If you’re starting a business in Massachusetts, the first step you’ll need to take is to form a Massachusetts LLC. A Massachusetts LLC will separate and protect your personal assets (that’s what the “limited liability” in a limited liability company means). It will also legitimize your business in the eyes of your potential customers.
This article will walk you through all the steps required to form your Massachusetts LLC and get your business started on the right foot. Be sure to bookmark this page, as the process may take you a few days from start to finish.
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Steps to Form a Massachusetts LLC
Forming an LLC in Massachusetts on your own doesn’t have to be difficult. Just follow these simple steps below and your new business will be up and running in no time!
How to Form a Massachusetts LLC – Quick Version
- Choose a name for your LLC (and get the domain name)
- Assign a registered agent (learn about Massachusetts registered agents)
- File Your Certificate of Organization (Massachusetts Corporations Online Filing System – $500 filing fee)
- Create Your Massachusetts LLC Operating Agreement (here’s a free template)
- Get an EIN (IRS EIN Assistant)
Or, skip the work and use a trusted LLC formation service. Our pick is Northwest Registered Agent ($29 + state fees).
Step 1. Choose a Name for your Massachusetts LLC
The first step to forming a Massachusetts LLC is to choose a name for your business. Deciding on the perfect name for your new business is one of the most crucial parts of starting a company. Choosing a name that’s easy to remember and stands out in search engine results will help you get more customers, which means more revenue, which leads to more growth!
When choosing a name, there are a few searches that you need to complete before you settle on the final option:
- Massachusetts LLC Name Search – Search here – This is the database of all “taxable entities” in Massachusetts. Essentially, your name must be unique to all existing entities in the state.
- Domain Name Search – Search here – You’ll want to ensure that your business’s name is available as a URL so that you can keep up your branding online. In many cases, the .com name may be taken. If this is the case, you can try adding “modifiers” to your name or use a different TLD (.co, .net, .biz, etc…) until you find an available domain name. Don’t skip this step. Even if you aren’t ready to start a website today, it’s important to register your domain name so that no one else snaps it up in the meantime.
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3. Social Media Search – Depending on your business, you may want or need to have a strong presence on the different social media platforms. Even if you don’t think you’re going to use them, it’s still wise to search Facebook, Twitter, Instagram, LinkedIn, and any other socials to see if your handle is available.
Massachusetts LLC Naming Rules
The Massachusetts Secretary of the Commonwealth has a few rules when it comes to naming LLCs:
- You must use an LLC designator (ie. “LLC” “L.L.C.”, or “Limited Liability Company”, etc…) in your LLC’s name.
- You cannot use a designator that could confuse your LLC with another business type (ie. “Corp”, “Inc”, “Non-Profit”, etc…).
- To use a term like “bank”, “university”, “law center” or other assuming words in your name, you must obtain approval from the proper authorities. This generally requires that your business hold the correct charters or have members with certain licenses before applying.
- Your name can’t be so similar to another business name that it could confuse customers.
For a list of rules and regulations governing the Massachusetts Limited Liability Company naming process, read the Massachusetts Guidelines and Restrictions.
The most common reason that LLC applications are denied is an issue with the name. If you follow the rules outlined above, you should be in the clear, but if you aren’t 100% sure then you may want to work with an LLC formation service to ensure you get it done right the first time. Our recommended LLC provider, Northwest Registered Agent is only $29 + state fees.
It’s worth noting that you should be fairly certain that the name you select is the name you are going to stick with. Changing an LLC’s name isn’t impossible, but there are a lot of headaches and fees associated with the process.
If down the road, you do decide that your LLC’s name no longer serves the branding of your business, a simple solution would be to create an assumed name (also known as a DBA). An assumed name allows you to keep your LLC name the same and operate under a trade name different from the LLC’s.
To learn more about naming businesses, check out our guide: Naming An LLC.
Once you’ve decided on a name that follows all of the guidelines above, move on to the next step.
Step 2. Assign a Registered Agent in Massachusetts
The Massachusetts Secretary of the Commonwealth requires all LLCs to appoint a registered agent.
A registered agent is a person or entity that is assigned to receive tax forms, legal documents, official notices, and any other documents or correspondence from the government on your business’s behalf. This person can be yourself, a friend or family member, another member of your business, or a hired registered agent service.
In order to act as a registered agent, the person or entity must:
- Have a physical street address in Massachusetts (not a P.O. Box)
- Be available at all normal business hours to accept service of process (official documents)
The registered agent will be assigned on the Certificate of Organization when filed.
Northwest Registered Agent offers their Massachusetts registered agent service free for one year when you form your LLC ($29 + state fees) with them.
Should You Be Your Own Registered Agent?
A common question is whether or not you should “be your own registered agent”. Taking this position for your business is absolutely possible, but there are some downsides that you should think about before making this decision.
