Although the process might seem extensive, it’s pretty straightforward to form a Massachusetts corporation, as long as you follow the right steps. If you need help along the way, you can team up with a trusted business partner like ZenBusiness to provide assistance and speed up the formation process.
This guide will help you navigate through the corporation setup process while pointing you to the necessary forms and applications required in Massachusetts.
How do I form a Corporation in Massachusetts?
Steps to form your Massachusetts Corporation
- Name Your Corporation
- Appoint Directors
- Choose an Massachusetts Registered Agent
- File the Massachusetts Articles of Incorporation
- Create Corporate Bylaws
- Draft a Shareholder Agreement
- Issue Shares of Stock
- Apply for Necessary Business Permits or Licenses
- File for an EIN and Review Tax Requirements
- Submit your Corporation’s first report
To officially form a corporation in Massachusetts, you must register your company with the commonwealth by filing your Articles of Incorporation. Before registering your corporation, you’ll have to do a bit of homework.
We’ll walk you through the 10 steps of the corporation formation process in Massachusetts:
Step 1: Name Your Massachusetts Corporation
The first step to forming your corporation is deciding on the right name for your new business. It’s important to choose a name that best represents your company, is memorable, and that follows all Massachusetts legal requirements. For example, when selecting a name, Massachusetts law prohibits you from using offensive or derogatory wording.
Once you have a few names in mind, you’ll want to conduct a search on the Massachusetts corporate name search portal available through the Commonwealth of Massachusetts website. Run all of the names you have in mind through the database to determine if they’re available. Massachusetts requires corporations to have unique names, so if a name is already taken, you’ll need to pick another option.
After you’ve decided on an available name, you’ll need to add a corporation designator to its end. Corporation designators and approved abbreviations include:
- Corporation (Corp.)
- Incorporated (Inc.)
- Limited (Ltd.)
So, if you’ve decided to name your business “Karl’s Garage,” you could add “Inc.” at the end to form “Karl’s Garage, Inc.”
Now that you’ve chosen an official name for your Massachusetts corporation, you may wish to reserve your name to ensure no one else registers it. To do this, you’ll visit the Reserved Business Names Database on the Commonwealth of Massachusetts website, enter your name, and select “reserve.” You can also file by mail. There’s a $30 filing fee for both methods, and names are held for 120 days.
If mailing your application, send the form and payment to:
The Commonwealth of Massachusetts
William Francis Galvin
Secretary of the Commonwealth
One Ashburton Place, Room 1717
Boston, Massachusetts 02108-1512
If you want a trademark on the federal level, you’ll need to search on the United States Patent and Trademark Office’s (USPTO) website to see if a trademark already exists. If the name is available, you can register your trademark there. If you’re interested in registering a trademark with the commonwealth of Massachusetts, you can do so online or via mail after confirming the trademark is available. There is a $50 filing fee. You may choose to file at the state level only since it is often easier and quicker, but a federal registration can offer broader protection, which is especially useful if you plan on doing business outside of Massachusetts.
Lastly, if your corporation plans to do business under any name other than your official corporation name, you’ll need to secure what’s known as a “doing business as” (DBA) name. First, you’ll go through the name search process to ensure the name is available, and then you’ll fill out the DBA application, which can be submitted online or through the mail. This form is filled out through your county office and not the commonwealth.
Step 2: Appoint Directors
Next, you’ll appoint a board of directors to your corporation. In Massachusetts, you must appoint at least one director to your board, although there are no limits on how many directors can be appointed.
Your corporation’s directors will look out for your company’s best interests and uphold its bylaws. There are no requirements set by the commonwealth as to who can serve as a director in Massachusetts.
You will also want to decide on an incorporator who will sign your Articles of Organization to officially register your corporation with the commonwealth (step four).
Step 3: Choose an Massachusetts Registered Agent
Now, it’s time to select a registered agent for your corporation. Your registered agent is a person or entity who will work on your behalf to accept legal notices and important documents and communications from the commonwealth of Massachusetts.
In Massachusetts, registered agents have to be over the age of 18 and must live in-state or hold a business office in Massachusetts. Registered agents are also expected to be available (at their office location) during standard Monday through Friday, 9 a.m. to 5 p.m., business hours.
Your corporation might want one of your shareholders to serve as your registered agent, which is allowed by law. There are some considerations you’ll want to weigh before choosing someone within your company, though.
Here are a few advantages to using an outside registered agent service:
- Your information stays secure. If you or someone on your board opts to serve as the company’s registered agent, a portion of this person’s private information will become public record.
