How to form an LLC in Massachusetts: Master the process to form an LLC in Massachusetts with our comprehensive guide. Learn to select a unique business name, file the Certificate of Organization, designate a Registered Agent, and secure an EIN.
Understand Massachusetts-specific guidelines to ensure a seamless business setup.
Form an LLC in Massachusetts for $0 + state feeÂ
To form an LLC in Massachusetts for free + state fee, we have listed 3 options to consider:Â
You can go online and visit the Massachusetts Secretary of State’s website and do it yourself or you can use the ‘free’ service from Incfile or ZenBusiness.
- DIYÂ $0 + state fee
- Bizee $0 + state fee
- ZenBusiness $0 + state fee
Want to Keep Things More Private?Â
- Northwest $39 + state fee ‘Privacy by Default’
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Forming an LLC in Massachusetts for $0 (DIY Summary)
Here’s a brief step-by-step guide to help you through the DIY process, along with relevant links to official resources:Â
Step 1: Choose a Name for Your LLC
Before you can form an LLC, you need to choose a unique and distinguishable name for your business.
Ensure that the name is not already in use by checking the Massachusetts Secretary of the Commonwealth’s online database.
Additionally, your chosen name must include the term “Limited Liability Company” or one of its abbreviations: “LLC” or “L.L.C.”
Step 2: Appoint a Massachusetts Registered Agent
In Massachusetts, every LLC must have a registered agent.
This individual or business entity will receive legal documents and official correspondence on behalf of your company.
The registered agent must have a physical street address within Massachusetts, not a P.O. Box.
You can choose to act as your own registered agent or hire a professional registered agent service.
Step 3: File the Certificate of Organization
To legally form an LLC, you need to file a Certificate of Organization with the Massachusetts Secretary of the Commonwealth.
This document provides essential information about your business, including the name, address, registered agent, and the purpose of your LLC.
You can file the certificate online through the Secretary of the Commonwealth’s website or by mail.
Step 4: Create an Operating Agreement
While Massachusetts doesn’t require LLCs to have an operating agreement, it is highly recommended to create one.
An operating agreement outlines the ownership structure, roles, and responsibilities of the LLC members, as well as rules for decision-making and distribution of profits.
Having an operating agreement in place helps prevent misunderstandings and legal disputes in the future.
Step 5: Obtain Necessary Permits and Licenses
Depending on the nature of your business, you may need to obtain specific permits and licenses to operate legally in Massachusetts.
Research and identify any industry-specific licenses or permits required at the state, county, or municipal level.
The Massachusetts Office of Business Development and the Massachusetts Department of Revenue can provide guidance on the licenses and permits you may need.
Step 6: Register for State Taxes
LLCs in Massachusetts are subject to state taxes, including income taxes and sales taxes.
You may need to register with the Massachusetts Department of Revenue for tax purposes.
This registration will allow you to obtain an Employer Identification Number (EIN), which is required for federal tax filings.
Step 7: Familiarize Yourself with Ongoing Requirements
After forming your LLC, there are ongoing requirements to maintain compliance. This includes filing an annual report with the Massachusetts Secretary of the Commonwealth and paying the associated fee.
Staying up to date with these obligations will ensure your LLC remains in good standing.
Congratulations! By following these steps, you are well on your way to forming your LLC in Massachusetts.Â
Massachusetts LLC: Definitions
Massachusetts Secretary of the Commonwealth: The Massachusetts Secretary of the Commonwealth is the government office responsible for overseeing the formation and regulation of business entities, including LLCs, in Massachusetts. They maintain the official registry of businesses and handle the filing and documentation processes.
Articles of Organization: The Articles of Organization is a legal document that is filed with the Secretary of the Commonwealth to officially form an LLC in Massachusetts. It includes important information such as the LLC’s name, purpose, registered agent, management structure, and other essential details.