The first and most important downside in acting as your own agent is that you lose any anonymity that your LLC would have provided you. Since your LLC formation is a public record, this means that your name, address, and any other contact information will be available for anyone to see. This generally results in lots of junk mail, solicitations, and possibly even unwanted visitors at your home address.
The second issue is a bit less common but just as important for some folks. If you don’t have a physical address in Massachusetts, then you won’t be able to file for an LLC. This affects non-residents or those trying to form a foreign llc.
Fortunately, using a registered agent service solves all of these issues at a very low cost. These service providers hold a physical office in each state and make the process simple for small businesses.
Want to learn more about registered agents? Check out these articles for a deeper dive into their services:
- Why You Need a Registered Agent
- Benefits of a Registered Agent Service
- Best Registered Agent Services
- How to Find a Registered Agent in Another State
Step 3. File Your Massachusetts LLC Certificate of Organization
After choosing your registered agent, the next step is to file the LLC Certificate of Organization with the Massachusetts Secretary of the Commonwealth. This is the document that actually forms your LLC as a separate legal entity.
With your application, you’ll need to pay the Massachusetts LLC Filing Fee for $500.
The simplest way to file this document is online with the Corporations Online Filing System. You’ll need to sign up using the name of your business, an active email address, and a credit card that you’ll use to pay the filing fee.
If you don’t want to use the online system, you can also apply by mail by downloading the Massachusetts LLC Certificate of Organization Form. Fill out the document completely and accurately. Mail the copy and a check for the $500 fee to:
William Francis Galvin
Secretary of the Commonwealth
One Ashburton Place, Room 1717
Boston, MA 02108
Step 4. Create Your Massachusetts LLC Operating Agreement
Once you’ve filed your Certificate of Organization, your next task is to complete your Massachusetts LLC Operating Agreement.
A Limited Liability Company Operating Agreement is a governing document that lays out the inner workings of your business’s structure. Think of this document as something similar to a prenup, except a lot simpler and less expensive. It will protect the interests of all parties involved in the case of any sort of trouble in the future.
There are six articles in a standard Operating Agreement:
- Organization – Lays out the members and business structure of the company (ie. single-member, multi-member, series LLC, limited partnership, etc…)
- Management and Voting – Goes over how the management operates and votes about changes in the LLC
- Capital Contributions – Discusses initial and subsequent capital contributions made by members
- Distributions – Explains how the profits and losses will be distributed among members
- Membership Changes – Outlines how members are added and removed from the company
- Dissolution – Describes how the affairs of the LLC will be wound up in the event of dissolution
In Massachusetts, you don’t need to file your operating agreement with the state, but this doesn’t mean that you should skip this step. If you don’t have this document in place and something happens to you or another member, it’s possible that the state could step in to settle any disputes. It’s better to have everything lined up at the beginning, rather than wait until it’s too late.
If your business needs a Massachusetts Sales Tax License to operate, you will be required to submit your operating agreement in that application. More about tax licenses later.
Free Massachusetts LLC Operating Agreement Template
Our friends over at TRUiC offer a free Massachusetts LLC Operating Agreement PDF for download. It’s robust enough to handle the needs of most single-member LLCs. If you have a multi-member LLC, manager-managed LLC, or other, more complicated setup, they offer a fill-in-the-blank Operating Agreement for all other uses. It’s also free of charge.
Step 5. Get an EIN (Employer Identification Number)
The last formation step for your business is to get an EIN (Employee Identification Number). An EIN is essentially like a social security number for your LLC. The IRS issues EINs and will use it to keep track of your business’s tax reporting.
The main reasons that you’ll need an EIN are:
- Opening a business bank account and/or credit card
- Hiring employees
- Tax purposes
- Further separates your personal identity from your business
To get your EIN, head to the IRS EIN Assistant and fill out the form. One of the requirements to obtain an EIN for your business is that you’ll need to enter either your personal Social Security number (SSN) or Individual Taxpayer Identification Number (ITIN). If you don’t have either of these, then you’ll need to jump through a few more hoops to get your EIN.
Check out TRUiC’s article on getting an EIN as a foreign person for more information.
Steps After Forming Your Massachusetts LLC
First off, congratulations on forming your LLC! Taking this first big step shows that you are serious about your new business and shows its legitimacy to the rest of the world!
Now that your LLC is formed and you have a separate legal business entity, you’ll need to take care of a few more things before you start selling.
Open a Business Bank Account
The main job of an LLC is to separate the business’s assets from you, the business owner’s personal assets. This separation is called the corporate veil. Essentially, it ensures that if your business is ever sued or has any other financial debts that your personal assets are sheltered from these liabilities. This is where the “limited liability” in LLC comes from.
The easiest way to break your corporate veil is to mix your personal bank account with your business’s. This mixing of funds is called commingling. This opens your personal bank account up to undue exposure and completely breaks the asset protection that your LLC was meant to provide.
