Forming an LLC in Massachusetts is a great way to protect your personal assets while creating a legal business entity for your company. Not only can it protect your business if you’re ever sued, but you can use it to hold assets, such as business real estate, cars, etc. It’s a good way to ensure your personal and business finances stay separate without going through all the paperwork of setting up a corporation.
Under this structure, if you ever lose money you’re limited to the amount of money you can lose and will only lose whatever you’ve invested into your business.
Registering an LLC in Massachusetts is easy, all you need to do is follow these 5 steps:
How to Form an LLC in Massachusetts – A Step by Step Guide
Forming an LLC ensures your personal assets are protected, you don’t get doubled taxed and you won’t have to jump through hoops to get it started! While the steps to submit your application and get approval are straightforward – make sure you follow each step correctly so there are no errors on your application.
Any mistakes or discrepancies will slow down the process, or worse, the Massachusetts state could deny your application. If you’re lacking confidence in following each step we’d advise hiring experts to file all your business paperwork for you (a more worry-free approach).
Otherwise, if you’re a do-it-yourself kind of person follow these 6 initial steps:
1. Name your Massachusetts LLC
To form an LLC in Massachusetts you need to follow specific name requirements set by the state law. Your business name needs to be unique, meaning no other company has a similar name.
Before checking to see if you’re desired business name is available, to abide by Massachusetts LLC law, make sure the name of your company contains one of the following:
- Limited Liability Company
Your LLC name can be your business name, like Plumbing King LLC, or the name of one of your LLC’s members, such as Joe Smith LC.
Check Name Availability
Once you’ve decided on your name you need to check to see if it’s available and there’s no other company in Massachusetts using it. The quick and easy way to do this is through a quick google search using your desired name.
If after that, you don’t find any competing companies you can move onto the next step – checking your business’s potential name through the Massachusetts name database.
If your name is available, but you’re not ready to file your LLC yet, you can reserve it by filling out a Name Reservation application form.
Reserving your LLC name costs $30 and lasts for 60 days. If after the initial 60 days you’re still not ready to file your LLC you can pay another $30 for another 60-day extension. Along with your application, you need to include a cheque made out to the ‘Commonwealth of Massachusetts.’ Applications are only accepted by mail and must be sent here:
William Francis Galvin
Secretary of the Commonwealth
One Ashburton Place, Room 1717,
Boston, Massachusetts 02108-1512.
Using a Fictitious Name
If you don’t want to use LLC in your business name then once your business is registered you can add a fictitious name. Also known as DBA (“doing business as”), or a trade name, a fictitious name allows you to run your business under a name that’s not the legal LLC registered name.
You can also use a fictitious name if you plan on running several different businesses under your LLC formation.
In Massachusetts to register a fictitious name, you need to submit a Business Certificate to the city or county where your business is located. If you’re not sure who to contact use the Massachusetts online directory to find the closest office.
Exact requirements for submitting a facetious name depend on the county/city so the next step is to email or call your local contact and ask them directly for the application form (or google your city’s name and business certificate, for example, ‘Cambridge business certificate’). Costs vary on location but expect to pay between $50-$65.
To give you a better idea of what to expect, here are some DBA application forms from Boston and Sudbury:
Town of Sudbury Business Certificate
City of Boston Business Certificate
Once you’ve figured out what your business name is and you’ve made sure it’s still available, the next step is to choose a registered agent who will help you with the legal side of your business.
2. Choose a Massachusetts Registered Agent
A registered agent is anyone who receives and sends legal documents on behalf of your company. They are the main point of contact between your company and the Secretary of State.
In Massachusetts, an LLC must have a registered agent who lives in Massachusetts and has a valid street address (not a P.O. box).
An LLC registered agent can be:
- A family member or friend
- A Commercial Registered Agent
Why you may want to use a registered agent
While the easier route seems to have yourself, or one of your LLC’s members, act as the registered agent, there are some benefits in hiring a professional. A registered agent will ensure your business is always in good standing with the state, helping you stay organized and up-to-date. It also adds a layer of protection since they’ll help you in the case of a lawsuit or any penalties/fines.
Once you’ve decided who’s the best person to be your registered agent the next step is to submit your LLC application form.
3. File a Massachusetts LLC Certificate of Organization
To file an LLC in Massachusetts you need to complete the LLC Certificate of Organization application form and submit it to the Secretary of the Commonwealth Corporations Division. You can submit by mail or through their online portal.
