Having a Massachusetts LLC is a better and cheaper option than having other business structures. A limited liability company (LLC) reduces the owners’ personal liability and protects their personal assets. One can start an LLC in two ways, domestic LLCs or foreign LLCs (LLCs in more than one state). By following some basic steps, you can easily form an LLC in Massachusetts.
On this page, you’ll learn about the following:
- How to Start an LLC in Massachusetts
- After Starting your Massachusetts LLC
- Massachusetts Foreign LLC
- Why an LLC in Massachusetts
- Best Businesses in Massachusetts
- Massachusetts LLC Formation Review
How to Start an LLC in Massachusetts
An LLC or a Limited Liability Company is a hybrid business entity combining a corporation’s characteristics with a partnership or sole proprietorship. It separates your personal assets from your business assets, thus giving you personal asset protection. This section gives you a step-by-step guide on how to start an LLC in Massachusetts.
Step 1: Decide a Name for Your LLC
Deciding on a business name is the first step to start an LLC. In Massachusetts, before you name your LLC, it is important to note a few things. Firstly, make sure the name is available to use. If the name is available, then check if the name complies with all the Massachusetts business naming requirements. Once you pass through them, you can successfully name your business.
Why do you need a proper business name?
If you want your LLC to have special identification, your company name is essential. However, many people face many issues by avoiding focus on choosing a business name for their LLC business formation filings.
Here are some of the major benefits of choosing the best LLC names.
- Helps establish a company’s presence in the market;
- Creates a new identity that will resemble your LLC;
- Allows ease in finishing your LLC registration process;
- You can get the EIN once you have your name registration certificate
Requirements when deciding a name for your LLC
LLC Name Search: A business name search is required to check if the desired name is available or not. If the name is available then the business owner has to fill up a name reservation form and send it to the Secretary of State, Massachusetts. To do the name search, one has to visit the Business Entity Search page on the official Secretary of State website. Send the name reservation form to the below address by mail to reserve your LLC name in Massachusetts. The cost of a name reservation is $30.
Important Quick Links:
Secretary of the Commonwealth
One Ashburton Place, Room 1717
Boston, Massachusetts 02108
Get Business Domain: To have a proper online identity for your business you need a website (domain + hosting) and custom email ID. With Bluehost, you will get everything at a cheaper price. We recommend you get this amazing offer from Bluehost which comes with a free domain. You can easily set up your website and custom email id without any hassle with Bluehost. Needless to say, Bluehost has been rated #1 web hosting by most major reviewers. Their price range is affordable compared to all other popular hosting providers.
Step 2: Assign a Registered Agent Service in Massachusetts
A registered agent for service is your authorized person or business entity that will act or work on your behalf. This person or business will receive significant tax forms, legal documents, official government documents, any internal document, a notice of lawsuits, and other official government correspondence in Massachusetts. Choosing a Massachusetts registered agent for your LLC is required.
They are responsible for any physical paperwork, documentation with a government agency, additional paperwork during the formation process, and so on.
Make sure your registered agents are residents of Massachusetts. The resident agent should have proper business licenses and their primary operating address should be in the state. It could also be a business. Here are the recommended agents:
Note that availing of the services of professional registered agents would be your best option since you are guaranteed that whoever is handling your legal affairs knows their stuff well. You will enjoy peace of mind and focus only on running your business, as the ‘professionals’ take care of all legal matters.
These LLC formation services are recommended registered agent services as they are authorized to conduct business in Massachusetts. Compare them to check the best yet cheapest option for you. Besides, they can guarantee you professional service because they have been in the business for years.
Step 3: File Certificate of Organization in Massachusetts
A Certificate of Name Reservation is needed to file a Certificate of Organization, as other states call it. You need to make reports of this certificate with the Massachusetts Secretary of State, which costs $500. You may file them online or by mail. Get the simple guide to file Massachusetts certificate of organization to know how to file it. The processing time is lesser if you submit the online application.
This Massachusetts Certificate of Formation is a legal document that forms your business officially. It will indicate details about your LLC in Massachusetts, like if it is a member-managed or managers-managed.
Before you start filing your forms, you must already have your LLC name and registered agents or employees. You will attach a copy of your Name Reservation Certificate along with a list of the services that your Massachusetts LLC will offer.
How to File Online
Go to the Secretary of State Online Service. Fill out the form and submit it. Be sure to double-check the information to avoid errors in filing. To know more about online filing, visit the Massachusetts Certificate of Formation.
How to File by Mail
If you prefer filing real-life forms for your Massachusetts LLC registration, then you can download the Massachusetts Limited Company Certificate of Formation. Read the form thoroughly and fill it out. It will have to fill, among others, your name, principal office address, city, state, zip code, and signature. You may also file in person by visiting the office on business days.
Mail To: William Francis Galvin
Secretary of the Commonwealth
One Ashburton Place, Room 1717
Boston, MA 02108
Fax To: (617) 624-3891
Step 4: Create Your Massachusetts LLC Operating Agreement
An operating agreement is a document that legally outlines the proprietorship and operating procedures of your LLC This document is vital as it ensures that all business owners are on the same page regarding how they operate, thus reducing future conflicts.
