How to Start an LLC in Massachusetts: Cost and Registration Steps

Do you want to start an LLC in Massachusetts? Is there anything special about Massachusetts you should know when starting a business in this state? Some would claim the state is rather small and densely populated and that’s true.

At the same time, though, there are only a few other states as business-friendly as Massachusetts. The state is a welcoming spot for bold projects and ambitious entrepreneurs. It’s known for a supportive business ecosystem that rather helps new ventures to get on their feet than competes with them. Top-ranked universities and strong educational programs ensure a well-educated workforce and contribute to innovative startups. This, in its turn, backs up a thriving economy.

One more Massachusetts peculiarity is that people in this state give preference to their local products and services, thus, providing mutual support to newly formed businesses that seek to operate on the local market. As a result, Massachusetts stands out as a state of big opportunities for smaller businesses. It gives a chance to get on a roll to everyone.

When you feel excited about embarking on a new business venture in Massachusetts, you might feel somewhat unconfident about your ability to start this journey on your own. Now, we are talking about a legal aspect, i.e. setting up a formal structure for your future venture. You’ll need it anyway to do your business lawfully, and a limited liability company is by far your best option.

If you have some doubts about being able to open an LLC on your own, follow our guidelines and tips below. It’s easier than you think. With our detailed instructions that will take you through the whole process, you’ll cope with the LLC formation in Massachusetts without a hassle.

How to Form an LLC in Massachusetts: Step by Step

Step 1: Name your Company

First off, you’ll have to handle all the formalities and bring your LLC to life as a legal entity by giving it an eligible form. And here are five major steps you need to take.

Words You Have to Use Starting an LLC in Massachusetts

That’s right, your company starts with a name. Unlike a sole proprietorship, which is automatically named after its owner, an LLC calls for inventing a different name. Though you are still free to make your first or last name a part of a company moniker, with LLCs, it’s still a bit more complex. Since this business form requires state registration, a company name should be first approved by the state. If it appears unacceptable, your whole filing application will be rejected. Hence, one way or another, you’ll have to pay more attention to LLC naming.

While you have a lot of freedom when inventing a name for your future company, it’s not entirely about your creativity, imagination, and wittiness. There are certain naming rules set forth by the government, and you should stick to them. Those rules are outlined in the Massachusetts General Laws and stipulate the following:

• A company name in Massachusetts should contain a business type identifier, i.e. words “limited liability company”, “limited company” or abbreviations “LLC, “LC” are obligatory;
• The General Laws allow you to make your personal name a part of your company moniker. It’s not a requirement but rather a suggestion. What’s more, Massachusetts is one of those states that enable you to use not only the names of LLC owners but also the names of hired company managers. This will let you engage well-known or popular persons in business and make their names work for your success.

If you need to issue a professional license or some other type of license to run your business activity, it’s highly important to ensure the chosen company name fully complies with the law and observes all valid naming rules. You need to do that before applying for a license, otherwise, your license issue will be rejected.

Words You Can’t Use

The rules about what words and phrases cannot be used in the name of the LLC are quite simple.

An LLC name that would sound confusing and make people think about your company as a government structure is unacceptable. Hence, such words as “CIA”, “tax agency”, “state department,” and alike cannot be used for naming LLCs.

The state of Massachusetts has a specific list of words restricted for use in LLC names. Mostly those are words implying that your company somehow relates to the government and military authorities. These are such words as “army”, “navy”, “government”, “marines”, “coast guard”, “corps”, “marine corps”, post exchange”, “P-X”, and “G.I.”.

Likewise, you can’t call your LLC a corporation or a nonprofit;
To make references to professions, most likely than not, you’ll need special permissive documents for that. So, be careful with that and check everything in advance.

Your future company name should be expressly different from other registered business names in the state. In fact, that’s the biggest rule to observe when naming your LLC. The name should have enough words to look and sound not similar to any existing names.

