How to Start an LLC in Massachusetts | 2023 Guide

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.

To accomplish the steps in starting an LLC, you can hire an LLC Formation Services that will help you build your desired business. We reviewed some of the best LLC formation services and provided features as an add-on with their packages for you to check out.

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. 

Recommended: We recommend a professional service that can offer you unlimited name search, trademark and copyright registration at a reasonable price. We recommend using –

LegalZoom – ($0 + State Fees for LLC Formation)

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.

Recommended: Filing formation papers is easy and hassle-free if you hire a professional service. We recommend using –

LegalZoom – ($0 + State Fee)

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.

Recommended: Get oprating agreement drafts ready on your table with a help of a professional service. We recommend using –

LegalZoom – ($0 + State Fee for LLC formation)

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).

Recommended: Professional services have the EIN included in their LLC formation package. We recommend using –

LegalZoom – ($0 + State Fee for LLC formation)

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

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How Fast Can I Form an LLC in Massachusetts

In Massachusetts, forming an LLC involves several steps, but with proper preparation and adherence to necessary requirements, the process can unfold relatively smoothly and efficiently. Though it’s not possible to pinpoint an exact timeline for the establishment of an LLC, exploring each step involved in the process can provide realistic expectations.

The first step in forming an LLC is choosing a name for your company. Massachusetts law stipulates that the chosen name must be unique and distinguishable from existing businesses, so a preliminary name availability search is recommended. This can be efficiently accomplished by using the Massachusetts Secretary of the Commonwealth’s online search tool. While name availability search can be an immediate process, it is necessary to ensure your proposed name is not infringing upon any existing trademarks or copyrights, which can add some additional time to the overall timeline.

Once you’ve settled on a suitable name, the next step is to prepare and file your Articles of Organization with the Secretary of the Commonwealth’s office. This document essentially establishes the LLC and outlines important details such as the purpose of the business, the registered agent, and the expected duration of the company. In Massachusetts, this form can be submitted online or via mail, and the processing time generally ranges from a few days to a couple of weeks, depending on the volume of applications at the time. It’s important to ensure your application is accurate and complete to avoid unnecessary delays.

After the Articles of Organization are approved, the next task is to obtain an Employer Identification Number (EIN) from the Internal Revenue Service (IRS). This unique identifier is necessary for various business-related activities, such as opening bank accounts and filing taxes. Applying for an EIN is usually a straightforward process that can be completed online through the IRS’s website. Once again, the processing time largely depends on the IRS’s workload, but counts in days rather than weeks.

With the administrative aspects complete, the final step is drafting an Operating Agreement. Although not required by Massachusetts law, having this internal document in place outlining ownership structure, roles, and responsibilities of members, and rules for decision-making is highly recommended.

While it’s challenging to provide an exact timeline for forming an LLC in Massachusetts due to various factors, through coordinated efforts and prompt completion of each step, this process typically takes several weeks. However, it’s important to remember that unforeseen circumstances or additional requirements can prolong the formation timeline.

In summary, forming an LLC in Massachusetts necessitates careful attention to detail and adherence to specific legal procedures. Entrepreneurs should be prepared to invest the necessary time and effort during each stage of the process. With a proactive approach, it is feasible to establish an LLC rather swiftly, setting the foundation for an exciting new entrepreneurial journey.

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. 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.