How to Start a Limited Liability Partnership in Massachusetts | 2023 Guide

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Start a Limited Liability Partnership in Massachusetts

A Limited Liability Partnership (LLP) is a popular business structure offering the flexibility of a partnership while providing limited liability protection like starting an LLC in Massachusetts. LLP structure is ideal for attorneys, accountants, and consultants. If you’re considering starting a Limited Liability Partnership in Massachusetts, this comprehensive guide will walk you through the necessary steps, from researching and planning to ongoing compliance and reporting requirements.

Webinarcare Editorial Team will help you gain knowledge through thorough research and market study. Before starting your Massachusetts LLP, all the steps in this article must guide you.

What is a Limited Liability Partnership?

Forming an LLP is like starting an LLC as well. However, there are differences in terms of it. A Limited Liability Partnership (LLP) is a type of business structure that combines elements of partnerships and corporations. It allows multiple individuals, known as partners, to jointly own and manage the business while providing limited liability protection to each partner. This means that each partner’s assets are generally protected from the debts and liabilities of the business, and they are only liable for their investment in the partnership.

LLPs are popular among professional service providers, such as lawyers, accountants, and consultants, as they allow for flexible management structures and profit-sharing arrangements. The partners in an LLP can directly manage the business, unlike forming a Corporation in Massachusetts, where a board of directors typically handles the management.

Each partner’s liability is also limited to the extent of their investment, and they are not personally responsible for the negligence or misconduct of other partners. This is a key difference between an LLP and Massachusetts General Partnership, where partners have unlimited liability for the partnership’s actions and other partners.

It is suggested that you speak with a legal professional before you begin setting up your limited liability partnership. They’ll understand what’s best for you and your company. To safeguard your personal assets from business debts, you can always start an LLC rather than a limited liability partnership.

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Steps in Starting a Limited Liability Partnership in Massachusetts

To form a limited liability partnership in Massachusetts, you must consider following the below guidelines that include research and planning, choosing an LLP name, designating a Resident Agent, filing for Certificate of Organization, drafting a partnership agreement, get an EIN, obtaining necessary licenses and permits, the opening of business bank account and maintain ongoing compliance and reporting requirements. 

Step 1: Research and Planning

Before forming an LLP in Massachusetts, you must familiarize yourself with the state’s laws and regulations governing LLPs. Conduct thorough research to determine if an LLP is the right business structure for your needs, and create a detailed business plan outlining your goals, strategies, and financial projections.

Step 2: Choose an LLP Name

Selecting a unique and appropriate name for your LLP is crucial. First, check the availability of your desired LLP name with the Massachusetts business registry. Ensure that your chosen name follows Massachusetts naming guidelines and requirements, which typically include the use of “Limited Liability Partnership” or “LLP” in the name. You can register and reserve the name with Massachusetts Secretary of State if desired.

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

  • Be distinguishable from other businesses registered in your state
  • Include the words “Limited Liability Partnership,” “LLP,” or a similar abbreviation.
  • Not include words that are restricted by your state
  • Ensure that your chosen name does not infringe on any existing trademarks or intellectual property rights.

However, to check the availability of your desired LLP name, you can also search the Massachusetts Secretary of State business name database and Massachusetts Business Name Search. 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 LLP 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 the Massachusetts Secretary of State.

You can check out how to file a DBA in Massachusetts for clearer understanding.

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Step 3: Designate a Resident Agent

In Massachusetts, you’ll need to designate a Resident Agent for your LLP. The Resident Agent is responsible for receiving the partnership’s important legal and tax documents. Choose a qualified individual or Massachusetts Resident Agent Services to serve as your LLP’s Resident Agent, ensuring that they meet Massachusetts requirements.

However, If you plan to become a Resident Agent of your own LLP, follow the steps below. Also, this applies a guideline in hiring your registered agent.

  • Research the requirements in the state where you want to offer your service. Each state has specific criteria, such as having a physical address and being available during normal business hours.
  • Obtain a physical address in the state(s) if needed.
  • Be familiar with the rules, regulations, and compliance requirements for businesses in your state.
  • Create a business plan outlining your services, pricing, and marketing strategy.
  • Register your business entity, such as an LLP, if required.

