How to Start an LLC in Massachusetts | 2024 Guide

Start a LLC in Massachusetts

How to Start an LLC in Massachusetts: If you’re looking to launch a business in Massachusetts, starting a Limited Liability Company (LLC) may be the right choice for you. An LLC provides personal liability protection for its owners while giving them flexibility in managing and taxing the business. This guide provides a step-by-step process for starting an LLC in Massachusetts. From choosing a unique name to registering with the state and obtaining necessary licenses and permits, Webinarcare Editorial Team will walk you through setting up your new business entity. So grab a pen and paper, and let’s get started!

What is a Limited Liability Company?

A Limited Liability Company (LLC) is a type of business entity that combines a corporation’s limited liability protection with a partnership’s tax benefits. LLCs are popular among small business owners for their flexibility and ease of formation. In Massachusetts, an LLC must have a unique name and file Certificate of Organization with the Secretary of State. Depending on their business needs, LLCs may also elect to be taxed as a corporation or an S-corp. Owners of an LLC, called members, are not personally liable for the company’s debts and losses, and the company’s profits and losses are passed through to the member’s personal tax returns. This makes an LLC an attractive option for those seeking personal liability protection and simplified taxation.

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Steps on How to Start an LLC in Massachusetts

To form an LLC for your business, you must follow the guidelines that include naming your LLC, hiring a Resident Agent, filing your Certificate of Organization, creating your LLC operating agreement, getting an employer identification number, opening a bank account and getting business licenses and permits.

Step 1: Name your LLC in Massachusetts

After you have decided on the idea to form an LLC in Massachusetts, deciding the name for your LLC is significant. There is a complete guide on LLC name guidelines for you to have a proper LLC business name. Here are some regulations you must follow while naming your LLC,

  • The name should not be confused with a government entity.
  • The name should be unique.
  • The name should be available to use.
  • Any other business does not use the name.
  • The new name must include “LLC” if it is a limited liability company.

In Massachusetts, if you do not wish to file your LLC right away but want to hold the name that you have decided on, then you can reserve your LLC name for 60 days. You must file a name reservation application in Massachusetts Secretary of State to keep the name.

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You can register your business under a different legal name if your preferred name isn’t available. Once you have chosen a name, you can submit an application for filing Massachusetts DBA (doing business as). In this manner, you can choose any name you desire for your business. A DBA allows a company to operate under the name of the person or entity who owns it. If you have decided to file for a DBA, you can file it in two methods, by mail and in person. However, before filing a DBA, you should know that you need to renew your DBA from up to four years, which costs around $65 Filing fee and $35 Additional fee if a non-Massachusetts resident.

Step 2: Hire a Resident Agent in Massachusetts

Hiring a Resident Agent in Massachusetts is a must since a Resident Agent is a person or business entity responsible for receiving important legal documents on behalf of your Massachusetts LLC. Most states require you to designate a Resident Agent when forming your LLC.

The qualifications of a Resident Agent vary depending on the jurisdiction. Still, generally, a Resident Agent must meet the following criteria:

  • Availability: A Resident Agent must be available during regular business hours to receive and process legal documents and official correspondence.
  • Physical Address: A Resident Agent must have a physical street address within the state where the LLC is registered. This address, known as the registered office, cannot be a P.O. Box.
  • Residency or Authorization: For individuals serving as Resident Agent, they must be residents of the Massachusetts where the LLC was formed. A business entity acting as a Resident Agent must be authorized to do business within that state.
  • Age: A Resident Agent must be at least 18 years old.
  • Good standing: A Resident Agent should not have any legal or financial issues that impede their ability to fulfill their duties.

Choosing a reliable and responsible Resident Agent is essential, as failure to receive and respond to legal documents can seriously affect your business. Some businesses use professional Resident Agent services to ensure compliance and proper handling of legal matters.

However, if you would like to have an easier process in filing the necessary documents, you can get Massachusetts Resident Agent Services.

Step 3: File your Certificate of Organization in Massachusetts

The Certificate of Organization for an LLC is an important document to start your limited liability company (LLC). Massachusetts Certificate of Organization is a simple document that contains the business name and address as well as the name and address of the person who received lawsuits on behalf of the organization.

