How to Form a Corporation in Massachusetts

Choosing to start a new company is both exhilarating and terrifying. It’s the first of many choices you’ll have to make along the path. Depending on where you reside, you may need to register your company at the state, municipal, and federal levels. This tutorial will assist you through the process of registering your Massachusetts company.

Making a Business in Massachusetts

1. Give Your Massachusetts Company a Name

There is one crucial step you must do before registering your new business: you must choose a name. While naming your new company may seem simple on the surface, it is really one of the most important and time-consuming activities you will do throughout the business launch process.

Your company’s name should be unique and capture customers’ attention, but it also conveys much more. It should provide a clear message about the things you sell and/or the services you provide. The name of your firm exposes the public to your brand and may convey a message about your company and what it stands for.

Considering Your Name

While many entrepreneurs are inclined to speed through the name process, you should take your time and investigate all naming options. Take multiple brainstorming sessions and utilize the free internet business tools available today to assist you come up with a variety of choices, narrowing them down as you go.

Name Lookup in Massachusetts

The Commonwealth of Massachusetts includes a business entity search engine that allows you to look for businesses by name. You should also make sure that your name isn’t too similar to any existing firm in your state. This will assist to prevent future misunderstanding and legal problems.

It’s time to start legitimizing your firm once you’ve chosen a name that appropriately portrays your brand. These following procedures will differ based on your company structure and the legal requirements of your state. The next section will go through the various company structures.

2. Select a Business Structure for Your Massachusetts Company

Now that you’ve picked a good name for your brand, it’s time to start the legalization process. Before you begin the registration procedure, you must decide which company structure is appropriate for you. Each has its own set of perks, drawbacks, and tax advantages.

The sole proprietorship

A single proprietorship is the simplest straightforward business form. This informal corporation was created for entrepreneurs who do not want to work with others. It provides no personal asset protection and does not need state filing.

Unless you register for a business certificate, your sole proprietorship will function under your surname. You may apply for a Massachusetts DBA in the city where your company is located. Contact your municipal clerk for additional information on the application procedure and costs. Visit the Massachusetts City and Town Directory for a complete list of contact information.

Partnership

A general partnership, like a sole proprietorship, is an informal structure established for entrepreneurs who form a partnership with at least one other person. You and your partners’ surnames may be used for the firm, or you can get a DBA name. Profits and losses would be reported on your (and your partners’) personal tax return, and no personal assets would be protected.

Some partnerships (such as limited partnerships and limited liability partnerships) in Massachusetts are required to submit formal documentation with the state, along with a filing fee.

LLC

If you do not intend to go public in the foreseeable future, a limited liability corporation (LLC) may be the best option. It provides more freedom and protects your personal assets in the case of a lawsuit.

The state of Massachusetts requires all LLCs to select a resident agent (also known as a registered agent) to receive legal papers on their behalf. Your resident agent must be a qualified Massachusetts resident or a company allowed to do business in Massachusetts. Many new LLCs choose to use a registered agent service, which costs between $29 and $300 each year.

Massachusetts also requires you to follow specific name rules and submit a Certificate of Formation, which contains important information about your business.

Corporation

A corporation is a kind of business entity for those who have (or want to have) shareholders. So, if you want to go public in the future, this may be the greatest alternative for you.

Corporations, like LLCs, must designate a resident agent to receive paperwork, compliance papers, and government communication on the organization’s behalf. Your resident agent, like an LLC, might be a professional service, a corporate organization, or a person.

In addition to appointing a resident agent, you must submit Articles of Organization with the state.

3. Determine whether your business has to be registered in Massachusetts.

Once you’ve decided on your formal company structure and registered your new business name, you need check with your state to see what the criteria are for business registration. Each state has its own set of rules, which must be strictly followed.

Most informal company arrangements, such as sole proprietorships and general partnerships, do not need to be registered with the State of Massachusetts. Check with your local government to discover whether your sole proprietorship or general partnership has to be registered at the county or municipal level.

Furthermore, certain firms (for example, sole proprietorships and single-member LLCs with no workers) are exempt from registering and filing for a Tax ID Number, also known as an Employer Identification Number (EIN), with the IRS. Even if this is not a necessity for your company, you should consider registering regardless since there are various legal and tax advantages.

Even though you are not compelled to register your firm, it is important to recognize that creating an LLC has several legal and financial advantages. Your business debts are considered personal debts if you are a single proprietorship or a partnership. This implies that in the case of a lawsuit, your personal assets might be taken. Personal protection is provided through LLCs, which legally shield your personal assets and minimize your personal liabilities.

Aside from personal protection, LLCs have various additional advantages, including:

Profit distribution, decision-making, and company management flexibility
“Flow-through” taxes permits the LLC’s revenue and costs to pass through to the owners’ personal income tax returns, with no limits on the number and type of owners.

If you don’t have the time or skills to organize your own LLC, there are a variety of trustworthy LLC filing services that may assist you. We analyzed and selected the five finest LLC registration services because we realize how difficult it can be to navigate through the thousands of accessible alternatives. Our LLC service review compares each to ensure you associate with a service that saves you both time and money.

4. Register Your Massachusetts Business for Taxes

EINs are used by the IRS to identify firms for tax purposes. Every company with workers is obligated to have one. Our EIN guide will assist you in determining the EIN requirements for your company structure and will coach you through each stage of the procedure.

Once you have your EIN, you must register for state income taxes as well as employer taxes. Businesses that sell physical goods and/or taxable services must get a seller’s permit and collect sales tax on all transactions.

Depending on your industry and location, your new company may be liable to extra taxes levied by the state, county, or city in which it is situated. For a complete list of prospective taxes and registration procedures, see Massachusetts’ business tax website.

5. Obtain Massachusetts Business Permits and Licenses

While no general business license is required in Massachusetts, certain professions or industries must obtain industry-specific business licenses or permits. A dental office, for example, will need to obtain permits from the state’s Board of Registration in Dentistry. For a complete list of all professions that require additional licenses, go to the Professional Licenses & Permits section of the Mass.gov website.

Furthermore, certain businesses are governed by a federal agency and need federal licenses and/or permits. A liquor company, for example, would be subject to FDA standards and recommendations. Visit the Small Business Administration (SBA) website to learn more about federal permit requirements and costs.