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Step 4: File a Certificate of Limited Liability Partnership

To officially form your LLP, you must file a Certificate of Limited Liability Partnership with the Massachusetts Secretary of State. Obtain the necessary forms and provide the required information, such as the LLP name, principal office address, registered agent’s name and address, names and addresses of partners, and management structure. Pay the required filing fee and submit the completed forms to the Massachusetts Secretary of State’s office.

Step 5: Draft a Partnership Agreement

A well-crafted partnership agreement is essential for governing your LLP and protecting the interests of its partners. This document should cover crucial provisions such as roles and responsibilities of partners, profit and loss sharing, decision-making processes, partner admission and withdrawal, and dispute resolution. Consider having the partnership agreement reviewed by an attorney to ensure its completeness and compliance with Massachusetts laws.

A partnership agreement should include the following:

  • Business name
  • Description of the business
  • Contact information of the business and its owners

Ownership of all business partners, decision-making, capital contribution, profits and distribution, death and disability, and withdrawal and addition of partners is one of the key factors to consider when forming or creating a partnership agreement. In this way, all business partners will understand what this is all about and how to proceed if the mentioned scenarios happen. 

Without a partnership agreement, your company will often be subject to the general partnership default laws of Massachusetts. The default laws in Massachusetts might not be appropriate for your requirements.

Step 6: Get an EIN

Your LLP must obtain Massachusetts Employer Identification Number (EIN) from the Internal Revenue Service (IRS). The application of an EIN 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.

After you have your EIN, you can benefit in several ways. It will give your LLP the absolute advantage necessary to operate at full capacity without encountering legal or judicial issues.

Step 7: Obtain the Necessary Licenses and Permits

Depending on your specific industry, you may need to obtain Massachusetts Business Licenses and permits to operate your LLP. Research your business’s licensing and permit requirements and apply for them accordingly.

You can check out the United States Business License & Licensing Fee Resources for more information about the costs in Massachusetts.

Step 8: Open a Business Bank Account and Obtain Insurance

Maintaining clear financial records is crucial for any business, so open a separate bank account for your Massachusetts LLP. Additionally, obtain the necessary Massachusetts Business Insurance, such as general liability insurance, professional liability insurance (if applicable), and workers’ compensation insurance (if you have employees). 

Check the Best Bank for Small Businesses in Massachusetts to open a bank account.

Step 9: Maintain Compliance and Reporting Requirements

Stay informed about and comply with relevant laws and regulations to keep your LLP in good standing. File Annual Reports with the Massachusetts Secretary of State (if required), maintain accurate financial and operational records, and file and pay required taxes at the federal, Massachusetts, and local levels.

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Advantages of Forming a Limited Liability Partnership in Massachusetts

While the specific advantages of forming an LLP in Massachusetts can vary depending on the state’s unique laws and regulations, several public benefits associated with LLPs often apply across jurisdictions. Here are some advantages to consider when forming an LLP in Massachusetts:

  • Limited Liability Protection: One of the main benefits of an LLP is its limited liability protection to its partners. This means that each partner’s assets are generally protected from the debts and liabilities of the business, and they are only liable for their investment in the partnership.
  • Pass-through Taxation: An LLP typically enjoys pass-through taxation, which means that the profits and losses of the business are passed through to the partners, who report them on their personal income tax returns. This avoids the double taxation often associated with corporations.
  • Flexible Management Structure: Unlike corporations requiring a board of directors, LLPs allow for a more flexible management structure. Partners in an LLP can directly manage the business and make decisions without needing a formal board.
  • Profit-sharing Flexibility: The partnership agreement can outline the distribution of profits and losses among partners, allowing for a customized profit-sharing arrangement based on the partners’ preferences and contributions.
  • Easier Formation and Compliance: Forming an LLP is generally less complicated and expensive than forming a corporation. Ongoing compliance requirements may also be less burdensome than other business entities, depending on the specific laws and regulations in Massachusetts.
  • Professional Credibility: Forming an LLP can enhance your business’s professional credibility, as it demonstrates a commitment to a formal business structure and can offer reassurance to clients, customers, and potential investors.