Here are the guidelines and specific requirements in filing your Certificate of Organization in Massachusetts.

1. Obtain the Necessary Forms: Visit the Massachusetts’s business filing office website, usually the Massachusetts Secretary of State’s office, to download the required forms or file online.

2. Provide the Required Information: Fill in the necessary details in the form, which typically include:

  • The name of your LLC (must include an LLC designator such as “LLC,” “L.L.C.,” or “Limited Liability Company”)
  • The purpose of your LLC (a general statement or specific business activities)
  • The address of your LLC’s principal place of business
  • The name and address of your registered agent (the person or business entity responsible for receiving legal documents on behalf of your LLC)
  • The management structure of your LLC (member-managed or manager-managed)
  • The duration of your LLC, if not perpetual
  • The names and addresses of the LLC’s organizers or members

3. Sign and File the Form: Submit the completed form in the {state} state office, either by mail, in person, or online. You may mail it at William Francis Galvin, Secretary of the Commonwealth, One Ashburton Place, Room 1717, Boston, MA 02108.

4. Pay the Filing Fee: When you submit your Certificate of Organization, you’ll need to pay a filing fee of $500. Make sure to check and include the correct payment with your submission.

5. Receive Confirmation: After your Certificate of Organization have been filed and processed, you’ll receive a confirmation from Massachusetts, typically a stamped and approved copy of the document or a Certificate of Organization.

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Once you have successfully filed your Certificate of Organization and it has been approved, your Massachusetts LLC is officially formed. However, remember to complete additional steps, such as creating an Operating Agreement, obtaining an EIN, and registering for any required licenses and permits.

Step 4: Create Your Massachusetts Operating Agreement

An operating agreement is a document that contains all of your company’s organizational details. Drafting an operating agreement in most states is not required. Yet, having one as an internal document is strongly advised. An operating agreement includes information like-

  • About Business
  • Members and management
  • Capital contribution
  • Profit Distribution
  • Change of membership
  • Dissolution

To understand how an operating agreement works, you should check out how to create an operating agreement in Massachusetts.

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Step 5: Get an EIN

After documenting the operating agreement, you should get or request an Employer Identification Number (EIN) in Massachusetts. An EIN will serve as the tax ID for your professional 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 the 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.

In obtaining an EIN for your LLC, you should be aware to ensure that your LLC is eligible for an EIN. You need an EIN if you have employees, operate as a corporation or partnership, or meet other specific IRS criteria. Before applying, gather the required information, including your LLC’s name, mailing address, and the responsible party’s Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN). Also, you can apply for an EIN through various methods, including online, by fax, mail, or telephone (for international applicants).

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Step 6: Open a Bank Account and Prepare for Taxes

After you have filed for and received your Employer Identification Number, you should open a bank account because you will use this account for yourself, your clients, and your employees.

Your business dealings in Massachusetts might be simpler with a US business bank account because it boosts your company’s legitimacy and liquidity. Most banks demand an EIN to create a business bank account for firms other than sole proprietorships. Also, having an EIN makes tax preparation easier. You can anticipate paying employment and corporate taxes with Massachusetts LLC.

Opening a bank account is necessary for Massachusetts business. If you are still wondering where to open an account in your Massachusetts, you should check the Best Bank for Small Business in Massachusetts.

Step 7: Get a Business and License Permit

You must get a business license in Massachusetts before establishing your LLC. A business license is a legal document granted by a state government body that permits you to conduct business within the area under its jurisdiction. The price of business licenses and permits in Massachusetts ranges from $50 – $300. If there is a requirement for a specific license or city-based permit, you must inquire with the Massachusetts Secretary of State.

Cost to Form an LLC in Massachusetts

Even if you have a business name and structure in mind, you should consider whether you can afford the costs of forming an LLC in Massachusetts. Certificate of Organization costs around $500. The initial filing fee is $500, and the annual fee is $500.

If you forget to pay the annual fee for your Massachusetts LLC, you will have a penalty of $25. However, you can check the Massachusetts LLC Cost for additional information.

