care.
CONTACT: City or county fire department; county health department; United States Treasury Department, Mississippi State Tax
Commission; Office of the Secretary of State of Mississippi
financing available
Selected Business
49
business financing
51
GRANTS
Community Development Block Grant Program (CDBG)
The Community Development Block Grant program (CDBG) helps communities realize their potential by providing funds necessary to
ensure decent housing, basic community services, environmental quality and economic opportunities for their residents. The State
CDBG Program makes funds available to incorporated municipalities and county governments that show a genuine need for specific
projects and can meet the program's state and federal eligibility requirements. In accordance with the Community Development Act of
1974, as amended, project activities must meet at least one of the following national objectives:
• Benefit low- and moderate-income persons;
• Aid in the prevention or elimination of slums or blight;
• Meet urgent needs because existing conditions pose a serious and immediate threat to the health or
welfare of the community and other financial resources are not available to meet such needs.
A local unit of government may apply for CDBG funds in the Public Facilities, Economic Development and Mississippi Micro-Enterprises
Development Demonstration categories.
The Public Facilities category provides funding for public improvements such as water, wastewater, drainage, streets, and certain pub-
lic buildings. This category includes a Regular Competition for funds as well as a Small Government and Emergency Set Asides, and
Community Self-Help Program. Some Public Facilities projects may be funded under the stringent Urgent Needs/Emergencies national
objective. An Urgent Needs/Emergencies project must prove a particular urgency because existing conditions pose a serious and
immediate threat to the health or welfare of the community and meet other criteria such as the date of occurrence of the emergency
condition.
The Economic Development category provides funding to local units of governments for eligible infrastructure improvements in the
support of business start-ups and expansions. Job creation is the key to CDBG-assisted economic development. Economic
Development Public Improvements subcategory provides grants to local governments on behalf of businesses for the provision of
needs such as water, sewer, and access roads. Economic Development Loans may be used for capital improvements, equipment or
working capital at the discretion of the Community Services Division
The Self-Help Category provides funding for public improvements such as water, wastewater, downtown improvements and recreation-
al improvements.
The Mississippi Micro-Enterprises Development Demonstration category provides funding in support of Micro-Enterprise business
endeavors. Grants are awarded to eligible units of local government that are then loaned to specific for-profit businesses, or local units
of government may contract with an eligible non-profit organization that is directly involved with Micro-Enterprise development.
For more information contact:
Community Services Division
Telephone: 601.359.3179
Fax: 601.359.9311
[email protected]
Development Infrastructure Grant Program (DIP)
The Mississippi Development Infrastructure Program (DIP), administered by the Mississippi Development Authority (MDA), is designed
for making grants to counties or municipalities (Local Sponsors) to finance small infrastructure projects to promote economic growth in
the State of Mississippi. Counties and municipalities are encouraged to use these funds in connection with other state and federal pro-
grams.
business financing
52
Eligible Applicants
Local governing authorities of counties or municipalities are eligible to apply for the DIP program.
Eligible Projects
Projects must be directly related to the construction, renovation, or expansion of a new or expanded industry.
Eligible projects financed with DIP funds must be publicly owned. Examples of eligible types of projects include:
• Drainage systems
• Energy facilities (power generation and distribution)
• Sewer systems (pipe treatment)
• Transportation facilities directly affecting the site, including roads, bridges, rail lines, or pipelines
• Water supply systems (storage, treatment, and distribution)
• Marine structures
• Land improvements
Eligible Industries
• Manufacturing and processing
• Large distribution facility
• Service support to agriculture, aquaculture, and mariculture
• Service support to manufacturing and processing
• Telecommunications and data processing
• Corporate headquarters and operations centers
• Research and development
Exclusions
DIP funds may not be used for working capital or to provide facilities for utilization by a gaming enterprise.
Terms: 1 year from date of executed grant agreement to request reimbursement.
Amount: Maximum GRANT amount: $150,000
Funding: Funding is derived from the issuance of state general obligation bonds.
To apply for this program, the eligible entity should contact MDA for program information.
Statute: Section 57-61-36, Ms Code 1972, Annotated
Economic Development Highway Grant Program (EDH)
The Economic Development Highway Act, administered by the Mississippi Development Authority (MDA), is designed to assist political
subdivisions with Highway Projects, which encourage private companies to engage in “high economic benefit” projects within their
area.
The purpose of this program is to promote industrial and other significant development in the State of Mississippi through the construc-
tion and/or improvement of highways in areas that demonstrate actual and immediate potential for the creation, or expansion of major
industries or other significant development. The highway or highway segment to be constructed must be necessary to ensure ade-
quate and appropriate access to a proposed company project for the purpose of encouraging its location within a political subdivision.
Eligible Applicants
• One or more counties or incorporated municipalities in the state
• A state-owned port located in a county bordering the Gulf of Mexico
business financing
53
Eligible Projects
An eligible project must meet one of the following criteria established in Ms Code 1972, Annotated, Section 65-4-5, paragraph (C)(i).
1. Any new investment by a private company with capital investments in land, building, depreciable fixed assets and improvements of
at least $50,000,000.
2. Any new investment by a private company with capital investments in land, building, depreciable fixed assets and of at least
$20,000,000 by a private company having capital investments in this state in land, building, depreciable fixes assets and improve-
ments of at least $1,000,000,000 in the aggregate.
3. Public investment of at least $100,000,000 to take place over a specified period of time and in accordance with a master plan duly
adopted by the controlling political subdivision.
4. Any new investments in land, buildings, depreciable fixed assets and improvements by 2 private companies upon land that is adja-
cent whenever the new investments in both companies are at least $60,000,000 in the aggregate, and such new investment by both
private companies provide for the employment of at least 500 employees in the aggregate.
5. Any project which would benefit from the construction of any highway bypass which would aid in economic development and would
provide an alternate route to avoid an existing route which underpasses a railroad and which would aid in existing or proposed indus-
try.
6. Any master planned community (refer to Statute Section 19-5-10).
7. Any new investments in land, buildings, depreciable fixed assets and improvements by not more than 3 private companies physically
located within one-half (1/2) mile radius of each other whenever the new investments by such companies are at least $60,000,000 in
the aggregate, and such new investments by such companies provide for the employment of at least 300 new employees in the aggre-
gate.
8. Any new investments in land, buildings, depreciable fixed assets and improvements by 2 or more private companies upon lands
originally adjacent, but now divided by a four-land state highway and bordered by a two-lane state highway, and the new investments
of the companies is at least $50,000,000 in the aggregate, and a portion of such new investment will be utilized for the construction of
a hospital.
9. Any new investments in land, buildings, depreciable fixed assets and improvements of at least $50,000,000 in the aggregate, in any
county having a population greater than 70,000 according to the latest federal decennial census, and in which the population of such
county, according to the latest federal decennial census, increased by at least 10% above the population in the preceding federal
decennial census, and a portion of such new investment will be used in the construction of a hospital for which a certificate of need
has been issued by the State Department of Health. (This criteria stands repealed after July 1, 2007.)
Eligible Industries
Private companies, which are eligible for assistance under the EDH Program include:
• Agricultural Enterprises
• Air Transportation/Maintenance Facilities
• Aquaculture Enterprises
• Distribution Facilities
• Hospitals
• Industrial Enterprises
• Large Hotels or Resorts
• Manufacturing Enterprises
• Maricultural Enterprises
• Movie Industry Studios
• Processing Enterprises
• Regional Shopping Malls
• Research and Development Enterprises
• Warehousing Facilities
business financing
54
Amount: Grant amount will be based on MDOT estimates and must be approved by the MDA Executive Director.
Funding: Funding is derived from the issuance of state general obligation bonds.
To apply for this program, the eligible entity should contact MDA for additional program information.
Statute: Section 65-4-1 et seq, Ms Code 1972, Annotated
Industrial Access Road Grant Program
The Mississippi Industrial Access Road Program, administered by the Mississippi Development Authority (MDA) and the Mississippi
Department of Transportation (MDOT), is designed to encourage and promote industrial growth by providing access roads to industrial
developments.
Under this program, MDA and MDOT assist local governmental entities in the construction of links to highways or roads necessary to
connect new & existing industrial sites to adequate road facilities. MDA and MDOT will designate the “industrial site” for purposes
intended for the Industrial Access Road Program.
An “industrial site” is generally defined as the property holdings, an area around a building site containing parking facilities, and circu-
lation roadways. Connections that would normally be considered as driveways from a public road to adjacent property or roads built for
internal circulation within an industry’s boundaries will not be eligible for assistance.
Once the project has been approved and selected, MDA shall issue a certificate of public convenience and necessity to the effect that
such designated and selected link of highway or road should be constructed in order to encourage and promote economic development
and file this certificate with the Director of MDOT.
MDA will not select and designate any such link of road or highway until satisfactory evidence that an industry desires and intends to
locate on the selected site and that the location of the industry and the construction of such road or highway is economically feasible.
Construction of any such road shall not begin until the location and construction of such industry is assured and contracts have been
made between the industry and the local authority.
Eligible Applicants
Local governmental authorities of the county or municipality with a need for access roads to new and existing industrial sites are eligi-
ble to apply for this program.
Eligible Projects
Industrial development of any port or harbor area or other industrial site in which it is necessary to connect selected sites to adequate
road or highways is eligible to apply for the program.
Amount: Grant amount will be based on MDOT State Aid standards and must be approved by the MDA Executive Director.
Funding: Any highway or public road approved under this program will be constructed from
highway funds of the highway district, in which the highway or road is located through MDOT.
To apply for this program, the eligible entity should contact MDA for additional program information.
Statute: Section 65-1-41, Ms Code 1972, Annotated
business financing
55
Freight Rail Service Grant Program (RAIL)
The Freight Rail Service Grant Program, administered by MDA, is designed for the purpose of making grants to counties and munici-
palities to defraying expenses related to upgrading railroad grade crossings. Only projects approved by the Mississippi Department of
Transportation (MDOT) shall be eligible for RAIL grants. The project approval process will be initiated by MDOT via a third party agree-
ment.
Municipalities and counties are encouraged to use these grants in connection with other state and federal programs.
Eligible Applicants
Counties with projects approved by MDOT are eligible to apply for the grant program.
Eligible Projects
Counties may receive grants for Freight Rail Service projects relating to the upgrading of rail grade crossings. Only projects approved
by MDOT will be eligible for RAIL grants.
Amount: Maximum GRANT amount: $250,000 per project.
Funding: Funding is derived from the issuance of state general obligation bonds.
To apply for this program, the eligible entity should contact MDA for additional program information.
Statute: Section 57-44-1, Ms Code 1972, Annotated
Job Protection Grant Program
The Mississippi Job Protection Act, administered by the Mississippi Development Authority, provides grants to ‘at risk’ industries that
have been operating in the state for at least 3 years that have lost jobs or are at risk to lose jobs because such jobs have been out-
sourced.
"Outsource" means to send out work or jobs of a certain provider or manufacturer in Mississippi to a provider or manufacturer located
outside the boundaries of the United States or any territory of the United States.
Eligible Applicants
‘At Risk’ industries that have been operating in the state for at least 3 consecutive years and have lost jobs or are at risk of losing
jobs due to outsourcing.
