Starting a Corporation in Massachusetts | What You Need to Know

In Massachusetts, starting a corporation can benefit entrepreneurs looking to establish a separate legal entity for their business. Incorporating your business provides liability protection for its owners and offers potential tax benefits and a professional image. This comprehensive guide will walk you through Starting a Corporation in Massachusetts, from choosing a corporate name to fulfilling ongoing compliance requirements. Some people consider starting a corporation since it has advantages and benefits rather than Starting an LLC in Massachusetts.

Webinarcare Editorial Team will help you gain knowledge in starting a corporation with thorough research and market study. It would be best to cross-check all the factors in this article before forming a corporation.

What is a Corporation in Massachusetts?

A corporation in Massachusetts is a business organization recognized as a separate legal entity from its owners, also known as shareholders. When a corporation is formed, shareholders invest capital by purchasing shares of stock and, in return, become partial company owners. The corporation is managed by a board of directors elected by the shareholders to oversee the company’s operations and make important decisions. Corporations in Massachusetts are required to have at least One directors. One of the main advantages of a corporation in Massachusetts is that it provides limited liability protection to its shareholders, meaning their assets are not at risk if the corporation incurs debt or is legally sued.

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Common Types of Corporations

Before you start with a corporation, you should know what type of corporation you will form. There are several different forms of corporations you can take into consideration, depending on your corporation’s objectives and ownership structure.

C-Corporation

C-Corporation is the most known type of incorporation. They have almost all corporate distinguishing characteristics. Profits are distributed to corporate owners who are taxed at an individual level. The corporation is taxed similarly to a business unit.

S-Corporation

S-Corporation in Massachusetts is set up similarly to a C-corporation but has different tax implications and owner limits. An S-Corporation has no more than 100 stockholders and is not taxed separately. These business units must also file paperwork with the Internal Revenue Service (IRS) to obtain their status.

Nonprofit Corporation

Religious, educational, and charity institutions frequently use nonprofit businesses to run their operations without making a profit. Thus, a nonprofit corporation is exempt from paying taxes. The nonprofit organization’s gifts, contributions, or cash are reinvested in the company to fund its growth, future endeavors, or operations.

It is recommended to Start a Corporation in Massachusetts if you would like to provide limited liability protection to your shareholders rather than Massachusetts LLC. However, you may want to consult to LegalZoom’s Business Attorney before starting a business.

– WEBINARCARE EDITORIAL TEAM

How to Start a Corporation in Massachusetts

To start a corporation in Massachusetts, you must follow the below steps that, include choosing a corporate name, hiring a Resident Agent, appointing directors, filing for Articles of Incorporation, creating corporate bylaws, holding the initial board of directors, issuing stock, obtaining required licenses and permits, registering with state tax agencies, and annual reporting and ongoing compliance. All these steps are basic ones. It can be changed depending on the type of corporation you form and the nature of your business.

Step 1: Choosing a Corporate Name

The first step in starting a corporation is choosing an available name that complies with Massachusetts naming rules. Most states require that the name of a corporation be distinguishable from other registered business names and include a corporate designator such as “Corporation,” “Incorporated,” “Company,” or an abbreviation thereof.

Here are some guidelines you must follow while naming your corporation in Massachusetts-

• Your business name must contain entity identifiers, such as “Incorporated,” “Limited,” “Corporation,” or “Company,” or an abbreviation, such as “Inc.,” “Co.,” or “Ltd.”
• Exclude any words in your business name, such as “Trust,” “Bank,” “Credit Union,” or “Trustee,” or words related to a government agency, such as “FBI,” “State Department,” or “Treasury.”

To check the availability of your desired corporate name, you can search the Massachusetts Secretary of State‘s business name database and Business Name Search in Massachusetts. If the name is available, you may choose to reserve it for a specific period of 60 days by filing a name reservation application and paying the online name reservation fee of Not available and mail name reservation fee of $30. If your corporation plans to operate under a name other than its legal name, you may also need to register a fictitious or “doing business as” (DBA) name.

The DBA filing can be done by two methods, by mail and in person., which costs around $65 Filing fee and $35 Additional fee if a non-Massachusetts resident. In addition, the DBA’s validity in Massachusetts is four years, which you can file in Massachusetts Secretary of State.

You can check out How to File a DBA in Massachusetts for clearer understanding.

Step 2: Hire a Resident Agent

Hiring a Resident Agent is essential in starting a corporation. Resident Agent is a person or company responsible for receiving important legal documents, tax notices, and other correspondence on behalf of your corporation. They ensure that your corporation remains compliant with state regulations and requirements. There are Massachusetts Resident Agent Services to check in forming Massachusetts Corporation. We reviewed some of the best-registered agent services and provided features as an add-on with their packages.

Step 3: Appointing Directors

Corporations in Massachusetts are required to have at least One directors, though some states may require more. Directors are responsible for overseeing the corporation’s management and making major decisions on behalf of the company. In Massachusetts, directors must be at least 18 years old and do not need to be state residents.