Registered Agent: A registered agent is an individual or entity designated to receive legal documents and official correspondence on behalf of an LLC. In Massachusetts, every LLC is required to have a registered agent with a physical street address within the state. The registered agent ensures that important documents are promptly delivered to the LLC.
Operating Agreement: An operating agreement is a legal document that outlines the internal operations and management structure of an LLC. It typically includes details about ownership, roles and responsibilities of members, decision-making processes, profit distribution, and other important provisions. While not mandatory in Massachusetts, having an operating agreement is highly recommended to establish clear guidelines and prevent disputes.
Employer Identification Number (EIN): An Employer Identification Number (EIN), also known as a Federal Tax Identification Number, is a unique identification number assigned to businesses by the Internal Revenue Service (IRS). LLCs in Massachusetts may need an EIN for tax purposes, such as filing federal tax returns, hiring employees, opening business bank accounts, and more.
Massachusetts Department of Revenue: The Massachusetts Department of Revenue is the state agency responsible for administering tax laws and collecting taxes in Massachusetts. LLCs formed in Massachusetts are subject to various state taxes, including income taxes and sales taxes. The Massachusetts Department of Revenue provides guidance and resources related to tax registration, filing requirements, and compliance for LLCs.
Annual Report: An annual report is a document that LLCs are required to file with the Secretary of the Commonwealth on a yearly basis. It provides updated information about the LLC’s business activities, members, and registered agent. Filing the annual report and paying the associated fee is necessary to maintain the LLC’s good standing and legal compliance in Massachusetts.
Dissolution: Dissolution refers to the process of legally ending or dissolving an LLC. In Massachusetts, an LLC can be dissolved voluntarily by filing dissolution documents with the Secretary of the Commonwealth or involuntarily through a court order or other legal means. Properly dissolving an LLC ensures that its legal obligations and liabilities are appropriately addressed.
Certificate of Good Standing: A Certificate of Good Standing is an official document issued by the Secretary of the Commonwealth that confirms that an LLC is in compliance with all filing requirements and is in good standing with the state. It may be required for various purposes, such as obtaining business loans, entering into contracts, or conducting business in other states.
Business Name Reservation: Before filing the Articles of Organization, individuals can choose to reserve a business name for their LLC. The business name reservation ensures that no other entity can use the chosen name during the reservation period, allowing time to prepare the necessary paperwork and complete the LLC formation process.
Reference Links and Resources:
- Massachusetts Secretary of the Commonwealth: Official Website
- Registered Agent: Definition and Importance
- Certificate of Organization: Guidelines for Filing
- Operating Agreement: What is an Operating Agreement?
- Massachusetts Office of Business Development: Official Website
- Massachusetts Department of Revenue: Official Website
Extended Version and Guide
This guide is for anyone who wants to create an LLC in Massachusetts. Continue reading to learn more about setting up your business.
Form a Massachusetts LLC
There are some important details that you need to remember when you first file an LLC in Massachusetts. You can read the following sections to determine what you should do before proceeding with your LLC formation.
If you want to use an LLC service, visit our list of the best LLC services in Massachusetts, details on looking up an LLC in Massachusetts and our article on how long it takes to get an LLC in Massachusetts.
Search and Reserve Your LLC Business Name
Double-check the availability of business names through the Massachusetts Secretary of the Commonwealth’s Website. Multiple search options are available, including the database for corporations and a search engine that searches for previously reserved business names.
You can request an Application for Reservation of Name form to hold a name. You can reserve a name for up to 60 days by paying $30. You can renew your reservation for another 60 days. This form cannot be faxed. You must send it by mail or in person.
It is important to note that your business name must include “limited liability corporation” or “limited company”, or any acceptable abbreviation like “LLC,” L.L.C., L.C., or “LC.”
Appoint a Registered Agent
Any LLC that operates within Massachusetts must have Massachusetts resident agents. They will accept important documents such as court papers on behalf of the LLC. The role is currently available to a Massachusetts resident or a company authorized for business in Massachusetts. You should expect to pay $50 to $300 per year if you hire someone.