Applicants are required to submit project information, financial information, and credit information on owners with 20% or greater
ownership. MDA will conduct a financial analysis of the business requesting the grant prior to approval.
Eligible Projects
The recipient must use the grant for job retention and to improve productivity and competitiveness. The industry cannot reduce
employment by more than 20% if a Job Protection Grant is received.
Job Protection Grant and Loan funds cannot exceed 50% of the total cost of the project. Job Protection Grants must be used in con-
junction with Job Protection Loans.
Amount: Maximum GRANT amount: $200,000.
Funding: Funding is derived from the issuance of state general obligation bonds.
To apply for this program, the eligible entity should contact MDA for additional program information.
Statute: Section 57-95-1 Ms Code 1972, Annotated
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Rural Impact Fund Grant Program
The Mississippi Rural Impact Fund Grant Program (RIF), administered by the Mississippi Development Authority (MDA), is designed to
assist and promote businesses and economic development in rural areas by providing grants to rural communities (Local Entities).
Eligible Applicants
Rural Community – a municipality with a population of 10,000 or less, according to the most recent federal decennial census, at the
time the application is submitted by the municipality; or, a county with a population of 30,000 or less, according to the most recent fed-
eral decennial census, at the time the application is submitted by the county.
Rural Business – means a new or existing business located or to be located in a rural community; or, a business or industry located or
to be located within five miles of a rural community.
Eligible Projects
Eligible grant projects financed with RIF must be publicly owned. All contracts and purchases must be made in accordance with normal
bid and purchase laws of a municipality or county.
• Construction, rehabilitation or repair of building
• Sewer systems and transportation directly affecting the site of the proposed rural business; Sewer facilities
• Acquisition of real property, development to real property, improvements to real property
• Any other project approved by MDA
Eligible Projects must have a direct connection in creating jobs. All projects funded should create a minimum of ten (10) net new full-
time jobs. The program intent is to stimulate job creation and economic development in rural communities in the State.
Amount: Maximum GRANT amount: $150,000
Funding: Funding is derived from the issuance of state general obligation bonds.
The local entity defined as a rural community should contact MDA Community Services for an application for this program.
For more information contact:
Mississippi Development Authority
Rural Impact Program
Community Services Division
Post Office Box 849
Jackson, Mississippi 39205
Telephone: (601) 359-3179
Statute: Section 57-85-1, Ms Code 1972, Annotated
Small Municipalities & Limited Population Counties Grant Program
The Mississippi Small Municipalities and Limited Population Counties Grant Program, administered by the Mississippi Development
Authority (MDA), is designed for making grants to small municipalities and limited population counties or natural gas districts to finance
projects to promote economic growth in the State of Mississippi.
Eligible Applicants
• Small Municipality – a municipality with a population of 10,000 or less, according to the most recent federal decennial census, at
the time the application is submitted by the municipality.
• Limited Population County – a county with a population of 30,000 or less, according to the most recent federal decennial census, at
the time the application is submitted.
• Natural Gas District – districts created by law and meeting the same requirements as small municipalities.
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Eligible Projects
Eligible projects must be publicly owned. All contracts and purchases must be made in accordance with normal bid and purchase
laws of a municipality or county.
Program funds may not be used for working capital, for general expenditures, which would normally be covered under a local sponsor
general operation budget, or for administrative expenses. Professional services (engineering/architectural cost) will be limited to
10% of the grant award amount.
Examples of eligible projects include, but are not limited to:
• Drainage systems;
• Utilities such as water supply systems and gas supply systems;
• Sewer systems (pipe treatment);
• Transportation facilities directly affecting the site, including roads, bridges, rail lines, or pipelines;
• Marine structures;
• Land purchases and improvements;
• Airfield and Airport improvements;
• Acquisition and improvements of buildings
Terms: Grant agreement must be signed within 6 months of the Grant Award Date and Requests for Reimbursement must
be submitted to MDA within one year from date the Grant Agreement is signed.
Amount: Maximum GRANT amount: $150,000 per local sponsor per calendar year.
Rate: N/A
Funding: Funding for grants to Local Sponsors is derived from appropriations or funds otherwise made available by the
State Legislature.
To apply for this program, the eligible entity should contact MDA for an application.
Statute: Section 57-1-18, Ms Code 1972, Annotated
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Loan Programs
Agribusiness Enterprise Loan Program (ABE)
The Agribusiness Enterprise Loan Program (ABE), administered by Mississippi Development Authority (MDA), is a loan program
designed to encourage the extension of conventional financing and the issuance of letters of credit by private lending institutions to
agribusiness enterprises in the State of Mississippi.
Eligible Applicants
To qualify for the Agribusiness Enterprise Loan Program, eligible entities must be directly involved with:
• Aquaculture
• Horticulture
• An agriculture related industry
• Manufacturing, research and development, or processing of agribusiness related goods and services.
Eligible Projects
Agribusiness loans can be used to finance of buildings and equipment, as well as costs associated with the purchase of land
(appraisals, title searches, etc.). Proceeds cannot be used to purchase land, pay off existing debt, or to provide working capital.
Terms: Maximum term: 15 years, equal to term set by financial institution.
Amount: Maximum loan amount: 20% of total project cost or $200,000, whichever is less. Excluding purchase of land.
Fees: MDA requires 1% servicing fee on State’s portion of loan, plus guarantee fees (2% SBA or 1% Farm Service
Agency), if applicable.
Rate: 0% on State’s portion of loan.
Funding: Funding is derived from the issuance of state general obligation bonds.
To apply for this program, eligible agribusinesses should contact a financial lending institution to originate the ABE loan application.
Statute: Section 69-2-13, Ms Code 1972, Annotated
Airport Revitalization Revolving Loan Program
The Mississippi Airport Revitalization Revolving Loan Program, administered by the Mississippi Development Authority (MDA), is
designed for making loans to airport authorities for the construction and/or the improvement of airport facilities located in Mississippi.
Eligible Applicants
Eligible entities include county and municipal airport authorities authorized to operate in the State of Mississippi.
Eligible Projects
Projects must be directly related to the airport facility and are limited to construction, expansion, improvements, rehabilitation, or repair
of airport facility.
Examples of projects may include:
• Drainage systems
• Energy facilities (power generation and distribution)
• Sewer systems (pipe treatment)
• Transportation facilities directly affecting the site, including roads, sidewalks, bridges, rail lines, rivers, pipelines, or runways
• Buildings
• Water supply systems (storage, treatment, and distribution)
• Equipment necessary for airport operation
• Land improvements
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Terms: Maximum term: 10 years
Amount: Maximum loan amount: $750,000 per project.
Rate: 3% Per Annum
Funding: Funding is derived from the issuance of state general obligation bonds.
To apply for this program, the eligible entity should contact MDA for additional program information.
Statute: Section 57-61-41, Ms Code 1972, Annotated
Port Revitalization Revolving Loan Program
The Mississippi Port Revitalization Revolving Loan Program, administered by the Mississippi Development Authority (MDA), is designed
for making loans to state, county, or municipal port authorities for the improvement of port facilities to promote commerce and eco-
nomic growth in the State of Mississippi.
Eligible Applicants
State, county, and municipal ports authorized to operate in Mississippi can apply for this program.
Eligible Projects
Eligible projects must be directly related to the port facility and are limited to construction, expansion, improvements, rehabilitation, &
repair of:
• Dock and channel sites to include dredging
• Drainage systems
• Energy facilities (power generation and distribution)
• Sewer systems (pipe treatment)
• Transportation facilities directly affecting the site, including roads, sidewalks, bridges, rail lines, rivers, or pipelines
• Building
• Water supply systems (storage, treatment, and distribution)
• Marine structures
• Equipment necessary for port operation
• Land improvements
Loan funds may not be used for working capital by the port facility, or to provide facilities for utilization by a gambling vessel.
Terms: Maximum term: 10 years
Amount: Maximum loan amount: $750,000 per project.
Rate: Interest rate of 3% Per Annum.
Funding: Funding is derived from the issuance of state general obligation bonds.
To apply for this program, the eligible entity should contact MDA for additional program information.
Statute: Section 57-61-41, Ms Code 1972, Annotated
Business Incubator Loan Program
The Mississippi Business Incubator Loan Program (Incubator Loan Program), administered by the Mississippi Development Authority
(MDA), is designed to assist local governments in the establishment of business incubator facilities in the State of Mississippi.
A business incubator is any existing or to be constructed facility, housing an enterprise support network, that contains shared services
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and equipment. The purpose of the facility is to enhance the process of local economic development through the creation of jobs and
the fostering of an environment that is conducive to business start-ups.
• The facility must be for multi-tenant commercial or light industrial usage
• The facility must be dedicated to the development of an identified market of entrepreneurial activity. A feasibility study identifying
that market is required.
Eligible Applicants
Municipalities or private companies may qualify to receive an Incubator Loan. Local governments are defined as any county, incorpo-
rated city or town.
The private company must commit to minimum job creation and investment amounts, and other program requirements as determined
by MDA.
Eligible Projects
Loan proceeds may be used for financing all project costs associated with the development of an incubator. Eligible expenditures
include fixed assets, professional fees related to the construction of the project, and the purchase of machinery and equipment.
Terms: Maximum term: 20 years for land and building and 10 years for machinery, equipment, and all other eligible
expenditures.
Amount: Maximum Loan amount: $500,000.
Rate: Interest rate: 3.0% Fixed
Funding: Funding is derived from the issuance of state general obligation bonds.
To apply for this program, the eligible entity should contact MDA for additional program information.
Statute: Section 57-61-34, Ms Code 1972, Annotated
Energy Investment Loan Program
The Mississippi Energy Investment Program ("Energy Investment Program"), administered by the Mississippi Development Authority
(MDA), is designed for making loans to qualified borrowers to promote development and demonstration of efficient, environmentally
acceptable, and commercially feasible technologies, techniques and processes. The program also promotes effectively utilizing the
state's existing alternative and conventional energy resources to foster economic and social growth.
Eligible Applicants
In order to obtain assistance under the Energy Investment Program, the applicant must be declared financially sound and capable of
repaying the loan and must belong to one of the following categories:
• Corporation
• Partnership
• Hospitals (public and private "non-profit")
• Institutions of higher learning
• Community colleges
• Schools (public or private)
• Local government entities
Eligible Projects
Eligible projects include retrofits and energy design process developments. The improvement must promote the development and
demonstration of efficient, environmentally acceptable and commercially feasible technology and processes, and must also utilize
Mississippi’s existing energy resources, public utilities and/or developing resources that foster economic growth.
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In order for the project to be eligible to receive assistance, the project must qualify pursuant to the 2-phase eligibility requirements
provided below:
• Phase 1 - Structural Eligibility
• Phase 2 – Eligible Retrofit Measures
Terms: Maximum term: 10 years or estimated life of project, whichever is less.
Amount: Minimum LOAN amount: $15,000 per project.
Maximum LOAN amount: $300,000 per project.
Fees: MDA requires 1% good faith deposit on projects involving real estate pledged as collateral.
Rate: Fixed-rate 3% below Prime Rate will be set upon loan approval.