The good news is that avoiding this danger is extremely simple. Open a business bank account using your EIN number, transfer any initial funds (keep a record of this transfer), and do your best to never cross personal and business funds in the future.
If you ever need to take money out of the business or invest more of your personal funds in just be sure to keep records of these transactions. This includes the transfers you make when paying yourself a “salary”.
Build Your Business Website
No matter what type of business you operate, you need a website in order for your customers to take you seriously. Almost all businesses transactions today start with an online search, so if you aren’t there to be found then your customers will find your competition. It’s that simple.
Luckily, it’s gotten a lot simpler to build and maintain a website on your own without any prior experience or knowledge of data science or code. Drag-and-drop website builders have improved to the point that anyone can get their business online with about a day’s work.
Our Recommended Website Builder
We recommend the GoDaddy Website Builder for all small businesses. It’s flexible enough to handle most types of small businesses and simple enough to actually use. Its AI-powered generation process will help you to get your site up and running in about 5 minutes. Seriously. After that you can change the text and images to match your business and that’s it; you have a fully functioning website.
Get the Proper Licenses, Permits, and Insurance
When starting a business, there are often several licenses and permits required before transactions can begin. Which licenses you need will depend greatly on the type of business you plan to operate and the location.
Massachusetts Business Licenses and Permits
Finding the specific licenses and permits your business needs to operate will start with a few simple searches. To get started, you’ll need to quickly search the websites of:
- The state-level (Massachusetts’ Professional Licenses and Permits)
- The county-level
- The city-level
Once you’ve identified the different location-based permits, you’ll need to acquire any licenses required by your industry. This includes licenses like the Massachusetts real estate license, the Massachusetts insurance license, the Massachusetts liquor license, and so on.
Massachusetts Business Insurance
Once you’re up and running, it’s important to have the proper insurance policies in place for your Massachusetts business. Some coverages will be required by the state if you have employees, while others will be required by landlords. Others still are “optional” but widely accepted due to their protective nature.
A few of the most common business insurance policies are:
- General Liability Insurance – Protects against claims of bodily injury, personal injury, or property damage. This coverage is generally required to rent office or warehouse space and to bid on certain jobs.
- Professional Liability Insurance – Protects against claims of inaccurate or negligent work. This coverage is most common in the “professional” space where businesses offer services or advice to other businesses or consumers.
- Workers’ Compensation Insurance – Protects your employees from on-the-job injuries or illnesses. Massachusetts requires to carry workers’ compensation coverage for businesses that have one or more employees.
How Much is Business Insurance?
94% of businesses have a requirement for business insurance. Policies range in price, and the only way to understand the true cost for your business is to get a personalized quote.
Register Your LLC for a Massachusetts State Tax Permit
Certain businesses will need to apply for a Massachusetts State Sales Tax Permit. Not all businesses are required to register for sales tax, but if your Massachusetts-based business engages in any of the following, then you will need to apply:
- If your business sells or leases personal property (tangible items)
- If your business offers taxable services
For more information on how to apply, visit the Commonwealth of Massachusetts’ Sales and Use Tax for Businesses page.
Massachusetts LLC Annual Report
In Massachusetts, LLCs must submit annual reports with the Corporations Division of the Secretary of Commonwealth. You can file online or send it by mail by downloading the form. The fee is $500 made payable to the Secretary of Commonwealth.
This report can be quite complicated depending on your business operations, so we recommend working with a licensed CPA to ensure you are filing correctly.
Massachusetts Secretary of the Commonwealth Contact Information
William Francis Galvin
Secretary of the Commonwealth
One Ashburton Place, Room 1717
Boston, MA 02108
Secretary of the Commonwealth
One Ashburton Place, 17th floor
Boston, MA 02108
Monday through Friday, 8:45 a.m. – 5 p.m.
Massachusetts LLC FAQ
How much does it cost to start an LLC in Massachusetts?
How long does it take to get an LLC in Massachusetts?
The general filing time for Massachusetts LLCs is about 4 hours following payment.
Can I start a Massachusetts LLC for free?
No. When filing an LLC in Massachusetts there is a $500 filing fee for all applicants.
What taxes do LLCs pay in Massachusetts?
While there is no state income tax or personal income tax in Massachusetts, there are several other Taxes that your LLC may encounter. We recommend speaking with a licensed tax professional to ensure you are filing and paying the proper taxes.
What is the cheapest way to get an LLC in Massachusetts?
The cheapest way to get an LLC in Massachusetts is to follow the steps above and file yourself. There is an LLC filing fee of $500, but this is required whether you file on your own or use an LLC filing service.
Can I be my own registered agent in Massachusetts?
Yes. See above for more information.
Do Massachusetts LLCs expire?
LLCs in Massachusetts don’t “expire,” but they can be dissolved. Massachusetts may dissolve an LLC after two years for failure to file an annual report. We recommend working with a professional registered agent service who will inform you of upcoming reports and even help you file them.