How to start an LLC in Massachusetts
Getting a new business off the ground is no easy task. Even the initial formation process – where you register your business as a legal entity – can feel complex. This guide is here to help – below, we’ll explain how to start an LLC in Massachusetts.
Whether you live in Boston or elsewhere in MA, the process of forming an LLC will be handled by the Secretary of State’s department. You will need to file paperwork with this department, or use a third-party formation service to help.
This guide will specifically focus on limited liability companies in Massachusetts. We’ll cover all the steps you need to take to form a Massachusetts LLC quickly and accurately.
Consider utilizing an LLC formation service
Before you get started, there’s a worthy consideration to take. For a small fee, you can use a professional LLC formation service, which will make the entire process much simpler and quicker. Companies like Northwest Registered Agent and ZenBusiness charge a small fee for this service (starting at $49), and the time they can save you is well worth the cost.
If you go this route, you will have access to modern tools, guides, and templates that help simplify the business formation process. You’ll also have accessory services available that are beneficial for your business. For instance, both ZenBusiness and NW Registered Agent offer “Registered Agent” services, which is a requirement (more on this below in step #3).
If you choose to file on your own, it will take a bit longer, but you will save some money. Follow the steps below if you plan to file on your own.
Name your new company
Selecting a name for your company is the first major step you will need to take. A name must be selected before filing any paperwork, as the LLC name is essential to the Certificate of Organization filing.
This step is important, for obvious reasons. You want to pick a name that suits your business and is memorable. It also must meet certain guidelines laid out by the state of Massachusetts.
The main requirement is that the name must be unique – and distinguishable from any other business name in MA. To confirm availability, you can conduct a MA business name search online.
In addition to the unique name requirement, MA has several other LLC naming requirements that must be met. The name must contain “LLC”, “L.L.C.” or “limited liability company”. It must not contain government-related words or phrases. And if it contains words from protected industries (banking, legal, medical, etc.) then special permission may be necessary.
Once you find the perfect name, you can move on to the next step. Names can also be reserved ahead of time, which is useful if you find a good name but are not yet ready to file for your LLC.
Using a Trade Name in Massachusetts
While thinking about names for your company, it’s worth considering the fact that MA allows for the use of “trade names”, also known as assumed names or “doing business as” names.
A trade name is basically a secondary name that you “attach” to your business license. This allows you to do business under this secondary name, without registering a second business entity. For example, “XYZ, LLC” could also do business as “ABC Plumbing”, if they registered that trade name. Trade names are registered on the city or county level.
The fact that you can use trade names gives you a bit of flexibility and means you don’t need to worry too much about finding the perfect LLC name. This also allows one LLC to serve as the parent company for multiple businesses.
Appoint a Registered Agent
All Massachusetts LLCs must appoint a Registered Agent to represent their company. This agent is chiefly responsible for receiving important documents on behalf of the business. This can include tax documents, legal notices, and other important communications.
Any MA resident can be a Registered Agent – including yourself or an employee. Alternatively, a professional Registered Agent service can be used. Northwest Registered Agent is a great option, providing excellent customer service and one-on-one help. ZenBusiness is also a good option that’s also quite cost-effective.
The advantage of using a professional service is that they ensure everything is handled correctly and in a timely manner. Their offices are always open, so your business will never miss an important notice – even if you yourself are on vacation. Plus, they protect your privacy, as it is their address that is publicly posted, instead of your own.
Create an operating agreement
Note: This step is optional, but recommended.
An operating agreement is not required in Massachusetts, but it’s a good practice to have one anyway. This is simply an internal document that establishes operating procedures – and ownership rights – for your business. It is drafted, signed by all stakeholders/owners, and kept on file internally. Because it establishes ownership structure, it’s a very important document for any business with multiple owners.
Operating agreements can be drafted with the help of a local attorney, or through an online service like ZenBusiness. Once you have the document drafted, make copies of it and store them in a secure place.
File LLC Certificate of Organization
The Certificate of Organization is the primary document that MA LLCs must file (in most states, this is called the Articles of Organization). This document formally establishes your LLC as a legal entity. To file it, you will need to select a business name, a registered agent, and establish other important details about your planned business.
There are two ways to file this document: Online, or by mail. The filing cost is $500 (Massachusetts is one of the more expensive states to start an LLC in).
To file online
Visit this link and follow the instructions. Pay the $500 fee by credit card or bank transfer.
To file by mail
Fill out this document and mail it in, along with a check or money order (payable to Secretary of the Commonwealth) for $500, to:
William Francis Galvin
Secretary of the Commonwealth
One Ashburton Place, Room 1717
Boston, MA 02108
Once submitted, you will need to wait for MA to process your documents. This can take as little as a few business days, but may take 1-2 weeks depending on the current backlog. You will be notified if there are any issues with your application.
Apply for an EIN
An EIN, or employer identification number, is required to hire employees. It’s also necessary for opening a business bank account, and other important business activities.
Because this is a federal tax ID number, it’s handled by the IRS, not Massachusetts. To apply, simply fill out this application on the IRS website. There is no cost, and the application is very quick.
Apply for business licenses & permits
Your business will likely need various business permits and licenses in order to operate legally. This is in addition to the actual LLC paperwork. The Certificate of Organization establishes your LLC as a legal entity, but it’s not the only paperwork you’ll need to complete.
The specifics vary depending on the type of business and the location(s) where it operates. At a minimum, you will likely need a business license in the city or town where you operate. Multi-location businesses may need multiple permits.
You will also need to register for tax accounts with the state of Massachusetts. This is necessary in order to pay employer/payroll taxes, sales taxes, etc.
Certain industries require more licenses than others – check this page on Mass.gov for more information.
Keep your business in good standing
Business owners will need to stay on top of various requirements in order to keep their business compliant with various government agencies. There are requirements on the federal level, and also state and local level – so it can be a lot to keep track of at times.
This list is certainly not exhaustive, but here are some of the important things you will need to handle on an ongoing basis:
Massachusetts LLC Annual Report – due every year
Massachusetts sales tax
Massachusetts employer taxes/payroll taxes
Federal income taxes
Federal business taxes
Federal employer taxes
Local city/county tax returns
Renewals of business permits and business licenses
There are other requirements, but the specifics vary for each business. It’s a good idea to research all your requirements now, and make a plan to stay on top of everything. Using a service such as Northwest Registered Agent or ZenBusiness can also help, as these companies will help remind you of important filing dates.
Open a business checking account
To keep your accounting as simple as possible, it’s very important to separate business and personal finances. The best way to do this is to open a dedicated business bank account and use this exclusively for business-related transactions.
You can likely open a business account at your existing bank, or shop around to find a better option in your area. You will need an EIN, business license, and other business documents (call ahead for specific requirements).