Funding: Funding for the loans to the Borrower are derived from the appropriated funds; a part of the Petroleum Violation
Escrow Fund, M.D.L. 378 Oil Overcharge Funds.
To apply for this program, the eligible entity should contact MDA for additional program information.
Statute: Section 57-39-39, Ms Code 1972, Annotated
Existing Industry Productivity Loan Program
The Mississippi Existing Industry Productivity Loan Program, administered by the Mississippi Development Authority (MDA), is designed
for making loans to deploy long-term fixed assets that through new technology will improve productivity and competitiveness.
Eligible Applicants
Existing manufacturing industries that have been operating in the state for at least 2 years and meet minimum criteria established by
MDA are eligible for this program.
A manufacturing enterprise is one that is exclusively or predominately engaged in activities of an industrial or commercial nature
wherein labor or skill is applied by hand or machinery, to materials belonging to the manufacturer so that a new, different, or more
useful article is produced for sale.
Eligible Projects
Loan funds are to be used to finance long-term fixed assets. These are assets that, through new technology, will improve productivity
and competitiveness of the company. The benefits of such asset must be documented.
An existing industry that accepts a loan under this program shall not reduce employment by more than 20% through the use of the
long-term fixed assets for which the loan is granted. MDA will conduct a financial analysis of the business or industry requesting the
loan. Guarantees will be required on all persons or entities with 20% or greater interest in the company.
Terms: Maximum term: 10 years or estimated useful life of Fixed Assets, whichever is less.
Amount: Minimum loan amount: $250,000
Maximum loan amount: 50% of total project cost or $500,000, whichever is less.
Rate: Interest rate on the most recent issue of 20-year state general obligation bonds occurring prior to the date the loan
is made.
Funding: Funding is derived from the issuance of state general obligation bonds.
To apply for this program, the eligible entity should contact MDA for additional program information.
Statute: Section 57-93-1, Ms Code 1972, Annotated
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Freight Rail Service Revolving Loan Program
The Mississippi Freight Rail Service Projects Revolving Loan Program (RAIL), administered by the Mississippi Development Authority
(MDA), is designed for making loans to municipalities and/or counties to finance freight rail service projects in the State of Mississippi.
Counties and municipalities are encouraged to use these funds in connection with other state and federal programs.
Eligible Applicants
The governing authority of a municipality or county is eligible to apply for this program.
Eligible Projects
A project, which involves the acquisition, construction, installation, operation, modification, renovation or rehabilitation of any freight
rail service facilities, is eligible for this program. Projects may include any fixtures, machinery or equipment, used in conjunction with
any freight rail service facilities.
Construction costs, including reasonable and customary site work for buildings, right of ways, easements, etc are eligible project costs.
Additionally, up to 8% of the principal loan amount may be used for design work, i.e. engineer or architect. Engineering and/or archi-
tectural costs above 8% must be paid from other funding sources.
Terms: Maximum term: 15 years or estimated life of project, whichever is less.
Amount: Cumulative maximum loan amount: $1,000,000 per project per calendar year.
Rate: Interest rate shall be 1% below the Federal Reserve Discount Rate at the time of loan approval.
Funding: Funding is derived from the issuance of state general obligation bonds.
To apply for this program, the eligible entity should contact MDA for additional program information.
Statute: Section 57-44-1 et seq. Ms Code 1972, Annotated
Job Protection Loan Program
The Mississippi Job Protection Act, administered by the Mississippi Development Authority, provides loans to ‘at risk’ industries that
have been operating in the state for at least 3 years that have lost jobs or are at risk to lose jobs because such jobs have been out-
sourced.
"Outsource" means to send out work or jobs of a certain provider or manufacturer in Mississippi to a provider or manufacturer located
outside the boundaries of the United States or any territory of the United States.
Eligible Applicants
‘At Risk’ industries that have been operating in the state for at least 3 consecutive years and have lost jobs or are at risk of losing
jobs due to outsourcing.
Applicants are required to submit project information, financial information, and credit information on owners with 20% or greater
ownership. MDA will conduct a financial analysis of the business requesting the grant prior to approval.
Eligible Projects
The recipient must use the loan proceeds for job retention and to improve productivity and competitiveness. The industry cannot
reduce employment by more than 20% if a Job Protection Loan is received.
Loan funds may be used for land, building, and depreciable fixed assets. Loan proceeds may not be used for working capitol, debt
refinancing or rolling stock.
Job Protection Grant and Loan funds cannot exceed 50% of the total cost of the project.
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Terms: Maximum: 10 years or the determined useful life of the project to be financed.
Amount: Minimum loan amount: $200,000
Maximum loan amount: $750,000
Rate: Interest rate shall be on the most recent issue of 20-year state general obligation bonds occurring prior to the date
the loan is made.
Funding: Funding is derived from the issuance of state general obligation bonds.
To apply for this program, the eligible entity should contact MDA for additional program information.
Statute: Section 57-95-1, Ms Code 1972, Annotated
Local Governments Capital Improvements Revolving Loan Program (CAP)
The Local Government Capital Improvements Revolving Loan Program is designed for making loans to counties or municipalities to
finance capital improvements in Mississippi. Counties and municipalities are encouraged to use these loans in connection with state
and federal programs.
Eligible Applicants
Counties or Municipalities are eligible to apply for this program.
Eligible Projects
• Construction or repair of water and sewer facilities.
• Construction or repair of drainage systems for industrial development.
• Improvements in fire protection.
• Construction of new buildings for economic development.
• Renovation or repair of existing buildings for economic development purposes.
• Construction or repair of access roads for industrial development;
• Purchase of buildings for economic development purposes.
• Construction or repair of railroad spurs for industrial development;
• Construction of any county or municipally-owned health care facilities, excluding any county health departments;
• Construction, purchase, renovation or repair of any building to be utilized as an auditorium or convention center;
• Construction of multipurpose facilities for tourism development;
• Loans to a county to aid in retiring interest-bearing loans utilized for the purchase of a motion picture sound stage;
• Construction, repair and renovation of parks, swimming pools and recreational and athletic facilities; or
• Remediation of brownfield agreement sites in accordance with Sections 49-35-1et al.
Terms: Maximum term: 20 years
Amount: MAXIMUM loan amount: $1,000,000 per local entity per calendar year.
MINIMUM loan amount: $30,000 per project.
The Maximum CAP loan Indebtedness allowed per applicant is $2,500,000 outstanding principal balance. Loans
for the construction, repair and renovation of parks, swimming pools and recreational and athletic facilities shall not
exceed $250,000 per project. Loans for remediation of brownfield agreement sites in accordance with Sections
49-35-1 through 47-35-25.
Rate: Tax-exempt Rate: 2% per Annum / Taxable Rate: 3% per Annum
Funding: Funding is derived from the issuance of state general obligation bonds.
To apply for this program, the eligible entity should contact MDA for additional program information.
Statute: Section 57-1-301, Ms Code 1972, Annotated
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Minority Business Enterprise Loan Program (MBE)
The Minority Business Enterprise Loan Program (MBE), administered by the Mississippi Development Authority (MDA), combines state
and private lending sources to assist new and existing minority businesses in gaining access to needed capital in the form of direct
low-interest loans. The program is designed to provide loans to socially and economically disadvantaged minority and women owed
businesses.
Eligible Applicants
A minority business enterprise means a socially and economically disadvantaged small business concern, organized for profit, perform-
ing a commercially useful function which is owned and controlled by one or more minorities or minority business enterprises certified
by the Mississippi Development Authority, at least 50% of whom are MS resident citizens. Eligible businesses are required to obtain
certification as a Minority Business Enterprise by the Minority Business Enterprise Division prior to consideration for the loan. (As
defined by the SBA (15 USCS, Section 637(a)).
The following entities are qualified to assist minority businesses in obtaining loans:
• Mississippi Planning and Development Districts ("PDDs")
• Small Business Investment Corporations
• Community Development Corporations
• Other appropriate entities
Eligible Projects
A minority business enterprise loan may be used for working capital, machinery, equipment, land, and/or buildings used in the minority
business.
Terms: 7 years - working capital
10 years - machinery and equipment
15 years - land and building.
Amount: Maximum loan amount: 50% of total project or $250,000, whichever is less.
Minimum total project considered: $25,001
Rate: Minimum interest rate: 2.0% below the Federal Reserve Discount Rate.
Maximum interest rate: 2.0% above the Federal Reserve Discount Rate.
Funding: Funding is derived from the issuance of state general obligation bonds.
To apply for this program, eligible minority businesses should contact the local Planning and Development District (PDD) to apply for
program. Go to www.mapdd.org for contact information.
Statute: Section 69-2-13(4), Ms Code 1972, Annotated
Minority Business Micro Loan Program
The Minority Business Micro Loan Program, administered by the Mississippi Development Authority, provides a funding source for
minority businesses needing financing for small projects.
Eligible Applicants
A minority business is a socially and economically disadvantaged small business concern organized for profit as defined under the
Small Business Act, 15 U.S.C.S., Section 637[a]), and performing a commercially useful function. The business must have one or more
minority or female owners with controlling interest.
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A business is required to obtain certification as a Minority Business Enterprise by the Minority Business Enterprise Division prior to
consideration for the loan.
Eligible Projects
• Purchase of fixed assets such as machinery and equipment,
• Use as working capital
• Inventory Purchase
Terms: Maximum term: 7 years
Amount: Minimum loan amount: $2,000
Maximum loan amount: $35,000
Rate: Fixed Interest rate: 4.0% over the Federal Reserve Discount Rate.
Funding: Funding is derived from the issuance of state general obligation bonds.
To apply for this program, eligible minority businesses should contact the local Planning and Development District (PDD) to apply for
program. See Mississippi Planning and Development Districts in the Business Resources section of this book (page 81.)
Statute: Section 69-2-13, Ms Code 1972, Annotated
Minority Surety Bond Guaranty Program
The Mississippi Minority Surety Bond Guaranty Program, administered by Mississippi Development Authority (MDA), strives to increase
minority participation in construction and building trade contracts with federal, state, and local units of government, and their sub-
sidiaries.
Often minority firms are unable to compete for this business because they cannot obtain the bid, performance, and payment bonds
required by government contracts. The Minority Surety Bond Guaranty Program assists these firms through surety bond guaranties and
technical assistance in internal management.
Eligible Applicants
• Be in the construction or building trade business;
• Be a certified Minority Business Enterprise through the Minority Business Enterprise Division of the MDA;
• Have been in business at least one year prior to application;
• Have its principal place of business located in Mississippi;
• Meet experience and financial standards appropriate to the contract;
• Agree to subcontract no more than 75% of a qualified contract;
• Show reasonable evidence of inability to secure bonding under normal market conditions.
Eligible Projects
Construction contracts with Federal, State and Local Units of Government.
Terms: Set by Financial Institution.
Amount: Maximum GUARANTY amount: 75% of contract bond amount or $175,000, whichever is less for the 1st year,
increasing up to $250,000 for 2nd year.
Maximum percentage (%) guaranty for any bond is 90%.
Rate: Set by Financial Institution.
