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 the Bay State 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.
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 Massachusetts.
Don’t let the process overwhelm you. We have your back. Our simple guide shows where to start to get your Massachusetts 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 Massachusetts can feel overwhelming. What are the steps your business needs to take to operate? If you are setting up an LLC, there are some specific steps to take in Massachusetts to ensure your business and partners are protected. This guide will help you with each step of the journey and show you how our services can make the process easier.
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 commonwealth and is distinct 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 commonwealth laws.
Make a list of possible names and then follow the instructions on our Massachusetts Business Entity Search page to see if your desired name is available in the commonwealth. 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 when conducting a search. 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 designators 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 designator at the end.
Once you’ve conducted your Massachusetts business lookup and 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, Massachusetts allows you to reserve a business name for 60 days for a fee. If you’d rather not deal with this process yourself, we have a business name reservation service that can handle it for you. As part of the service, we also check to see if your desired name is available.
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 us to help.
To make sure you’re entirely in the clear with your business name, visit the United States Patent and Trademark Office website to see whether your business name or logo is federally trademarked. Trademarks can also happen at the state level. To find out more and/or apply for a trademark in the commonwealth, go to the Massachusetts Secretary of the Commonwealth website page for trademarks.
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 meets all of the requirements (Massachusetts residency, authorization to do business in Massachusetts, and a permanent address in the commonwealth).
A couple of benefits of using an outside registered agent service like ours include:
- 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.
- Organization. If you use our registered agent service, we’ll accept your important legal documents and store them in your digital dashboard so you can view, download, or print them anytime online.
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. Or, better still, you could have us do it for you. Filing official government documents like this can be intimidating, which is why we’re here. With our business formation plans, our experts handle your filing to make sure it’s done quickly and correctly the first time.
But, although we can handle this for you, we’ll show you how the process works below.
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: You’ll need to identify your resident agent’s name and address.
- 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 (owners), 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 LLC 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 substantial nonrefundable filing fee if you file by mail and slightly more if you file online.
If you have us handle filing your Articles of Organization, once the commonwealth approves your LLC, your paperwork will be available from your ZenBusiness dashboard, where you can keep it and other important paperwork digitally organized.
Once you get your physical paperwork back from the commonwealth approving your new LLC, you’ll want to keep it in a safe location along with your other important documents, such as your operating agreement, member certificates, contracts, compliance checklists, transfer ledger, etc. We offer a customized business kit to help you keep these important documents organized and looking professional.
By now you’re realizing how often you’ll need to supply an address for your new business. That can be unsettling for some business owners, especially those running their business from home. In instances where you’re not required to give the registered agent address or official principal address for your business, a virtual business address can come in handy.
With our virtual business address service, we supply you with a physical street address where you can have your mail sent without divulging your real address to more people than necessary. Then we can send that mail to the address of your choice.
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 for Massachusetts. 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 help protect you and your assets in the event of dissolution or bankruptcy.
If you’re unsure as to how to begin creating an important document like an operating agreement, we offer a customizable template to help get you started.
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, also known as a Tax ID Number, is essentially your company’s Social Security number — it helps identify your business and allows you to open financial accounts, hire employees, and pay taxes.
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 from identity theft, as you won’t have to use your Social Security number for business purposes.
You can get your Massachusetts LLC’s EIN through the IRS website, by mail, or by fax, but if you’d rather leave dealing with that particular government agency to someone else, we can get it for you. Our Tax ID Number service is quick and eliminates the hassle.
Once you’ve secured an EIN, you’ll be able to open a business bank account. Having separate accounts for your business and your personal banking is critical for sorting out your finances at tax time and helps you avoid commingling funds. Commingling funds can not only make your taxes more difficult, but it could also be used against you if someone takes you to court to challenge whether you and your LLC are truly separate entities (i.e., they want to sue you for not just your business assets, but also your personal assets).
We offer a discounted bank account for your new business. This allows for unlimited transactions, online banking, a debit card, and more. When you want to authorize others in your business to use the account, we offer a banking resolution template to simplify the process.
For further help managing your new business’s finances, try the ZenBusiness Money App. It can help you create invoices, receive payments, transfer money, and manage clients all in one place.
Massachusetts LLC FAQs
How much does it cost to start an LLC in Massachusetts?
Starting an LLC in Massachusetts can be costly, as the filing fee is among the highest in the nation. The fees for forming an LLC in the commonwealth can range from $500 to $550, depending on factors such as your method of filing and whether you choose to reserve your business name. Note that fees change over time, so you should check the Secretary of the Commonwealth website for the most recent fee schedule.
Keep in mind this does not include ongoing costs. Each year, for instance, you’ll be required to file a Massachusetts annual report with the Secretary of the Commonwealth that carries a large fee equivalent to the original LLC filing fee.
We can help you with your annual report in a couple of ways. Our annual report service will help you file your report, and our Worry Free Compliance service not only helps with filing your annual report, but also sends you other important compliance reminders and helps you with two amendment filings each year.
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, helping protect 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.
Those who purchase any of our plans get a free accounting consultation and tax assessment from our specialists to receive helpful resources and no-obligation recommendations around your bookkeeping, accounting, and tax needs.
What is the processing time to form my Massachusetts LLC?
In about 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 Commonwealth of Massachusetts?
The operating agreement is kept internally by the members of the Massachusetts LLC. 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. You 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. Consult a tax professional for guidance.
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 commonwealth 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.
Licensing 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. If you don’t have the time or inclination to do all this research yourself, or if you just want the peace of mind to know that your business has all the licenses and permits it’s legally required to have, our business license report service can do the work for you.
Your LLC might also need to secure insurance policies, 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.
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.
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.