Research the LLC Name You Want

Should your company name fail to be unique, it won’t be approved by the state and your LLC filing will be declined. It will mean you’ll have to come up with another name version to make it acceptable. To avoid this situation and prevent your application rejections for an inappropriate name, you can perform a business name search before filing your formation documents. This will help you make sure an LLC name you’ve set your eyes on is available and not used or reserved by any other entity.

Checking an LLC name is easy in Massachusetts. On the Secretary of the Commonwealth’s official website, there is an advanced search engine that will navigate you through an extensive database of Massachusetts companies to look for any similarities and coincidences. This tool is free, so you are not limited in your efforts.

To optimize the research, it’s advisable that you check your targeted LLC name in full and also monitor by separate words, This way, you’ll discover all business names somehow similar to the one you have in your mind and will be able to come up with a really unique name version acceptable for the Secretary of the Commonwealth.

Massachusetts DBA: Using a Fictitious Business Name

Sometimes, a registered LLC name is not what you actually expect it to be. It might sound too simple, look plain, too ordinary, or not catchy enough. You might want it to be more original, more noticeable, more memorable, but naming rules limit your endeavors to a certain extent. This is where a DBA (doing business as) name comes into play. 

A DBA is also known as a fictitious, assumed, or trade name. It’s an alternate name version that might be somewhat or completely different from the registered company name. Unlike a registered name that normally appears in official and legal docs or circulates in public records, a DBA is mostly used for operational and marketing purposes. It’s the name under which your business will appear on the market and will be known to your customers. As such, a DBA can function without a compulsory “LLC” tag. So you can easily let it appear in infomercials, advertisements, and marketing materials or use it on billboards or outdoor signs.

The biggest advantage of a DBA is the opportunities it offers for business. You can have as many DBAs for your LLC as you need. Thus, you’ll be able to kickstart new product lines, introduce new brands, and expand your business without the need to form more legal entities. Everything will be done under the umbrella of the same LLC. Besides, should you grow your business to something bigger and more impressive that breaks the limits of the currently used DBA, you can easily register a new fictitious name that will catch up with the pace of your business development.

The DBAs' use and registration in Massachusetts is regulated by the Massachusetts General Laws. To eligibly use a DBA on the territory of the state, you’ll have to apply for an appropriate certificate with a clerk's office of any city or county you are going to establish your LLC office. Filing requirements might differ locally, yet, such a certificate should include your LLC’s full registered name and address, names and addresses of LLC members and managers, and a DBA name you want to operate under. 

DBA registration is usually a payable service, and the state of Massachusetts is not an exception in this concern. However, in contrast to $15 or $25 per filing, Massachusetts will charge only $1 per DBA.

Step 2: Appoint a Registered Agent to Create an LLC in Massachusetts

A registered agent is a core element of any LLC structure. It’s a law requirement you can’t skip or neglect. Yet, let’s dig deeper into the functions of this role and why it’s important for your LLC.

A registered agent or a resident agent as they call it under the Massachusetts General Laws is meant to be an intermediary between your LLC and the public. Its major function is to receive and process your LLC’s mail. It seems like nothing special, right? Yet, would the government make this role a requirement if it were not important? We doubt that.

Thus, if you look into this position in more detail, you’ll see that it will be on guard of your LLC’s compliance status. While an agent receives all LLC correspondence, their major task is to keep an eye on official letters and service of process, i.e. legal documents, official notifications, government notes, tax and filing requests, etc.

If your LLC appears to be a party to a lawsuit, the Massachusetts Rule of Civil Procedure calls for your resident agent to receive all the related paperwork in the sue. It’s the registered agent’s data that are entered into all state registries and records. Hence, if you fail to get court papers in time or your response will come to the court too late, chances are great you’ll lose the lawsuit by default judgment. Likewise, failure to provide state reports in an opportune manner might cause penalties and fines, not to mention more serious legal problems.

As such, doing their seemingly simple and routine work, registered agents greatly contribute to your company’s compliance with the state laws and maintain its good standing status with the state.