To apply for this program, eligible minority businesses should contact the local Planning and Development District (PDD) to apply for
program. See Mississippi Planning and Development Districts in the Business Resources section of this book (page 81.)
Statute: Section 69-2-13(5), Ms Code 1972, Annotated
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Capital Access Loan Program (MS CAP)
The Mississippi Capital Access Program (MS CAP), administered by the Mississippi Development Authority (MDA), is designed to
increase the availability of financing for borrowers who, for various reasons, might have difficulty in obtaining conventional loans.
MDA may establish loss reserve accounts at financial institutions that participate in the program, and require payments by the financial
institution and the borrower to such loss reserve accounts. Under the capital access program, a participating financial institution may
make a loan to any borrower the MDA determines to be qualified under rules and regulations adopted by the authority and be protect-
ed against losses from such loans as provided in the program. Contributions established by MDA in such loss reserve accounts shall
be used in the event of a loan default.
Eligible Applicants
Business entities as defined by Section 8(d) of the Small Business Act, including:
• A Small Business
• A Small Disadvantaged Business
• A Minority Business (minority or woman owned business)
Eligible Projects
Projects directly relating to the creation or expansion of a small business may include the following:
• Fixed assets
• Working capital
• Start-up costs
• Rental payments
• Interest expense during construction
• Professional fees
• Repair, renovation & building improvements
Funds cannot be used to pay off existing debt and/or creditors; consolidation purposes; construction or purchase of residential housing;
or real property that is held primarily for sale or investment.
Terms: Set by Financial Institution.
Amount: Maximum loan amount: $150,000 per borrower.
MDA will match amount deposited in loss reserve account at financial institution and require payments by the
financial institution. Payments made by the borrower into the loss reserve account will have a maximum payment
being 7%.
Rate: Minimum interest rate: 1.5%.
Funding: Funding is derived from the issuance of state general obligation bonds.
To apply for this program, the eligible entity should contact MDA for additional program information.
Statute: Section 57-61-36(5) Ms Code 1972, Annotated
Mississippi Business Investment Program (MBI)
The Mississippi Business Investment Act Program (MBI), administered by the Mississippi Development Authority (MDA), is a program
designed for making loans to local governmental entities, acting individually or jointly, in order to finance authorized improvements for
projects necessary to compliment investments by private companies.
Projects should increase domestic and international commerce and create and maintain new full-time jobs in Mississippi.
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67
Eligible Applicants
Counties and incorporated municipalities, acting individually or jointly, to compliment private investments that will create and maintain
new, full-time jobs in Mississippi are eligible to apply for this program.
Eligible Projects
Projects directly relating to the creation or expansion of the following industries:
• Agricultural Enterprises
• Industrial Enterprises
• Manufacturing Enterprises
• Research and Development Enterprises
• Tourism Enterprises
• Maricultural Enterprises
• Aquacultural Enterprises
• Regional Shopping Malls
• Service Enterprises
Use of loan funds must be directly related to a Private Company's facilities and is limited to construction, expansion, improvement, reha-
bilitation or repair infrastructure needs as outlined in the MBI Guidelines.
Job creation requirement: $15,000 for each new job created and maintained.
Private match: $3.00 for every $1.00 of MBI assistance.
Terms: Maximum term: 10 years or estimated life of project, whichever is less.
Amount: Minimum loan amount: $500,000 per project.
Rate: Negotiable by MDA Executive Director
Funding: Funding is derived from the issuance of state general obligation bonds.
To apply for this program, the eligible entity should contact MDA for additional program information.
Statute: Section 57-61-25, Ms Code 1972, Annotated
Major Economic Impact Authority (MMEIA)
The Mississippi Major Economic Impact Authority (MMEIA), administered by the Mississippi Development Authority (MDA) and the State
Bond Commission, is designed to allow the state to assist local communities in meeting the development requirements inherent in large
capital projects, thereby generating an investment in the quality of life in such communities.
Eligible Applicants
All units of local government are eligible with projects that offer a minimum investment of $300 million by the private sector.
Eligible Projects
• New projects or expansions of existing facilities, which have a minimum initial investment of $300 million by the private sector or
the U.S. Government.
• Eligible projects include industrial or commercial projects, research and development, warehousing, distribution, transportation, pro-
cessing, mining establishments, U.S. Government projects, and tourism facilities.
• Employers may also qualify if they have a capital investment of $150 million from private sector or US Government sources together
and create 1000 net new jobs or if they create 1000 net new jobs that pay 125% of the annual wage rate of the state. Ancillary devel-
opments that occur as a result of certain enterprises may also be eligible.
• Other projects may qualify based on individual legislation.
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Terms: Maximum loan term shall not exceed 20 years.
Rate: The loan will bear interest rate determined by the authority.
Funding: Funding is derived from the issuance of state general obligation bonds.
To apply for this program, the eligible entity should contact MDA for additional program information.
Statute: Section 57-75-5, Ms Code 1972, Annotated
Research and Development Loan Program
The Mississippi Research and Development Program (R&D Loan Program), administered by the Mississippi Development Authority
(MDA), is designed for making loans to private companies to aid in the creation of new and expanding research and development and
technology-based businesses and industries.
Eligible Applicants
Private companies that meet the requirements of a Research and Development or Technology intensive enterprise may qualify for this
program.
Research and Development
A business engaged in laboratory, scientific or experimental testing and development related to new products, new uses for existing
products, or improving existing products. Research and Development does not include any business engaged in efficiency surveys,
management studies, consumer surveys, economic surveys, advertising, promotion, or research in connection with literary, historical or
similar projects.
Technology
The enterprise shall manufacture plastics, automobiles, aircraft, computers or electronics, or be a computer design or software pub-
lishing facility with at least 10% of the workforce being scientists, engineers or computer specialists. The average wage of all workers
employed shall be at least 150% percent of the state average annual wage. A basic health care plan must be provided to all employ-
ees.
Additionally, the following requirements must be met:
• Employ at least 10 persons in full time positions
• Inject a minimum of 10% equity into the project.
• Present evidence that the company can repay the debt, and must not have defaulted on any previous loan from the State or
Federal Government.
Eligible Projects
Proceeds may be used to finance land, building and depreciable fixed assets (“R&D Project”). Loan proceeds may not be used for
working capital, debt refinancing or rolling stock. Other state finance programs including Community Development Block Grants may
not be used to finance the remaining cost of the R&D Project.
Terms: Maximum term: 10 years or estimated useful life of the project, whichever is less.
Amount: Maximum loan amount: 50% of total project cost up to $750,000 per project.
Minimum loan amount: $250,000.
Rate: Interest rate on the most recent 20-year general obligation bonds occurring prior to the date the loan is made.
Funding: Funding is derived from the issuance of state general obligation bonds.
To apply for this program, the eligible entity should contact MDA for additional program information.
Statute: Section 57-61-34, Ms Code 1972, Annotated
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Rural Impact Fund Loan Program (RIF)
The Mississippi Rural Impact Fund Program (RIF), administered by the Mississippi Development Authority (MDA), is designed to assist
and promote businesses and economic development in rural areas by providing loans to rural communities (Local Entities) and loan
guarantees to rural businesses (Businesses).
Eligible Applicants
Rural Community – a municipality with a population of 10,000 or less, according to the most recent federal decennial census, at the
time the application is submitted by the municipality; or, a county with a population of 30,000 or less, according to the most recent fed-
eral decennial census, at the time the application is submitted by the county.
Rural Business – means a new or existing business located or to be located in a rural community; or, a business or industry located or
to be located within five miles of a rural community.
Eligible Projects
Eligible projects financed with RIF must be publicly owned with the exception of loan guarantees to rural businesses. Eligible projects
include, but are not limited to:
• Construction, rehabilitation or repair of building;
• Sewer systems and transportation directly affecting the site of the proposed rural business; Sewer facilities;
• Acquisition of real property, development to real property, improvements to real property;
• Any other project approved by MDA, and
• Loan guarantees to financially sound Rural Businesses not to exceed eighty percent (80%) of the principal loan amount.
Eligible Projects must have a direct connection in creating jobs. All projects funded should create a minimum of ten (10) net new full-
time jobs. The program intent is to stimulate job creation and economic development in rural communities in the State.
Amount: Maximum LOAN amount: $200,000 for rural community
Maximum LOAN guarantee: $200,000 on 80% loan guarantees
Funding: Funding is derived from the issuance of state general obligation bonds.
To apply for this program, the eligible entity should contact MDA for additional information.
MDA Rural Impact Program
Post Office Box 849
Jackson, Mississippi 39205
Telephone: (601) 359-3179
Statute: Section 57-85-1, Ms Code 1972, Annotated
business financing
70
Other Finance Programs
Appalachian Regional Commission (ARC)
Mississippi participates in the Appalachian Regional Commission (ARC). ARC is a partnership of federal, state and local governments that
serves portions of 13 states. The Mississippi Appalachian Regional Office (ARO) is located in the Mississippi Development Authority's
Regional Office in Tupelo, and its staff works to fulfill the mission of the ARC program, the Governor's state ARC plan, and the economic
development goals and objectives of MDA.
The Mississippi ARO works in a collaborative manner with local planning and development districts (PDDs), economic development organ-
izations, local communities, and other state agencies in the development of eligible projects to address the needs in the 24 Mississippi
ARC counties. ARC supports counties in the northeast and east central portion of the state; approximately 616,000 of Mississippi’s 2.8
million residents live in this rural corner of Mississippi.
Mississippi Appalachian Development Plan
ARC provides matching funds for projects in numerous areas under two broad themes:
1. Increase private sector and high wage jobs across the MS Appalachian Region.
2. Develop sustainable communities with high quality of life throughout the Mississippi Appalachian Region.
ARC also has funding available for a special regional initiative in Asset Development.
The Mississippi counties served by ARC are Alcorn, Benton, Calhoun, Chickasaw, Choctaw, Clay, Itawamba, Kemper, Lee, Lowndes,
Marshall, Monroe, Montgomery, Noxubee, Oktibbeha, Panola, Pontotoc, Prentiss, Tishomingo, Tippah, Union, Webster, Winston, and
Yalobusha.
The Mississippi ARO will write each Mississippi Appalachian Local Development District (PDD) in May of each year and solicit project
applications for review and consideration. The invitation letter will list funding limitations, project criteria, and any other relevant material
to be used in consideration for that particular year’s annual cycle. All project applications are due at the ARO in Tupelo by September 1 of
each year. Additional information on the application process can be found athttp://www.mississippi.org/content.aspx?url=/page/3019&.
Projects identified as priority will be submitted to ARC-Washington for funding purposes. PDD’s will be notified of the projects included in
the submission to ARC-Washington.
ARC participation costs will be limited to 50% of project costs, with the following exceptions:
For projects located in ARC designated distressed counties, the maximum grant will be 80% of project costs.
ARC assistance for multi-county projects in which at least half the counties are distressed may be increased to as much as 80% of proj-
ect costs; if at least one, but less than half, of the counties area distressed, ARC assistance is limited to the higher of 50% or the average
percentage applicable to the counties in the project.
