You’ve decided to start a new business in Massachusetts. You’re excited about the new venture’s possibilities, but at the same time, you are nervous about where to start.
Don’t fret: This guide to starting an LLC in Massachusetts will give you the basics so that you can go forth with confidence, armed with the essential information you require to navigate the system and get established the right way.
To get your Massachusetts limited liability company (LLC) up and running, you must know what documents need to be filed where, if an Operating Agreement is required, and how to handle taxes and business licenses. Follow this step-by-step guide to be on your way to becoming an official owner of a Massachusetts LLC.
The 5 steps to form an LLC in Massachusetts:
Your new business idea has probably already taken hours of research and planning. You’re ready to get started, but before you begin doing business, you need to take care of all the paperwork to ensure your business is compliant in Maine.
Don’t let the process overwhelm you. ZenBusiness has your back. Our simple guide shows where to start to get your Maine limited liability company (LLC) up and running quickly and affordably.
In this guide, we’ve outlined five steps and simplified the details. We’ve also shown how the right LLC service can make the process easy and quick, allowing you to focus on opening and growing your business.
Starting a new business in Wisconsin can feel overwhelming. What are the steps your business needs to take to operate? What are the fees? How do you hire people when you are ready? If you are setting up an LLC, there are some specific steps to take in Wisconsin to ensure your business and partners are protected. This guide will help you with each step of the journey.
Step 1: Name Your Massachusetts LLC
Before you register your LLC in Massachusetts, you need to have a company name for it — ideally, one that is unique, tells people who you are and what you do or offer, and resonates with your target market. You must be sure that your name isn’t taken by another company in the state and is unique enough to be distinguished. Slight variations in spelling, punctuation, and suffix will not suffice. Make sure not to include any offensive language or words that are derogatory in nature to adhere to state laws.
Make a list of possible names and run them through the Massachusetts Secretary of the Commonwealth website’s business entity name search. To garner more results (and ensure the name isn’t too close for comfort to another business), just enter the key portions of the name. The more detailed your query, the fewer results you’ll receive.
Once you’ve found an available name, you’ll need to decide on an LLC designator to place at the end of your company name. For instance, if your company name is “Modern Movers,” you could add “LLC” to the end to form “Modern Movers, LLC.”
A list of available LLC designations include:
- Limited Liability Company
- Limited Company
That means you could go with other options, like “Modern Movers L.C.” or “Modern Movers Limited Company” — the official company name just has to have the LLC designation at the end.
Once you’ve found an available name, you’ll need to determine if you’re ready to file right away or if reserving the name is in your best interest. If you’re not quite ready to finish up the paperwork, you can reserve your chosen name by filing the Application of Reservation of Name with the Secretary of the Commonwealth. For a filing fee of $30, your LLC name will be reserved for 60 days. For another $30, you can extend the name reservation for an additional 60 days. Note that you will have to turn in this document in-person or by mail. You can mail the application, along with a check, to:
Secretary of the Commonwealth
1 Ashburton Place, Room 1717
Boston, Massachusetts 02108-1512
If you choose to create a website for your company, then you’ll want to register a domain. Typically, businesses choose a domain name close to their actual company name. To find out what domains are available, do a quick domain search until you find one you’d like to use. When you’re ready to register, reach out to a partner like ZenBusiness to help.
You can secure your business even further by registering trademarks at the state and federal levels. To register a trademark at the state level, you’ll fill out the Massachusetts Trademark/Service Mark Application. You’ll submit this by mail and pay a $50 filing fee. The trademark is good for five years.
If you plan on doing business outside of Massachusetts and want broader protection, you can register your trademark at the federal level through the United States Patent and Trademark Office website.
Lastly, if you prefer to use a different business name, you can file a Massachusetts DBA (“doing business as”) Certificate. Massachusetts DBA names are filed with the city or town clerk’s office where your company will be doing business.
Step 2: Appoint a Massachusetts Resident Agent
Another important step in the LLC formation process is to appoint a resident agent, referred to as a registered agent in most states. A resident agent in Massachusetts is a person or entity acting as the point of contact for all service of process documents and any other legal documents. If your company is subpoenaed or sued, Massachusetts will deliver all necessary documents to your Massachusetts resident agent.
As the owner, you can act as your company’s resident agent. While that may seem like the easiest and most logical option, it’s not always in your best interest. After all, being served in front of customers can tank your company’s reputation.
Instead, you may benefit from hiring an outside registered agent service — one that ensures all of the requirements (Massachusetts residency, authorization to do business in Massachusetts, and a permanent address in the commonwealth) are met and prevents any awkward encounters in the future.
A couple of benefits of using an outside registered agent service like ZenBusiness include:
- Privacy of your personal information. When using a third-party resident agent, your private information will stay private. By acting as your own resident agent, some of this information will become public.
- Control over your business hours. When you act as your LLC’s resident agent, you’re expected to hold normal business hours at your primary operating address to receive the paperwork. If you don’t want to be tied to traditional business hours, you should partner with an outside registered agent service.
