- Step 1. Naming Your Massachusetts LLC
- Step 2. Appoint a Registered Agent
- Step 3. File Your Articles of Organization
- Step 4. Create an Operating Agreement
- Step 5. Get an EIN/Tax ID Number
- Step 6. Keeping Your LLC Running
- Massachusetts LLC Resources
- Massachusetts LLC FAQs
Step 1. Naming Your Massachusetts LLC
When naming your LLC, you will need to follow certain naming rules that adhere to Massachusetts LLC law, in addition to choosing a name that is completely unique and distinct from others in the state.
Legally Required Designation
In accordance with Massachusetts LLC regulations, the name of your LLC must contain the phrase “limited liability company” or one of the following abbreviations:
- Limited Company
To ensure that you select an LLC name that is separate from any other in the state and avoids any type of infringement, you should search through the available name database on the website for the Massachusetts Secretary of the Commonwealth.
If you figure out an available name that you like, you can file an Application of Reservation of Name to hold your LLC name for up to 60 days before establishing your business. There is a $30 filing fee associated with this form, and it can be filed either online or through the mail.
You may also want to conduct an available domain name search while you are looking for an LLC name. Even if you aren’t sure that you want a business website immediately, it is a good idea to purchase one ahead of time to reserve it for when you will need it.
When choosing an LLC name, keep in mind that you are not able to include any words that run the risk of confusing your business with a government entity. This can include words like “IRS,” “Treasury,” “FBI,” or “State Department.”
You should also be aware that using words such as “bank,” “attorney,” or “university” may require the presence of a properly licensed individual in your LLC and filing additional paperwork.
Using an Assumed Name
You can use an assumed, or DBA (doing business as), name for your LLC in Massachusetts. This means that you will continue using the legally registered LLC name on all official documents, but will use a different registered name when interacting with the public.
To use a DBA name in the state, you will need to register your chosen name with the city or county that your LLC is located in. Visit the county or city clerk’s office or website to receive the appropriate forms and then follow the filing instructions. Once the form has been filed with your locality’s clerk, you will be set to use your DBA name.
Filing fees for DBA name registration will vary based on your town and city, so be sure to double-check when receiving the form how much you may be required to pay.
Step 2. Appoint a Registered Agent
A registered agent is required for every LLC established in Massachusetts. Your registered agent will be responsible for receiving all legal documents, government communications, and necessary tax documents, essentially acting as a contact point between your LLC and federal agencies or the state of Massachusetts. They will also be the responsible party that is contacted in the event of a lawsuit against your LLC.
You can appoint any individual, any member of your LLC, or a registered agent service that is authorized to conduct business in Massachusetts as your registered agent. As long as your agent has a valid state address and is available during regular business hours, they are eligible to be your registered agent.
Step 3. File Your Articles of Organization
Once you have your LLC name chosen and have selected a registered agent, you will need to file your Certificate of Organization with the Secretary of the Commonwealth of Massachusetts. This document is what legally establishes your LLC and will allow you to conduct business in the state once it is processed. Below, you can get an idea of some of the information that is required on the form.
- Your LLC’s name and office address
- Your LLC’s business type
- Your LLC’s termination period, if not perpetual
- Your LLC’s registered agent’s name, address, and signature
- If manager-managed, the names and addresses of each LLC manager
- The name and address of any LLC member authorized to execute LLC documents (required if the LLC is member-managed)
You can file this form either by mail or using the online filing system. There is a $500 filing fee associated with the form, and you may need to pay more in credit or debit card processing fees when using online filing.
To file a new LLC online, you can use the portal on the Secretary of the Commonwealth, Corporations Division website. Simply visit the portal and fill out the form with all the required information.
Once you submit the Certificate, you will be asked to pay the filing fee of $500 plus any card processing fees.
If you want to file your Certificate of Organization by mail, you will need to print and fill out this form. Once completed, put the form in an envelope along with a check for the $500 filing fee made out to the Secretary of the Commonwealth of Massachusetts. You can then send it to the address below.