Advantages of Creating Massachusetts LLC

Even though some people decide on what to do with their businesses, some choose to put it in their own individual name, while others still choose to set it up via LLC in Massachusetts. Important benefits will help you set up an LLC in Massachusetts.

  • Pass-Through Taxation: The pass-through structure will make the company not pay twice the tax. Most start-ups and entrepreneurs in Massachusetts apply for an LLC because of this structure. Pass-through taxation refers to how income and losses from an LLC (Limited Liability Company) are passed through to its members (owners) for tax purposes rather than being taxed at the business entity level. This means the LLC does not pay federal income taxes; the members’ profits and losses are allocated based on their interests. Each member then reports their share of the LLC’s income or losses on their personal tax returns and pays taxes at their individual tax rates.
  • Ownership Flexibility: If you need sole and primary control over your company’s operations, a sole proprietorship will allow you to do so. If you apply for an LLC in Massachusetts with flexibility, you will have default rules set by law and need an operating agreement.
  • Personal Liability Protection: Personal Liability Protection protects your business from damage, debts, or legal obligations. In personal liability protection, the company’s profits and earnings will stay as is even if your company is about to be sued. This protection of having an LLC in Massachusetts can also be extended to the company’s properties and assets. Many start-up companies will benefit from this since most are starting to build a company. Even if liability exists, the LLC in Massachusetts will protect its assets.