- Legal documents remain private. If someone within your corporation serves as your registered agent, their operating address would likely be your office location. This means the government could easily serve you sensitive paperwork, such as subpoenas or summons, in front of important clients or potential business partners, injuring your business relationships.
Step 4: File the Massachusetts Articles of Incorporation
It’s finally time to file your Articles of Organization. This document legally registers your corporation with the commonwealth of Massachusetts, legitimizing your business. You’re required to file this form before you can start conducting business.
- The corporation name. This is your company name, including the designation.
- The corporation’s purpose. This is your industry and reason for conducting business.
- Shares information. This is your company’s number of shares to be issued and types of shares.
- Effective date. This is the date when your company will begin operating.
- Registered address. This is your registered agent’s address.
- Registered agent’s name. This is your agent’s full name.
- Director, officer, and shareholder names. Include names, titles, and addresses of these people.
- Fiscal year-end. This is when your company’s fiscal year will stop.
- Type of business. This is a quick overview of your company’s industry.
- Principal corporation address. This is your primary office address.
- Records address. This is the address where your paperwork and records will be held.
- Incorporator signature. The name, address, and signature of the person completing the form.
You’ll need to pay a $275 fee when filing for up to 275,000 shares and an additional $100 for each additional 100,000 shares or any fraction thereof. You can submit your payment online or mail it to:
The Commonwealth of Massachusetts
William Francis Galvin
Secretary of the Commonwealth
One Ashburton Place, Boston,
Step 5: Create Corporate Bylaws
The next step in setting up your corporation is creating bylaws. Your corporation’s bylaws will explain your company’s managerial structure, operating procedures, and legal regulations.
Your corporation’s bylaws will detail your basic managerial structure, legal requirements, and operating parameters. These agreements should be put into writing and kept within your company for shareholders to view.
To establish company bylaws, Massachusetts law requires holding a meeting to establish the below:
- Cadence and number of shareholder meetings
- Record-keeping procedures
- Shareholder voting rules
- Board of director responsibilities
- Stock shares
Step 6: Draft a Shareholder Agreement
The next step is creating a shareholder agreement, which is essentially a written agreement between the shareholders and the corporation. It should be in agreement with the company’s bylaws, but unlike your bylaws document, this contract is a private agreement only viewed by shareholders.
This agreement can go into greater detail regarding how to initiate new shareholders, how to leave shareholder positions, and add more context to financial and shares processes.
Every shareholder in your company should read, agree to, and sign this document.
Step 7: Issue Shares of Stock
Every corporation in Massachusetts is legally required to issue shares of stock. You’ll need to make sure the shares issued do not exceed the amount listed on your Articles of Incorporation. All shares can only be issued once, although they can be sold and traded.
To issue stock, you’ll need capital available. Capital refers to the funding required to form your corporation. The number that you’re required to operate can then be divided across your corporation’s number of shares.
You can choose to sell your shares of stock privately, among shareholders and directors, or publicly on the marketplace. If you decide to go public with your stock, federal law requires your corporation to report quarterly stock statements to the U.S. Securities and Exchange Commission (SEC). These statements will detail your stock information and help the government track your stocks to ensure your corporation is compliant with federal law. You can find this form on the SEC website.
Step 8: Apply for Necessary Business Permits or Licenses
The state of Massachusetts does not require a general business license for your company to operate, but some counties and cities within the commonwealth do. It’s important to look into your county’s and city’s requirements to comply with local laws.
In addition, you may need to secure special licenses or permits depending on your corporation’s industry. You can learn more about specific requirements on the Massachusetts government website.
Licenses and permits can be federal, state, local, and industry-specific, so there’s no central source to look up all the licensing your corporation may require. It’s your responsibility to do the necessary research or hire someone to do it for you.
Step 9: File for an EIN and Review Tax Requirements
Next, you’re ready to register with the IRS by requesting an Employer Identification Number (EIN). Your company’s EIN is similar to an individual’s Social Security number — it allows your company to open financial accounts, secure financing, pay taxes, and hire employees, and it identifies your company to the IRS.
Applying for an EIN is quick, easy, and free. You’ll visit the website for the IRS and fill out the online form. You’ll receive your EIN right after filing.
You’ll also want to review the tax requirements for your corporation. Instead of a traditional corporate net income tax, Massachusetts has a corporate excise tax. This means you’ll pay an 8% tax on your state income and an additional tax on personal property or net worth, whichever is greater, at a rate of $2.60 per $1,000. The minimum corporate excise tax in Massachusetts is $456.