For additional program information contact the MDA Asset Development Group, Appalachian Regional Office by phone at 662.844.5413
Delta Regional Authority (DRA)
The Delta Regional Authority is a federal-state partnership serving a 240 county/parish area in an eight-state region. Mississippi
Development Authority's (MDA) Office of Strategic Initiatives coordinates Mississippi activities and grants in Mississippi's 45 DRA counties.
MDA works collaboratively with local planning and development districts (PDDs), economic development organizations, local communities,
and other state agencies in the development of eligible projects to address the needs in the 45 Mississippi DRA counties. The PDD’s play
an active and essential part by preparing applications that are consistent with the DRA Code, guidelines, and plans.
business financing
71
Mississippi Delta Region Development Plan
1. Increase private sector and high wage jobs across the Mississippi DRA Region.
2. Develop sustainable communities with high quality of life throughout the Missisiippi Delta Region.
Under federal law, at least 75 percent of the funds must be invested in distressed counties and parishes and pockets of poverty, with
50 percent of the funds earmarked for transportation and basic infrastructure improvements. Participating DRA States are Alabama,
Arkansas, Illinois, Kentucky, Louisiana, Mississippi, Missouri, and Tennessee.
MDA ensures that these federal funds are used to economic and community development on the following activities:
• Basic public infrastructure in distressed counties and isolated areas of distress.
• Transportation infrastructure for the purpose of facilitating economic development in the region.
• Business development, with emphasis on entreprenuership.
• Job Training or employment related education, with emphasis on use of existing public educational institutions located in the
region.
Mississippi Counties served by DRA are Adams, Amite, Attala, Benton, Bolivar, Carroll, Claiborne, Coahoma, Copiah, Covington, DeSoto,
Franklin, Grenada, Hinds, Holmes, Humphreys, Issaquena, Jefferson, Jefferson Davis, Lafayette, Lawrence, Leflore, Lincoln, Madison,
Marion, Marshall, Montgomery, Panola, Pike, Quitman, Rankin, Sharkey, Simpson, Sunflower, Tallahatchie, Tate, Tippah, Tunica, Union,
Walthall, Warren, Washington, Wilkinson, Yalobusha, and Yazoo.
For further information on the Mississippi Delta Regional Plan go tohttp://www.mississippi.org/content.aspx?url=/page/DRA&
Mississippi Business Finance Corporation (MBFC)
The Mississippi Business Finance Corporation (MBFC) administers a variety of finance programs designed to assist businesses in locat-
ing or expanding in the state. MBFC provides companies an opportunity to review all financial programs through one source.
MBFC works with other public entities and the private sector to coordinate efforts to stimulate both commercial and industrial develop-
ment. The following information is provided as an overview of the finance programs available through MBFC, MDA, and local units of
government.
Programs available through the Mississippi Business Finance Corporation:
• Industrial Development Revenue Bond Program
• Small Enterprise Development Program
• Rural Economic Development Assistance Program
Industrial Development Revenue Bond Program
The Industrial Development Revenue Bond Program reduces the interest costs of financing projects for companies through the issuance
of both taxable and tax-exempt bonds. Additionally, ad valorem and sales tax exemptions are granted in conjunction with this type of
public financing.
Most types of commercial businesses are eligible for IRB financing. Proceeds of the bond issue may be used for the acquisition and
construction of real property, machinery and equipment, capitalized interest and limited bond issuance expenses.
The bonds must be secured by an irrevocable, direct-pay letter of credit or other credit enhancement acceptable to MBFC.
The proceeds of a bond issue may be used for the acquisition and construction of real property, machinery and equipment, capitalized
interest, reserve funds, and a limited amount of the cost of issuance in accordance with provisions of the Internal Revenue Code.
business financing
72
Although there is no restriction on the amount of taxable debt that may be incurred, there is a $10 million cap on tax-exempt financ-
ing. The maximum term of a bond issue will be equal to 120% of the average life of the financed assets or thirty years, whichever is
less. The bond purchaser will determine the interest rate. The borrower will pay the costs of issuance and any other applicable fees.
Small Enterprise Development Program
The issuance of state general obligation bonds provides funds for manufacturing and processing companies to finance fixed assets,
i.e. land, buildings, new machinery and new equipment at below market interest rates for terms of up to fifteen years.
Although a company may qualify for more than one loan under this program, the aggregate amount loaned to any company cannot
exceed $2 million. Interest rates on these loans are equal to the net interest rate on the bonds issued by the State plus a servicing
fee. The borrower will pay the costs of issuance and any other applicable fees.
A project must create a minimum of ten jobs, and loans cannot exceed 90% of the market value of the financed assets. Companies
participating in the program will be required to obtain a bank letter of credit guaranteeing the loan.
Rural Economic Development Assistance Program
Companies financing projects through the Small Enterprise Development or Industrial Revenue Bond Programs, which are adminis-
tered by MBFC, may be eligible to participate in the Rural Economic Development Assistance Program. The program allows eligible
companies to receive credits on Mississippi corporate income taxes.
Mississippi corporate income tax credits will be granted at the end of a company's fiscal year and will be based on the Mississippi tax
liability at that time. The amount a company will be required to pay in Mississippi income tax could be reduced by an amount up to
the debt service paid during the tax year.
The total amount of tax credits earned may not exceed the annual debt service on the bond issue. These credits may be used to offset
up to 80% of the company's state corporate income tax liability.
For more information, go tohttp://www.msbusinessfinance.com/
Local Industrial Development Revenue Bonds
Local political entities in Mississippi, including counties, supervisors' districts, incorporated cities and towns, have the authority to
issue tax-exempt and taxable industrial development revenue bonds to finance new or expanding industrial enterprises. There is no
election approval required unless 20% or more of the entity's electors object to the bond issuance in writing. Ownership of a bond-
financed facility is retained by the issuing political entity, which leases it to a company for rental sufficient to pay the annual principal
and interest on bonds.
Industrial development revenue bonds can finance up to 100% of total project costs, including land, buildings, fixtures, new equip-
ment, new machinery and professional fees.
Facilities financed by such bonds are allowed up to a ten-year property tax exemption, in addition to being exempt from most sales
and use taxes on project related purchases during construction.
General Obligation Bonds
Local political entities have the authority to issue general obligation bonds for the purpose of acquiring sites and constructing facilities
for lease to new or expanding industries with rentals sufficient to amortize the debt service on the bonds.
General obligation bonds carry the full faith and credit of the issuing political entity. As title to the property remains with the political
entity issuing the bonds, no taxes, except school taxes, are assessed on the improvements made with the proceeds of such bonds. An
agreement is negotiated between the industry and the political entity covering the details of the issuance of the bonds and the lease.
business financing
73
Small Business Assistance Program (SBA)
The Mississippi Small Business Assistance Program was established for the purpose of providing funds to qualified entities to establish
revolving loan funds to assist small businesses.
Eligible Applicants
Qualified entities are defined as Mississippi Planning and Development Districts (PDDs), Small Business Investment Corporations,
Community Development Corporations, and other similar entities. These entities must provide loans to assist small businesses.
A small business is defined as any for-profit commercial enterprise with fewer than 100 full-time employees, less than $2 Million in
net worth or less than $350,000 in net annual profit after taxes during two of the last three years. Eligible industries include:
• Manufacturers
• Processors
• Distributors
• Wholesalers
• Retailers
• Service Providers
Eligible Projects
Qualified entities may provide loans to finance land, buildings, machinery, equipment, working capital, inventory, or other needs as
negotiated with the borrower.
Terms: 15 years - Land/Building
10 years - Machinery/Equipment
5 years - Working Capital
3 years - Purchase of Inventory
Collateral negotiable
Amount: Maximum loan amount: 50% of project or $100,000, whichever is less.
Fees: MDA requires a 1% servicing fee on State’s portion of loan.
Rate: Interest rate: 5% minimum per annum or more than 4% above Federal Reserve discount rate plus service fees.
Funding: Funding is funneled through MDA as a revolving loan to PDDs.
To apply for this program, small businesses should contact their local PDD, Small Business Investment Corporations, Community
Development Corporations, or other similar entities for additional information on Small Business Assistance Loan Programs.
Statute: 57-10-507; 57-10-511, Ms Code 1972, Annotated
Resources
Business
75
Business Resources
77
Mississippi Development Authority Regional Offices
1 - North Delta Region
The North Delta Regional Office
Post Office Box 641 • Senatobia, MS 38668
Phone: (662) 562-0410 • Fax (662) 562-0407
Street address:
910 E. F. Hale Drive • Senatobia, MS 38668
2 - Northeast Region
The Northeast Regional Office
Post Office Box 1606 • Tupelo, MS 38802
Phone: (662) 844-5413 • Fax (662) 842-3667
Street address:
330 West Jefferson • Tupelo, MS 38804
3 - Northwest Region
The Northwest Regional Office
Post Office Box 32 • Greenwood, MS 38935-0032
Phone: (662) 455-4508 • Fax (662) 455-7903
Street address:
522 West Park Village, Suite 0
Greenwood, MS 38930
4 - East Central Region
The East Central Regional Office
Post Office Box 4398 • Meridian, MS 39304
Phone: (601) 692-2006 • Fax (601) 484-2532
Street address:
2401 11th Street • Meridian, MS 39301
5 - West Central Region
The West Central Regional Office
Post Office Box 849 • Jackson, MS 39205-0849
Phone: (601) 359-2457 • Fax (601) 359-5042
Street address:
501 North West Street, Suite 428
Jackson, MS 39201
6 - Southwest Region
The Southwest Regional Office
Post Office Box 728 • Summit, MS 39666-0728
Phone: (601) 276-3089 • Fax (601) 276-3870
Street address:
Southwest Mississippi Community College
Brumfield Building • Summit, MS 39666
7 - Southeast Region
The Southeast Regional Office
Post Office Box 1287 • Hattiesburg, MS 39403-1287
Phone: (601) 545-4001 • Fax (601) 545-4006
Street address:
420 West Pine Street • Hattiesburg, MS 39403
8 - Gulf Coast Region
The Gulf Coast Regional Office
1141 Bayview Avenue, Suite 401 • Biloxi, MS 39530
Phone: (228) 523-4034 • Fax (228) 374-2973
4
8
2
Meridian
1
6
7
Gulfport
5
Jackson
3
Greenwood
Tupelo
Hattiesburg
Senatobia
Summit
TISHOMINGO ALCORN
TIPPAH
PRENTISS
BENTON
UNION
LEE
ITAWAMBA
PONTOTOC
LAFAYETTE
MARSHALL
DESOTO
TATE
PANOLA
TUNICA
COAHOMA
QUITMAN
TALLAHATCHIE
YALOBUSHA
GRENADA
SUNFLOWER
BOLIVAR
WASHINGTON
HUMPHREYS
HOLMES
LEFLORE
CARROLL
MONTGOMERY
WEBSTER
CALHOUN
CHOCTAW
ATTALA
WINSTON
NOXUBEE
KEMPER NESHOBA LEAKE
SCOTT
MADISON
RANKIN HINDS
JEFFERSON
ADAMS
FRANKLIN
WILKINSON AMITE PIKE WALTHALL
LINCOLN
LAWRENCE
JEFFERSON DAVIS
MARION
LAMAR
COVINGTON
SIMPSON
SMITH
JASPER
JONES
FORREST
STONE
PEARL RIVER
GREENE
GEORGE
JACKSON
HARRISON
HANCOCK
PERRY
WAYNE
COPIAH
CLAIBORNE
YAZOO
SHARKEY
ISSAQUENA
WARREN
NEWTON
CLARKE
LAUDERDALE
OKTIBBEHA
CLAY
LOWNDES
MONROE
CHICKASAW
Business Resources
78
Mississippi Procurement Technical
Assistance Program
South Mississippi Contract
Procurement Center, Inc.
