How to Start a Professional LLC in Massachusetts - Form a PLLC in MA
Launching a professional practice is a serious step to take. Similar to other beginner businessmen, you’ll find yourself wondering which type of entity will best suit your business needs.
An LLC structure ensures liability protection, flexible taxation, and easy enterprise control while providing independence for the business. In Massachusetts, certified specialists could go further and create a professional LLC. Check our guide to start on the right foot.
How to Form a PLLC in Massachusetts?
If you have some sort of certification or registration enabling you to deliver specialized services, you can open a PLLC in Massachusetts. Professions entitled to PLLC formation include but are not limited to:
- Architects and engineers;
- Certified public accountants, lawyers, and attorneys;
- Different types of medical practitioners;
- Veterinarians.
Before you dig into your Massachusetts PLLC registration, though, make sure all prospective PLLC members have required professional permits in place. Otherwise, your future company will be open to eligibility risks.
Once you are ready, it won’t take you long to form a legal entity. Just follow our simple instructions below.
Name Your Massachusetts PLLC
First and foremost, when naming a PLLC, there are certain legalities to observe. Both a professional regulatory board and state law can set naming restrictions. You can find a full code of naming rules in the Massachusetts State Statute.
Meanwhile, a few key rules to remember when inventing a moniker for your future company are as follows:
- A company name should include an entity designation such as a “limited liability company”, “professional limited liability company” or abbreviations thereof;
- You are not allowed to use any words suggesting affiliation to federal or state authorities and statutory or governmental organizations;
- Your business name should be unique in Massachusetts i.e not used by any other registered business entity in the state;
- The name cannot sound like any other existing business name. Notably, plural forms, suffixes, prefixes, and articles won’t make a name distinguishable;
- Avoid using the words “bank”, “credit agency”, “college”, “school”, “university” and other similar terms that require specific licensing.
To ensure the chosen business name is available in the state and can be further entered into your formation docs, do a business name search in Massachusetts. This will help prevent rejected filing due to selecting the wrong company name.
Besides, it’s advisable that you choose a descriptive name that will refer to your professional activity. Since you already have professional certifications, you can use professional terms in your business moniker.
Designate a Resident Agent in Massachusetts
Typically known as a registered agent across the nation, a resident agent (RA) in Massachusetts is an individual or legal entity that will handle official mail on behalf of your PLLC including:
- Service of process, court summons, and other lawsuit docs;
- Tax notifications;
- Filing requests;
- Regulatory statements;
- Statutory provisions and prescriptions, etc.
State residency and a registered address in Massachusetts are two core rules for RAs in this state. An agent should be present under the registered address from 9 am to 5 pm on weekdays to personally handle your correspondence.
There are no other limitations, though. With that, you can:
- Be an RA for your own PLLC;
- Agree with some of your friends, relatives, colleagues, or even neighbors to perform this role;
- Delegate the task to a specialist with associated professional expertise such as an attorney, business accountant, or tax consultant;
- Hire one of the RA services operating in Massachusetts and solely dedicated to this work.
Two latter options come at a cost, yet, will certainly save you peace of mind and contribute to your business compliance by monitoring your crucial correspondence. With an RA service on your side, you can also expect to match your RA needs in other states.
File Your Certificate of Organization in Massachusetts
When you check the chosen business name and decide on an RA, you are ready to file a PLLC in Massachusetts. At this stage, you should submit your Certificate of Organization to the state office and get it approved by the Secretary of State.
You can file using one of the following methods:
- Online via the Commonwealth of Massachusetts website;
- By mail, fax, or in person. Download the form, fill it in, print it out, and send or bring it to.
William Francis Galvin
Secretary of the Commonwealth
One Ashburton Place, Room 1717
Boston, MA 02108
or fax it to
(617) 624-3891 along with a cover sheet.
