If you’re looking for a reliable DIY guide for starting an LLC in Massachusetts, look no further.
Below you’ll find all the information you need to launch your business and handle any associated costs. Follow each step carefully and your LLC will be established and ready to hit the ground running.
That said, the process can be complex, with various filings and costs, so if at any point you need help, you can hire a good LLC service.
Need Help Starting Your LLC?If you want to make sure your LLC is formed correctly, hire an LLC service. Below are the top two that will take care of all the legal paperwork:
ZenBusiness – $39: If getting the most value out of an LLC service is your priority, choose ZenBusiness. They charge one of the lowest rates online and include all the most important features when starting a business. IncFile – $0: If you're on a strict budget and prefer using the cheapest LLC service, choose IncFile. They will form an LLC for free (plus state filing fee) and give you great features along the way.
ZenBusiness – $39: If getting the most value out of an LLC service is your priority, choose ZenBusiness. They charge one of the lowest rates online and include all the most important features when starting a business.
IncFile – $0: If you're on a strict budget and prefer using the cheapest LLC service, choose IncFile. They will form an LLC for free (plus state filing fee) and give you great features along the way.
Step 1: Name Your LLC
What’s in a name? Quite a bit, actually. Your business name is your Massachusetts LLC’s identity, its personality, its reputation. Find a name that sticks in customers’ minds – while conveying your brand qualities – and you’ve struck gold. A unique, memorable name can draw in new customers and keep existing ones coming back.
Your LLC name is going to appear everywhere: business cards, marketing collateral, websites, legal contracts, bank accounts, invoices, directories, and much more. So be sure that it conveys your product, service, brand, and values.
While you can (and should) be creative with your business name, there are certain commonwealth requirements that it must follow.
Before you choose a name, confirm that it meets the commonwealth’s requirements. This means it must use the words “limited liability company,” or “limited company,” or one of the following abbreviations: “L.L.C.,” “L.C.,” “LLC,” or “LC,” and it must be distinguishable and “not deceptively similar” to any existing business names.
But if your name is unavailable, how can you make it distinguishable? The commonwealth doesn’t provide specifics, but typically, changing the following elements won’t cut it:
- Punctuation and special characters
- Capitalization and spacing
- Articles (“a,” “an,” and “the”)
- Conjunctions (like “and,” “but,” and “or”)
- Business type designators like LLC, Ltd, Inc., or Corp.
In short, to create a unique name, you must significantly alter or rearrange it’s key words rather than its syntax.
Consider this: your friend Fanny wants to open a flower shop in Salem, Massachusetts. The name she wants, Flowers by Fanny, LLC is already in use. So she comes up with a new one: Fanny’s Florals and Design, LLC. This name is similar to the original but includes new words, distinguishing it in the Secretary of the Commonwealth’s records.
Determine the Name is Available
Of course, you will only need to make distinguishable changes if your name is already taken. Don’t make the mistake of ordering business cards, creating advertisements, and using a name on documents like the Certificate of Organization without first confirming it’s available. Use the Secretary of the Commonwealth’s Business Entity Search and Reserved Names Database to see if there’s an existing business using your desired name.
Maybe you pegged a distinguishable name right away, or maybe it took some modifications, but either way, once you have a unique name, you can lock it down by filing a name reservation.
Optional: Name Reservation
You may have fallen in love with a particular name, but still have some preparation and paperwork to sort out before starting your LLC, and you’re worried that someone will swipe it in the meantime. To calm your nerves, you can reserve that name in Massachusetts for a total of 60 days.
Think about Fanny. After making her name distinguishable, she’s ready to make it official, but if she’s waiting on some paperwork to start her LLC, she can place a hold by mailing or hand-delivering an Application of Reservation of Name and a $30 payment to:
Secretary of the Commonwealth
One Ashburton Place, Room 1717
Boston, Massachusetts 02108-1512
The standard processing time is 3-5 business days. And while this can be a helpful tool if you’re not quite ready to start your business, it’s not worth it if your LLC is ready to go right away. You’ll save time and money by simply using your name on the Certificate of Organization instead, as this will register it automatically.
Step 2: Choose a Resident Agent
Fanny’s LLC is quickly taking shape, and if it’s going to operate in Massachusetts, she’ll need a go-between for commonwealth and legal communications. This is called the resident agent.
A resident agent is a key component of your budding LLC, handling all of its sensitive communication with the commonwealth so you don’t have to. But maintaining an agent isn’t just a convenience, it’s required. According to Massachusetts law: “Each limited liability company shall have and maintain in the commonwealth… a resident agent for service of process on the limited liability company.”
Taxes, lawsuits, maintenance requirements, and more – the resident agent takes care of it all. If you had to do this yourself, it would pile additional tasks onto your already-full plate. Plus, your agent makes your business available to receive documents even when you’re out of town or away from the office. This is especially important if your physical office is outside Massachusetts.
