Form a Massachusetts LLC

LLC Massachusetts

You may be wondering what you can do to form an LLC Massachusetts company. Having the right knowledge and know-how can go a long way in helping you to pull this off. LLCs are some of the most commonly formed companies within the United States, and they have become popular because you can use this structure as a way of protecting your assets like your home, car and your personal bank account.

How to Begin

Getting Started is usually the hardest step. Once you have committed to starting your business you can rely on professional assistance from agencies such as LLC Formations to help along the way. To begin, you will first have to choose a name. You will want to choose a name that no one else uses, or you could run into issues with trademark laws. For starters, you will type the name that you have chosen into the database. You do this as a way of seeing if you have picked a company name that already exists. If that’s the case, you will need to choose another name. Filing for starting an LLC in Massachusetts isn’t necessarily a difficult process. You have to file the Certificate of Organization, and you will do this through the Massachusetts Secretary of Commonwealth. After you have applied, you don’t have much more to do than wait for the approval.

Filing Online

If you chose to file online, you will pay $520 for the fee. If you do it through mail, it only costs you $500. You pay a little extra for filing online because it offers you a little more convenience. No matter how you choose to file, you can expect the response time to take anywhere from 24 to 36 hours. If they have approved you for your LLC, you will need to draw up your Operating Agreement and ask for an EIN from the IRS. Let’s walk you through the process of creating an LLC in Massachusetts.

What are the Name Requirements in Massachusetts?

Before you set out to name your business in Massachusetts, you should first abide by some of the naming requirements to ensure that you don’t experience any problems with it. First, for your business to classify as an LLC, you will have to end your company name with an LLC at the end. You can’t use incorporated or “Corporation” in your names for LLC in Massachusetts because it doesn’t technically classify as a corporation. In addition, you can’t use the abbreviations for these words like Inc. or Corp.

When choosing a name, you have to have a name that distinguishes you from the thousands of other LLCs in the state. This helps you to separate yourself from the rest. Hyphens, periods and commas don’t give you enough distinction. If you have a similarly used name to something else, this could lead to a rejection of your LLC. In addition, singular, possessive and plural won’t be enough to give you a distinction either. You have to make sure that when you go to create another name, you have distinguished yourself enough from the others.

When you go to do the Massachusetts LLC search, you should understand how you want to leave out the LLC in the search. In addition, capitalizing things don’t matter when it comes to the search. If there’s a similar name, it will find it. You want to be thorough for this part because you want to make sure that you have chosen a name correctly. You also don’t want to find out later that the LLC is being used.

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Looking into the Results

Setting out to display the items, you will have it set to 100 items per page. Next, you click on the button that says “Search Corporations,” and you should see up to 100 items per page. Let’s say that you don’t have anything come up. That’s a good thing. It means that you have chosen a unique enough name, and you don’t have to worry that someone else will come back and file a lawsuit against you because you have the same name. You might also see search results that show names that aren’t too similar to yours. This is also a good thing. It means that you can still use your LLC. The key when doing the search is that you don’t want anything that looks to similar to any of the others. You will need to come up with a new name if you see anything that looks similar.

One of the ways that you can find out if your name has too much similarity to another one is to try to file your paperwork and send it in. If the Massachusetts Secretary of Commonwealth sees that the name is too similar, they will send you back a notice and alert you to the fact that you have to change the name.

Getting a Resident Agent

Before you will be allowed to file your Certificate of Organization, you will first have to choose a resident agent. This is the person who will answer for you. They will take your mail, and they will notify you of any important court documents or anything else related to your business. This is why it is so important that you choose a good resident agent. You want someone that you can depend on because there have been cases where lawsuits were filed while the resident agent was out of town. The owner of the LLC never received their information, and the lawsuit proceeded without their knowing it. In the Old Colony State, the resident agent will serve as the point of contact between the state and the LLC. They will give out payment notices, tax reminders and essential documents that a business needs keeping them informed.

The resident agent is not allowed to have a P.O. Box in the state of Massachusetts. They will also need to be available during the regular business hours from 9 am until 5 pm. Some of the documents that they will handle include summons, complaints and subpoenas. You have a couple of different options when choosing a resident agent. They can be your friend or family member, but you can also choose to hire a commercial resident agent. A commercial resident agent gives you a lot more benefits because you don’t have to worry as much that they will fail to inform you about essential information. You can also choose to be your own resident agent, and some people prefer to go this route. However, you have to remember to stay alert to any documents that may come your way. The only real requirement is that the resident agent that you have chosen will need to be a resident of the state of Massachusetts.