When appointing directors, it is essential to consider individuals who are knowledgeable, trustworthy, and capable of making sound business decisions. Maintaining a record of appointed directors, including their names, addresses, and terms of service, is also a good idea.

Step 4: Preparing and Filing Articles of Incorporation

After you appoint the initial board of directors in your Massachusetts corporation, the next step is to write and file a Articles of Incorporation. In writing, the Massachusetts Articles of Incorporation, the corporation name, principal place of business, the purpose of business, Resident Agent contact information, and the names and addresses of incorporators and initial board members, should be written.

To officially form your Massachusetts corporation, you must prepare and file Articles of Incorporation with the Massachusetts Secretary of State. The Articles of Incorporation is a legal document that outlines essential information about your corporation, such as its name, address, purpose, and details about its stock.

The specific requirements for Articles of Incorporation vary by state, but generally, the document must include the following:

• The corporate name
• The purpose of the corporation
• The name and address of the registered agent
• The names and addresses of the initial directors
• The number of authorized shares and their par value
• The name and address of the incorporator(s)

Once the Articles of Incorporation are complete, please submit them to the Massachusetts Secretary of State’s office, along with the required filing fee. Fees vary by state, but in Massachusetts, the Articles of Incorporation filing fee costs around $275 for filing online, in-person, or by mail. It is crucial to provide accurate and complete information on this document, as errors or omissions may result in delays or rejection of your filing.

• Online Filing: Get the online form from Secretary of State, fill it up, and submit. Don’t refresh the page during the process. It will erase everything.
• Offline filing: Send the form by mail or drop it off in person to William Francis Galvin, Secretary of the Commonwealth, One Ashburton Place, Room 1717, Boston, MA 02108.

Step 5: Creating Corporate Bylaws

Now you are done filing Articles of Incorporation in Massachusetts, the next step is to draft corporate bylaws. While not always required by law, creating corporate bylaws is essential in establishing Massachusetts corporation. Bylaws are the internal rules and regulations that govern the corporation’s operations and management. They outline the rights and responsibilities of directors, officers, and shareholders and provide guidelines for holding meetings and making decisions.

Key provisions to include in your corporate bylaws may include:

• The corporation’s purpose and principal place of business
• The roles and responsibilities of directors, officers, and shareholders
• The process for appointing and removing directors and officers
• The procedures for holding annual and special meetings
• The methods for amending the bylaws and Articles of Incorporation
• The procedures for issuing stock and maintaining shareholder records

Once the bylaws are drafted, they must be adopted by the corporation’s board of directors. Keeping a copy of the bylaws with your corporate records and updating them to reflect changes in the corporation or applicable laws is essential.

Step 6: Holding the Initial Board of Directors Meeting

The initial board of directors meeting is a crucial milestone for your Massachusetts corporation. During this meeting, the directors will adopt the corporate bylaws, elect officers, and make other key decisions to set the foundation for the corporation’s operations.

The agenda for the initial board meeting may include the following:

• Adopting the corporate bylaws
• Ratifying any pre-incorporation actions taken by the incorporator(s)
• Electing corporate officers (e.g., president, vice president, secretary, treasurer)
• Designating a corporate bank account
• Authorizing the issuance of stock
• Approving necessary licenses, permits, and tax registrations

It is essential to keep detailed minutes of the initial board meeting, documenting the decisions made and actions taken. These minutes should be stored with your corporate records.

Step 7: Issuing Stock

Corporations in Massachusetts are required to issue stock to their owners, also known as shareholders. When preparing to issue stock, you must determine the number of authorized shares and their par value, as outlined in your Articles of Incorporation. You may choose to issue different classes of stock, each with its rights and privileges, such as voting rights and dividend preferences.

The process for issuing stock typically involves the board of directors approving a stock issuance resolution, determining the price per share, and recording the issuance in the corporation’s stock ledger. Maintaining accurate and up-to-date records of all stock transactions, including transfers and cancellations, is crucial to ensure proper ownership tracking and compliance with securities laws.

Step 8: Obtaining Required Licenses and Permits

Depending on the nature of your corporation’s activities and location, you may need to obtain various licenses and permits to operate legally. These may include federal, state, and local requirements, such as:

• A Federal Employer Identification Number (EIN) for tax reporting and employee withholding purposes.
• State sales and use tax registration, if your corporation sells taxable goods or services
• Professional or occupational licenses for specific industries (e.g., healthcare, construction, food service)
• Massachusetts Business Licenses, zoning permits, and health department approvals

Researching and obtaining all required Massachusetts licenses and permits before commencing operations and maintaining compliance with any ongoing renewal or reporting requirements is essential.

Step 10: Registering with State Tax Agencies

In addition to obtaining licenses and permits, your Massachusetts corporation may also need to register with various tax agencies. This may include registering for sales and use tax, obtaining an Employer Identification Number (EIN) in Massachusetts for payroll tax purposes, and filing state income tax and franchise tax returns.

