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How to Form A Massachusetts LLC: Massachusetts and its Many Business Benefits

There are many requirements that go into getting your Massachusetts LLC up and running, some of which can be overwhelming for first-time LLC applicants.

However, with the right support, you’ll be able to successfully form your Massachusetts LLC so you can start doing business as a limited liability company. Below you will find an overview of each step for the state of Massachusetts:

The Massachusetts LLC formation process has nine easy steps:

1. Complete an LLC Name Search

2. Select a Registered Agent

3. Obtain a Certificate of Formation

4. Create an LLC Operating Agreement

5. Get an EIN Number

6. Open a Business Bank Account

7. Obtain Business Licenses and Permits

8. File Your LLC Taxes

9. Complete an Annual Report

 

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What is a Limited Liability Company (LLC)?

A limited liability company, also known as an LLC, is a business structure that an entrepreneur can open in order to legally offer business services in their chosen state. In addition to the many benefits offered by an LLC, perhaps the most well-known advantage is the protection of personal assets offered by the limited liability company.

Limited liability companies allow you and your partners to offer your business services with the guarantee of your personal assets being protected in the case of debts or lawsuits. This means that any personal bank accounts, properties, or vehicles remain separate from the LLC and cannot be taken in the case of debts or lawsuits against the LLC.

If you need help with any part of the LLC formation process, contact the professionals at LLC Formations so we can help you get your Massachusetts LLC up and running.

1. Choose an LLC Name for Your Massachusetts LLC

The first step of forming an LLC is choosing the name of the LLC. Your small business needs to have a clever and unique name that has no similarity to any other business entity in the state of Massachusetts when you start an LLC.

Conduct an LLC Name Search

In order to check the availability of your LLC name, you will need to conduct a name search through the Secretary of the Commonwealth website. The Commonwealth of Massachusetts will be the ones to approve or deny the LLC name for your business entity.

To conduct the search, click the button that says “Search Corporations,” and you should see up to 100 items per page. If nothing comes up, it means that you have chosen a unique enough name for your LLC and can continue forward with the process of forming your Massachusetts LLC.

What if the LLC Name is Denied?

If the Massachusetts Secretary of Commonwealth sees that your business name is too similar to another business name, they will send you back a notice and alert you to the fact that you have to change the name of your Massachusetts LLC.

At this point though, you have already included the filing fee for your LLC name, and this fee is unfortunately not refundable. Be sure to conduct a name search through the Secretary of the Commonwealth website in order to avoid this issue.

What is the Filing Fee?

If you chose to file for the LLC name online, the filing fee will be $520. If you file by mail, the filing fee will be $500 $500. No matter how you choose to file, you can expect the response time to take anywhere from 24 to 36 hours.

If the Secretary of the Commonwealth has approved your LLC, you will then be able to continue forward with your LLC formation process. If you need help with any part of the process, contact the team at LLC Formations so we can help you get your business started.

Reserve a Domain when You Form Your Massachusetts LLC

It’s important that you make sure to reserve a domain name with your business name before submitting your LLC application. Business is often done online, and missing the opportunity for an online presence can negatively impact your Massachusetts LLC.

A small business will benefit from having a website to attract customers and clients. The domain name of your website should be the same as your company name. This way, your marketing material remains consistent for your business from when you form an LLC.

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2. Choose a Registered Agent for Your Massachusetts LLC

When you start a business in Massachusetts, the state requires you to organize a registered agent or a registered agent service for your LLC. The registered agent, also known as a resident agent, is a representative who receives official notices on behalf of your LLC.

The documents can include certified mail, official notices, or court documents such as a Service of Process. The Service of Process means that your LLC is being sued, so it’s definitely important to be made aware of all mail intended for your LLC. This is why it’s important to choose a resident agent or a service who can be fully available, reliable, and responsible.

Your chosen registered agent (R.A.) must have a physical street address in the state of Massachusetts. If you are operating as a foreign LLC, you may want to hire an agent for service if you reside outside of Massachusetts.

Who Can be a Registered Agent?

Be Your Own Registered Agent

As the owner of the limited liability company, you can be your own registered agent according to the Secretary of the Commonwealth. You need to be of at least 18 years of age, you must have an address in Massachusetts, and you must be relatively available during normal business hours to receive mail on behalf of the LLC.

Choose a Family Member or Friend

You can find a trustworthy friend or family member to act as the registered agent for your LLC in Massachusetts. This person must be at least 18 years old, provide written consent, have an address for their home or business in Massachusetts, and remain reasonably available during normal business hours to receive mail on behalf of the LLC.

