How to Form an LLC in Massachusetts in 7 Steps
Forming a Massachusetts limited liability company (LLC) involves several steps including naming your LLC, appointing a registered agent, filing articles of organization, getting an EIN for tax purposes and applying for business and tax accounts.
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A limited liability company (LLC) is a popular business structure for small businesses. Its benefits include pass-through taxation and limited liability for business owners. Follow along with our step-by-step guide to create your own Massachusetts LLC.
Steps to Start an LLC in Massachusetts
Name Your LLC
Your business should have a distinctive and memorable name to stand out from the competition. Whether you already have a company name in mind or you are starting from scratch, you will need to make sure to follow the Massachusetts naming rules.
According to the Massachusetts Limited Liability Company Act Mass. Gen. Laws 156C,§3, your LLC name must:
- Be unique: Your name must differ from all other registered Massachusetts business names.
- Make it clear that your business is an LLC: Your Massachusetts LLC name must include language to show that your company is an LLC. You can use “limited liability company,” “limited company,” or an abbreviation. Accepted abbreviations include “LLC”, “L.L.C.”, “LC”, or “L.C.”
Search for Business Name Availability
The Massachusetts Secretary of the Commonwealth website offers a searchable database of business entities. To check if your business name is available, you should start by doing a name search on this website.
Next, you should do an internet screening search to see if any other businesses are using your name. Just type your potential business name into your favorite search engine to see if there are any matches.
Check for Trademark Registration
Further, you should make sure that no other business has a federal trademark on your name. This will help you to avoid getting in trouble for trademark infringement. It’s easy to search for trademarks on the U.S. Patent and Trademark Office (USPTO) trademark database.
Check Domain Name Availability
Finally, it’s a good idea to find out if your domain name is available. Although you might not start a website immediately, it’s wise to reserve your domain name for future use.
Reserve Your Business Name
If you are not yet ready to file your certificate of organization, you can still reserve your business name with the Division of Corporations. Under Mass. Gen. Laws 156C,§4, the reservation is good for 60 days. The fee is $30 to reserve the name.
Get a Resident Agent
Under Massachusetts law, Mass. Gen. Laws 156C,§5, you must have a resident agent for your LLC. Most states refer to this as a registered agent. A resident agent agrees to accept service of process for your company. In other words, if someone sues your company, your resident agent will be the one who receives the legal papers for the lawsuit.
This person or entity must reside in Massachusetts or must be authorized to do business in the state. They must have a physical street address in the state, not just a P.O. Box. If none of your LLC members can act as your resident agent, you could consider a professional registered agent service. With a resident agent service, another company agrees to accept your legal documents in exchange for a modest fee.
File Your Certificate of Organization
A certificate of organization is similar to articles of organization. It should contain basic company information and contact details. Specifically, under Mass. Gen. Laws 156C,§5A, your Massachusetts certificate of organization must provide the following:
- Your LLC’s name
- The address where your LLC keeps its records
- The nature of your business
- Your LLC’s employer identification number (if it has one)
- The end date of your LLC (if any)
- The name and business address of each manager
If anybody else is authorized to execute documents for your LLC, you must also include their information in the certificate of organization.
You can file your LLC certificate of organization through the Secretary of the Commonwealth’s online portal. You will complete a fill-in-the-blank online filing form and submit a fee for your registration. If you prefer to file by mail, you can print and complete the LLC certificate of organization.
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Draft an Operating Agreement
Massachusetts does not require you to have an LLC operating agreement. However, it is a key legal document for an LLC. It forms a contract among your LLC’s members on various issues. In it, you will agree on your LLC members’ rights and responsibilities, ownership percentages, allocation of profits and losses, rules on how to release or add members, and anything else that’s important to your business.
Even single-member LLCs should create operating agreements. If you ever want to open a business bank account or apply for a business loan, your financial institution will likely want to see your operating agreement. Other professionals like lawyers and accountants may also ask to see your operating agreement before providing you with services.
Get an EIN
You will probably need to get a federal employer identification number (EIN) unless you are a single-member LLC with no employees. An EIN is a unique number that the Internal Revenue Service (IRS) uses to identify businesses for tax purposes. In this way, an EIN is like a Social Security number. You can apply for an EIN quickly and easily through the IRS website.
Set Up Business and Tax Accounts
You must register your new business for state and federal tax accounts, especially if you have employees.
You can learn about your state business tax requirements through the Massachusetts Department of Revenue. You may need to register to collect sales taxes if you sell goods.