An EIN will serve as the tax ID for your Massachusetts corporation. EIN can be obtained from the Internal Revenue Service (IRS). It is a 9-digit number similar to Social Security Number. EIN, however, is distinct from SSN. It is only used for business-related activities, particularly for submitting general taxes. The form must be completed and uploaded to the IRS website.

The application of an EIN in Massachusetts can be through the following:

• Apply Online- The online EIN application is the preferred method for customers to apply for and obtain an EIN.
• Apply by Fax- Taxpayers can fax the completed Form SS-4 application to the appropriate fax number), after ensuring that Form SS-4 contains all of the required information.
• Apply by Mail- The EIN application Form SS-4 can be filed via mail. The processing time frame to receive the mail is four weeks.
• Apply by Telephone-International Applicants – International applicants may call 267-941-1099 (not a toll-free number) from 6 a.m. to 11 p.m. (Eastern Time) Monday through Friday to obtain their EIN.

Each state has tax requirements, so consult a tax professional or Massachusetts Department of Revenue for guidance on your specific obligations.

Step 11: Annual Reporting and Ongoing Compliance

Once your Massachusetts corporation is up and running, you must fulfill ongoing reporting and compliance requirements to maintain good standing. This may include filing Annual Report with the Massachusetts Secretary of State, updating your corporate records to reflect changes in directors or officers, and staying current on any required licenses or permits.

In addition, it is essential to stay informed about changes in corporate laws and regulations that may impact your business and to seek professional advice when needed.

Paying Your Taxes in Massachusetts

Even if you have established your corporation in Massachusetts, pay your taxes and keep everything up to date so you won’t pay any penalty. Unlike an LLC, there is a corporate tax that every corporation in Massachusetts has to pay. On the other hand, they must pay income taxes based on their business income. Some other types of taxes in Massachusetts are sales tax, franchise tax (not applicable to all the states), and other state taxes.

Cost of Forming a Corporation in Massachusetts

In forming a corporation in Massachusetts, a filing and Annual fee must be paid. Without it, your corporation won’t operate. A corporation’s initial filing fee may vary from state to state. However, in Massachusetts, it costs $275 for filing online, in-person, or by mail. The corporation in Massachusetts also has to file an Annual Report (though it might not be mandatory, it is recommended to file one). Ensure you comply with all the necessary fees and costs so your corporation will run successfully and smoothly.

FAQs

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How to Save Money While Forming Your Massachusetts Corporation

First and foremost, it is important to have a clear understanding of the legal requirements and procedures for incorporating in Massachusetts. By educating yourself on the process, you can avoid unnecessary legal fees and streamline the formation of your corporation. Utilize online resources and guides to help you through the process, and consider seeking assistance only when absolutely necessary.

When it comes to deciding on a business structure, carefully consider the options available to you. While a C corporation may offer certain tax benefits, it also comes with increased complexity and expenses. If your business is small or just starting out, you may want to consider forming an LLC instead. LLCs are generally more cost-effective to establish and maintain, making them a viable option for those looking to save money during the formation process.

Another way to save money while forming your Massachusetts corporation is to avoid unnecessary add-ons and features. While it may be tempting to opt for every premium service available, such as expedited processing or personalized support, these extras can quickly drive up your expenses. Stick to the basics and only pay for services that are essential to the success of your business.

Consider using online incorporation services to help you form your Massachusetts corporation. These services are often more affordable than hiring a lawyer or accountant to handle the paperwork for you. While online services may not offer the same level of personalized assistance, they can provide a cost-effective and efficient way to get your corporation up and running.

Additionally, take advantage of any available discounts or promotions when incorporating your business. Many online services offer discounts for new customers or promotional codes to help you save money on the formation process. Be sure to do your research and shop around to find the best deals before committing to any particular service.

Finally, consider partnering with other entrepreneurs or businesses to share the costs of forming your Massachusetts corporation. By working together with others who are in a similar position, you can split expenses such as legal fees, filing costs, and administrative expenses. This collaborative approach can help you save money and build a strong network of support as you navigate the complexities of forming a corporation.

In conclusion, forming a Massachusetts corporation doesn’t have to break the bank. By educating yourself on the process, carefully selecting a business structure, avoiding unnecessary add-ons, using online services, seeking discounts, and collaborating with others, you can save money while laying the foundation for a successful business. With careful planning and resourcefulness, you can ensure that your corporation is not only cost-effective to establish but also poised for long-term growth and success.

Conclusion

Starting a corporation in Massachusetts involves several critical steps, from choosing a corporate name to fulfilling ongoing compliance requirements. Following the steps outlined in this guide and seeking professional advice when needed, you can successfully establish your Massachusetts corporation and enjoy the benefits of limited liability, potential tax savings, and a professional business image.