Resident agents’ requirements in Massachusetts are quite straightforward and not too limiting. Any adult residing in Massachusetts or a legal entity registered and operating in the state could be your registered agent. There are no strict rules in terms of educational or professional background and neither an individual nor a company should have some specific expertise for that. You can even serve as your own registered agent which will save you time and effort on searching for it.

The biggest requirement to this function is that a resident agent should be permanently present under the registered address during business hours on weekdays. They should be able to receive regular mail or sign for express letters and deliveries at any time of the working day.

When choosing a registered agent, many entrepreneurs (especially beginners) choose between themselves and hiring third parties. Which is a better option you wonder? Let’s look into each alternative in more detail.

Being your own resident agent is by far the easiest choice. And there is hardly anyone you can trust more than yourself. No one will have access to your sensitive mail but you, and all mail will come directly to your office. Besides, you won’t have to pay anyone for doing this job for you and save some money, which is a plus for limited budgets.

If an idea of engaging a dedicated service sounds interesting and attractive to you, in our Best Registered Agent review, we’ll provide descriptions of top-ranked services operating in different price segments and offering various types of service bundles to match varying needs.

On the other hand, though, there are a number of drawbacks to this decision:

• Spam mail: You’ll inevitably receive junk letters that will hinder you from what is important. Eventually, you’ll have to tackle piles of junk mail to dig out essential service of process;
• Personal privacy at risk: Serving your own registered agent, you should be ready that your personal data will linger on public records since registered agent’s info is to be publicly available;
• Stiff and rigid time schedules: You’ll be bound to your registered address, be it home or office, with little to no time for city commutes and out-of-the-office meetings. Otherwise, you could miss important mail;
• Much less time for yourself: Along with working schedule limitations, your personal time schedules will be hurt as well. You’ll lack flexibility in planning your holidays, journeys, and vacations since registered agents have only regular weekends and state holidays.

Obviously enough, hiring someone to be your resident agent is a more reasonable and convenient decision. Besides, you don’t have to appoint any random person. Dedicated registered agent service is by far your best option. Duly organized by professionals, the process of mail handling will work like a charm, with no missed due dates or lost letters. On top of that, most professional services operate nationwide and can cover your resident agent needs in any other state, should you want to expand or move your business at some point. Though the service is payable, the price of about $100 per year is a fair cost for the peace of mind and professionalism you’ll enjoy.

Step 3: File Your LLC Certificate of Organization

The law of Massachusetts declares that an LLC is not officially formed until its Certificate of Organization is filed with the state. Once the LLC formation document is approved by the state, your company gets a sort of legal passport and can lawfully start its business journey. So, forming an LLC is actually about filing a Certificate of Organization that will give your enterprise an independent status and entitle it to take its own actions and make its own steps as a legal entity.

We’d like to pay your attention that there is nothing special about registering your formation docs with the state. And you can cope with it on your own for sure. However, if you’d rather avoid the paperwork and focus on strategic business issues, you can delegate this work to a third party. Multiple LLC services are there for you and will handle the whole formation process or realize some of the steps. It’s up to you to decide.

What to include in my Massachusetts Certificate of Organization?

First and foremost, this document is of generic nature. It has an organized structure stipulated by the Massachusetts General Laws and embraces common company info that should be made a part of state registries, entries, and records after the registration process is over.

The major points your Massachusetts LLC Certificate of Organization should include are as follows:

• Full LLC name and complete registered address of your company;
• Your registered agent’s profile including the name and street address;
• A statement showing the registered agent’s consent to fulfill their functions (either contained in the Certificate or attached to it);
• Your LLC’s expiration date if you decide that a company should exist for a certain period of time;
• Non-member LLC managers’ data, if any;
• Info of your LLC organizer who will sign your formation docs (it’s not necessarily an LLC member, could be any hired person or an LLC manager);
• LLC’s purpose;
• Names of individuals who will be entitled to perform and sign transactions with the company property (if you deem it necessary).

You can either execute the Certificate of Organization by yourself or use a ready-made template available on the Secretary of Commonwealth’s portal.