FAQs

What is an LLC in Massachusetts?
An LLC in Massachusetts is a Limited Liability Company, a type of legal entity that blends the pass-through taxation of a partnership or sole proprietorship with the liability protection of a corporation.
What are the benefits of starting an LLC in Massachusetts?
Some benefits of starting an LLC in Massachusetts include personal liability protection, flexibility in management, pass-through taxation, reduced paperwork and formalities, and the ability to raise capital.
How do I start an LLC in Massachusetts?
To start an LLC in Massachusetts, you need to file Articles of Organization with the Secretary of the Commonwealth and pay a filing fee of $500.
Can I form an LLC in Massachusetts without an attorney?
Yes, you can, but it’s recommended to consult with an attorney to make sure everything is done correctly and avoid any legal issues.
What are the requirements for forming an LLC in Massachusetts?
The requirements for forming an LLC in Massachusetts are completing the Articles of Organization form, choosing a business name that is unique and not already in use in the state, designating a registered agent, and paying the filing fee.
Do I need to have a registered agent in Massachusetts for my LLC?
Yes, an LLC in Massachusetts must have a registered agent that maintains a physical address within the state and is available during normal business hours.
Can I be my LLC’s registered agent in Massachusetts?
Yes, you can, as long as you are a resident of Massachusetts or a designated agent for service of process that has a physical address in the state.
How long does it take to form an LLC in Massachusetts?
It usually takes five to ten business days for the Massachusetts Secretary of State to process your LLC filing after receiving it.
How much does it cost to form an LLC in Massachusetts?
It costs $500 to file Articles of Organization in Massachusetts.
How old do I have to be to start an LLC in Massachusetts?
There is no specific age limit in Massachusetts for forming an LLC, but you must be legally able to sign contracts.
Can I change my LLC’s name in Massachusetts?
Yes, you can. You need to file a Certificate of Amendment of Articles of Organization and pay the filing fee of $100 to make the necessary changes.
Do I have to renew my LLC in Massachusetts?
Yes, an LLC in Massachusetts must file an Annual Report and pay the fee of $500 by the anniversary of your LLC’s formation or authorization to do business in the state.
What is the Massachusetts Annual Report fee for an LLC?
The Massachusetts Annual Report fee for an LLC is $500.
Can I operate my LLC under another name in Massachusetts?
Yes, you can, but it requires filing a “Doing Business As” (DBA) name with the state and abiding by certain requirements.
What type of taxes does my LLC have to pay in Massachusetts?
An LLC in Massachusetts is subject to a corporation tax and a sales tax, among other taxes.
How do I obtain an EIN for my LLC in Massachusetts?
You can obtain an EIN (Employer Identification Number) for your LLC in Massachusetts through the IRS website.
Can I convert my Massachusetts LLC to a different business structure?
Yes, you can convert your Massachusetts LLC to a different business structure by filing the necessary paperwork with the Secretary of State.
Do I need a business license to operate an LLC in Massachusetts?
It depends on the type of business you operate, but some LLCs in Massachusetts need to obtain business licenses and registrations to operate.
What state fees do I need to pay to operate an LLC in Massachusetts?
Massachusetts LLCs need to pay the incorporation fee of $500 and an annual report fee of $500.
Can I have a single-member LLC in Massachusetts?
Yes, you can have a single-member LLC in Massachusetts.
What is a multi-member LLC in Massachusetts?
A multi-member LLC in Massachusetts is an LLC owned by more than one member.
Should I get an attorney to draft my LLC operating agreement in Massachusetts?
While it’s not required, it’s recommended to get an attorney to draft the LLC operating agreement as it ensures that the document is legally sound and fulfills your needs.
How much personal liability protection does Massachusetts LLC offer?
In Massachusetts, LLC members have personal liability protection up to the limit of their investment in the company.
What is the latest time of year I can file an LLC Annual Report in Massachusetts?
The latest time of year to file the LLC Annual Report in Massachusetts is the anniversary date of the original filing.
Can I change the structure of my Massachusetts LLC from a single-member to a multi-member LLC?
Yes, you can add members to your Massachusetts LLC by amending the Articles of Organization and filing them with the Secretary of the Commonwealth.
Is a Massachusetts LLC liable for federal taxes?
Yes, a Massachusetts LLC is liable for federal taxes.
How do I dissolve my Massachusetts LLC?
To dissolve your Massachusetts LLC, you must file a Certificate of Cancellation form with the Secretary of Commonwealth, obtain tax clearance from the Department of Revenue, and complete any other necessary forms.
Can I start a foreign LLC in Massachusetts?
Yes, you can start a foreign LLC in Massachusetts, but you need to register your company with the Secretary of Commonwealth.
What is an LLC?
An LLC, or Limited Liability Company, is a type of business entity that provides certain protections and benefits to its owners.
What are the benefits of forming an LLC in Massachusetts?
There are many potential benefits of forming an LLC in Massachusetts, including liability protection, tax flexibility, and easier management and ownership structure.
How much does it cost to start an LLC in Massachusetts?
The fee to file a Certificate of Organization and start an LLC in Massachusetts is $500.
How long does it take to start an LLC in Massachusetts?
The processing time for an LLC in Massachusetts varies, but it can take up to several weeks to receive your Certificate of Organization.
Can I be the only member of my LLC in Massachusetts?
Yes, in Massachusetts, you can form a single-member LLC.
What are the residency requirements for forming an LLC in Massachusetts?
There are no residency requirements to start an LLC in Massachusetts.
What is a Registered Agent in Massachusetts?
A Registered Agent in Massachusetts is the legal representative of an LLC who can receive legal notices and service of process on behalf of the company.
Is a Written Operating Agreement required for LLCs in Massachusetts?
While not required by law, a Written Operating Agreement is highly recommended for LLCs in Massachusetts to provide structure and clarity among members.
Do I have to file an annual report for my LLC in Massachusetts?
Yes, in Massachusetts, LLCs are required to file an annual report and pay the associated fee.
How do I change my LLC’s name in Massachusetts?
To change the name of your LLC in Massachusetts, you’ll need to file a Certificate of Amendment and pay the associated fee.
How many business names can I reserve in Massachusetts?
In Massachusetts, you can reserve up to two business names at a time.
Do I need a business license to start an LLC in Massachusetts?
Depending on your industry and location, you may need a business license to legally operate your LLC in Massachusetts.
Can a foreign LLC do business in Massachusetts?
Yes, a foreign LLC can do business in Massachusetts by filing for a Foreign Registration and obtaining a Certificate of Authority.
How many managers are required for an LLC in Massachusetts?
LLCs in Massachusetts are not required to have managers; they can be managed by either members or non-members in a “member-managed” or “manager-managed” structure.
Are LLC members’ personal assets protected in Massachusetts?
Yes, LLC members’ personal assets are generally protected from business debts and liabilities in Massachusetts.
Can an LLC in Massachusetts issue stock?
No, LLCs in Massachusetts are not able to issue stock, it is an S-Corp or C-Corp’s privilege.
How do I dissolve my LLC in Massachusetts?
To dissolve an LLC in Massachusetts, you’ll need to file a Certificate of Dissolution with the state and follow any additional steps outlined in your Operating Agreement.
What is a tax certificate, and is it required for Massachusetts LLCs?
A tax certificate is a document that verifies that an LLC has met all tax obligations in Massachusetts, and it may be required to obtain certain licenses and permits.
What is the difference between a domestic LLC and a foreign LLC in Massachusetts?
A domestic LLC is one that is formed in Massachusetts, while a foreign LLC is one that is formed in another state or country but doing business in Massachusetts.
Can an LLC be taxed as an S-Corp in Massachusetts?
Yes, an LLC can elect to be taxed as an S-Corp in Massachusetts by filing Form 2553 with the IRS.
Are operating agreements public records in Massachusetts?
No, Operating Agreements are not public records in Massachusetts.
What is the Massachusetts LLC Annual Report fee?
The fee to file an LLC Annual Report in Massachusetts is $500.
What is the LLC Alternative dBA Name fee in Massachusetts?
The fee to file an Alternative dBA Name for an LLC in Massachusetts is $30.
Can I file the Massachusetts LLC Annual Report online?
Yes, you can file the Massachusetts LLC Annual Report and fees online, along with any necessary changes to your registered agent or other information.
Can I change my Massachusetts LLC Ownership Structure?
Yes, you can change your Massachusetts LLC Ownership Structure by amending your Operating Agreement.
What is a Professional LLC in Massachusetts?
A Professional LLC in Massachusetts is a specific type of LLC for professionals such as lawyers, accountants, and architects who require licensure for their services.
Can I form a Series LLC in Massachusetts?
No, Massachusetts does not currently recognize Series LLCs.