Be prepared to include the following information when filling out the form:
- the LLC’s name
- the effective date of formation (either the day you’re applying or a future date).
- the name and address of the LLC’s registered agent
- your Employer Identification Number (EIN) – You won’t have your EIN until after your LLC has been approved. While an EIN is requested on the form you shouldn’t get one before you have approval. During the application process, you can leave this section blank and then update it later on through an ‘amendment form’. If you’re using a registered agent this is something they can help with.
- the LLC’s initial principal office address, and
- signatures of the LLC’s organizers
Important Note: You won’t have your EIN until after your LLC has been approved. While an EIN is requested on the form you shouldn’t get one before you have approval. During the application process, you can leave this section blank and then update it later on through an ‘amendment form’. If you’re using a registered agent this is something they can help with.
In Massachusetts, it costs $500 to form an LLC. Whether you apply online or mail in your application you should get approval within 24-36 hours.
While you’re waiting for approval you can move onto step 4 – creating an LLC Operating Agreement. If you’re operating your LLC by yourself skip to step 5.
4. Create a Massachusetts LLC Operating Agreement
If your LLC has two or more members, it should have an operating agreement. Although it’s not required in Massachusetts, it’s recommended as it will outline how the business is structured and how it will operate among its members.
Some of the sections you’ll typically find covered in an operating agreement include:
- Capital distributions
Again, while this is not a necessary step, as you don’t have to mail it to the secretary of state, it is recommended if your LLC has more than 2 members. It helps clarify the rules of your LLC and makes sure they are legally documented.
Without an LLC operating agreement the state LLC law can control how your business operates (which is not ideal if you ever run into any problems or legal disputes).
After you’ve agreed and created an LLC Operating Agreement the next step is to create your unique employer identification number.
5. Apply for your Massachusetts LLC Employer Identification Number (EIN)
Once your LLC has been approved you’ll need to get an employer identification number (EIN).
An EIN is a federal tax ID number that registers you with the Internal Revenue Service (IRS). This number is used to identify your company when filing taxes.
How to register for an EIN:
– Apply online or,
– fill out the Employer Identification Number form and fax it to 855-641-6935, or mail it to:
Internal Revenue Service,
Attn: EIN Operation,
If you apply online you’ll get instant approval. If you apply by fax it takes up to 4 business days whereas mailing it can take up to 4 weeks. Applying for your EIN is completely free! Once you have it, don’t forget to update your records so your LLC has your EIN on file.
Massachusetts LLC Registration – Final Checklist & Summary
Ready to get started? Use this simple checklist to make sure you’ve dotted your i’s and crossed your t’s!
- Name your LLC – Your business name must include Limited Liability Company, LLC, L.L.C., LC, or L.C. It can’t be used by any other business in Massachusetts. Make sure you confirm the availability of your desired name through the state’s name search.
- Choose a Registered Office – A registered agent is a person who receives and sends legal documents on behalf of your company. It can be you, a friend or family member, or a commercial registered agent.
- File a Massachusetts LLC Certificate of Organization – To File an LLC in Massachusetts you need to fill out the ‘Certificate of Organization’’ application form. It costs $200 and you can file it online or by mailing it in.
- Apply for your MassachusettsLLC Employer Identification Number (EIN) & File your Tax Registration Form – Once you get approval for your LLC you need to apply for an employer identification number (EIN) through the IRS. This number is used to identify your company when filing taxes. You can apply online for free and approval is instant.
- Create Massachusetts LLC Operating Agreement – If your LLC has two or more members, you should create an LLC operating agreement that outlines how the business is structured, who is responsible for what, and how much of the LLC each person owns. You don’t have to send your operating agreement to the Massachusetts state but you should have one so everything is documented and signed by all members.
While there are a few different pieces to making sure your LLC is filed correctly, make sure you follow each step as stated so there are no errors.
If you can, we recommend using an all-around service to make sure your LLC gets set up correctly from the get-go. Just make sure you do your homework and choose one of the best LLC services for your business.
Our first recommendation is to go with ZenBusiness, an LLC creation service that holds your hand from start to finish. Packages start as low as $49.
How To Apply for a Massachusetts LLC Online
Now that you know the exact steps on what’s needed to form your LLC it’s time to start the application process. There are two ways of going about this:
1. Do it Yourself
Taking the DIY route is a good option if your budget is tight or you’ve previously opened an LLC and understand how it works.