Step 3: File Massachusetts Certificate of Organization
Once you’ve decided on a name and appointed a resident agent, the next step is making your Massachusetts LLC official. To do so, you’ll need to complete your Certificate of Organization and file it with the Massachusetts Secretary of the Commonwealth. To accurately fill out this form, you’ll need the following:
- Federal Identification No.: Actually, you don’t need this, even though it’s the first item listed on the form. This is also known as an Employer Identification Number or EIN, and it’s usually obtained after filing your Certificate of Organization (see Step 5 below). If you do already have it, you can list it here. Otherwise, you can leave this blank.
- Your LLC name: Here, you’ll put your LLC’s chosen company name with the LLC designator at the end.
- LLC street address: Here, you’ll put your company’s street address. You can put your home address if you do not have office space. This is where records will be maintained.
- General character of the business: Briefly explain what your business will be doing.
- Latest date of dissolution: If you plan to end your business on a certain date, indicate that here. If you want it to exist indefinitely, leave this blank.
- LLC resident agent name and address: Here, you’ll need to identify your resident agent’s name and address. A resident agent will act as a third-party contact between you and the commonwealth of Massachusetts for any legal paperwork.
- Name and address of manager(s): If your business is run by one or more appointed managers (as opposed to being run by the members), you would list each manager’s name and office address here. If your LLC is run by its members, you’ll need to provide their information.
- Document authorization: The name and business address of each person in addition to the manager(s) who is authorized to execute documents filed with the Corporations Division. If there are no managers, you have to name at least one person.
- Real estate authorization: The name and business address of each person authorized to sign for the corporation for real estate transactions. If your company isn’t involved in real estate, you can leave this section blank.
- Resident agent consent: Your resident agent must sign the form, indicating that they accept the role of registered agent.
You can fill out the document on paper and mail it in or use the online portal to submit your paperwork. You’ll be responsible for paying a nonrefundable $500 filing fee if you file by mail or $520 if you file online.
Step 4: Create an Operating Agreement
Every company has rules to follow, processes in place, and plans for the future. LLC Operating Agreements outline all of this and more. However, not every state requires LLCs to have one, including Massachusetts.
If you’re a single-member LLC, you may feel drafting an Operating Agreement is pointless, especially since it is not required in Massachusetts. But even as a single-member LLC, your company can benefit from having an Operating Agreement on file. This document outlines how your company is run, how finances will be handled, and how decisions will be made, but it also details what happens to your company if you leave or become unable to lead. An Operating Agreement can also protect you and your assets in the event of dissolution or bankruptcy.
Step 5: Apply for an EIN
Now that you’re registered, have a resident agent, and have obtained an Operating Agreement, you’re ready to complete the last step in the LLC formation process: registering with the Internal Revenue Service (IRS).
To register with the IRS, you’ll apply for an Employer Identification Number or EIN. Your EIN is essentially your company’s Social Security number — it helps identify your business and allows you to open financial accounts, hire employees, and pay for business expenses.
While LLCs with multiple members or employees will be required to apply for an EIN, sole-member LLCs without employees might wonder if this step is necessary. However, obtaining an EIN can provide an additional layer of protection, as you won’t have to use your Social Security number for business purposes.
To apply for an EIN, visit the IRS EIN application page online. The application only takes minutes and does not cost a penny. Minutes later, you’ll receive your EIN, ready to be used.
How much does it cost to start an LLC in Massachusetts?
Starting an LLC in Massachusetts can be costly. Filing your Certificate of Organization through the mail is $500, while filing online will cost $520.
Keep in mind this does not include ongoing costs. Each year, for instance, you’ll be required to file an annual report with the Secretary of the Commonwealth of Massachusetts that carries a $500 filing fee by mail or a $520 online fee.
ZenBusiness can help you form your Massachusetts LLC. Our experts will complete and submit all of the necessary paperwork, provide a registered agent service, and supply a template for an Operating Agreement.
You can also choose more comprehensive packages for a bit more per year. These packages include expedited services, help obtaining your EIN, and an automatically generated webpage.
From basic to all-inclusive packages, partnering with ZenBusiness means peace of mind for you at every step of your LLC’s formation.
What are the benefits of an LLC in Massachusetts?
LLCs are often the business type many small businesses or new business owners choose. That’s because LLCs combine many of the benefits of a corporation with those of a sole proprietorship or partnership. They’re particularly great for owners looking for flexible management options and liability protection.
Here are a few benefits to keep in mind when forming an LLC in Massachusetts:
- The separation between personal and business finances: When forming an LLC, it’s easy to separate your personal and business finances, debts, and liabilities, protecting your personal assets from the business’s liability.