Hire a Registered Agent

You can also hire a registered agent service for a small fee when you form an LLC. Hiring a professional agent for service is a great way to guarantee availability and professionalism on behalf of your business in Massachusetts.

Since the address of a registered agent is public record, this method is also a good way to keep your personal address off public records sites. Additionally, if you’re starting business as a foreign LLC in Massachusetts, then you’ll want to hire a service if you live out of state. Hiring commercial resident agent offers you the freedom to do what you want without worry that you might miss something important.

If you need help with choosing a registered agent for your Massachusetts LLC, contact the team at LLC Formations so we can help you get your business started.

3. Create Your Certificate of Organization

The Certificate of Organization, also referred to as the Articles of Organization, is the document that officially and legally forms your LLC in Massachusetts. When you form an LLC, you will need to file your Certificate of Organization with the Secretary of the Commonwealth to receive your LLC approval.

If you operate as a foreign LLC, even if you have the Articles of Organization completed in another state, you will need to create a new document with the relevant information for your LLC in Massachusetts.

You must also include a state filing fee when you file a Certificate of Organization. You can either file your Certificate of Organization online or by mail, with the online option being the quickest and most convenient. If you file your Certificate of Organization online, you can pay the fee by credit card. If you file by mail, you can pay the fee with a check or money order.

What is Included in the Massachusetts Certificate of Organization?

  • Business Name (Unique and distinguishable)
  • Registered Agent (with Massachusetts street address)
  • Principle Business Address
  • Member-Managed or Manager-Managed
  • Duration (Most people leave this open-ended to let the state know the business plans to run indefinitely)

4. Create an LLC Operating Agreement

The Operating Agreement is important information to have on file when you form an LLC because it will cover your LLC legally. If you have multiple members in your Massachusetts LLC, investors, or multiple partners involved in your business, you will want to have an Operating Agreement because it helps your LLC to stave off disputes before they have the opportunity to arise.

You should always keep the Operating Agreement accessible for your own records. The Operating Agreement looks at how losses and profits get distributed. It also looks at how your taxes get paid, and you can also include any specific information that is relevant to how your LLC runs.

Operating Agreements are Meant for Flexibility

It’s important to note that Operating Agreements were meant to provide you with the maximum level of flexibility across business structures. This means that you can make changes to the information as the need arises.

However, as you make changes, you will need to keep documentation of both the old and the new Operating Agreement. Any changes that you make to the Operating Agreement will require a new printed document with the information and signatures. This ensures that everyone agrees to the terms of the new Operating Agreement for the organization.

In the state of Massachusetts, it is not required for LLCs to have a formal Operating Agreement. However, it is a good idea for LLCs to have one because as stated before, it keeps conflict from arising and keeps members organized within Massachusetts LLC.

If you need help with deciding which information to include on your Operating Agreement, contact the professionals at LLC Formations so we can help you create your Operating Agreement.

5. Get an Employer Identification Number (EIN) for Your Massachusetts LLC

When you do business as an LLC in Massachusetts, you’ll want to get an EIN as soon as your LLC status is approved. An EIN, short for a federal employer identification number, is crucial to the successful start-up of your LLC in Massachusetts.

There are many benefits of having an EIN, such as being able to open a business bank account, pay employees through company payroll, and you can apply for specific licenses and permits. You will also receive benefits for tax purposes once you form an LLC and register an EIN.

How to Obtain an EIN from the IRS

Obtaining an EIN can’t be done on a regional or state level. It can only be done directly through the United States government itself. Specifically, the United States Internal Revenue Service is tasked with handling all the business of collecting taxes as well as handling the taxpayers themselves.

The recommended method is to follow this link to the official EIN application backed by the IRS. This is where you will need to register for an EIN. Be sure to include your company name, members, and any other relevant information you will need to register on the site. There will be no filing fees required for LLCs when applying for an EIN.

Complete the necessary information and submit it to your regulatory authority to be reviewed by a person authorized to give out an EIN. Usually, you will have the chance to get an instant response with a page generated that will serve as proof of your EIN in the state of Massachusetts.

EIN for Foreign LLCs

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 instead of the traditional online application once you form an LLC.

Keep Your EIN Secure

Your EIN is like the Social Security Number of LLCs today, so be sure to keep this number somewhere safe. This number will identify your business and keep it accounted for by the federal government.