William Francis Galvin
Secretary of the Commonwealth
One Ashburton Place, Room 1717
Boston, MA 02108
Step 4. Create an Operating Agreement
Massachusetts does not require you to create an operating agreement for your LLC, but it is a good idea to create one anyway. An operating agreement sets clear guidelines for how exactly your LLC is managed, the rights that members or managers have, and what to do in the case that your LLC dissolves or experiences a lawsuit.
Most business bank accounts, loan applications, and other business services will require you to have an operating agreement on hand to demonstrate your LLC as a separately operating business entity before you can secure funding or business services.
If you choose not to create an LLC operating agreement, state law will dictate how your LLC is to be managed in the event of dissolution, conflict, or lawsuit. This may not be in your best interest, so creating an operating agreement is a good idea to protect yourself and your assets.
Step 5. Get an EIN/Tax ID Number
Once your LLC is legally established in Massachusetts, you will need to apply for a Tax ID number, also known as an EIN (Employer Identification Number). Any LLC that has more than one member, any single-member LLC that wants to hire employees, or any LLC that chooses to be taxed as a corporation is required to apply for an EIN.
Your EIN will be used to identify your business to the IRS on all tax documents and necessary government filings. The number acts much like a social security number for your LLC. If you want to hire employees, file federal taxes, open business bank or credit accounts, or apply for business funding, you will need an EIN.
It is free to apply for your EIN with the IRS, and you can file the application online or by mailing it in. Keep in mind that if you are a foreign filer or do not have a social security number, you will need to file for your EIN through the mail.
The quickest and easiest way to apply for your EIN is online; you will receive your number once your application is completed.
Visit the IRS website to apply for your EIN for free.
You will need to fill out this form when applying for your LLC by mail. If you are a foreign filer or do not have a social security number, leave section 7b blank. Mail the completed form to the address below.
Internal Revenue Service
Attn: EIN Operation
Cincinnati, OH 45999
If you need to check your status, you can call the IRS at (267) 941-1099.
Step 6. Keeping Your LLC Running
Even after you have established your LLC and received your EIN from the IRS, there are a few things that you will need to remember to keep your LLC running.
File Annual Reports
All LLCs that are operating in Massachusetts will need to file an annual report with the Secretary of the Commonwealth of Massachusetts. This report can be filed online or through the mail by printing out this form and mailing it to the address listed.
Your annual report will need to contain the same information as your Certificate of Organization with any changes added clearly to the form. The report is due each year before or by the anniversary date of your LLCs establishment, and there is a $500 filing fee associated with the form.
Filing your annual report late may incur penalty fees, and failing to file completely may result in your LLC being involuntarily dissolved by the state.
Separate Your Business Finances
A business credit or debit account can help keep your LLC’s finances separate from any personal ones, establishing the LLC as an independently operating business. It is not required by Massachusetts to open a business bank account, but it may be a good idea to establish one anyway.
You will most likely need to show your Articles of Organization, Operating Agreement, EIN, or possible other LLC documents to open a bank account for your LLC. Compare all of your options before making a choice on which bank account to open, as different banks will have varying minimum required balances or credit spending limits; you want to be sure that you select something that is the best for your LLC’s needs.
Keep up With Federal and State Taxes
In addition to meeting state filing requirements, you will also need to keep up with federal and state taxes. What you owe may vary depending on your individual tax structure and your LLC type, so be sure to consult with a professional accountant or financial advisor if you have concerns about your tax burden.
Federal Tax Requirements
There are several different tax structures you can choose from to use in your LLC that may meet different company needs; each tax structure comes with its own unique type of federal taxation. This article can help you gain an in-depth understanding of the differences between each type and help you decide which is best for you.
In general, most LLCs are taxed as sole proprietorships or partnerships. This means that you will be expected to file Schedule C along with your individual income tax return to declare any income that you receive through your LLC.
When using this tax structure, you should keep in mind that you will most likely need to pay self-employment tax (which has a rate of 15.3%), in addition to any income tax. You may also need to make quarterly estimated tax payments to avoid any IRS fines; the IRS website gives more details on this.