Now for the practical application, the “how-to.” Appointing a resident agent is a one-step process. All you need to do is include the agent’s name and address on your Certificate of Organization, and that information will become part of your LLC’s public record. But make sure you get the agent’s permission before doing so.
You have two options for who can serve as a resident agent: an individual or a company.
Individual as Resident Agent
You may think that an individual resident agent would need specialized training or experience, but this isn’t the case. Anyone can serve as your resident agent, as long as they are a Massachusetts resident with a current physical address in the commonwealth, and are at least 18 years old.
Third parties like attorneys, accountants, or consultants are good options, but friends and family are also valid. You can even serve as your own LLC’s agent, provided you meet these requirements.
Resident Agent Service
It can be a lot easier, though, to use an LLC formation service like ZenBusiness (or even IncFile and Northwest Registered Agent), so we highly recommend it. Not only will they take care of business formation requirements, but they’ll also include a free registered agent service. Or, if you’d rather start your LLC in MA on your own, you can use a national registered agent service to cover your agent duties.
During the life of your LLC you may, at some point, need to change your resident agent. Perhaps you want to switch from an individual to a professional service, or maybe your existing resident agent resigns. Either way, you’ll want to make the change as soon as possible because operating without an agent on file can lead to administrative dissolution.
Step 3: File the Formation Documents with the Commonwealth
This is where the LLC formation process kicks into high gear. Let’s check back in with Fanny.
She’s reserved her unique business name, designated a resident agent, and she’s ready to get her LLC off the ground. It’s time for Fanny to take on the most important LLC document: the Certificate of Organization. This filing creates a record for Fanny’s Florals and Design, LLC with the Secretary of the Commonwealth, giving it the authorization to commence business in Massachusetts.
When it comes to actually filing the Certificate of Formation, you’ve got options. The commonwealth accepts form online, by mail, by fax or in person, so you can choose the method that works best for you. The filing fee is steep, though, no matter which route you take – $500 for mailed or hand-delivered forms and $520 for online or faxed submissions. The standard processing time is 24-48 hours.
By filing electronically, you can take care of the entire process from your desk by using the Corporations Online Filing System. Select “Certificate of Organization” under “Limited Liability Companies and you can enter your LLC’s information on the next page.
Filing by Mail
Complete the paper application in its entirety, then include your payment and mail it to:
Secretary of the Commonwealth, Corporations Division
One Ashburton Place, 17th floor
Boston, MA 02108-1512
In Person Filing
If you live in Boston, you can also hand-deliver your finished form and payment to the same address.
All faxed documents must include a Fax Voucher Cover Sheet. You can fax both documents to (617) 624-3891.
Step 4: Create an Operating Agreement
The operating agreement is the framework that holds up an LLC, the vital underpinning that establishes processes for its procedures, activities, and conduct. Essentially, it serves as your company’s bylaws.
Massachusetts LLCs are not required to adopt an operating agreement, as there’s no law that mandates it. That said, it’s still important to draft one because it will provide the stability, legal protection, and efficiency necessary for your LLC’s success. Not only will it standardize your business conduct, but it will also legitimize your company in the eyes of banks, courts, and government agencies.
Let’s say our friend Fanny sells a percentage of her company to two other owners. Her operating agreement could stipulate how the LLC’s assets would be distributed among them in the case of dissolution. But if she decided to maintain sole ownership, the agreement could be used in court as evidence that the LLC’s assets are separate from her personal ones. These are just two examples, but the operating agreement governs everything from member duties to the tax structure.
If you’ve decided to draft an agreement, there are two ways to go about it:
- Write it yourself. Don’t be intimidated by this option. There are plenty of free online templates that serve as helpful guides. You can create an effective document from most of the templates out there, but we recommend getting one through ZenBusiness, which includes a free LLC operating agreement with every package. This will save you a lot of time and money.
- Hire an attorney. If you want to be absolutely sure that you don’t miss any important details, an attorney can write or review the agreement for you, ensuring that it complies with commonwealth law, includes all necessary information, and avoids Massachusetts’ default laws.
What are default laws?
Each state has its own set of generic, baseline laws for how LLCs should operate. These laws, however, only govern matters not included in your operating agreement. Take dissolution, for example. If your LLC ever dissolves, your operating agreement would determine what happens to its remaining assets and debts. But if you fail to include it in the agreement, the commonwealth will make that decision for you.
Because default laws are broad and not tailored to your specific business, they often aren’t in your LLC’s best interest, so it’s best to avoid them by being as comprehensive as possible in your agreement.
Step 5: Get an EIN
There’s simply no way to avoid taxes. In fact, it’s illegal to try, so don’t do it.
