In this article, we’ll describe how to start an LLC in Massachusetts, the steps involved, and the costs associated with starting an LLC. This is part of our larger group of articles on how to start an LLC in every state.
The Process for How to Start an LLC in Massachusetts
Before we begin: the process to start an LLC in Massachusetts is a combination of several steps, each as important as the others. We recommend hiring a registered agent to do this work because they have the experience and knowledge of this state’s laws and processes regarding LLCs; doing it yourself can cost you valuable time and money should you get it wrong.
Registering an LLC in Massachusetts involves a handful of tasks: picking the name, forming the company, establishing an operating agreement, getting an EIN from the IRS, and getting licensed where necessary. After starting the LLC (and having the paperwork to prove it), we recommend establishing a bank account and phone number for your business, and we’ll cover those steps, too.
Hiring a Registered Agent to create your LLC in Massachusetts will save you time. Registered Agents do this regularly and know the ins and outs of Massachusetts’s requirements for LLCs. We recommend ZenBusiness because of its ability to bundle multiple helpful services into one and its ability to support your LLC after creation.
Massachusetts LLC Fees
Massachusetts charges various fees for LLC formation and reporting. Here are the fees:
- Initial Filing Fee: $500.00
- Reporting Fee: $500.00 yearly
1. Massachusetts LLC Name Reservation
Your business name is a big part of your brand and identity, so spending some time thinking of a good one is essential. A name that is catchy and easy to remember can help you stand out from the crowd and make a good impression on potential customers.
Be sure to do a Business Entity Search with Massachusetts before starting the process to make sure your desired business name is available.
Once you have a name in mind, though, and you’re sure it’s available, Massachusetts has a few extra hoops for you to jump through to ensure it’s yours. In Massachusetts, a separate (potential) Name Reservation requirement before creating the LLC (we’ll touch on that in a bit).
The LLC Designation: The business name must end in LLC, L.L.C., or Limited Liability Company. Some states allow additional variants of this formatting, including Ltd. Liability Company (in California).
Comma: a comma between your business name and LLC is optional. Both BigWares LLC and BigWares, LLC are are acceptable formats.
Name Reservation: Most states do not require the business name be explicitly reserved before the LLC formation takes place. Massachusetts does require that, however.
Filing Methods: You can file online or by mail. It’s recommended to file online, however, because in doing so, your name approval happens much more quickly and you do not need to file separately for a name reservation.
2. Establish a Massachusetts Registered Agent
Limited Liability Companies in Massachusetts must have a registered agent. A registered agent is a person (age 18 years or older) or business that acts as the official point of contact for a company or organization. The registered agent’s job is to receive and send legal documents on behalf of the company, such as service of process, tax forms, and official government correspondence. The registered agent must have a physical address in Massachusetts (a P.O. box is unacceptable) and be available during regular business hours to receive these documents. The registered agent is on all related filings for the LLC in Massachusetts, which means their name and address will be public information. Because of that, we recommend hiring a business to act as your registered agent.
3. Create the Certificate of Formation
The Massachusetts Certificate of Formation, sometimes called Articles of Organization in other states, is the primary document that declares and creates your LLC. You can file this document online or by mail (download PDF), which will take about a week, though doing so online generally results in instant approval.
We recommend filing online because the process is faster and is less prone to errors or paperwork getting lost. Click here to file online (e-file)
4. Create the Operating Agreement
An operating agreement for A Massachusetts limited liability company (LLC) is a legal document describing an LLC’s ownership, administration, and organizational structure. It serves as a guide for internal administration and management of the business.
Most states do not legally require an operating agreement, but we strongly recommend it for for all LLCs because it can offer several advantages.
In an operating agreement for a Massachusetts LLC, the following clauses are frequently present:
- Members’ (owners’) names and addresses of the LLC
- Each member’s percentage of interest in the LLC Management structure (e.g., whether it will be member-managed or manager-managed)
- Rules for acquiring and disposing of ownership interests and admitting new members
- Provisions for distributing gains and losses among the participants
- Provisions for resolving member conflicts and impasses
- Modification procedures for the operating agreement
An Operating Agreement is an internal document typically not filed with the state; nonetheless, if there is a dispute among the members, it may be used as evidence in court. A well-written operating agreement can prevent misunderstandings and disagreements among members and, in the event of a legal issue, can be used to establish the existence and structure of the firm.