1141 Bayview Avenue, Suite 401
Biloxi, Mississippi 39530
Phone: (228) 374-2970 • Fax: (228) 374-2973
www.mscpc.com
Delta Contract Procurement
Center, Inc.
Post Office Box 1179 • Greenville, MS 38702
Street address:
Washington County Courthouse, 2nd Floor
900 Washington Avenue • Greenville, Mississippi 38702
Phone: (662) 334-2656 • Fax: (662) 334-2709
www.mscpc.com
East Central Contract
Procurement Center, Inc.
c/o Meridian Community College
910 Highway 19 North • Meridian, Mississippi 39307
Phone: (601) 482-7445 • Fax: (601) 482-5803
www.mscpc.com
Central Mississippi Contract
Procurement Center, Inc.
Post Office Box 849 • Jackson, MS 39205-0849
Street address:
Woolfolk Building, 6th floor
501 Northwest Street • Jackson, Mississippi 39201
Phone: (601) 359-3485 • Fax: (601) 359-5290
www.mscpc.com
Northeast Mississippi Contract
Procurement Center, Inc.
Post Office Box 1805
Columbus, Mississippi 39705-1805
Street address:
318 7th Street North • Columbus, MS 39703
Phone: (662) 329-1077 • Fax: (662) 327-6600
www.mscpc.com
Business Resources
79
Northeast Mississippi Business Incubation System
Ripley Facility
401 CR 565
Ripley, MS 38663
Phone: (662) 287-4369 • Fax: (662) 287-1214
Corinth Facility
1828 Proper Street
Corinth, MS 38834
Phone: (662) 287-4369 • Fax: (662) 287-1214
Iuka Facility
2021 Seago Road
Iuka, MS 38852
Phone: (662) 287-4369 • Fax: (662) 287-1214
North Mississippi Enterprise Initiative
Batesville Enterprise Center
275 Nosef Drive
Batesville, MS 38606-2729
Phone: (662) 563-3126
Oxford Enterprise Center
9 Industrial Park Drive
Oxford, MS 38655-5343
Phone: (662) 234-4651 • Fax: (662) 561-0790
www.northmiss.org
Grenada Enterprise Center
500 Enterprise Drive
Grenada, MS 38901-9544
Phone: (662) 226-2571
Coahoma County Business Development Center
Post Office Box 160
Clarksdale, MS 38614
Phone: (662) 627-7337 • Fax: (662) 627-1313
Columbus-Lowndes Business Development Center
118 South McCrary Road
Columbus, MS 39702
Phone: (662) 328-8369 • Fax: (662) 328-9888
www.cldlink.org
Mississippi Business Incubator Program
Business Incubation is a dynamic process of business enterprise development. Incubators nurture young firms, helping them to sur-
vive and grow during the startup period when they are most vulnerable. Incubators provide hands on management assistance, access
to financing and orchestrated exposure to critical business or technical support services. They also offer entrepreneurial firms shared
office services, access to equipment, flexible leases and expandable space – all under one roof. Listed below are the incubator loca-
tions around the State of Mississippi.
Golden Triangle Enterprise Center
1 Research Boulevard
Suite 204
Starkville, MS 39759
Phone: (662) 323-3322 • Fax: (662) 320-3999
www.gtec.org
Winston County Economic Development District
Post Office Box 551
Louisville, MS 39339
Phone: (662) 773-8719 • Fax: (662) 773-8719
www.winstoncounty.com
Kemper County Industrial Incubator Center, Inc.
102 Industrial Park Drive
DeKalb, MS 39328
Phone: (601) 743-2754 • Fax: (601) 743-2760
Mississippi Technology Alliance Innovation Center
1230 Raymond Road, Box 600
Jackson, MS 39204
Phone: (601) 965-0352 • Fax: (601) 965-0362
www.innovationcenter.ms
Alcorn State University Technology Incubator
101 North Wall Street
Post Office Box 982
Natchez, MS 39121
Phone: (601) 442-0202
Gulf Coast Business Technology Center
1636 Popps Ferry Road
Biloxi, MS 39532
Phone: (228) 392-9741 • Fax: (228) 392-9743
www.gcbtc.org
Mississippi Enterprise for Technology
Building 1103
Suite 143
Stennis Space Center, MS 39529
Phone: (228) 688-2083 • Fax: (228) 688-1064
www.mset.org
Business Resources
80
ALCORN
DESOTO
MARSHALL
BENTON
PRENTISS
ITAWAMBA
MONROE
TATE
TUNICA
PANOLA
YALOBUSHA
CARROLL
QUITMAN
COAHOMA
WASHINGTON
YAZOO
NOXUBEE
JEFFERSON
PEARL RIVER
ADAMS
WILKINSON
AMITE
FRANKLIN
PIKE
WALTHALL
CLAIBORNE
COPIAH
JASPER CLARKE
WAYNE
JONES
JACKSON
STONE
HARRISON
KEMPER
WARREN
HINDS
RANKIN
LAUDERDALE
MARION
LAMAR
PERRY GREENE
GEORGE
TALLAHATCHIE
LEFLORE
LINCOLN
ISSAQUENA
HOLMES
HUMPHREYS
GRENADA
LOWNDES
LAFAYETTE
LEE
MADISON
SHARKEY
LAWRENCE
HANCOCK
TIPPAH
UNION
PONTOTOC
CALHOUN
CLAY
WEBSTER
CHOCTAW
WINSTON
LEAKE
OKTIBBEHA
NEWTON
SIMPSON
SMITH
COVINGTON
JEFFERSON
DAVIS
NESHOBA
SCOTT
FORREST
ATTALA
CHICKASAW
MONTGOMERY
SUNFLOWER
BOLIVAR
TISHOMINGO
Mississippi Incubator Facilities
Ripley
Corinth
Iuka
Clarksdale
Starkville
Columbus
DeKalb
Jackson
Stennis
Space
Center
Biloxi
Batesville
Oxford
Grenada
Louisville
Natchez
Mississippi
Business
Incubators
Business Resources
81
Mississippi Planning and Development Districts
1 -North Delta Planning and Development District
Post Office Box 1488 • Batesville, Mississippi 38606
Phone: (662) 561-4100 • Fax: (662) 561-4112
www.ndpdd.com
2 - South Delta Planning and Development District
124 South Broadway
Post Office Box 1776 • Greenville, Mississippi 38702
Phone
662) 378-3831www.southdeltapdd.com
3 - North Central Planning and Development District
711 South Applegate • Winona, Mississippi 38967
Phone: (662) 283-2675
4 - Central Mississippi Planning and Development District
1170 Lakeland Drive
Post Office Box 4935 • Jackson, Mississippi 39296-4935
Phone: (601) 981-1511 • Fax: (601) 981-1515
www.cmpdd.com
5 - Southwest Mississippi Planning and Development District
100 South Wall Street • Natchez, Mississippi 39120
Phone: (601) 446-6044
www.swmpdd.com
6 - Southern Mississippi Planning and Development District
SMPDD Gulfport Office
9229 Highway 49 • Gulfport, Mississippi 39503
Phone: (228) 868-2311
www.smpdd.com
SMPDD Hattiesburg Office
700 Hardy Street • Hattiesburg, MS 39401
Phone: (601) 545-2137
www.smpdd.com
7 - East Central Planning and Development District
280 Commercial Drive
Post Office Box 499 • Newton, Mississippi 39345
Phone: (601) 683-2007
Email: [email protected]
8 -Golden Triangle Planning and Development District
Post Office Box 828
106 Miley Road • Starkville, Mississippi 39760-0828
Phone: (662) 324-7860 • Fax: (662) 324-7328
www.gtpdd.com
9 - Three Rivers Planning and Development District
75 South Main Street
Post Office Box 690 • Pontotoc, Mississippi 38863
Phone: (662) 489-2415
www.trpdd.com
10 - Northeast Mississippi Planning and Development District
Post Office Box 600 • Booneville, Mississippi 38829
Phone: (662) 728-6248 • Fax: (662) 728-2417
www.nempdd.com
7
9
Meridian
1
5
6
Gulfport
4
Jackson
3
Greenwood
Tupelo
Hattiesburg
Senatobia
Summit
TISHOMINGO ALCORN
TIPPAH
PRENTISS
BENTON
UNION
LEE
ITAWAMBA
PONTOTOC
LAFAYETTE
MARSHALL
DESOTO
TATE
PANOLA
TUNICA
COAHOMA
QUITMAN
TALLAHATCHIE
YALOBUSHA
GRENADA
SUNFLOWER
BOLIVAR
WASHINGTON
HUMPHREYS
HOLMES
LEFLORE
CARROLL
MONTGOMERY
WEBSTER
CALHOUN
CHOCTAW
ATTALA
WINSTON
NOXUBEE
KEMPER NESHOBA LEAKE
SCOTT
MADISON
RANKIN HINDS
JEFFERSON
ADAMS
FRANKLIN
WILKINSON AMITE PIKE WALTHALL
LINCOLN
LAWRENCE
JEFFERSON DAVIS
MARION
LAMAR
COVINGTON
SIMPSON
SMITH
JASPER
JONES
FORREST
STONE
PEARL RIVER
GREENE
GEORGE
JACKSON
HARRISON
HANCOCK
PERRY
WAYNE
COPIAH
CLAIBORNE
YAZOO
SHARKEY
ISSAQUENA
WARREN
NEWTON
CLARKE
LAUDERDALE
OKTIBBEHA
CLAY
LOWNDES
MONROE
CHICKASAW
10
2
8
Business Resources
82
State
Mississippi Development Authority (MDA)
501 North West Street
Post Office Box 849
Jackson, Mississippi 39205
Phone: (601) 359-3593 • Fax: (601) 359-2832
www.mississippi.org
Mississippi Department of Employment Security (MDES)
1235 Echelon Parkway
Post Office Box 1699
Jackson, Mississippi 39213-1699
Phone: (601) 321-6000
www.mdes.ms.gov
Mississippi Secretary of State
700 North Street
Post Office Box 136
Jackson, Mississippi 39205-0136
Phone: (601) 359-1350 • Fax: (601) 359-1499
www.sos.state.ms.us/
Mississippi Small Business Development Centers (SBDC)
Post Office Box 1848
University, Mississippi 38677-1848
Phone: (662) 915-5001 or 800-725-7232 • Fax (662) 915-5850
Email: [email protected]
www.olemiss.edu/depts/mssbdc/
Mississippi State Board of Health
570 East Woodrow Wilson Drive
Post Office Box 1700
Jackson, Mississippi 39215-1700
Phone: (601) 576-7400 • Fax: (601) 576-7948
www.msdh.state.ms.us/
Mississippi State Tax Commission (MSTC)
Post Office Box 1033
Jackson, Mississippi 39215
Phone: (601) 923-7000 • Fax: (601) 923-7039
www.mstc.state.ms.us/
Mississippi Workers’ Compensation Commission
1428 Lakeland Drive
Post Office Box 5300
Jackson, Mississippi 39296-5300
Phone: (601) 987-4200
www.mwcc.state.ms.us/
FEDERAL AND STATE AGENCIES
Federal
Small Business Administration Offices (SBA)
Mississippi District Office
210 East Capitol, Suite 900
Jackson, Mississippi 39201
Phone: (601) 965-4378 • Fax: (601) 965-4294
www.sba.gov
Gulfport Branch Office
Gulf Coast Business Technology Center
1636 Popps Ferry Road, Suite 203
Biloxi, MS 39532
Phone: (228) 863-4449 • Fax: (228) 864-0179
www.sba.gov
United States Department of Labor
Occupational Safety and Health Division (OSHA)
3780 I-55 North, Suite 210
Jackson, Mississippi 39211
Phone: (601) 965-4606 • Fax: (601) 965-4610
www.osha.gov
United States Department of Labor
Wage and Hour Division
100 West Capitol Street, Suite 608
Jackson, Mississippi 39269
Phone: (601) 965-4347
www.dol.gov
United States Equal Employment Opportunity Commission (EEOC)
100 West Capitol Street, Suite 207
Jackson, Mississippi 39269
Phone: (601) 948-8400 • Fax: (601) 948-8401
www.eeoc.gov
United States Internal Revenue Service (IRS)
Federal Building
100 West Capitol Street
Jackson, Mississippi 39269
Phone: 1-800-829-1040
www.irs.ustreas.gov
United States Treasury Department
Bureau of Alcohol, Tobacco and Firearms
100 West Capitol Street, Suite 335
Jackson, Mississippi 39269
Phone: (601) 292-4000
www.atf.treas.gov
Business Resources
83
Terms of Business/Glossary
Advertising
A paid form of communicating a message by the use of
various media. It is persuasive, informative, and designed to
influence purchasing behavior or thought patterns.