Step 10: Submit Your Corporation’s First Report
Lastly, you’ll need to prepare to file your first annual report to comply with Massachusetts law. Your first annual report will be due two and a half months after the end of your first fiscal year (as detailed in your Articles of Incorporation).
You can file online or via mail. The filing fee is $125 by mail or $100 online.
How much does it cost to start a corporation in Massachusetts?
The cost to form your corporation in Massachusetts will vary depending on how you file and whether you use an outside consultant.
At a minimum, you’ll be required to pay $275 to set up your Massachusetts corporation (the Articles of Incorporation). This cost does not include securing a DBA name, any special business licenses or permits you may need, or filing your annual report.
If you want to prevent any headaches, you can partner with a trusted business professional like ZenBusiness. We have formation plans to help you secure a registered agent, streamline the filing process, and provide a template for your corporation’s bylaws.
What are the benefits of a corporation in Massachusetts?
There are various business types to choose from. When starting a business in Massachusetts, you’ll want to explore all of your options. Many business owners in Massachusetts opt to form a corporation because of the financial and legal protections this business type provides.
Here are some benefits of forming a corporation:
- Liability protection. You won’t have to worry about personal liability issues if your corporation runs into legal trouble.
- Financial protection. Your personal finances and assets are protected if your company runs into any financial hardships.
- Business recognition. Incorporating can offer prestige to your company. This enhanced reputation can make clients and investors more willing to take your business seriously.
- Global business opportunities. Corporations are allowed to handle business globally, which doesn’t limit them to only conducting business in the United States.
- Stock offerings. Since corporations are legally required to issue shares, your corporation can improve its chances of expanding and growing your profits.
At the same time, here are a few downsides you should be aware of:
- Double taxation. When you form a corporation, you’ll be taxed twice. Your corporate profits will be taxed on your company taxes, and your personal earnings and profits will be taxed again on your personal taxes.
- Formal management structure. Corporations must adhere to government standards of operation, including issuing stock as a requirement and appointing at least one person to a board of directors.
- Meticulous reporting requirements. Corporations must keep track of all of their records, including minutes in shareholder meetings. This business type also has stricter reporting regulations and must file annual reports, quarterly stock reports, and keep records of bylaws and stockholder agreements.
How is an Massachusetts corporation taxed?
There are three types of corporations in Massachusetts: C corporations, S corporations, and nonprofit corporations. Your company will automatically be registered as a C corporation unless you choose differently.
C corporations are looked at as separate business entities that are taxed at a corporate level. This leads to double taxation for shareholders and owners who must pay both corporate and individual taxes.
S corporations are looked at as pass-through entities. Typically, this means they are not taxed at a corporate level, and shareholders only pay taxes on their individual tax returns. However, in Massachusetts, S corporations do not owe income tax but are subject to the other half of the corporate excise tax ($2.60 per $1,000 of personal property or taxable net worth, whichever is higher).
If you form a nonprofit corporation and follow nonprofit guidelines, you’re exempt from paying any corporate taxes. Employees of the nonprofit corporation will still pay taxes on their wages.
Massachusetts Corporation FAQs
- Does running a corporation in Massachusetts involve more paperwork than running other types of businesses?
Yes, typically, corporations in Massachusetts have more paperwork to keep track of than other business types, such as limited liability companies (LLCs). Corporations have strict reporting requirements and must file annual reports, quarterly stock reports, and organize initial startup documents like bylaws and shareholder agreements.
- What is the difference between an LLC and a corporation in Massachusetts?
In Massachusetts, LLCs and corporations are taxed and managed differently. An LLC is viewed as a pass-through entity, which means they’re exempt from double taxation and typically only pay taxes on their individual tax returns. LLCs also offer a more flexible business structure and have fewer reporting requirements. You can find out more about the distinctions between an LLC and a corporation here.
- How do I change my corporation’s name in Massachusetts?
If you decide to change your corporation’s name in Massachusetts, you’ll return to step one to search for an available name. If your new name is available, you’ll need to file Articles of Amendments either online or by mail.
- How many people are needed to form a corporation in Massachusetts?
Typically, you’ll need at least three people to form a corporation in Massachusetts — yourself (the incorporator), a director, and a registered agent. You could technically serve as all three roles, which would only require your involvement.
- Can I form my Massachusetts corporation online?
Yes, your Massachusetts Corporation can be formed entirely online by following the steps outlined in this guide. You’ll file all forms online through the Massachusetts Corporations Online Filing System.
- How do I dissolve my Massachusetts corporation?
If you decide to dissolve your corporation, you’ll need to submit your Massachusetts Articles of Voluntary Dissolution. This can be done online or through the mail and has a $100 filing fee.