If you want, you can choose to have your LLC taxed as a corporation, such as an S Corporation or a C Corporation. You will need to fill out IRS Form 8832 and IRS Form 2553 to declare this. After these forms have been processed, your LLC will be treated as a corporation and expected to file a separate corporate tax return with the IRS.
Massachusetts Business Taxes
There is no state-wide business tax for LLCs, but if your LLC is being taxed as a corporation, you may be liable to pay the Massachusetts corporate excise tax. This tax is based on income and varies in rate, depending on whether your business will be taxed as an S Corporation or a C Corporation. You can read more about the corporation excise tax here.
LLCs that are being taxed as a sole-proprietorship or a partnership will be treated as pass-through entities, and you will be required to pay state income tax on your business each year by filing your income on your individual tax return with the state.
Sales and Use Taxes
If your LLC will be selling goods or services, you will likely need to register to pay for sales and use taxes with the Massachusetts Department of Revenue. You can make an account online and sign up for these taxes through MassTaxConnect, where you can also pay your taxes and submit additional documentation.
If you want to read more about whether or not you are required to pay sales and uses taxes, you can find that information out here.
State Employer Taxes
LLCs that have employees will be required to pay both withholding and unemployment insurance taxes. Withholding tax will need to be paid with the Massachusetts Department of Revenue, and you can pay for these taxes on the MassTaxConnect website. More information on this can be found here.
For unemployment insurance taxes, you will need to register your LLC with the Department of Unemployment Assistance. This can be done online through the Department’s website, where you will also be able to receive help calculating how much you owe and figuring out a time period to make your payment. Step-by-step instructions for this process can be found here.
Acquire Necessary Permits and Licenses
While there is no state-wide requirement of a business license in Massachusetts, certain cities or counties in the state may require that your LLC applies for a business license. You may also need to meet certain requirements for professional permits and licensing, depending on the type of business you are running.
Additionally, you may be required to obtain certain permits and licenses for your LLC on a federal level. Whether this is needed depends mostly on the type of business you are running and the services you are offering. For help determining if you need to meet additional federal licensure requirements, you can use the directory on the U.S. Small Business Administration’s website.
Massachusetts LLC Resources
The below list of resources can help guide you through every step of the process in setting up your Massachusetts LLC.
- Available LLC name search
- LLC Application of Reservation of Name
- Available domain name search
- Certificate of Organization form
- Certificate of Organization online file
- IRS EIN online application
- Annual Report form
- IRS Form 8832 and Form 2553 to declare LLC corporation tax status
- Massachusetts corporate excise tax information
- MassTaxConnect website
- Massachusetts Department of Revenue
- Massachusetts Department of Unemployment Assistance
- Massachusetts Permit and Licensing information
- S. Small Business Administration
Massachusetts LLC FAQs
The answers to these frequently asked questions can help you put to rest any remaining worries about starting up your LLC in Massachusetts.
In Massachusetts, it will cost you $500 to file your Certificate of Organization, in addition to any online processing fees (if you choose to file online). You may also pay a $30 fee to reserve an LLC name ahead of time, and will need to pay a fee if you choose to register a DBA name for your LLC.
The cheapest way to start your LLC in Massachusetts is to file your Certificate of Organization through the mail without reserving an LLC name ahead of time or registering for a DBA name. This way will only cost you $500. If you want faster processing, you can file your Certificate online and pay an additional card processing fee—the cost will be pretty close, and your formation will be completed sooner.
How much your Massachusetts LLC pays in taxes depends on the individual tax structure that you have set up for your business. Some LLCs may also have to pay separate employer or sales taxes, or will be liable to pay the state’s corporation excise tax.
You will need to file your LLC report annually with the state. This report is due each year by the anniversary date of your LLC’s establishment and comes with a $500 filing fee. You can file it either online or through the mail.
If you are done conducting business under your LLC, you will need to file a Certificate of Cancellation online with the Secretary of the Commonwealth of Massachusetts. There is a $100 filing fee for this form.
You will also need to consult with your operating agreement and other LLC members to complete the agreed-upon terms for closing down your business and tying up any final loose ends.