- Protection from double taxation: When you’re taxed as a corporation, you’ll pay taxes on your company’s profits and the profits you earn as an individual from the company. However, with an LLC, you’ll only be required to pay personal taxes on your individual company profits if you elect to be taxed the default way, which is as a sole proprietorship or partnership. You’ll also avoid the Massachusetts excise tax if you opt to be taxed this way.
- Customized management structure: There are no set requirements for managing an LLC in Massachusetts, allowing you to create a management style and organizational structure that makes sense for your LLC.
- Fewer reporting requirements: While corporations can have lengthy reporting requirements, LLCs have very few.
For a more in-depth look at why an LLC might be a better option for you, see our breakdown of what an LLC is and how it compares to a corporation.
How is an LLC taxed in Massachusetts?
While the basic tax setup is not complicated, you might want to team up with an accountant if you don’t understand the tax forms or want a second set of eyes reviewing your tax paperwork. This can prevent potential tax issues that could cause trouble for your LLC.
Here are the basic tax laws for LLCs:
- As an LLC owner, you’ll be responsible for paying into Social Security and Medicare through a “self-employment tax” directly on your tax returns.
- You may have very high earnings and feel it’s more advantageous to be taxed as a C or S corporation. If you choose to be taxed as one of these designations instead of a partnership or sole proprietorship, you’ll need to file specific tax forms: the 8832 tax form for C corporations and the Form 2553 for S corporations. You’ll also have to pay Massachusetts’s corporate excise tax.
- LLCs need to pay quarterly estimated tax payments each year to avoid tax penalties. You’ll need to make these payments each quarter for both federal and state taxes. If your LLC has employees, you’ll also need to withhold federal, state, Social Security, and Medicare taxes from their paychecks. These withholdings need to be submitted to the IRS. You’ll need to set up a wage withholding account via the MassTaxConnect government site. As an employer, you’ll also need to pay Massachusetts unemployment insurance (UI) tax.
- If your LLC sells items or services and collects sales tax, then you’ll also need to apply for a sales tax license online via the Massachusetts government website.
Massachusetts LLC FAQs
- What is the processing time to form my Massachusetts LLC?
In just four hours after payment, your Certificate of Organization will be processed with the Massachusetts Secretary of the Commonwealth if you file online. Filing by mail takes a bit longer — between four to five business days.
- Do I need to file my Operating Agreement with the state of Massachusetts?
The Operating Agreement is kept internally by the owner and partners or managers of the Massachusetts business. While some states legally require LLCs to have an Operating Agreement, Massachusetts does not.
- What tax structure should I choose for my Massachusetts LLC?
Many LLCs opt to be taxed the default way — as a sole proprietorship (for single members) or a partnership (for multiple members) — particularly to avoid the Massachusetts excise tax. Choosing to be taxed the default way ensures you’ll only be taxed on profits that you claim on your personal tax return.rnrnYou can also choose to be taxed as a corporation, which some large companies opt to do. In addition to having to pay the Massachusetts excise tax, you’ll also want to understand the other distinctions that are unique to the corporation tax structure. You can find out more about these differences in our comprehensive corporation tax guide.rnrnIf the LLC has multiple members, it will be classified as a partnership by the IRS, with each partner paying taxes on their share of the business. You can also file as a corporation. This route has its advantages, but be sure to review each option’s details to determine the best one for your business.
- Does Massachusetts allow a Series LLC?
No, you’re not legally allowed to create a Massachusetts Series LLC. A Series LLC refers to an LLC structure where one LLC operates as a parent company over multiple children LLCs. Most states do not allow Series LLCs.
- Which licenses and insurance are required for an LLC in Massachusetts?
Some LLCs need to have a business license to operate, so it’s important to secure them as soon as possible. The state doesn’t require a general business license, but cities and counties sometimes require one as well as additional licenses and permits, so check with your local government offices. rnrn rnrnLicensing happens at the federal, state, and local level and is often industry-specific, so you’ll need to research which licenses and permits your LLC needs or hire a service to do it for you. For state licensing, you can check Massachusetts’s Business Licenses & Permits website.rnrn rnrnYour LLC might also need to secure a company insurance policy, depending on your industry and whether you have employees. The types of required insurance can range from professional liability insurance (typically required of consulting and legal firms) to unemployment and workers’ compensation insurance. You can find out more about LLC’s minimum insurance requirements on the Massachusetts government site.rnrnIf you’re scratching your head, we recommend hiring a professional service like ZenBusiness to do the research for you. We can provide you with a comprehensive package of all the licenses and insurance required for your Massachusetts LLC and help you with paperwork.
- Can I make changes to my Massachusetts LLC?
Yes. You can update your LLC name, change your resident agent, or make additional changes online via Massachusetts’s website. Each change has its own form and associated filing fee, which can be filed and paid through the online filing system. A list of all PDF forms can be found here.
- How do I dissolve my LLC in Massachusetts?
Dissolving your LLC requires you to file a Certificate of Cancellation with the commonwealth of Massachusetts. You can file your cancellation via the Massachusetts online filing system.