Bear in mind that the advantages of forming an LLP in Massachusetts may vary based on the specific laws and regulations governing LLPs. Researching the applicable laws and consulting with legal or financial advisors is essential to fully understand the benefits and requirements of forming an LLP in Massachusetts.

Cost of Forming an LLP in Massachusetts

The cost of forming an LLP in Massachusetts may vary depending on the required filing fees and any additional services you may need. The filing fee for a Certificate of Limited Liability Partnership typically ranges from $50 to $200, depending on the state.

Can I Form an LLP in Other States?

You can form an LLP (Limited Liability Partnership) in other states. To form an LLP in a different state, you must follow that state’s specific registration requirements and filing procedures. This usually involves filing an application or certificate of registration, paying a registration fee, and obtaining any necessary permits or licenses.

Additionally, you may need to register your LLP as Massachusetts Foreign LLC if you plan to conduct business in multiple states. It is advisable to consult with an attorney or a business consultant familiar with the laws and regulations of the state where you plan to form your LLP.

Can an LLP Need to Have One Owner?

An LLP (Limited Liability Partnership) cannot have just one owner. By definition, an LLP is a partnership, which means it requires at least two partners to be formed. If you want a business structure with limited liability protection and only one owner, you may consider forming a Single-Member LLC in Massachusetts instead. An LLC can have one or more owners, known as members, and offers limited liability protection and pass-through taxation. The requirements for forming an LLC will vary by state, so consult your state’s laws and regulations.

