Learn about the reporting and tax filing requirements for Massachusetts limited liability companies.
To establish and operate a Massachusetts limited liability corporation (LLC), you must prepare and submit a number of paperwork with the state. This page discusses the initial filing procedures for Massachusetts LLCs, as well as the most essential continuing reporting and state tax filing needs.
Table of Contents
Organizational Certificate
The certificate of incorporation is the first required state filing for each Massachusetts LLC. To form an LLC, you must submit a certificate of formation with the Corporations Division of the Secretary of the Commonwealth. The certificate is a short document in which you supply your new LLC’s name and official street address, the name and address of the LLC’s registered agent, a brief description of the LLC’s purpose or character, and a few other basic facts.
A blank certificate of incorporation form is accessible on the Corporations Division’s website. The form is in PDF format, and you may fill it out using your computer (you will have to print it out in order to sign it). The current certificate of incorporation filing cost is $500 by mail and $520 online.
Before filing, verify sure the name you desire for your LLC isn’t already in use by someone else. The Corporation Division’s website, where you may search for reserved company names, is the first place to look. Division. If you pay an extra $30 before the initial reservation ends, you may extend it for another 60 days.
Remember that, in addition to the certificate of incorporation, you need draft—or have drafted by a lawyer—an operating agreement for your new company.
The Annual Report
The state of Massachusetts requires you to produce an annual report for your limited liability company. The report may be sent in or completed online at the Corporations Division website. To access the online form, you’ll need your customer ID number and PIN. The report requires just a few pieces of information, such as the LLC’s formal name, the location of its major office, and the name and street address of the resident agent.
Every year, on or before the anniversary date of the filing of the original certificate of incorporation, the annual report must be submitted. A Massachusetts LLC’s annual report filing cost is $500.
State Corporation Tax
Most LLCs are pass-through tax corporations when it comes to income taxes. In other words, the burden for paying federal income taxes is passed via the LLC to the individual LLC members. LLCs do not pay income taxes by default; only its members do. Some states charge LLCs a separate tax or fee for the privilege of conducting business in their jurisdiction. However, Massachusetts is not one of those states.
However, in certain situations, the owners of an LLC elect to have their firm taxed as if it were a corporation. This decision is made by submitting IRS Form 2553 to the IRS. (The form is available on the IRS website.) When an LLC elects to be taxed as a corporation rather than as a pass-through entity, the firm must submit a separate tax return. Massachusetts, like almost every other state, has a corporate income tax. In Massachusetts, the tax is normally computed on taxable tangible property plus 8% of income derived from Massachusetts sources, or a minimum tax of $456. If your LLC is taxed as a corporation, you must pay corporate income tax. The Massachusetts Department of Revenue receives the state corporate tax return (Form 355). (DOR).
Employer Taxes in the State
Do you have workers in your LLC? If this is the case, you must pay employer taxes. Some of these taxes are paid to the federal government (the IRS) and are not addressed in this section. (However, it is important to understand that federal employer tax duties begin with getting a federal employer identification number (EIN).) However, Massachusetts employers must additionally pay state taxes.
To begin, you must withhold and pay employee income taxes. The DOR website contains instructions for registering your LLC and paying these taxes. Employers are required to register online. After registering, you must submit income tax withholding on a regular basis (usually quarterly or monthly) using the relevant version of Form M-941.
Furthermore, you will most likely be required to register online with the Massachusetts Department of Unemployment Assistance (DUA) and subsequently pay quarterly unemployment insurance (UI) contributions to the DUA using the UI Online system. For further information, see the Office of Labor and Workforce Development’s website.
Taxes on Sales and Use
If your LLC sells items to clients in Massachusetts (you are a “sales tax vendor”), you must collect and remit sales tax. This implies you’ll need to register with the Department of Revenue for this reason and then make yearly sales tax payments. To begin, register online at the DOR website. Following registration, you will be given a Sales and Use Tax Registration Certificate (Form ST-1) for each of your company locations. Then, every year, you must submit a state sales tax return. If your company is registered with the DOR, you may file the return online utilizing the WebFile system. Alternatively, you may get Form ST-10 on the DOR website.
Other States Registration
If you want to do business in states other than Massachusetts, your LLC may need to be registered in any or all of those states. The exact states concerned will determine if you are needed to register: each state has its own regulations for what defines conducting business and whether registration is required. For registration reasons, having a physical presence (a business location) in a state, recruiting personnel in a state, or soliciting business in a state (through telephone, print advertisements, mail, or the Internet) are sometimes considered conducting business. Obtaining a certificate of authority or comparable document is normally required for registration.