Federally, LLCs are classified as “pass-through” entities, businesses that don’t file corporate tax returns, but whose owners include income and losses on their individual returns. Still, there are certain circumstances that require LLCs to pay federal taxes, like classifying as a corporation or partnership, hiring employees, or selling merchandise. So, in Fanny’s case, if she plans on hiring additional florists and selling bouquets, she will need to apply for an EIN.
The Employer Identification Number (EIN) is a nine-digit number that the IRS will use to identify your company’s tax accounts, so if you pay any business taxes, it’s extremely important to have one. Click the “Do I need an EIN?” link on this page to see if you fall into this category. If so, apply for an EIN one of three ways:
Need to get this done quick? File online – it’s by far the most efficient method. You can only complete the process between 7 a.m. and 10 p.m. EST, Monday through Friday, but you’ll receive your number immediately upon finishing the digital form. Keep in mind that you will need to provide a valid individual taxpayer number (like a Social Security Number) as part of the process.
You might prefer the feel and security of a paper form. In this case, download Form SS-4, complete it, and fax it to (855) 641-6935. You will receive your EIN within four business days.
Or, there’s always trusty postal mail. However, this is the slowest option, as processing typically takes around four weeks. If that doesn’t deter you, fill out Form SS-4 and send it to:
Internal Revenue Service Operation
Attn: EIN Operation
Cincinnati, OH 45999
Okay, so you’ve filed the Certificate of Organization, designated a resident agent, adopted an operating agreement, and filed for an EIN. Time to start doing business, right? Sorry, there are a couple of additional steps you may need to take first. But don’t worry, you’re almost there!
Step 6: Taxes, Licensing & Income Reporting
For all intents and purposes, most LLCs will be official after completing all the prior steps. Still, it’s important for business owners like Fanny to keep looking ahead, as there are certain maintenance requirements to keep a Massachusetts LLC running smoothly and in good standing with the commonwealth.
Before you start doing business, create a plan for the following potential LLC requirements:
As mentioned earlier, LLCs are almost always classified as “pass-through” entities, which means that they don’t pay income taxes directly to the federal government. That responsibility falls instead on the owners, who must include business income and losses on their personal 1040 tax returns and/or Schedule C. LLCs are flexible with tax structure, so you can choose to have yours taxed like a corporation instead. In this case, it would need to file a separate corporate tax return.
As a Massachusetts LLC, your commonwealth taxes are fairly simple. Like federal income taxes, commonwealth ones pass through to the owners’ personal returns. And unlike some other states, Massachusetts does not impose a “franchise” or “privilege” tax on its LLCs. You may read about the Corporate Excise Tax on the Department of Revenue website, but this tax doesn’t apply to LLCs.
Your LLC may be responsible for other business-related taxes if it meets certain conditions. Do you have employees? Then your LLC will owe Withholding and Unemployment Taxes. Do you sell any merchandise? If so, it will need to pay Sales and/or Use Taxes. You can register for all of these taxes through MassTaxConnect.
Plus, depending on your LLC’s location, it may owe a local tax to the city, municipality, or county where it resides. Consult your local government’s website to find out.
The Certificate of Organization may have already made your business legitimate, but your LLC might still need to obtain a license before doing business. This all depends, however, on the type of business you run.
Our friend Fanny, for example, may need a Nursery Agent License from the Department of Agricultural Resources before her flower shop can open its doors. Your LLC might need licensure or permits as well. Check out the commonwealth’s Division of Professional Licensure page to find out.
Certain cities and counties require their own specific licenses on top of any commonwealth ones, so you should also check with your local government.
Once you’ve taken all the steps to start your LLC, you’ll be off and running, making deals and growing the company. But when you’re rolling along and things are moving 100 miles per hour, don’t forget that Massachusetts requires all of its businesses to submit one important recurring filing: the Annual Report.
Your LLC must file an Annual Report on or before its anniversary date each year. Like the Certificate of Organization, each report costs $500 for mailed and in-person submissions and $520 for online and faxed ones.
Use the filing information listed in the Certificate of Organization section to submit your reports, and make sure you don’t forget to file because your LLC can lose its good standing if it misses an Annual Report.
And we’ve come to the end. It’s a long process, and not always easy, but the reward is well worth it. If you’ve made it this far, congratulations! Your Massachusetts LLC is ready for takeoff. So go ahead and start with that big sale, promotional campaign, or business deal. Maybe you’ll see Fanny out there in the business world, selling her beautiful floral creations.
Need Help Creating Your LLC?
If you even skimmed this guide to look over the steps, you likely got a sense of how many moving parts there are when starting an LLC. Can you do it all yourself? Absolutely. We have complete confidence in you.
But if you’d rather hand it off to someone else and not have to worry about it again, we recommend using an LLC registration service. This way, you can go about your other business responsibilities with the confidence that everything will be submitted correctly and punctually.
Plus, an LLC formation service can handle maintenance items like Annual Reports, so you can take them off your to-do list. And on top of that, many services also provide a resident agent.