The pandemic did not deter new business growth in Massachusetts. As with many other states, there was a notable surge in startups. As states rush to accommodate this wave of enthusiasm for entrepreneurship, this is an ideal time to move forward with Massachusetts LLC formation.

We created this comprehensive guide for those who want to learn how to start an LLC in Massachusetts. Please read on for more about how to establish your new business.

Before You Set Up Your Massachusetts LLC

In the early stages of filing an LLC in Massachusetts, there are a few important details to take care of. Please read the sections below to learn what you need to do before going ahead with your LLC formation.

Reserve Your LLC Business Name

Be sure to double-check business name availability through the Massachusetts Secretary of the Commonwealth’s website. There are multiple search options, including the database of corporations and a search engine for previously reserved business names.

If you want, you can hold a name by submitting an Application of Reservation of Name form. The fee is $30, and the process will let you reserve a name for 60 days. The reservation can be renewed for an additional 60 days. Please note, this form cannot be faxed; you must deliver it in person or by mail.

An important detail to remember about your business name is that it must include “limited liability company” or “limited company” or an acceptable abbreviation such as “LLC,” “L.L.C.,” L.C.” or “LC.”

Purchase Web Domain

While not required, a business website is great to own, as potential customers often do internet research on brands. If you have no website or even a Facebook page, it can negatively impact customer perception and trust. Therefore, you should take this formative phase as a chance to lay the foundation for your future web presence.

Hire a Resident Agent for Your LLC

Resident agents in Massachusetts are required for any LLC operating within the state. These agents accept vital documents, such as court papers, on behalf of your LLC. Presently, the role can be filled by a Massachusetts resident with a business address in the state, or by a company authorized to do business in Massachusetts. If you choose to hire someone, be prepared to pay between $50 and $300 annually.

While some may instinctively look for a bargain, it may be worth it to pay more for this service. Read reviews and ask questions, which will help you obtain the resident agent most suited to your company’s needs.

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Submit Your Massachusetts Certificate of Organization

After handling all preliminary steps, you can move forward with filing forms for your Massachusetts LLC. Complete a Certificate of Organization and pay the $500 filing fee. You can expedite the process for an additional $20 when filing electronically or by fax.

A foreign entity establishing an LLC in Massachusetts also pays a $500 fee but must instead complete an Application for Registration. The document should be accompanied by a Certificate of Legal Existence or Certificate of Good Standing. While it is possible for foreign entities to submit paperwork by fax, they cannot complete this process electronically.

Remember to make all checks payable to the “Massachusetts Secretary of the Commonwealth.”


What To Do After Establishing Your Massachusetts LLC

Following the successful processing of your LLC, you will have a few other things to take care of. These additional steps are covered in the following sections.

Create an LLC Operating Agreement

Though not a legal obligation in Massachusetts, an operating agreement is still a very worthwhile investment. Operating agreements are essential for protecting the long-term integrity of your business by laying a detailed foundation about how you intend to operate it.

Operating agreements typically provide information such as:

  • The day-to-day operations and individual member responsibilities for running the LLC
  • Member contributions and how that may figure into member voting
  • How new members are to be brought into the LLC

By creating an LLC operating agreement, you can potentially avoid confusion and hostility later on. It is also a document that may prove valuable for showing your LLC’s legitimacy.

Get an Employer Identification Number (EIN)

An EIN is sometimes called a federal EIN (FEIN) or federal tax identification number (FTIN). Most businesses are required to have an EIN, though single-member LLCs with no employees can get by with a Social Security number. Even so, an EIN might be preferable as it protects the privacy of your Social Security number. EINs are free and available through the IRS website.

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Annual Reports and Fees

Massachusetts requires all LLCs to submit a yearly report and pay a $500 fee. Doing so is essential for keeping your business in good standing. The report and fee are due on the first day of the anniversary month of your LLC formation or registration.


Frequently Asked Questions

What is an LLC?

A limited liability company balances the relative ease and flexibility of a partnership or sole proprietorship structure with the increased risk protection of a corporate structure. Like corporate shareholders, LLC owners (known as “members”) enjoy limited liability, meaning personal liability to the company includes only what members have invested and does not extend beyond it to cover corporate losses or debts.

By default, members of an LLC pay taxes as a share of personal income just as owners of a sole proprietorship or general partnership would—this is often referred to as a “pass-through” tax structure. An LLC can elect to be taxed as a C corporation C-corp or S corporation (S-corp) if it meets certain requirements. Many small business owners choose LLCs for their simplicity and flexibility.

What are the benefits of forming an LLC?

LLCs are an affordable means of launching a business. LLCs tend to have a more flexible structure and fewer record-keeping requirements than corporations. Additionally, they provide some limited liability shielding of personal assets while functioning as a pass-through entity when filing taxes.

How much does it cost to file an LLC in Massachusetts?

Massachusetts LLCs, both domestic and foreign, cost $500. It may be possible in some cases to pay an additional $20 for expediting the process.

How is an LLC taxed in Massachusetts?

Massachusetts LLCs are taxed the same way by the state as they are federally. Unless treated as C-corporations, LLCs are typically taxed as “pass-through” entities.

Must I file taxes for an LLC if it has no income?

As a regular LLC, not necessarily. However, if you choose to have the LLC taxed as a corporation, you must make yearly corporate filings. This is regardless of whether the LLC earned income or not.

What are the different types of LLCs to set up?

When determining how to start an LLC, there are several types of LLCs to choose from. Knowing the LLC structures available is essential for selecting a business model that most closely aligns with the nature of your company and how you intend for it to operate. These LLC structures include:

  • Single-member LLC: This LLC is owned and operated by a single person. While similar to a sole proprietorship, this LLC provides additional tax benefits and liability shielding.
  • Multimember LLC: Standard LLCs with more than one member, often divided into manager-managed or member-managed entities.
  • L3C: These entities, also known as “low-profit liability companies,” act as a bridge between nonprofit LLCs and for-profit LLCs where the business cause remains the primary focus rather than earnings.
  • Series LLC: Series LLCs are tiered business structures where the topmost LLC owns a series of lower-tiered LLCs through limitless segregation. Each LLC in the series operates mostly independently of one another; their assets are also primarily separated.
  • PLLC: A specialized LLC, this business formation type is only available to certain licensed professionals.
  • Restricted LLC: Restricted LLCs are not taxed during the first 10 years of formation. Likewise, they cannot make distributions to members. It must be stated in the articles of organization that the LLC will be restricted.