Also Read

How Fast Can I Form an LLC in Massachusetts

If you’re looking to form an LLC in Massachusetts, you may be wondering how fast the process can be completed. The good news is that forming an LLC in Massachusetts is relatively straightforward and can be done fairly quickly if you have all the necessary information and documents readily available.

The first step in forming an LLC in Massachusetts is to choose a name for your business. It’s important to select a unique name that complies with Massachusetts guidelines. Once you’ve settled on a name, you can conduct a search on the Massachusetts Secretary of the Commonwealth website to ensure that your desired name is available.

Next, you’ll need to appoint a registered agent for your LLC. A registered agent is responsible for receiving legal documents on behalf of your business. You can choose to serve as your own registered agent or hire a professional registered agent service.

After you’ve selected a name and appointed a registered agent, you’ll need to file Articles of Organization with the Massachusetts Secretary of the Commonwealth. This document officially establishes your LLC and includes important information such as the name of your business, the address of your principal place of business, and the names and addresses of your LLC’s members or managers.

Once you’ve submitted your Articles of Organization, you’ll need to pay the required filing fee. The fee can vary depending on the method of filing and the speed at which you want your LLC to be processed. If you choose to file online, you can expect a faster processing time compared to filing by mail.

After your Articles of Organization have been approved and your filing fee has been processed, your LLC is officially formed. You will receive a Certificate of Organization from the Massachusetts Secretary of the Commonwealth, which serves as proof that your business is a legal entity.

Overall, the time it takes to form an LLC in Massachusetts can vary depending on several factors, including how quickly you can gather the necessary information and documents, as well as the method of filing you choose. By ensuring that you have all the necessary information at hand and completing the required steps promptly, you can accelerate the process of forming your LLC and start building your business sooner rather than later.

Conclusion

In conclusion, starting an LLC in Massachusetts is a strategic choice for entrepreneurs seeking a flexible, straightforward business structure with limited liability protection. By following the essential steps, including choosing a business name, filing Certificate of Organization, appointing a Resident Agent, creating an Operating Agreement, obtaining an EIN, and securing the necessary licenses and permits, you can successfully establish your LLC. We recommend using ZenBusiness as they offer LLC formation at $0.

This business structure offers numerous advantages, such as pass-through taxation and ownership flexibility, making it an attractive option for small business owners looking to grow and protect their ventures. As always, consult legal and business professionals for guidance specific to your situation and state requirements.

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