Amortize
To pay a debt gradually through scheduled periodic payments;
the process of writing off against expenses the cost of an
intangible asset over the period of its economic usefulness.
Assets
The items on a balance sheet showing book value of a
business.
Balance Sheet
A listing of the assets, liabilities and equity of a business.
Balloon Payment
The final bulk payment that retires a loan when minimal
previous payments have not fully amortized it.
Barterting
A system of trading goods and services for advertising time or
space. For example, a hotel might trade-out the value of one
or two nights stay to the newspaper in return for the same
value in advertising space.
Benchmarks
Standards or averages by which similar items can be
compared.
Book Value
The value of something as shown on bookkeeping records as
distinguished from market value; the value of an asset equal
to cost less depreciation.
Business Support Organization
Federal, state, county, city, and community organizations
which assist small business people. Examples: Small
Business Administration (SBA), Small Business Development
Centers (SBDC), Mississippi Development Authority (MDA),
chambers of commerce, economic development foundations
and groups, junior and senior colleges, city hall, county court-
house, etc.
Capital
Net worth of the individual or business; also, the excess of
total assets over total liabilities; the funds used to start a
business.
Cash Flow Statement
A listing of cash receipts and cash disbursements that
occur over a specific period of time. Note that non-cash
expense items such as depreciation are not included.
Collateral (Security)
Personal or real property possessions that the borrower
assigns to the lender to help ensure debt payment. If the
borrower does not repay the loan, the lender may take
ownership of the collateral to pay the loan balance.
Cooperative Advertising (Co-Op advertising)
An arrangement between manufacturer and retailer to
reimburse the retailer in full or in part for local placement
of manufacturer-produced ads and commercials. These
ads would include the addition of the retailer’s name in the
copy. Co-op advertising might also mean a joint effort
between two or more businesses to pool advertising money
for more buying power. The ads would feature both com-
pany names and benefits.
CPT (Cost Per Thousand)
Divides the cost of an advertising medium by the number of
persons in the target audience who are reached by the
medium.
Cumulative Cash Flow
The balance in your checking account at the end of each
accounting period.
Debenture
A corporate security other than an equity security bond; a
bond backed by the general credit of the issuer rather than
a specific lien on particular assets.
Demographics
The statistical study of populations, particularly as it relates
to the age, race, sex, income, and other pertinent socioeco-
nomic factors of a specific area.
Depreciation
The process of writing off against income the decrease in
value of a fixed asset over its useful life.
Entrepreneur
One who organizes and assumes the risk of business.
Equity
The money value of property or of an interest in a property
in excess of claims or liens against it; a risk interest or
ownership right in property.
Business Resources
84
Gross Margin
The percentage difference between the cost and the selling price
of goods (e.g., an item purchased for $1.00 and sold for $1.25
has a gross margin of 20 percent).
Gross Profit
The monetary difference between the sale price and the actual
cost of the item sold.
Logo
A unique symbol or design that represents a company. Also
called a trademark.
MDA
Mississippi Development Authority.
Market
The demand for one’s goods. Available customer base.
Market Niche
The unique advantage or benefit a product or service offers a
particular group of customers. Marketing success is dependent
upon establishing how a product stands out from similar ones.
Market Research and Analysis
The determination of the following: the size of your market, who
your customers are, who your competitors are and what their
pricing policies are, what their promotional activities are, and an
analysis of their product.
Market Activities
Includes identifying unmet needs; producing products and serv-
ices to meet those needs: and pricing, distributing, and promot-
ing those products and services to produce a profit.
Marketing Mix
Includes a combination of product, packaging, price, channels of
distribution, advertising, promoting, and personal selling to get
the product in the hands of the customer.
Markup
The percent of increase from the cost to the selling price of
goods (e.g., an item purchased for $1.00 and then sold for $1.25
has a markup of 20 percent).
Media
The print (newspaper, magazine, etc.) and electronic (radio and
television) communication devices used for advertising.
Media Frequency
The number of times the target audience is exposed to an
advertising message.
Media Reach
The percentage of a target audience that is exposed to an
advertising medium.
Mississippi Mainstreet
A statewide program to provide member communities in
Mississippi with information and services to help them accom-
plish their downtown development and revitalization goals.
MSA (Metropolitan Statistical Area)
The U.S. Bureau of Census’ term for an area consisting of one
or more counties around a central urban area with 50,000 or
more inhabitants and with minimal agricultural employment.
Net Cash Flow
Gross receipts minus gross expenditures as stated on a
monthly basis.
“Objective and Task” Budgeting
The determination of the desired advertising result, the costs
of the tasks to be done, and determining the amount required
to achieve those results.
“Percent of Sales” Budgeting
One of the easiest and most commonly used methods of
determining an advertising budget total. Percentages vary, by
three to five percent of past sales or a forecast of future sales
is a general rule of thumb to use. The assigned percentage
may be even higher for a grand opening, introduction of a new
product, or other very special promotional reasons. An exam-
ple of “percent of sales” budgeting would be a firm planning
to do $100,000 worth of business next year and allocating five
percent of sales or $5,000 for the annual advertising budget.
Per-Unit Budgeting
Determines the size of the marketing or advertising budget
and allocates it for specific products or services. With this
method, each product or service has its own individual budget.
Positioning
The attempt to control the public’s perception of a product or
service as it relates to competitive products.
Business Resources
85
Prime Rate
An interest formally announced by a bank to be the lowest available at
a particular time to its most credit-worthy customers.
Pro-Forma
Projected; provided in advance to prescribe form or describe items
(e.g., pro-forma balance sheet).
Psychographics
Personal and mental concepts that are measured in terms of atti-
tudes, beliefs, opinion, perceived benefits, self-concepts, and
lifestyles.
Public Relations
A form of communication primarily directed toward gaining public
understanding and acceptance. Public relations usually deal with
issues rather than products or services and is used to build goodwill
with the public or employees. Examples of public relations are
employee training, support of charitable events, or a news release
about some positive community participation.
Purchase Cycles
The time periods between purchases of a product, which is important
in estimating product or service demand.
SBA
Small Business Administration.
S Corporation
A corporation that elects, by unanimous consent of its shareholders,
not to pay any corporate tax on its income (except capital gains, cer-
tain passive investment income and certain investment credit recap-
ture) and, instead, to have the shareholders pay taxes on it, even
though such income is not distributed.
Segmentation
The process of directing all marketing efforts at a particular group of
potential customers. For example, Rolex directs the marketing of its
watches to upscale customers who are very brand conscious.
Target Market
The specific group of customers that a company aims to capture.
They have been identified as people with needs or wants that can be
met with the products or services from this company.
Test Marketing
A limited introduction of a product or service to test public reaction for
a full market strategy. Giving the public a small sample of what is to
be offered is a form of test marketing.
Business Resources
86
Resources for Marketing Research
Annual Statement Studies
Philadelphia: Risk Management Association.
Current and historical financial ratios for manufacturers,
wholesalers, retailers, service ventures, and contractors.
Published annually. Known as the RMA. www.rmahq.org
County Business Patterns
U.S. Bureau of the Census. Washington: U.S.
Government Printing Office.
Set of statistical publications covering employment, payroll,
and a number of establishments by county and business
type on national, state, and county levels. Published annu-
ally. www.census.gov/epcd/cbp/view/cbpview.html
County and City Data Book
U.S. Department of Commerce, Bureau of the Census.
Washington: U.S. Government Printing Office.
A compilation of statistics on states, counties, and cities of
25,000 or more, and places of 2,500 and more. Subjects
include population, education, housing, labor force, busi-
ness types, etc. Published irregularly.
www.census.gov/statab/www/ccdb.html
Directory of Department Stores
New York: Business Guides, Inc.
Nationwide listing of department stores, corporate address-
es, executives, and buyers. Published annually. Check with
your local library.
Directory of Leading Chain Stores in the United States
New York: Business Guides, Inc. List of U.S. chain stores in
retailing and food service industries. Published annually.
Directory of Manufacturers’ Agents National
Association
Irvine, California:
Manufacturers’ Agents National Association (MANA).
Comprehensive directory of the members of MANA listed
alphabetically by state location and product line.
www.manaonline.org
Economic Census
U.S. Bureau of Census. Washington: U.S. Government
Printing Office. Geographic Area Series.
Number of establishments, sales, payrolls, and selected
ratios by type of business. Separate publications every five
years in the categories of retail trade, service industries
wholesale trade, transportation, manufacturers, mineral
industries, and construction industries.
www.census.gov/epcd/www/econ97.html
Encyclopedia of Associations
Detroit Michigan:
Gale Research Company.
Comprehensive list of all types of professional and trade
associations. Includes purpose, number of members, staff,
headquarters’ address and services offered.
Published annually.
www.gale.com
Mississippi Business Directory
Omaha, Nebraska: American Directory Publishing Company.
Statewide business listing by yellow page category and city;
manufacturers by city and product. Published annually.
Check with your local library.
Mississippi City Traffic Maps, Average Daily Traffic
Jackson, Mississippi:
Mississippi State Highway Department.
