The process of starting an LLC in Massachusetts is not difficult. By completing the necessary documentation, adhering to state rules and regulations, and paying the required registration fee, it is possible to start an LLC in Massachusetts as a resident or non-resident.

Getting Started

Naming the LLC

Naming a new LLC in Massachusetts is fairly straightforward, with only a few restrictions or limitations. The name must have “Limited Liability Company” within it, or at least the abbreviation for Limited Liability Company (LLC). The name cannot contain words that would cause confusion with other state or federal government agencies, such as FBI or EPA. The only other restriction is that some names may require additional paperwork and/or licensing, such as if the name included Bank, Banc or Banque.

The name of the new LLC must not be the same as a currently registered LLC in Massachusetts. The state makes it easy to determine if a name is available by using its online search tool. If a name is taken, it may be possible to make minor variations to use something similar.

A website domain name should also be considered when naming a new LLC. Many domain names are taken, so it is worthwhile to verify if a website URL is available as part of the naming process. Sites like GoDaddy offer search options to see if a domain name is available, along with options to buy available domain names.

Selecting a Registered/Statutory Agent

The State of Massachusetts requires that every LLC have a registered agent available to accept legal documents and paperwork, such as if the LLC is sued by another company or individual. The registered agent must either be a resident of the state or must be authorized to transact business in the state.

If the owner(s) of the company or an employee of the LLC resides in Massachusetts, the LLC can elect an individual from within the company to serve as the registered agent. Otherwise it will be necessary to employ the services of an individual or organization to serve as the registered agent for the LLC.

File Certificate of Organization for Domestic LLC

The paperwork to file for an LLC in Massachusetts, the Certificate of Organization for Domestic LLC, must be filed with the Secretary of the Commonwealth of Corporations Division. The Massachusetts documentation is detailed, requiring information on what the business will do, the name and address, the name and address of the registered agent, how the LLC will be managed and more.

The cost for filing the Certificate of Organization is $500 if filed by paper, and $520 if filed online.

Create Operating Agreement

While Massachusetts does not require that LLCs have an operating agreement, it is still recommended that all LLCs have an operating agreement if possible. An operating agreement lays out how the business will operate – such as the responsibilities of each partner if there are partners. It can be in written form, or even an oral agreement. Whatever the form, an operating agreement can help to provide much-needed clarity when the LLC encounters challenges.

Running Your Business

Getting Your EIN

What’s an EIN?

An EIN is an employee identification number, issued by the Internal Revenue service. Sometimes it is also called a Federal Tax Identification Number. It’s a unique number issued to each business.

You’ll need an EIN to

  1. Open a business bank account.
  2. File Federal and State Taxes
  3. Hire employees.

Before you get your EIN:

  1. Make sure your new business has been properly formed before applying.
  2. Be wary of paid sites. EINs are free direct from the IRS.

How do I get an EIN?

  1. Apply online: The easiest way is to apply online for an EIN. Note, the IRS website has office hours, and is only available Monday through Friday, 7am to 10pm. Yes, we also agree this is one of the most ridiculous things we’ve ever seen.
  2. Call: You can call 1-800-829-4933, between 7am to 7pm of your time zone, Monday to Friday.
  3. Snail Mail – You can download the form and mail it in.

Keep Business and Personal Accounts Separate

  1. Get a business bank account for your business. This will help you protect your personal assets from potential creditors and lawsuits, and will also make life A LOT easier come tax time.
  2. Get a business credit or debit card. This will help you keep your expenses separate and easier to track.

Accounting

No matter what business you run, accounting software and processes is a must for any small business. If you have an accountant, ask them which software they work with and recommend.

A good accounting system is necessary to:

  1. Track income and expenses, so you can easily see if you’re making money
  2. Makes filing income taxes so much easier.

Always try and find something that will:

  1. Sync with all of your bank and credit card accounts automatically – not just downloads, but auto sync.
  2. Automatch vendors, customers and other accounts.
  3. Let you accept credit cards and ach drafts with ease.

Setting Up for Taxes in Massachusetts

 

Registering with the Massachusetts Department of Revenue

LLCs that plan on having employees or selling goods need to register with the Massachusetts Department of Revenue.

Employee Taxes

For LLCs with employees, Massachusetts requires filing of both unemployment insurance tax and employment withholding tax.

Sales Tax

Most businesses operating in Massachusetts that are selling goods collect sales tax, which then must be remitted to the state. The Massachusetts government site offers information on taxes, including sales tax, as it relates to businesses.

Business Licenses

Different types of businesses operating in Massachusetts may be required to have licenses, permits or other documentation before doing business. The Massachusetts Department of Revenue offers a comprehensive guide to explain which businesses need which kind of license, and how to obtain it.

Workers’ Compensation

Most employers are required to carry workers’ comp insurance. Any LLC with employees needs to be aware of current workers’ compensation law in Massachusetts.

Keeping Your LLC Compliant

Hiring Employees

Massachusetts has comprehensive employment laws that must be adhered to by any business hiring employees in the state. Laws and further information are available from the Massachusetts Court System.

Annual Report

Every LLC operating in Massachusetts must file an Annual Report. The report, which is due on the date which the LLC was formed, can be filed online for a fee of $500.

Certificate of Good Standing

A Certificate of Good Standing is available to LLCs that were formed legally and are in current good standing with the state. They can be obtained online or by mail.

How to File a Foreign LLC in Massachusetts

Businesses from outside of Massachusetts can file a foreign LLC for $500.