FAQs

What is a limited liability partnership in Massachusetts?
A limited liability partnership (LLP) in Massachusetts is a type of business structure that provides liability protection to its partners while maintaining the tax benefits of a partnership.
How do I form an LLP in Massachusetts?
To form an LLP in Massachusetts, you need to file LLP articles of organization with the Secretary of State’s office, pay the required fee, and meet any other state and local requirements.
What is required to file LLP articles of organization in Massachusetts?
To file LLP articles of organization in Massachusetts, you will need to provide the names and addresses of the partnerships’ partners, a registered agent, and a statement about the nature of the partnership’s business.
What is a registered agent in Massachusetts?
A registered agent in Massachusetts is a person or entity appointed to receive legal notices and other documents on behalf of a business.
Can an out-of-state person be a registered agent in Massachusetts?
Yes, an out-of-state person can be a registered agent in Massachusetts, as long as they have a physical address in the state and can be reached during normal business hours.
Is there a fee to appoint a registered agent in Massachusetts?
There is no fee to appoint a registered agent in Massachusetts, although some registered agent companies may charge a fee for their services.
Do I need a business license to operate an LLP in Massachusetts?
Yes, you will need to obtain any necessary business licenses and permits to operate an LLP in Massachusetts, which may vary depending on the location and nature of your business.
What taxes does an LLP in Massachusetts have to pay?
An LLP in Massachusetts is not a separate tax entity, so it is generally not subject to federal income tax. However, it may be subject to state and local taxes, such as the Massachusetts corporate excise tax.
Does Massachusetts have any annual report requirements for LLPs?
Yes, LLPs in Massachusetts must file an LLP annual report with the Secretary of State’s office each year, which includes financial statements and other information about the partnership’s operations.
What is the deadline for filing an LLP annual report in Massachusetts?
The deadline for filing an LLP annual report in Massachusetts is the 15th day of the third month following the close of the partnership’s fiscal year.
What is the difference between an LLP and an LLC in Massachusetts?
The main difference between an LLP and an LLC in Massachusetts is that an LLP is designed for professional partnerships, such as lawyers or accountants, while an LLC is a more general type of business structure.
Can a non-resident own an LLP in Massachusetts?
Yes, non-residents can own an LLP in Massachusetts, but they may need to file additional paperwork with the Secretary of State’s office and follow other state and federal requirements.
Can a partnership or LLC be converted to an LLP in Massachusetts?
Yes, a partnership or LLC can be converted to an LLP in Massachusetts by filing a partnership amendment form with the Secretary of State’s office.
Can an LLP in Massachusetts have employees?
Yes, an LLP in Massachusetts can have employees, but it will need to comply with state and federal employment laws and regulations.
Can an LLP in Massachusetts raise capital by selling ownership interests?
Yes, an LLP in Massachusetts can raise capital by selling ownership interests to outside investors, but it will need to comply with securities laws and regulations.
Where can I find additional resources on forming an LLP in Massachusetts?
You can find additional resources on forming an LLP in Massachusetts on the Secretary of State’s website or by consulting with an attorney or other business professional.
Are any professional licenses required to operate an LLP in Massachusetts?
Yes, some types of professional partnerships, such as law firms or medical practices, may require that the partners hold certain professional licenses to operate in Massachusetts.
How are profits and losses distributed in an LLP in Massachusetts?
Profits and losses in an LLP in Massachusetts are generally distributed among the partners according to their ownership percentages, which are typically outlined in the partnership agreement.
Can a partner in an LLP in Massachusetts be held personally liable for the partnership’s debts?
In most cases, partners in an LLP in Massachusetts are not personally liable for the partnership’s debts, but there are some exceptions, such as if the partner personally guaranteed a loan or engaged in fraudulent activities within the partnership.
Can an LLP in Massachusetts be sued in court?
Yes, an LLP in Massachusetts can be sued in court, but the partners are generally protected from personal liability for the partnership’s debts and obligations.
What is required to dissolve an LLP in Massachusetts?
To dissolve an LLP in Massachusetts, you will need to file a certificate of cancellation with the Secretary of State’s office, pay any outstanding debts and obligations, and comply with any other state and federal requirements.
Does Massachusetts require LLPs to carry liability insurance?
Massachusetts does not require LLPs to carry liability insurance, but it is recommended to minimize the risk of losses from lawsuits or other legal actions.
Can an LLP in Massachusetts borrow money from a bank?
Yes, an LLP in Massachusetts can borrow money from a bank or other lender, but the partners may need to personally guarantee the loan or meet other lender requirements.
How are partnership agreements structured in Massachusetts?
Partnership agreements in Massachusetts are typically customized to the needs and goals of each partner and can cover topics such as profit distributions, decision-making processes, and partnership dissolutions.
Can a partner transfer their ownership stake in an LLP in Massachusetts?
Yes, a partner can transfer their ownership stake in an LLP in Massachusetts, but it will be subject to any restrictions outlined in the partnership agreement or state and federal regulations.
Can a non-lawyer own part of a law firm LLP in Massachusetts?
In most cases, non-lawyers cannot own part of a law firm LLP in Massachusetts, as it is generally not allowed by state bar associations and ethics rules.