Check for Additional Federal or State Requirements
Check state and federal websites to determine if there are any specific rules for your business. For example, some LLCs may have to file a Beneficial Ownership Information Report (BOIR) with FinCEN. Under current law, LLCs created in the United States are “domestic reporting companies” and are exempt from the BOIR requirement.
However, laws may change, so stay up to date with state and federal requirements.
Business and Tax Requirements in Massachusetts
When you set up your business in Massachusetts you must pay taxes and license fees. The nature of your business and if you have employees, determines your tax and business license obligations.
State Business Tax
Register your new business with the Massachusetts Department of Revenue to determine your tax liability. If you haven’t elected your LLC as a corporation for tax purposes, your LLC is a pass-through entity. Therefore, any profits or losses pass to the members’ individual tax returns. The Massachusetts state income tax is 5%.
If you elected your LLC as a corporation for tax purposes, the LLC is subject to a corporate excise tax.
State Employer Tax
You must pay employment taxes and state fees if your new business hires employees. The state has a guide to setting up an account to collect withholding taxes in Massachusetts. You may also need to register a new employer account and pay unemployment insurance to the Massachusetts Department of Unemployment Assistance.
Sales and Use Taxes
The sales tax in Massachusetts is 6.25% on taxable sales or rentals of tangible personal property or telecommunications services. Your customer pays the sales tax, and you, as the seller, collect and pay the tax to Massachusetts. Check if Massachusetts considers your LLC a vendor and if is required to charge and remit a Massachusetts sales and use tax.
Business Licenses and Permits
Your LLC’s licensing requirements will vary depending on the nature of your business. The Small Business Administration’s website can help you to find out about business licenses and permits. Check your local government agencies in your city and town to see what regulations they have.
Registration in Other States
If you want your LLC to operate in another state, you must register as a foreign LLC. Once accepted as a foreign LLC you file annual franchise tax reports with the Secretary of State’s office in that state. Also, determine if you or your LLC must pay state taxes in that jurisdiction.
Annual Requirements in Massachusetts
LLC owners must file yearly reports with the Division of Corporations. You can file the annual report online, with the $500 filing fee. The information you need to provide in your annual report is similar to your original certificate of organization. However, document any address changes or changes to the manager-members. It should be quick and easy to submit this annual report.
FAQs About Massachusetts LLC Formation
The filing fee for a limited liability company certificate of organization is $500.
- Single-member LLC. A single-member LLC (SMLLC) is a limited liability company with only one member. Forming an SMLLC in Massachusetts is similar to a multi-member LLC, using the same certificate of organization form and paying the $500 filing fee.
- Multi-member LLC. Massachusetts also allows multi-member LLCs where multiple people or "members" own the LLC. The members nominate someone or a group of people as "manager-members" to operate the LLC.
- Professional LLC. Certain businesses in Massachusetts require professional licenses, for example, dentistry, medicine, law, and engineering. If you are forming a professional services LLC (PLLC), you file the same way you would as a Massachusetts LLC, but you must also file a Certificate by Regulatory Board.
A certificate of organization is commonly called articles of organization or certificate of formation in other states. A certificate of organization is proof that Massachusetts accepted your LLC.
You may need to show your certificate of organization to your bank, lender, or state licensing board. You can get a copy of the LLC registration from the Commonwealth of Massachusetts for a $12 fee. This certificate only proves your LLC is a Massachusetts LLC. It is different from a certificate of good standing.
A certificate of good standing shows that your LLC is authorized to operate in Massachusetts and complies with state law. You may need one in the following situations:
- Opening a business bank account
- Setting up a merchant account for credit or debit cards
- Applying for a loan or credit
- Registering as a foreign LLC to do business in another state
- Selling your business
You can order your Massachusetts certificate of good standing online. There is a $25 fee to request a certificate of good standing in Massachusetts.
There are only a few requirements to form a Massachusetts LLC:
- LLC business name
- Resident agent and resident agent’s office address
- Completed certificate of organization
- Payment of the $500 application fee
You do not need an operating agreement for an LLC in Massachusetts, but it is good to have one for other business reasons.
Personal liability protection and tax advantages are the main benefits of the LLC structure.
According to Massachusetts law, LLC status protects members’ personal assets from business liability. In other words, you can act as a member or manager of your LLC without putting your personal bank accounts, home, cars, or other assets at risk of your company’s liabilities. Limited liability is a significant benefit to the LLC structure.
A general partnership or a sole proprietorship does not give you liability protection. With those business structures, you can be personally liable for your company’s debts, lawsuits, and other obligations. To avoid this, you should create a business structure that gives you liability protection, like an LLC.