When it comes to an LLC operating agreement Massachusetts does not require you to have a comprehensive operating agreement, but it is ideal to have one that contains all your details of business operation. This document would be useful if you decide to dissolve Massachusetts LLC later.
Step 5: Filing a Massachusetts LLC EIN
The Employer Identification Number or, simply, the E.I.N. is a nine-digit number given by the Internal Revenue Service (IRS) to make it easier to identify types of business for tax purposes and taxes in general. It is like a Social Security number dedicated to a business’ taxes. The EIN is necessary for any active business or any form of business for that matter.
EIN is needed when the LLC hires employees. Hiring employees in Massachusetts LLC requires specific rules and regulations. One should know about them before hiring employees. EIN for Massachusetts foreign LLC should be obtained if your LLC is based in other states.
To obtain EIN (aka FEIN) one has to fill up a form (Online or by mail) and submit it to the IRS. Before sending the form, ask for EIN Assistant. Enter details of your LLC, and finally complete the form and send it to the address given.
Mail to: Internal Revenue Service, Attn: EIN Operation, Cincinnati, OH 45999
Fax: (855) 641-6935 | Fee: Free
Note: You don’t need a Social Security number when getting an EIN. You can proceed to fill out I.R.S. Form SS-4 and leave section 7b blank. You must then call the IRS at (267) 941-1099 to complete your application. Agents or employees will help you with that.
And that’s all! Congratulation, you are now done with all the necessary steps to form your Massachusetts LLC. If you still haven’t used a professional service from here, I strongly recommend having one to handle the remaining tasks.
After Starting your Massachusetts LLC
After forming your LLC, there are still some things that you will need. Take note of the following:
- Get a company business bank account
- File Massachusetts business permits & licenses
- Get liability for business and professional liability insurance with coverage for employees
- File a Massachusetts LLC annual report or biennial report
- Already existing LLCs that wish to operate in Massachusetts must register as Massachusetts foreign LLC.
This page has provided you with steps to LLC formation and filing processes. You now have to remember upcoming filing deadlines and filing fees or filing costs, including fees for late filings to make sure your LLC is up-to-date.
Massachusetts Foreign LLC
To register a Massachusetts foreign LLC, one has to file the foreign LLC formation certificate with the Secretary of State, Massachusetts. Forming a foreign LLC allows you to operate your business in more than one state in the USA as a single business entity. Check Massachusetts Foreign LLC to know more about having a foreign LLC.
Cost of Massachusetts LLC
The LLC cost in Massachusetts includes the one-time cost that is the name reservation fee ($30) and the filing fee ($500). Other than that not many federal taxes are required to pay. LLCs, in general, do not have to pay any taxes on their business income. However, individual members are needed to pay personal taxes on the basis of their income.
LLCs with employees may have to bear the employer cost paid to the federal government. If LLCs hire employees, they have to obtain EIN and complete the tax paperwork. While forming an LLC in Massachusetts, business owners get tax classification options. They can choose a proper tax structure before starting an LLC. Unlike a corporate tax structure, LLCs have a less complicated tax structure. Read more about LLC cost in Massachusetts here.
Why an LLC in Massachusetts
Below discussed are some of the long-lasting benefits of the Massachusetts LLC. For an LLC, especially start-ups, Massachusetts have diverse business funding options. Depending on the type of business, for example, a woman-owned business, get loan facilities. Some of the benefits that a new LLC business will enjoy in the state are discussed. It will help a person take a step towards the formation of an LLC and start their business. LLCs have the opportunity to earn extra profit as it costs lesser than other types of business structures.
Succession of shares
While setting up a Massachusetts LLC, entrepreneurs will enjoy the benefit of a succession of shares to their heirs. In other states, this facility is not available. Generally, after the death of a member, the shares of that particular person get distributed to other members. On the other hand, in MA, the shares will be passed on to their family/heirs. If any misfortunate incident happens with any of the members while serving in LLC, his/her family can continue as a member/partner.
Discounted prices of taxes for LLCs
The tax one has to pay while setting up an LLC in Massachusetts is discounted for many businesses. Around 25% to 40% discounts are given to the LLCs on paying state and federal taxes. Read more on Massachusetts’ classification of LLC tax.
Moreover, there is a discount for the members on the health insurance as well. It helps in an overall saving in the monthly costs of the member, and one can use it to bear some of the company’s costs.
Economic development incentive program credit
The government of Massachusetts State starts the IPC program to ensure some savings on taxes. It will help LLCs to create jobs and develop the state’s economic status. Additionally, the government can provide a credit of up to $5000 for every job created by the LLC. But for getting this benefit, one needs to qualify their business under the state’s laws.
Great point of attraction for investors
If someone looks forward to starting a Massachusetts LLC, they benefit from attracting an investor and raising funds. The state let the LLC issue their stocks in the early stages to onboard the investors with the help of stocks and explore their USPs in a much better way.
Brownfield Tax Credit
The BTC is again an incentive for LLCs in Massachusetts in which the members are allowed to lease their contaminated land, which will help them get over their financial burdens and keep the LLC in a running state.