Are there any ongoing reporting requirements for LLPs in Massachusetts?
LLPs in Massachusetts must file annual reports with the Secretary of State’s office and may need to file other reports with state and federal agencies, depending on the nature of their business activities.
What are the benefits of forming an LLP in Massachusetts?
The benefits of forming an LLP in Massachusetts include liability protection for the partners, flexible management structure, and the ability to share profits and losses while maintaining pass-through taxation.
What is a limited liability partnership?
A limited liability partnership is a type of partnership that protects partners from personal liability.
How can I start a limited liability partnership in Massachusetts?
To start a limited liability partnership in Massachusetts, you must file a certificate of limited liability partnership with the Secretary of the Commonwealth.
How much does it cost to form a limited liability partnership in Massachusetts?
The filing fee for a certificate of limited liability partnership in Massachusetts is $500.
Do all partners have limited liability in a limited liability partnership in Massachusetts?
Yes, all partners in a limited liability partnership in Massachusetts have limited liability.
What are the requirements for forming a limited liability partnership in Massachusetts?
To form a limited liability partnership in Massachusetts, you must have at least two partners, file a certificate of limited liability partnership, and maintain a registered agent in the state.
Can one person form a limited liability partnership in Massachusetts?
No, a limited liability partnership in Massachusetts must have at least two partners.
Do I need to have a registered agent in Massachusetts to form an LLP?
Yes, you must maintain a registered agent in Massachusetts to form an LLP.
Can I be my own registered agent for my LLP in Massachusetts?
Yes, you can act as your own registered agent in Massachusetts if you have a physical address in the state where legal documents can be delivered.
How do I choose a name for my LLP in Massachusetts?
To choose a name for your LLP in Massachusetts, you should search the name in the state’s online database to ensure it’s available, and then register it with the Secretary of the Commonwealth.
Is a certificate of good standing required to form an LLP in Massachusetts?
No, a certificate of good standing is not required to form an LLP in Massachusetts.
How long does it take to form an LLP in Massachusetts?
It takes about 5-7 business days to process and approve a certificate of limited liability partnership in Massachusetts.
Do I need to publish a notice of formation in Massachusetts when forming an LLP?
No, Massachusetts does not require the publication of a notice of formation for LLPs.
How is an LLP taxed in Massachusetts?
An LLP is taxed as a partnership in Massachusetts, which means the partners report their share of the LLP’s income on their personal tax returns.
Are there any annual filing requirements for LLPs in Massachusetts?
Yes, LLPs in Massachusetts must file an annual report with the Secretary of the Commonwealth and pay a $500 fee.
Can a foreign LLP do business in Massachusetts?
Yes, a foreign LLP can do business in Massachusetts by obtaining a certificate of registration from the Secretary of the Commonwealth.
What are the minimum capital requirements for an LLP in Massachusetts?
There are no minimum capital requirements for LLPs in Massachusetts.
Does Massachusetts require LLPs to have a written partnership agreement?
No, but it is highly recommended that an LLP have a written partnership agreement.
Can an LLP be converted to a different type of entity in Massachusetts?
Yes, an LLP can be converted to a different type of entity (such as a corporation or LLC) in Massachusetts.
What happens to the partners’ liability when an LLP is converted to a corporation in Massachusetts?
When an LLP is converted to a corporation in Massachusetts, the partners no longer have limited liability and will now be subject to the same personal liability risks as other corporate shareholders.
Are partners in an LLP considered employees under Massachusetts law?
No, partners in an LLP are not employees under Massachusetts law.
Can an LLP in Massachusetts own property and enter into contract agreements?
Yes, an LLP in Massachusetts can own property and enter into contracts agreements on behalf of the partnership.
What happens if a partner in an LLP dies or withdraws from the partnership?
If a partner in an LLP dies or withdraws from the partnership, the partnership may continue and be dissolved according to the terms of the partnership agreement.
Can an LLP in Massachusetts be sued?
Yes, an LLP in Massachusetts can be sued as an entity, but individual partners are not liable for the partnership’s obligations.
Can an LLP be formed to provide legal services in Massachusetts?
No, LLPs are not permitted to provide legal services in Massachusetts.
Is malpractice insurance required for LLPs in Massachusetts?
There is no state requirement for malpractice insurance for LLPs in Massachusetts, but it is recommended that your LLP carry some sort of professional liability insurance.
What kind of restrictions are there on LLP business names in Massachusetts?
LLPs in Massachusetts cannot use a business name that is the same as or deceptively similar to another already registered name or trademark in the state.
Can an LLP issue stock or sell membership interests in Massachusetts?
No, an LLP cannot issue stock or sell membership interests in Massachusetts as it is not a corporation.
Can partners in an LLP be employees of the partnership in Massachusetts?
Yes, partners in an LLP in Massachusetts can also be employees of the partnership.

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Conclusion

Starting an LLP in Massachusetts may seem daunting, but you can successfully establish and run your business with thorough research, planning, and compliance with legal requirements. Feel free to seek professional assistance from legal or financial advisors when needed to ensure your Limited Liability Partnership’s smooth operation and growth in Massachusetts.

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