City maps depicting average daily traffic passing at specific
points on city streets. Revised periodically.
www.gomdot.com/maps/city_maps.asp
Mississippi County Traffic Maps, Average Daily Traffic
Jackson, Mississippi:
Mississippi State Highway Department.
County maps depicting average daily traffic passing at spe-
cific points on county roads. Published annually. www.gom-
dot.com/maps/county_maps.asp
Mississippi Manufacturers Directory
Jackson, Mississippi: Mississippi Manufacturers
Association.
Identifies manufacturers within the state by city, by SIC code
and in alphabetical order. Indicates number of employees.
Published annually. www.mma-web.org/directory.aspx?
Occupational Outlook Handbook
Washington: Bureau of Labor Statistics, U.S. Department of
Labor.
Outlook on various industries and professions as they relate
to the job market. www.bls.gov/oco/
Progressive Grocer’s Guide
Stamford, Connecticut: Progressive Grocer’s Trade
Dimensions.
Published Annually.
Comprehensive data concerning the supermarket industry.
www.progressivegrocer.com
Business Resources
87
Small Business Sourcebook
Detroit, Michigan: Gale Research Company.
Prime reference tool with information sources for 100 (mostly
trade and service) small businesses. Also contains general
resources. Updated regularly. www.gale.com
Standard Directory of Advertising Agencies
Wilmette, Illinois: National Register
Publishing Company.
Nationwide listing for major advertising firms, number of
employees, years in business, names of large accounts, names
of account objectives. www.nationalregisterpub.com
Survey of Buying Power
New York: Sales and Marketing Management.
Current estimates of effective buying income, population by
age, and retail sales by broad groupings. Arranged geographi-
cally by states and countries. Published annually. www.sale-
sandmarketing.com/smm/index.jsp
The Sourcebook of Demographics and Buying Power for
Every County in the USA
Fairfax, Virginia: CACI, Inc.
Provides basic demographic, socioeconomic characteristics,
and purchasing potential of market areas. Published annually.
Check with your local library.
The Sourcebook of Demographics and Buying Power for
Every Zip Code in the USA
Fairfax, Virginia: CACI, Inc.
Contains the same kinds of information for zip codes as
described for the publication above.
Check with your local library.
Thomas Register of American Manufacturers and Thomas
Catalog File
New York:
Thomas Publishing Company.
Multi-volume directory of manufacturers and suppliers arranged
alphabetically by products, address, and location of sales
offices. Published annually. www.thomasnet.com
Thomas Grocery Register
New York: Thomas Publishing Company.
The official buyer’s and seller’s guide of the food industry.
Published annually. www.thomasnet.com
Trade Shows Worldwide
Detroit, Michigan: Gale Research Company.
An international directory to events, facilities and suppliers.
www.gale.com
U.S. Industrial Outlook
U.S. Department of Commerce, International Trade
Administration.
Washington: U.S. Government Printing Office.
An overview of numerous U.S. industries including recent
trends and future outlooks. Statistics on changes in supply
and demand for industries. Published annually.
www.ita.doc.gov/td/industry/otea/outlook/index.html
appendices
89
Appendices
91
MEDIA ADVANTAGES DISADVANTAGES
Newspaper Broad market coverage Inconsistent reproduction
Immediacy One-day life span
Short lead time Limited demographic selection
Flexible ad size “Lost in the crowd” placement
Visibility of product Lack of movement and sound
Color
Use of coupons to measure direct results
People believe what they read
Radio Demographic selection Restrictive message length
High frequency Need for repetition
Immediacy Short recall factor
Sound reinforcement Cluttered placement
Quick flexibility
Television Use of sight, sound, motion, color Short exposure
Mass coverage Expensive production
Immediacy Expensive air time
Demographic selection Cluttered placement
Viewing time drops as income rises
Direct Mail Demographic selection Expensive
Unlimited message length Difficulty in obtaining “pure” mailing lists
Consistent reproduction Long lead time
Direct response by order form or coupon Negative reaction to “junk” mail
Outdoor Reaches large audience Limited message length
Long-term exposure Expensive to produce and place
Color and graphics Difficulty in obtaining the best locations
Forms include billboards, posters, Legal restrictions for use
illuminated signs, moving vehicle signs,
bench ads
Appendix A - Media Types and Advantages/Disadvantages
Appendices
92
Appendix B - Preparing the Marketing Budget
Initial budgets are difficult to prepare without a previous record or guide, but it is imperative that adequate money be set aside for
marketing. There are several methods of determining budget dollars: “percentage of sales”, “objective and task” and “per unit”.
Each is appropriate for certain types of business. All are defined in the Glossary section. Choose the one that best suits your
company’s needs.
A. Initial Preparation
The easiest budget method and the one that most commonly used by small business is “percentage of sales”.
Calculate projected sales and set aside a percentage of the total figure for marketing expenses, keeping in mind that three percent of
sales is an average figure for advertising and promotional costs alone. Higher percentage allowances generally produce greater
results if dollars are wisely used. The marketing fund must also cover general administrative expenses, travel, supplies, postage,
resource development training, sales force expenses, marketing research, subscriptions, and professional memberships. Although the
budget must be flexible enough to allow for miscellaneous expenditures, it is necessary to live as closely as possible within the con-
fines of the predetermined allowance.
The market budget may be prepared monthly or quarterly, depending upon the individual business. Begin by planning a monthly
budget. After a year of operation, you may determine that a quarterly breakdown is adequate.
B. Annual Revision
The marketing budget is only effective when implemented around annual business and development objectives, and may be increased
or decreased each year depending upon sales and changing needs. Developing subsequent marketing plans is a far simpler process
with a previous plan available as a measuring stick. Good marketing requires research, commitment and the ability to be flexible as
the market changes. The written plan must be a constant business tool, not constructed then shelved until the next year. Use market-
ing to make things happen for your business.
Appendices
93
SAMPLE MARKETING BUDGET OUTLINE*
Quarter I Quarter II Quarter III Quarter IV
Percent Percent Percent Percent
Marketing Marketing Marketing Marketing Marketing
Expenditures $ Budget $ Budget $ Budget $ Budget
Advertising
Newspaper
Magazines
Trade Publications
Radio
Outdoor
Television
Specialty Items
Direct Mail
Point of Purchase
Co-op Ads
Production/Creative
Sales Promotion
Brochures/Flyers
Trade Shows
Newsletters
Customer Services
Décor/Display
Community Events
Clerical
Managerial
Secretarial
Telephone
Travel
Postage
Supplies
Sales Force Expenditure
Motivation Program
Recruiting
Salaries and Benefits
Telephone
Training Program
Travel
Professional Membership
Subscriptions
Appendices
94
SAMPLE MARKETING BUDGET OUTLINE continued
Quarter I Quarter II Quarter III Quarter IV
Percent Percent Percent Percent
Marketing Marketing Marketing Marketing Marketing
Expenditures $ Budget $ Budget $ Budget $ Budget
Marketing Research
Computer Time
Salaries and Benefits
Supplies
Telephone
Travel
Miscellaneous
Total Budget
* NOTE: Many specific items in the sample will not be necessary for all businesses. Some businesses will require even more
items in the budget.
Appendices
95
Appendix C - Sample Financial Pro-Forma Statements
The financial plan is basic to the evaluation of a business opportunity and should represent your best estimate of future operations. It
can also serve as an operating plan for your management team.
In developing a financial plan, several basic forecasts must be prepared. Many decisions will be based on what you present here. At
the appropriate time, your advisors may recommend some changes, but it is vitally important that you apply your best effort in formu-
lating these forecasts.
A. SOURCES AND USES OF FUNDS
Please refer to Exhibit VI-A.
B. PRO-FORMA CASH FLOW ANALYSIS
Please refer to Exhibit VI-B.
C. PROFIT AND LOSS FORECASTS
Please refer to Exhibit VI-C.
D. PROFORMA BALANCE SHEET
Please refer to Exhibit VI-D.
For an existing business, balance sheets and income statements for the current and previous three years should be provided. After you
have completed preparation of the financial exhibits, briefly highlight the important conclusions that can be drawn. Finally, explain all
of your assumptions and the sources of your data.
Appendices
96
EXHIBIT VI-A - Sources and Uses of Funds
FUNDS AVAILABLE:
Owner’s funds
Other equity
Loan No. 1
Loan No. 2
Total
USES OF FUNDS:
Land
Building
Equipment
Machinery
Renovations
Prepaid insurance
Promotions
Inventory
Furniture and fixtures
Deposits
Other
Total
CASH BALANCE:
(Or working capital)
Appendices
97
Exhibit VI-B
Appendices
98
Sales # 1
Sales #2
Less returns
0-30 days
31-60 days
Over 60 days
Material cost
Labor
Management
Payroll tax
Benefits
Advertising
Auto expense
Contributions
Charge cards
Dues
Freight
Insurance
Legal/acct.
Office supplies
Shop supplies
Travel
Telephone
Utilities
Repairs
Tax/license
Rent/lease
Other expense
Principal pmt.
Interest pmt.
Add. inventory
Equipment
Fixtures
Utility deposits
Other assets
Income taxes
NET CASH FLOW
CUMULATIVE
Month: 1 2 3 4 5 6 7 8 9 10
Sales:
EXHIBIT VI-B
TOTAL SALES
Cash Receipts:
Total
Disbursements:
Total
Appendices
99
11 12 13 14 15 16 17 18 19 20 21 22 23 24
Appendices
100
Sales #1
Sales #2
Gross Sales
Less returns
Cost of goods sold:
Beginning inventory
Purchases
Additional inventory
Goods available
Less ending inventory
Labor
Management
Payroll tax
Benefits
Advertising
Truck/auto expense
Contributions
Charge cards
Dues & subscriptions
Freight
Insurance
Legal & accounting
Office supplies
Shop supplies
Travel
Telephone expense
Utilities
Repairs
Taxes/licenses
Rent/lease
Other expenses
Interest payments
Depreciation
Income tax:
Federal
State
Total taxes
Sales:
EXHIBIT VI-C - Profit and Loss Forecast
Net Sales:
Total Material Cost
G&A Expenses
Total G&A Expenses
Net income (pre-tax)
NET INCOME
Year 1 Year 2
Amount % of Net Amount % of net
100% 100%
Appendices
101
Cash
Ending inventory
Accounts receivable
Other
Total current assets
Land
Building
Equipment
Machinery
Renovations
Furniture & fixtures
Other
Total fixed assets
Less accum. depreciation
Net fixed assets
Deposits
Other
Total other assets
Notes payable
Current portion
long-term debt
Other
Total current liabilities
Loans payable
Less current portion
Total long-term debt
Owners’ funds
Retained earnings
Current Assets:
EXHIBIT VI-D - Pro-Forma Balance Sheet
Year 1 Year 2
Fixed Assets:
Other Assets:
Total Assets:
Current Liabilities:
Long-Term Liabilities:
Total Liabilities:
Total Equity
Total Liabilities
And Equity
ASSETS
LIABILITIES
EQUITY
entrepreneur’s toolkit
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NOTES
entrepreneur’s toolkit
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NOTES
entrepreneur’s toolkit
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NOTES
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