2. Use an Online Formation Company
Using an online formation company is a better option if it’s your first time opening up an LLC and if it’s within your budget (formation services cost anywhere between $49 – $199). This is typically a better choice if you want to avoid headaches and have peace of mind knowing professionals are handling everything for you.
If using a professional service is more up your alley, here are our top 3 recommendations:
ZenBusiness built its platform to meet the needs of your business throughout its lifetime. When you pay for their services, you’ll receive a personalized dashboard for your business to store documents, receive alerts, and manage your website.
ZenBusiness charges are based on a tier system. There are three different tiers with pricing as follows:
- The Starter = $49 annually
- The Pro = $199 annually
- The Premium = $299 annually
IncFile provides you with a full suite offering startup services to best support your business formation.
Their pricing model also depends on the state you are filling. You can generate a personalized quote on their website by entering the necessary information about your business.
LegalZoom is an online legal service provider that helps you to be able to create legal documents without having to pay the expensive lawyer fees. Some of the services they provide assistance to includes business formation, copyrights, and trademarks.
LegalZoom has many different pricing options available. For their LLC service, pricing begins at $79 + the allotted state fee.
After Starting Your Massachusetts LLC
You’ve been approved – now what? The journey doesn’t stop here – there’s still a handful of things you need to do to get your business off the ground. We recommend ticking off the following items to make sure your LLC gets off on the right foot.
Purchase A Domain For Your Business
Having an online presence, even if your business is local, is important in creating trust, professionalism, and a way for people to find you. If you haven’t already thought about getting a website, now’s the time. In a tech-saturated world, you need a domain to not only attract new customers but help create a good first visual impression of what your business does and how it can help.
Get A Business Phone Number
Since your business is now an approved Massachusetts LLC you should think about getting a business phone number. Having a business number is a great way to show professionalism to your clients and customers. It makes you more serious and more importantly – more trustworthy.
There’s a variety of different online phone services you can go with, or you could go the traditional route and open an account through a local branch. You can get a local number or a 1-800, the options are endless!
Open Your Massachusetts LLC Business Bank Account
You’ll want to open a business account that’s separate from your personal banking. This will not only make accounting easier but you won’t have to worry about your finances mixing in with your business finances.
USA Business Bank Accounts
If you already have online banking it might be easier to open a business account through your current bank so all your banking (although in separate accounts) will be accessible in the same place. If you prefer to open something new keep these checking accounts in mind:
Chase – Free checking account with no extra fees – as long as you keep a $1,500 minimum balance.
BlueVine – Free checking account with mobile banking and a debit MasterCard.
Bank Novo – Open a free checking account with Free transfers and free ATM fees.
Uni Bank – Open a business checking & saving account and set up a variety of deposits with great returns.
Along with your business checking account, you should apply for a business credit card too. Having a business credit card is a good way to establish your business credit score (which may help if you ever need a loan). It also makes it easier for online purchases and again, it will keep your personal and business finances separate.
Find Accountant/Buy Accounting Software
Taxes get complicated fast and can be a burden to deal with. We recommend getting an accountant or using accounting software to make sure all your spending actions are being tracked (payroll, bills, invoices, receipts, etc.). Here are some popular options to look into:
Wave – Free invoicing & accounting software with credit card processing & payroll services.
Intuit Quickbooks – Online accounting software to track expenses, customize invoices, and run reports.
Freshbooks – Accounting software to send invoices, track time, manage receipts, expenses, and accept credit cards.
Directory of Federal Tax Return Preparers with Credential – If you want to use a local tax specialist you can search for a certified public accountant (CPA) through the IRS online directory.
Having all of your business reports in one spot is highly beneficial so you can keep an eye on your cash flow. To run a successful business you’re going to need to analyze how your business is performing and narrow down what’s working or what isn’t working so there’s always room for growth.
File Annual Registrations On Time
Every LLC has to file an annual report in Massachusetts. You’re expected to file this report before your LLC’s anniversary date. For example, if you opened your LLC on May 7th, then each year before May 7th you’d need to submit your annual report to the Secretary of the Commonwealth Corporations Division.
It costs $500 to file the report and you can submit it online or by mailing it in.
Notify Massachusetts Of Any Changes You Make To Your LLC
If at any time you make changes to your LLC you need to inform the state. If you’re using a registered agent they can do this for you. If you’re going about this alone then you can update changes through Massachusetts’s business portal or through your registered agent.