Best Businesses in Massachusetts
Several businesses are established in Massachusetts state that you should know before you form an LLC in Massachusetts. That is why here is a list of top businesses operating for a longer period of time.
If you look at Massachusetts’ geography, then it has around 1500 miles of Atlantic ocean borderline. This has enabled the traders to easily trade through the marine ways, which has become a major part of the state domestic economy with time. This growing industry has contributed around $2.40 billion to the state GDP. Through the sea links, goods can be transported easily and at lower prices.
Another benefit of such a huge sea coast is the seafood and its product. A whale can be easily found in the Atlantic sea, and they have been hunted for their precious oil and food. Other valuable sea fishes are haddock, Atlantic cod, Black Sea Bass, etc.
According to recently generated reports, the northeastern state of Massachusetts is home to 1700 IT companies. The reason behind such a massive number of IT companies is the easy availability of highly qualified staff in the state. They are established in the state, offering plenty of IT and technology-related services to businesses and organizations to help them grow. The IT sector’s contribution to the GDP of Massachusetts is around $35.18 billion, which is expected to double in less than a decade.
Finance and Real Estate
The contribution of the financial and real estate businesses to the state GDP is around $110 billion. More than dozen of fortune 500 companies are formed and located in the state that is helping people. Many personal and corporate financing houses are available in the state that handles all your business-related finances and issues.
Some small business ideas of Massachusetts state are:-
- Customized tour and travel services
- Berry farming and export
- Life coaching
Massachusetts LLC Formation Review
Time needed: 5 minutes.
Just to recap, here are the easy steps again when forming a Massachusetts LLC. Click on the steps in this list to read the full detail.
- Name your Massachusetts LLC
The first thing you must do is to choose a company name, which should be unique, easy to find, and available in the state.
- Choose a registered agent
In Massachusetts, it is mandatory to select a registered agent for your LLC. You can check out our list of our 5 Best LLC Services in the United States.
- File a formation certificate
Filing a formation certificate is necessary when forming an LLC. Depending on the state, it could be called any of the following: Certificate of Formation, Articles of Organization, or Certificate of Organization.
- Create operating agreement
An operating agreement is not a strict requirement but something encouraged when you start an LLC.
- Get an EIN
The Employer Identification Number (EIN), also called Federal Tax Identification Number, serves to identify a business entity like a social security number but for a company.
How Fast Can I Form an LLC in Massachusetts
You may be wondering: “How fast can I form an LLC in Massachusetts?” After all, running a corporation requires a lot of upkeep. You need to have shareholder meetings, keep detailed minutes and do a lot of other paperwork. That means you’ll probably be spending more time running your business than on paperwork. An LLC, on the other hand, only requires filing an Annual Report with the state. Therefore, you can save a lot of time and money by forming an LLC.
One thing to consider when forming an LLC in Massachusetts is the name of the business. The name should be unique to avoid confusion with another existing entity. For instance, if your business is a restaurant, you can’t call it Big John’s Plymouth Barbecue, LLC. If you’d like to own a Plymouth-based barbeque restaurant, you’ll need a name that will attract customers and clients.
Once you’ve determined the name of your business, you can proceed with the rest of the process. When naming your business, it’s crucial to use a unique name that is memorable, especially if you’re running a one-person operation. Your name should convey what your business does. The name you choose should be different than any other companies in the same field, and minor variations are not enough. Moreover, it should be free of derogatory language.
You can also select an individual as the registered agent, but you should keep in mind that this is a public record. You can also choose to have your agent be a resident of Massachusetts. This may prevent unwanted phone calls and mailings. If you decide to go this route, you should file a Certificate of Organization (CO). It can be filed online at the Massachusetts Secretary of Commonwealth’s website or sent by mail. You can also contact the state to file questions related to the process.
If you are a resident of Massachusetts, then you can file your LLC by yourself. However, it is always worth having a professional than doing it yourself to handle legal complexities, paperwork, and other documentation.
Apart from the formation fee of $500 (domestic LLC) and $500 (foreign LLC), LLC costs in Massachusetts include $500 for Annual Reports every year. LLCs are liable to pay sales tax of 6.25% every year.
It takes 4 hours to get a Massachusetts LLC if you file it online. For the mail filing, it takes 4 to 5 business days to get an LLC.
Every year all the LLC have to submit an Annual Report and pay $500 to the Massachusetts Secretary of State and renew the LLC. It is mandatory to renew your LLC every year.
Generally, for the LLCs, it is a default tax structure. Once you will obtain the EIN, you will get the various tax structure options to select. Sometimes LLCs choose S Corp to reduce federal tax burdens.
Having an LLC is easier than other forms of business. LLCs have a ‘pass-through taxation’ advantage LLCs are easier to establish than other business structures. Small businesses, especially start-ups can easily start their LLC in Massachusetts at a bare minimum cost. LLCs have a ‘pass-through taxation’ advantage for which they are excluded from certain taxes. The formation of limited liability companies requires much lesser documents and legal processes. Share your queries with us, leave a comment below.