Before taking the leap and starting your professional practice, you will encounter the daunting decision of choosing the right entity type. A limited liability company (LLC) could be your first preference. It offers asset protection, easy maintenance, and flexible taxation. But, if you need a state license to provide your professional service, a Massachusetts professional limited liability company may be a better choice.
In this guide, we’ll help you understand the benefits of starting a Massachusetts PLLC and how to form one. The process is easier if you have the right information and help at your disposal. So, here we go.
Who can form a PLLC in Massachusetts?
You can create a professional LLC if you possess a license, certificate, or registration to offer your services. Some examples include:
- Certified public accountants (CPAs)
- Medical practitioners, including podiatrists, dentists, chiropractors, psychologists, registered nurses, and physical therapists
This is not an exhaustive list. If you have more than one member in your Massachusetts PLLC, they all must have a license in the same profession.
Should you form a professional corporation (PC) or a PLLC?
Massachusetts allows for the formation of PLLCs and professional corporations (PCs). It’s easy to start a professional LLC in the commonwealth, and you get several benefits. For example, a PLLC can be treated as a pass-through entity, meaning that the business itself isn’t taxed on profits, just the individual members (as opposed to a PC, which is taxed on both levels). Though liability protection is slightly higher in a PC, you may prefer starting a professional LLC due to its ease of management and flexible tax options.
Choose a name for your Massachusetts PLLC
Choosing a perfect name for your Massachusetts professional limited liability company is the first step to turn your dream into reality. Give ample thought to finding a name that matches your professional service but is entirely unique. For this, you should check the state’s official business database to ensure that the same name isn’t shared by another entity in the commonwealth.
The name should be distinguishable and contain no derogatory or offensive words as per state law. Most importantly, remember that slight variations in spellings, suffixes, articles, or punctuations aren’t enough to make the name distinguishable.
In Massachusetts, both professional regulatory boards and state law can restrict the name you can take for your PLLC. Like most other states, your name must include an appropriate designation, such as limited company, professional limited liability company, P.L.L.C., or PLLC. A full list can be found in the Massachusetts Limited Liability Company Act.
You can search the Secretary of Commonwealth’s database to check if a name is currently in use. If you are unsure of your chosen name’s availability, contact the Corporate Division of the Massachusetts Secretary of State.
Business Name Reservations
Once you’ve found an available name, you may want to reserve it until you’re ready to file to ensure no one else claims it. The Secretary of the Commonwealth charges $30 to reserve a business name for 60 days. You can also avoid the hassle by choosing our name reservation service, which helps with the process and includes name checks. You should also check out potential website names for your Massachusetts PLLC. You can check domain name availability with ZenBusiness.
Select a Massachusetts resident agent
According to the Secretary of the Commonwealth, PLLCs must appoint a resident agent (called a registered agent in other states) with a street address in Massachusetts. A resident agent serves as a point of contact between your entity and the state’s business formation agency as well as the courts. The person or business providing this service is responsible for receiving these communications on your behalf. You may act as your PLLC’s resident agent, but it isn’t necessarily wise. It requires you to be on-site at all times during business hours, which can create compliance issues if you have to leave.
Third-party registered agent services from our service partners can save you time and help you focus on your business and your clients. Our partner agents will help you meet the Massachusetts resident agent requirements.
File a Massachusetts Certificate of Organization
After you complete the above steps for your Massachusetts professional limited liability company, submit your Certificate of Organization to the Secretary of the Commonwealth in person, by mail, or online. The certificate informs the state about your:
- Business entity’s name
- Its purpose
- Its members
- Its business contact information
- Registered agent
- Signature of the person forming the PLLC
Don’t forget to mention if the company is member-managed or manager-managed in the certificate. Member-managed occurs when members oversee the day-to-day activities of your PLLC and make decisions on the PLLCs behalf. Manager-managed occurs when you appoint a member(s) or hire an individual(s) from outside the PLLC with or without a stake in ownership to manage your PLLC.
The cost to file a Certificate of Organization is $500 for LLCs and PLLCs. There’s a $20 expediting charge if you choose to file online, and multiple payment methods are accepted depending on the filing method.
Handle Massachusetts tax obligations
Your PLLC will likely need an Employer Identification Number (EIN) from the IRS. It’s like a Social Security number for your business. You may need it to file tax returns, open a bank account, and hire employees. If you need help requesting your EIN, reach out to ZenBusiness.
For state-level taxation, visit MassTaxConnect to register your PLLC and file your business taxes online through the Department of Revenue. Also, check local tax requirements to stay compliant every step of the way. If you’re unsure of these responsibilities, ask a qualified tax professional.
Obtain Massachusetts business licenses and permits
Before offering professional services in Massachusetts through your PLLC, you need to obtain proper business licenses. You can visit Mass.gov for information about professional licenses and permits you may need.
Local permits may also be mandatory in your county or city depending on your industry. Check this information through local government websites. Because licensing can be federal, state, local, and industry-specific, there’s no one central place to check to see if your business has everything it needs. You can do this research yourself or use ZenBusiness’s business license report service to make sure you have all your bases covered.
Acquire insurance for your Massachusetts PLLC
As a licensed professional, you need to secure your practice with proper insurance. Although it’s not necessary per state law, it makes sense to buy general liability insurance, such as a business owner’s policy, to protect your interests.
Massachusetts is one of seven states that requires health care providers to carry medical malpractice insurance. Additionally, 211 Code of Massachusetts Regulations 24.00 states that PLLCs must carry at least $250,000 of professional liability insurance for each licensed member.
If you hire employees, Massachusetts requires you to buy workers’ compensation insurance for every employee. These requirements are determined by the Division of Insurance and the Department of Industrial Accidents.
Open a business bank account
To keep your personal assets separate from business funds, open a company bank account with a reputable bank. It will help protect your PLLC’s business status and simplify tax filings and recordkeeping. You may need your EIN and Certificate of Organization to open the account.
Ready to start your business?
At ZenBusiness, we are proud to support small businesses through a variety of different tools and services. Whether you need a registered agent service, want to reserve a business name, or are looking to register a domain name for your website, our goal is to help you stay on the road to success. Check out our services and contact us today to see how we can help you grow your company.
Massachusetts PLLC FAQs
What are the filing fees for a Massachusetts PLLC?
You need to pay $500 to file the Certificate of Organization with the Secretary of the Commonwealth of Massachusetts. The cost of online filing is $520, which includes a $20 expediting fee. Multiple payment methods are accepted depending on whether you file by mail, in person, or online.
Do I need a lawyer to form a Massachusetts PLLC?
No, it isn’t essential to hire a lawyer to form a Massachusetts PLLC. The process is relatively simple. Follow the online procedure, and ask ZenBusiness to help you if needed.
Does Massachusetts have a professional corporation entity?
Yes, Massachusetts recognizes professional corporations (PCs) and professional limited liability companies (PLLCs).
Can professionals from different fields form a Massachusetts PLLC together?
No. According to state law, every member of a PLLC must have a relevant license in the same profession.
How will I be taxed as a Massachusetts PLLC?
One of the biggest advantages of starting a Massachusetts professional limited liability company is the flexibility in choosing the tax structure. Your PLLC can function like a corporation or a pass-through entity. The tax rate is 8% for corporate entities and 5% for individuals. If you provide any qualifying service, you may be required to pay additional taxes.