5. Register For An EIN With The IRS
The Internal Revenue Service (IRS) issues an exclusive nine-digit number known as an Employer Identification Number (EIN), sometimes referred to as a Federal Tax Identification Number, to identify a business entity.
Do I need an EIN? Most businesses, but not all, are required to have an EIN. You may need an EIN if you have workers, operate as a partnership or corporation, or are required to submit specific types of taxes.
How to obtain an EIN: There are three methods for requesting an EIN from the IRS:
- By mail (slowest–can take months)
- By fax (also slow)
- Online (instant)
We recommend requesting an EIN online because when your application is approved, you’ll have the option to print your EIN information immediately instead of receiving your EIN in the mail. Click here to apply for an EIN. Should you wish to request an EIN by mail or fax, fill out Form SS-4 and send it by mail to:
Internal Revenue Service
Attn: EIN Operation
Cincinnati, OH 45999
Or fax it to (855) 641-6935.
In order to apply for an EIN online, your business must be located in the United States or one of its Territories and you must have a valid SSN or ITIN. If you do not have an SSN or ITIN, you can request an EIN by filling out Form SS-4 and mailing or faxing it. You can write “Foreign” in the place where the SSN/ITIN would go.
6. State Taxes and Annual Reports
Massachusetts collects state income tax from businesses, and as such, an LLC registered in Massachusetts must also file a tax return every year with its. Additionally, Massachusetts requires that annual reports be filed yearly. Massachusetts does not require LLCs to pay a yearly franchise tax.
Sales tax: The State of Massachusetts collects sales tax on retail purchases made in the state. Depending on your business and Massachusetts’s sales tax laws, you may be required to register to collect sales tax.
The state may require that you hold other licenses depending on your business type. Here are a few links that may help determine which additional licenses you need. You can also defer to the state’s department of licensing–or equivalent–for more information. Most states have one-stop-shop portals that can provide specific information based on your business type.
You can find the relevant forms on Massachusetts’s website linked above or at the end of this article.
7. Check If you Need Any Licenses or Certifications
Depending on your business, you may need one or more licenses to operate in Massachusetts. Generally, a business license is always required, while you may need additional licenses for your specific business.
In addition to statelicenses and permits, your business may be required to hold federal licenses. The Small Business Administration has a list of agencies that handle those licenses, depending on your industry.
We recommend hiring a professional to help navigate the licensing requirements in Massachusetts if you’re short or time or not familiar with the various requirements. ZenBusiness offers an additional, optional, service that will do the research for you and let you know exactly which licenses your LLC needs in Massachusetts.
8. Establish a Bank Account for the LLC
Once your LLC is formed and ready to go, we highly recommend opening a business-specific bank account. Keeping your business and personal finances and expenses separate makes accounting much more manageable and prevents potential issues with assets mixed inappropriately or unintentionally.
To open a business bank account, you’ll need the following:
- Your LLC’s Certificate of Formation
- The EIN you received from the IRS
- Two forms of identification
9. Create a Business Telephone Number
In addition to keeping your business and personal finances separate, we highly recommend keeping your business and unique phone numbers separate. An independent business phone number can look more professional than giving out your cell phone. Optionally, pick your own 1-800 toll-free number to make your new business look seasoned and experienced. Once your phone number is attached to your business’s public records, you will soon start getting calls and texts from unscrupulous marketers and companies. They’ll want to give you the hard sell on their service(s) or offer high-priced business financing (speaking from experience). Keep them away from your number now, and you’ll thank yourself later.
- Massachusetts Secretary of State Web site
- Massachusetts Department of Revenue
- Certificate of Formation, Online filing (e-file)
- Sample Operating Agreement (DOCX)
The Seller Journal provides the content on this page for informational purposes only. Do not interpret it as legal, financial, or tax advice or recommendations. The Seller Journal does its best to ensure the information provided is accurate, but your situation may vary or be unique, and the information provided above may only be somewhat suitable. The Seller Journal recommends consulting a professional if you have legal or tax issues. Please contact us if you believe this page’s information is inaccurate.