Experienced entrepreneurs advise business owners to save the PDF to their computer and back it up to a cloud drive. You can then go ahead and print off as many copies as you need while being assured you also have a hard copy in multiple places in case the need arises.

6. Open a Business Bank Account

After forming an LLC in Massachusetts and obtaining an EIN, the next step is to open a business bank account for your LLC. Even if you run a single-member LLC, it is important to keep personal and business finances separate to help with asset protection and to keep your LLC organized.

It is best to sign up for a business bank account in person. Be sure to bring the following documents with you to your appointment:

  • Stamped Certificate of Organization
  • EIN approval letter
  • Name and address on photo ID

 

You should also call ahead to determine if the bank needs anything else. Be sure to ask if there is a minimum monthly balance required when you own a business account. You can also consider signing up for a credit card to build business credit, which can provide your LLC with the option to grow in the future.

7. Get the Proper Business Licenses and Permits

When forming an LLC in Massachusetts, you should make sure that your business complies with all required permits and licensing within the state. Not every LLC will require additional business licenses, but it’s important to check if the service or services you offer require any additional steps in the state of Massachusetts.

If you fail to comply, you could have to pay fines and penalties to the state. Even worse, the state could block you from doing business as an LLC in Massachusetts.

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 in your state. You might even hire a company that understands your specific state and its needs so everything can be properly taken care of.

If you need help to understand which business licenses and permits your Massachusetts LLC may need, contact the professionals at LLC Formations so we can help you get your business up and running.

8. Understand Taxes for Your LLC

When it comes to taxes, you may want to hire a specialist because taxes aren’t always so straightforward from state to state. Having a specialist will ensure that you meet all your obligations as an LLC within the state of Massachusetts.

You also have a variety of other taxes that will need to be paid to the Massachusetts Department of Revenue depending on which services your LLC offers. Some of the taxes that you might owe to the Department of Revenue include:

  • Tobacco tax
  • Property tax
  • Employer’s withholding tax
  • Income 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 not being able to afford your taxes, or worse, to the dissolving of your LLC. It’s important that you follow through with protocol and hire a professional who is authorized to execute important decisions about how your Massachusetts LLC should handle taxes.

Speak with a Tax Representative

When it comes to taxes, 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 your LLC individually.

Taxes can be complicated, and there can be many tax laws to navigate when you do business as a Massachusetts LLC. 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. This is why you want to work with a professional who understands LLCs and their specific field of taxes in Massachusetts.

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.

How a Massachusetts LLC is Taxed

LLCs can choose to structure themselves in a couple of ways. Some LLCs may be more advantageous than others. By default, you structure your business based on the number of members who belong to your Massachusetts LLC.

Through the default status, you won’t be taxed as a corporation. Instead, 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. When you are taxed as a sole proprietorship, 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 profits and losses on their tax return. Since all members will be responsible for their own profits and losses, it’s important to keep your business bank account organized.

9. File Your Annual Report

If you plan to do business as an LLC in Massachusetts, you will have file an annual report each year. The submission of the report ensures that your Massachusetts LLC stays compliant and that the relevant information is on file with the state.

What is the Annual Report Filing Fee?

The fee for most LLCs is $500 if filed by mail, or $520 if you choose to use the online service. You won’t have to file your first annual report until after the first year of your business in Massachusetts being active.

When is the Report Due?

Every year, the report will be due by April 2, 2020. You have to make sure that you file the report on time because you don’t want your Massachusetts LLC to be seen as delinquent, or worse, dissolved.

We recommend that you mark the due date down on the calendar once you form an LLC. This way, you ensure that you never forget to file your report on time. A few months before the due date, the state will mail you a reminder to make sure that you know that it is due. The letter will be sent to your registered agent who should then inform you about this important requirement for your business.

If you need help with organizing the report for your Massachusetts LLC, contact the professionals at LLC Formations. We offer a service for every step of the LLC formation process and can help you organize your yearly report.

Keep a Record of Your Annual Reports</>

If you decide to send your report via mail, you will want to attach a check or money order for the fee payment. It’s important to keep a record of your payment to show that your annual reports have been filed if a dispute ever arises for your LLC.

How Can LLC Formations Help You?

Starting a new business can be overwhelming, but when you have the right help, the process can be quick and painless. Having someone to help guide you through the filing process allows you to focus on the most important parts of growing your LLC in Massachusetts.

By following the steps listed above, you will be able to have your business up and running in no time. Contact our professional team at LLC Formations if you need help with any part of the process. We offer services that help with every part of the process.

Check out our guide on opening a Michigan LLC.

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