Entrepreneurs also recognize another benefit of an LLC, which is pass-through taxation. With pass-through taxation, your LLC can pay taxes on its profits through the members’ personal income tax returns. Pass-through taxation is preferable to a corporate tax status because corporations are subject to double taxation. Double taxation occurs when the company pays taxes on its profits, and the shareholders also pay taxes on dividends.
Finally, LLCs have fewer reporting and record-keeping requirements than corporations.
There are a few requirements to keep your LLC in good standing. First, you need to follow good record-keeping procedures. According to Massachusetts law, you must have the following on file:
- A current list of your members and managers
- Tax returns
- Your LLC operating agreement (if you have one)
- Financial records and statements
Second, you need to file an annual report. This report is easy to complete on the Secretary of the Commonwealth’s website. Or, if you prefer, you can file your annual report by mail. Your yearly report will require you to submit basic company information and a fee. This report is due on or before the anniversary of the date you initially filed your certificate of organization. It’s a good idea to note this date so you can file on time every year.
No, a certificate of organization is a document you file with the state to establish your Massachusetts LLC. Your operating agreement is an internal company document. You do not submit it to the state.
An operating agreement is a written contract among your LLC members. It establishes your company’s rules on issues such as management style, rights and duties of members, profit allocation, and more. You may need an operating agreement to open a business account or get a bank loan. Banks, accountants, lawyers, and other professionals may ask to see an operating agreement before working with your LLC. You should keep a copy of your operating agreement on file with your other business records.
Yes, you can operate under a different business name from your LLC name. To do this, you must file a DBA (a "doing business as") registration with the city clerk where you do business.
Businesses commonly need a DBA when they want to branch into a new line of business or sell a new product under a different business name.
The state of Massachusetts does not require a general business license for your LLC. However, depending on the type of business you operate, you may need to apply for a local business license and permits. Contact your local city or county to determine what licenses and permits you need for your LLC. You may also want to research what other things you need for your business, such as liability insurance.
Yes. You can submit a certificate of organization online with the Commonwealth of Massachusetts Division of Corporations online portal. Or you can use an online business formation service company to file the paperwork for you.
You can submit your certificate of organization in person or by mail. The address is:
Secretary of the Commonwealth
Corporations Division
McCormack Building
One Ashburton Place, 17th floor
Boston, MA 02108
Yes. A resident agent handles contact with the Division of Corporations. Using a registered agent service company has many benefits, from initial drafting and filing your certificate of organization to maintaining your LLC’s good standing. Registered agent service companies:
- Accept service of process at your agent’s address, keeping lawsuits away from your place of business
- Provide an address for your business so you can maintain privacy
- Forward mail and notify you of annual tax and reporting deadlines
- Help with LLC paperwork and order documents you need, such as certified copies of your certificate of organization or certificate of good standing
- Are available during regular business hours, which may not be yours.
The fees paid to a registered agent service company may be less than the penalties assessed if your Massachusetts LLC misses a tax deadline. Missing deadlines also jeopardizes your LLC status, which is vital to maintain liability protection.
A domestic LLC in Massachusetts is an LLC formed in Massachusetts. When you file a certificate of organization for your LLC in Massachusetts, and the Division of Corporation accepts it, you have a domestic LLC. If you want to do business in another state, you register as a foreign LLC in that new state.
If you want to do business in another state, you must register as a foreign LLC in that state. Contact the Secretary of State’s office in that state for the application process. You may need a certificate of good standing for your LLC issued by the Division of Corporations. You should also check to see if your Massachusetts LLC name can be used in that state or if you need to file for a fictitious name or DBA name.
If you have formed an LLC in another state but want to do business in Massachusetts, you register as a foreign LLC in Massachusetts. The procedure is similar to forming an LLC. You need a Massachusetts resident agent and must register the foreign LLC with the Division of Corporations. The fee is $500. Attach a certificate of good standing in the state where the LLC was formed, along with the application.
Contact the Division of Corporations if you want to close your business and dissolve your LLC. You file your articles of dissolution by completing a certificate of cancellation and paying a $100 fee. You will also want to contact the Massachusetts Division of Revenue to close your business registration accounts.
No. Only a few states allow anonymous LLC formation, meaning the Secretary of State does not reveal who the LLC owners are. Only Delaware, Nevada, New Mexico, and Wyoming offer true anonymous LLCs. Massachusetts does not.
Disclaimer: The information presented here does not constitute legal advice or representation. It is general and educational in nature, may not reflect all recent legal developments, and may not apply to your unique facts and circumstances. Consider consulting with a qualified business attorney if you have legal questions.
How to Start an LLC in Other U.S. States
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