Although some people instinctively seek a bargain, paying more for this service might be worthwhile. Ask questions and read reviews to find the best resident agent for your company.
Visit our list of the best registered agents in Massachusetts
File Your Massachusetts Certificate of Organization
Once you have completed all the necessary steps, you can start to file forms for your Massachusetts LLC. You will need to complete a Certificate of Organization. Then, you’ll need to pay the $500 filing fee. For an additional $20, you can expedite this process by filing electronically or via fax.
An additional $500 fee is required for a foreign entity to establish an LLC in Massachusetts. However, the applicant must also complete an Application For Registration. The document should accompany a Certificate of Legal Existence (or Certificate of Good Standing). Foreign entities can submit paperwork electronically, but they are not allowed to do so by fax.
Make sure to make checks payable to “Massachusetts Secretary of the Commonwealth”.
Establish Your Massachusetts LLC
After your LLC is approved, there are a few things you need to do. These steps are described in the next sections.
Make an LLC Operating Agreement
Although it is not required by law in Massachusetts, operating agreements are a worthwhile investment. Operating agreements are crucial for protecting your business’ long-term integrity by providing a solid foundation on how you plan to run it.
Operating agreements usually include information such as:
- Day-to-day operations of the LLC and individual member responsibilities
- How member contributions may impact member voting
- Who the members of the LLC are
You can avoid hostility and confusion later by creating an LLC operating contract. This document can also be used to prove the legitimacy of your LLC.
Register for an Employer Identification Number (EIN).
Sometimes called a Federal Tax Identification Number (FTIN), or Federal Employer Identification Number, an EIN is also known as a Federal Tax Identification Number. EINs are mandatory for most businesses, but single-member LLCs without employees can still get by with a social security number. An EIN is preferred because it protects your SSN’s privacy. EINs can be obtained for free from the IRS website.
Annual Reports and Fees
Massachusetts requires that all LLCs submit a annual report and pay $500. This is vital for maintaining your business’ good standing. The fee and the report are due on or before the first day of each anniversary month following the formation of your LLC.
Buy a web domain
Although it is unnecessary, having a business website can be very beneficial as potential customers often search online for brands. A website, or even a Facebook Page, can have a negative impact on customer trust and perception. This is the best time to start building your web presence.
Most Frequently Asked Questions
What is a Massachusetts LLC?
A limited liability company combines the flexibility and ease of a sole proprietorship or partnership structure with the greater risk protection offered by a corporate structure. LLC owners, also known as “members”, have limited liability. This means that their personal liability to the company is limited to what they have invested. It does not cover losses or debts beyond that amount.
Members of an LLC are subject to taxes by default. This is the same as for owners of a general partnership or sole proprietorship. This structure is commonly referred to as a “pass-through” tax structure. If the LLC meets certain criteria, it can choose to be taxed either as a C corporation (C-corporation) or an S corporation (S corporation). Small business owners prefer LLCs because of their simplicity and flexibility.
What is the cost of a Massachusetts LLC?
Massachusetts LLCs cost $500 for both domestic and international. In some cases, it may be possible to pay $20 extra to expedite the process.
What is the Massachusetts tax treatment of an LLC?
Massachusetts LLCs are treated the same way federally as they are state-taxed. LLCs are not treated as C-corporations and are generally taxed as “pass-through” entities.
Can LLCs get tax refunds?
Your LLC will not be subject to income tax unless it has elected to tax as a C corporation. Instead, LLC income and expenses are passed through to owners who pay taxes on the LLC’s profits. While LLC members may be eligible for a tax refund, the LLC generally won’t pay taxes or get refunds.
Do I have to file taxes for an LLC that has no income?
Not necessarily if you are a regular LLC, if you want your LLC to be taxed as an entity, you will need to file annual corporate filings. This applies regardless of whether or not the LLC has earned income.