How to Get Your Federal Tax Identification Number (EIN) for an IL Startup

This can’t be done on a regional or state level, as it must be done directly through the United States government itself. Specifically, the United States Internal Revenue Service who is tasked with handling all the businesses collecting taxes as well as the taxpayers themselves.

The recommended method is to follow this link to the official EIN application backed by the IRS themselves. Complete the necessary information and submit it to your regulatory authority in order to be a step closer to full compliance of all local and federal business laws and regulations. Usually you will have the chance to get an instant response with a page generated to serve as proof (which is to be printed for your records of course) of your Federal Employer Identification number. It’s the SSN of companies today and how they’re identified as well as accounted for by the federal government itself.

What is advised by experienced entrepreneurs who’ve already been in the spot you’re in today is to save the PDF to your computer and back it up to your cloud drive that’s normally used for backing up critical and sensitive information pertinent to the operations of your business. You can then go ahead and print off as many copies as you need while being assured you also have a hard copy in 2 places that can be used in the future should it become a necessity to provide an agency or other party with.

Which to Choose

How do you choose a resident agent? Keep in mind, you want someone who will be dependable. If you have a street address in Massachusetts, you could choose to be your own resident agent if you are available from 9 am to 5 pm. For those who aren’t a resident, they could use the address of a friend or family member. However, make sure that you can depend on them. Finally, for those who don’t have this, they can choose to hire a commercial resident agent, which eliminates many of the risks associated with this work. Normally, your setup will look much better, and you will have a lot more privacy. For example, some people prefer it this way because it keeps their address off public records.

When you hire a commercial resident agent, it offers you the freedom to do what you want without worry that you might miss something because you have to keep yourself available.

Certificate of Organization

Through the Certificate of Organization, your Massachusetts LLC will be formed. Like from before, you have the option to do this either online or via mail. You pay $500 for mail, and you will pay $520 online for the convenience of filing it online. You can expect the approval time to take anywhere from 24 hours up to 36 hours. If you’re not sure how to file the Certificate of Organization, you can find instruction online for doing it both in the online environment or via mail.

Operating Agreement

The Operating Agreement matters because it will cover you legally. If you will have multiple members at your company, investors or multiple people involved in your LLC, you will want to have an Operating Agreement because it helps you to stave off disputes before they have the opportunity to arise. Important to note, you should always keep the Operating Agreement for your own records as well.

The Operating Agreement looks at how losses and profits get distributed. It also looks at how your taxes get paid.

Meant for Flexibility

It’s important to note that Operating Agreements were meant to provide you with the maximum level of flexibility. This means that you can make changes as the need arises. However, as you make changes, you will need to keep documentation of the old Operating Agreement as well so that people can see how it has changed over time. Any changes that you make to the Operating Agreement, you will have to print off the document and get all the members under the LLC to sign it. This ensures that everyone agrees to the terms of the Operating Agreement.

In the state of Massachusetts, it is not required that you have a formal Operating Agreement. However, it is a good idea to have one because as stated before, it keeps conflict from arising. Everyone knows how business is done this way, and they understand what is acceptable and what isn’t.

Getting an EIN in Massachusetts

The IRS will gladly issue you an EIN after you have finished your Massachusetts LLC filing. We never advise that you get the EIN until after the Massachusetts Secretary of Commonwealth has approved you for your LLC. That’s because if you get rejected for your LLC, you will have an EIN, but you won’t be able to do anything with it. If you wait until after you have received approval for your LLC, you know that your EIN will do its job. Luckily, even if you do get your EIN but no LLC, you can cancel your EIN easily.

What is an EIN?

EIN stands for Employer Identification Number. The IRS gives it out for free, and they will issue it to your LLC in Massachusetts. If you had to compare the EIN to something, you might call it a form of identification like how humans have a social security number. Meanwhile, businesses have an EIN. It serves the business when they go to file their taxes. In some cases, you may not need an EIN. However, it will help you to identify your business to the IRS, and you have a few perks and benefits that come with having one.

Some of the benefits of having an EIN include:

  • You can open an LLC business bank account
  • You can apply for business licensing
  • Obtain business loans and lines of credit
  • Get a business credit card to help your LLC

What if You're a Foreigner?

You can still get an EIN if you don’t have a social security number or an ITIN. For those who are foreigners, to get an EIN, you will have to fill out the SS-4 form. Perhaps you read that you can do a phone application for getting your EIN. However, the IRS decided that they will no longer continue with this form.