How Much Is an LLC in Massachusetts? Filing Fee

We must admit that Massachusetts is one of the most expensive states to file an LLC. A state filing fee here is $500 as compared to around $100 in other states. This rate is specified in the Secretary’s Corporation Division official fee schedule and will be charged if you submit your formation documents by mail or bring it to the state office in person. To file online or via fax, get ready to pay another $20.

Massachusetts LLC Processing Time

Processing times in Massachusetts justify higher formation prices. You’ll be surprised to know that your formation docs will be reviewed and approved within 24 to 36 hours after the Secretary’s office receives them. To learn that your LLC is formed, it will be enough to check for it in the Business Name Search.

When mailing your formation documents, don’t expect to get them back by mail. The papers will be only returned if your filing has been declined. Otherwise, your LLC’s date will simply appear in the Business Entity Database.

When it comes to online and fax filings, these methods are not actually faster. Processing times remain the same, except for your docs are delivered to the Secretary’s office sooner.

Step 4: Draft your Massachusetts LLC Operating Agreement

Right off the bat, an Operating Agreement is an optional LLC document. It’s not required by law, and you can omit it, especially if you have a single-member LLC. Yet, we wouldn’t recommend doing that. The main purpose of an Operating Agreement is to formalize the covenants and contracts between the LLC co-owners. Those are the covenants related to the company’s management and day-to-day operation. While you can describe the main operational procedures in the Certificate of Organization, an Operating Agreement is a better option for that. Here is why.

An Operating Agreement needs no state registration, hence, amending or modifying it will be as easy as agreeing on any rule changes between the owners. Meanwhile, introducing amendments to the Certificate of Organization requires re-registration. Besides, an Operating Agreement will enable you to run your business your way based on your business principles and strategies rather than on the state default laws. What it means is that you can customize operational and control procedures to your current business situation and avoid sticking to generic rules that might be useless for your company.

The content of an Operating Agreement in Massachusetts is governed by Section 20 of the General Laws. While you are free to enter into it any issues you deem necessary, there are a few common clauses to consider:

• Ownership structure with the owners’ powers and responsibilities;
• Management system with the managers’ duties and authorities;
• Voting issues and voting rights;
• Profit distribution methods and approaches;
• Procedures for accepting and retiring LLC members and managers, i.e. how to make changes in the company ownership and managing structures;
• LLC dissolution including circumstances that lead to this process and the procedure’s description in detail. 

As such, an Operating Agreement is your “safety cushion” against any disputes, disagreements, and conflicts between the LLC owners and managers that will dampen the consequences of those disputes and provide rules for settling them.

Step 5: Get an EIN (Employer Identification Number)

An Employer Identification Number (EIN) is a Social Security Number analog for LLCs. This nine-digit code will make your company visible on the tax screen, as well as identify it as a taxpayer for other government authorities and financial institutions. 

To get an EIN for your newly formed Massachusetts LLC, it’s enough to visit the Internal Revenue Service website and fill in an online Form SS-4. In fact, you’ll be a few minutes away from your EIN number. Once you download the form, you’ll get your number back the same day. Note that you’ll receive it for free, so you can do it yourself without a doubt.

Many single-member LLCs disregard obtaining an EIN for their companies, and they are wrong. You might need this number in many cases beyond tax reports:

• If you establish a company using hired staff;
• If you need to pay an excise tax and some other specific taxes;
• If you want to open a separate checking account;
• If you search to use a corporate taxation scheme for your LLC. 

Given how easy it is to get an EIN, don’t neglect this aspect.

First Tasks After Setting Up an LLC in Massachusetts

Here you are almost ready to open your LLC and that's great. But there are a few things to take care of that are just as important as the filing of the articles of incorporation.

Open a Business Bank Account

If you want to further fortify your corporate veil and keep it intact, opening a separate business bank account for your LLC is a must. Using your personal checking account for business purposes, you not only mix assets but also show that you treat business funds as your own. This fact might serve as a reason for the court to pierce your corporate veil, should you be involved in a lawsuit. And your individual assets will be used to offset business debts and liabilities. 