8 Benefits of Forming an LLC in Massachusetts
When you file your company as an LLC in Massachusetts it helps solidify your standing in the business world. This motion shows other businesses and potential customers that you are willing to do what it takes to be a legally operating business.
Choosing to form your business as an LLC in Massachusetts allows you to take advantage of the benefits of both a corporation and a partnership structure. Some of these benefits include:
1. Protect Your Personal Assets
The LLC will have its liability that does not automatically extend to the owners, unlike a sole proprietor, where you are legally responsible for everything. That means Massachusetts LLC protects the liabilities and debts incurred by the business. In most situations, your assets, such as your car, home, or savings, will never be at risk if your Massachusetts LLC is faced with lawsuits or bankruptcy.
2. Benefit From Business Profit Taxation
In an LLC in Massachusetts, your profits and losses can pass through to your income without having to have corporate taxation.
3. Simple to Create and Maintain
The formation of a Massachusetts LLC requires minimal paperwork and requirements. They are known for being easy to start and simple to maintain.
4. Minimal Restrictions
Your business matters can be managed by more than one owner or member while still being one main business to the public. This means all decisions and transactions behind the scenes can be equitably distributed while presenting one entity as you move forward.
5. Heighten Your Credibility
As you move forward, your Massachusetts LLC will continuously be recognized as an entity. People and other businesses prefer doing business with a legitimate entity because it shows your level of professionalism.
6. Gain Access to Business Loans
When you form your Massachusetts LLC, you will obtain a DUNS number and build your business credit, helping you to further build upon your business.
7. Benefit From Flexible Profit Distribution
In an LLC, you are not required to spread the distribution of profits equally across the owners. You have full control over profit distribution in your Massachusetts LLC.
8. Good For Any Kind Of Business
An LLC business structure in Massachusetts is an excellent choice for both medium and higher-risk level businesses. You might always want to consider opting to go with an LLC if you have a significant amount of personal assets to protect from your company. And lastly, LLCs are great for owners who are interested in paying lower tax rates than corporations.
Forming an LLC in Massachusetts is the perfect business structure to follow for both new and veteran business owners. It doesn’t matter whether you run a small business or a larger one, creating an LLC will legitimize your company while making sure your personal assets are completely protected.
Once you’ve decided an LLC is on the right path, getting approval from the state is fairly straightforward (all you need to do is follow the 5 initial steps mentioned above). The only real problem arises if something is filed incorrectly or you forget a step, as sometimes these mistakes aren’t realized until later on.
If you can, it’s always in your best interest to use the help of professionals when forming an LLC. We recommend ZenBusiness as they file for you and act as your registered agent. Taking this route will free up your time so you can focus on more important aspects of your business – like your initial launch and marketing!
File Your Dream Business with ZenBusiness
F.A.Q. About Forming Massachusetts LLC
There are several different steps you’ll need to do to legally form your LLC. It’s a lot of information to take in and can get confusing. To help out we’ve compiled some answers to the most frequently asked questions:
What are LLCs and why are they important?
An LLC is a Limited Liability Company. It’s a business structure used to protect your assets, like your house, your car, or even your savings. No matter what happens to your business (lawsuits, bankruptcy, etc.) your assets are kept safe.
How Much Does It Cost to Start an LLC in Massachusetts?
Expect to pay $500 to file a certification of organization. After that, you’ll need to pay $500 annually to renew it.
How Long Does It Take to Form an LLC in Massachusetts?
If you register online it takes between 24-36 hours.
Can You Start an LLC on Your Own?
Yes, you can start forming an LLC on your own by following the step-by-step instructions provided in this article. For additional help, look to hire an all-around service provider.
Do You Need a Lawyer to Start an LLC in Massachusetts?
No, you can start an LLC without a lawyer just be prepared to file and report everything on your own. If you’re not interested in getting a lawyer but want to make sure everything is filed correctly then use an online business formation service, like the ones listed in this article, with ZenBusiness as our #1 recommendation.
Does an LLC Need to Make Money?
No, an LLC doesn’t need to make profits but if you’re claiming tax deductions with no income the IRS will likely audit your business.
What Are The Downsides to Having an LLC?
There are pros and cons to forming an LLC. The pros are tax reductions, protecting your personal assets, and creating credibility for your business (and possible future business loans). The main con of an LLC is you’re considered self-employed. This is a disadvantage as you’d be taxed under self-employment and responsible to pay Social Security and Medicare taxes. The amount you’d be required to pay depends on your business’s total net earnings.