How They Tax Massachusetts LLCs

You can choose to structure your LLCs in a couple of ways. Some may be more advantageous to you than others. By default, you can do this based on the number of members who belong to your LLC. Through the default status, you won’t be taxed as a corporation. You have two different types. You can either choose Single-Member LLC, or you can choose Multi-Member LLC. Under Single-Member LLC, you will be taxed as a sole proprietorship. That means that the business itself doesn’t get taxed separately. With a Multi-Member proprietorship, your LLC gets taxed more like a partnership. That means that each partner will share their income and losses on their tax return.

Speak with a Tax Representative

When it comes to these things, you should speak with a licensed tax specialist who understands LLCs. They can look at your circumstances to figure out what will prove the most beneficial for you individually. Taxes can be complicated, and you have many tax laws that you need to navigate. Not to mention, new laws pop up every year, and you want to stay on top of the new laws that are coming up each year. LLCs can get a little confusing when it comes to tax laws, which is why you want to use someone who understands this specific field of taxes. A failure to pay your fees on this can lead to your LLC being dissolved, so you want to make sure that you follow through with everything on it.

Filing Your Annual Report

If you plan to do business in Massachusetts as an LLC, you will have file an Annual Report each year. This ensures that you LLC stays compliant so that they can’t shut it down. You will pay $500 to file it via mail, or you can pay $520 to file it through the internet. You won’t have to file your first Annual Report until after the first year has passed for your LLC being formed. Every year, it will be due on April 2, 2020. You have to make sure that you file this because you don’t want your LLC to be seen as delinquent and consequently dissolved. Important to note, you have to file it by April 2, but you can file it earlier if you want.

This is so important that it is recommended that you mark it down as a date on the calendar. In this way, you ensure that you never forget to file it. A few months before the due date, the state will mail you a reminder to make sure that you know that it is due. Remember, however, that the state does this out of courtesy. They don’t have to do this, and you don’t want to rely on it because you could forget to do it if they failed to send it out. You should add a reminder on your calendar 90 days before the due date comes to ensure you get it.

Keep a Record of It

If you decide to send it via mail, you will want to send it in money order form. This is because you want to keep a record that you paid it, and the state won’t do this for you. Let’s say that you decided to pay online. For those cases, you will be given something that you can print off to show that you have paid for it.

Getting Business Licenses and Permits

When forming an LLC in Massachusetts, you should make sure that your business complies with permits and licensing. Not every LLC will require this, but you do have some that will need to comply. If you fail to comply, you could have to pay fines and penalties. Even worse, the state could block you from doing business here.

Some of the permits and licenses that you may need include:

  • Zoning permit
  • Health permit
  • City business licenses
  • Alcohol and tobacco permit
  • Building permit
  • Occupational permit
  • Alarm permit

 

With almost 20,000 license and permit jurisdictions within the United States, you have to keep up with each one to make sure that you remain compliant. You might even hire a company that understands this so that they can do research for you to make sure that you have everything needed. They will do their research and help you to prepare your taxes to get the most from it.

Getting Your Taxes Done

With your taxes, you may want to hire a specialist because this field of law isn’t quite as straightforward. Having a specialist will ensure that you meet all your obligations, and they can help you to get everything that is needed. You also have a variety of other taxes that you need to stay aware of.

Some of the taxes that you might face include:

  • Tobacco tax
  • Property tax
  • Employer’s withholding tax
  • Sales and use tax
  • Transient room tax
  • Fuel tax
  • Local taxes

You want to make sure that you calculate your taxes correctly because a failure to do so could lead you to the dissolving of your LLC. This is why it is very important that you follow through with protocol and hire a professional. In some cases, people no longer want to do business under an LLC because it is more advantageous to do otherwise. In these cases, you will need to file a dissolution of your LLC. When looking for a professional, take the time to interview multiple tax specialists. You want someone who specializes in LLCs because they will understand the tax laws better.

Luckily, creating an LLC in Massachusetts isn’t overly difficult. However, you could benefit from having someone else come in and help you to file for it. This is because they will have a greater understanding of the different intricacies. They have made it their business to do this, and they will know what works and what doesn’t work. In addition, they can help you to steer clear of some of the many pitfalls that you can encounter when you first get started with your LLC Massachusetts company. These are all things that you need to consider to get the best results. The next topic we will be discussing is on Michigan LLC best practices.

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