A few more reasons to open a dedicated business account from the start include future business opportunities and accounting convenience. Thus, banks are reluctant to provide loans to companies without a separate account. So, you might have problems if you need business credit at some point to maintain your company’s growth.  

Speaking of accounting, splitting personal and business assets is essential for accurate and transparent bookkeeping. You should be able to clearly identify your business expenses, profits, incomes, losses, and cash flows if you want to get a true-to-life picture of your LLC's financial state.

Get Business Insurance For Your Massachusetts LLC

It’s nice to know that your legal entity has some added layer of protection for the case when some unexpected situations occur or accidents happen. Business is an exciting thing, yet, problems and risks stand side by side with success. However, being informed means being prepared. This is how business insurance works. It’s aimed at protecting your business from potential damages, consequences, and negative impacts of possible issues and emergencies. 

The most common types of insurance policies appropriate for business include general liability insurance, commercial property insurance, worker’s compensation insurance, business income insurance, and professional liability insurance. They work to create a backup shield for your business assets and certain business liabilities. 

To create an individual insurance scheme efficient for your business, we still recommend that you consult with an insurance expert.

Keep Your Company Compliant

A lot has been already said about business compliance. It implies your business’s matching a set of state rules and regulations to maintain a good standing status. It’s a vital issue for any LLC to keep its eligibility and the right to lawfully operate on the market. In this area, there are several aspects you should set your eye on.

Massachusetts Business Permits and Licenses

Most types of business activities do require some sort of license or permit at the federal, state, or local level. Notably, Massachusetts doesn’t call companies to get compulsory business licenses. At the same time, though, the city or county you are going to operate in might have its own licensing requirements. The lack of appropriate permissive documents can cause fines and even pierce your LLC’s compliance status. Hence, treat this issue with diligence and contact the Massachusetts Department of Revenue to get a full list of licenses your business needs. Consulting with a licensing specialist wouldn’t go amiss as well.

Massachusetts Tax Requirements

Similar to other LLCs, your Massachusetts LLC will pay income taxes on the personal tax returns of its owners. That’s a benefit of pass-through entities for federal tax purposes. Speaking of state-specific and other types of business taxes your LLC might be exposed to, those will directly depend on the type of your business activity. Thus, employers will have to pay employee-related taxes and charges while businesses engaged in commerce are open to sales and use taxes. 

Whatever your industry, check with the Department of Revenue for the business taxes you need to pay in Massachusetts, and don’t neglect to hire a good accountant or tax consultant to work out the most efficient tax scheme for your enterprise.

Annual Report and Other Filing Requirements 

The state of Massachusetts requires LLCs to file general reports on an annual basis. The filing date is your LLC’s anniversary date, i.e, the date when your company is formed. This report should simply update your basic company info and can be submitted online. However, this service is not free. You'll have to pay a fee of $500 each year you file a report.

Massachusetts Business Formation Quick Links

• Massachusetts General Laws Chapter 156C — Limited Liability Company Act
• Massachusetts Secretary of the Commonwealth — Business Entity Search
• Massachusetts Secretary of the Commonwealth — Corporation Division Fee Schedule
• Massachusetts Secretary of the Commonwealth — Form Annual Report
• Massachusetts Secretary of the Commonwealth — Form Certificate of Organization
• Massachusetts Secretary of the Commonwealth — General Listing of State Licenses
• Massachusetts Secretary of the Commonwealth — Online Filing
• Massachusetts Workers’ Compensation Insurance Requirements
• IRS — apply for an EIN online
• IRS information regarding the federal tax treatment of LLCs
• Massachusetts Department of Revenue — Business Licenses and Permits
• Massachusetts Department of Revenue — Business Taxes
• Massachusetts General Laws Chapter 110, Section 4B — Words That Cannot Be Used in Business Names
• Massachusetts General Laws Chapter 110, Section 5 — DBAs

FAQ About Massachusetts LLC Registration