By form and content, the Certificate of Organization is a generic document embracing standard company info including the following:
- Your PLLC name;
- RA name and address;
- Company purpose;
- Statement about member-managed or manager-managed structure;
- Mentioning the entity type which is a professional LLC;
- Authorized person info and signature.
Create an Operating Agreement for Your Massachusetts PLLC
Massachusetts doesn’t call for LLCs to have an Operating Agreement. Yet, this document is too important to be neglected, especially when you form a company providing professional services.
Though an internal instrument, this agreement stipulates the rules of how the company is to be managed and controlled. Its major function is to:
- Describe operational procedures for efficient ongoing business management;
- Avert any conflicts and misunderstandings between the PLLC members that could lead to wrong decisions and negatively impact certain business spheres.
An Operating Agreement is compiled by the PLLC co-owners and reflects their covenants regarding:
- Ownership split;
- Management structure;
- Manager and owner rights and powers;
- Voting rights and procedures;
- Profit and loss distribution;
- Management and membership changes;
- Company dissolution.
Acquire an EIN for Your Massachusetts PLLC
Once formed, your PLLC becomes an independent entity legally separate from you. And it will be treated as such by all statutory and regulatory authorities. To identify your entity as such, those authorities use codes similar to Social Security Numbers for Individuals.
An EIN is a Federal Tax Identification Number or an Employer Identification Number that makes business entities visible in legal and regulatory fields as well as visible as a taxpayer. It’s issued by the IRS for free and getting it is as simple as filing an online application.
At the same time, you will need an EIN to:
- Run a multi-member PLLC;
- Pay some federal and state levies;
- Hire employees;
- Open a bank account for your business.
How Much Is a PLLC in Massachusetts: PLLC Massachusetts Cost
The state has the highest filing fee in the US. You’ll have to pay $500 for the PLLC formation in Massachusetts. It’s a compulsory state fee and you can’t skip it.
Above that, though, there are a few other expenses you might find on your payment list
| Service | Cost |
|---|---|
| An expedited filing fee for quick online processing | $20 |
| A name reservation fee if you seek to put your name on hold before filing | $30 |
| DBA registration fee if you want another name for your company different from its registered name | $65 |
| Annual RA service subscription | between $50 and $300 |
Starting PLLC in Massachusetts: First Post-Formation Steps to Take
To keep your company afloat after you start a PLLC in Massachusetts, there are a few important steps you need to take immediately after state filing.
Opening a Business Bank Account
It’s vital to separate personal and business funds, assets, and expenses from the very beginning to retain the corporate veil integrity and enjoy the liability protection to the full.
Set up a dedicated bank account for your business and maintain an accurate and comprehensive accounting system. This way, you’ll control business cash flows in the best manner possible and avoid any liability issues.
Getting Business Licenses
Apart from the professional certifications you need to have in place when setting up a PLLC in Massachusetts, there are other permissive documents you might need for your business.
Thus, LLCs are licensed at the federal, state, and local levels. You can check a US Small Business Administration Guide and the Professional Licenses and Permits section on the state website for federal and state licenses appropriate to your business.
Besides, contact municipal authorities and your local clerk’s office to find out a complete list of local certifications you need to get.
Purchasing Insurance Policies for Business
Operating a professional service company, you need to secure your business against certain risks. This is where business insurance comes in to help minimize some types of risks and damage.
It will be a reasonable move to get general liability insurance to shield your own interests. Meanwhile, worker’s compensation insurance is required for employer businesses.
Besides, Massachusetts is one of the few states that require PLLCs to maintain professional liability insurance for each professional member, with a minimum coverage of $250.000.
Maintaining Your Massachusetts PLLC Compliant
When formed, legal entities have to match certain legalities to stay legitimate and operable. In Massachusetts, PLLCs have the following compliance commitments:
- Properly enacted resident agent in the state;
- Valid permissive documents verifying your professional qualifications;
- Timely reported taxes;
- Filing an LLC annual report and paying a $500 fee.