How to form an LLC in Massachusetts

Small firms can benefit from forming an LLC because of the liability protection it provides and the tax benefits it provides. Follow the steps below for getting your Massachusetts limited liability company up and going after you’ve decided that an LLC is the most suitable corporate entity for your requirements.

Note that you have the option of forming the limited liability company (LLC) yourself, or you may employ a professional company formation agency to do all of the legwork on your behalf.

1. Naming your Massachusetts LLC

When choosing a name for a limited liability company (LLC) in the state of Massachusetts, there are two primary rules that must be followed:

• The name of a limited liability company (LLC) must be able to be differentiated from the names of other firms already registered with the Massachusetts Secretary of the Commonwealth Corporations Division.
• The name of a limited liability company (also known as an LLC) is required to include one of the following words or abbreviations: “Limited Liability Company,” “Limited Company,” “L.L.C.,” “LLC,” “L.C.,” or “LC.”

Make a reservation for your LLC name with the Commonwealth Corporations Division.

After deciding on a name for your limited liability company (LLC), you can make a reservation for it with the Corporations Division of the Massachusetts Secretary of the Commonwealth. 

This will prevent another company from using the name before you submit the Certificate of Organization for your LLC.

First, check to see whether the name you want to use for your limited liability company is available by utilizing the Business Entity Search and the Name Reservation Database provided by the Secretary of the Commonwealth. 

In the event that the name you choose is not already used, you may submit an Application for Reservation of Name to secure it for a period of up to sixty days. The registration must be sent over the mail, and there is a charge of $30 to reserve the space.

In the event that a term of sixty days is insufficient for your needs, you have the option of extending your reservation for an additional sixty days by paying an additional price of thirty dollars before the first reservation period comes to an end.

2. Choose a Registered Agent in Massachusetts

A registered agent in Massachusetts is required of every limited liability company operating in the state. If the limited liability company (LLC) is taken to court, this refers to a person or company that has agreed to accept service of process on its behalf.

It is acceptable for the Registered Agent to be either a resident of Massachusetts or a business entity that is permitted to conduct operations in the state. It is required that the Registered Agent have a real, live street address in the state of Massachusetts.

What exactly is the role of a Registered Agent?

A Registered Agent receives tax forms, legal paperwork, lawsuit notices, and formal government communication for your firm. Consider the role of the registered agent as that of the point of contact for your company with the state.

Who can serve as a Registered Agent?

A Registered Agent must either be an individual who lives in Massachusetts on a permanent basis or a company that is permitted to operate inside the state of Massachusetts and act in the capacity of a Registered Agent service. You have the option of selecting anybody who works for the organization, including yourself.

3. Filing your Certificate of Organization

The Certificate of Organization, also known as the Articles of Organization in other states, is a document that lays forth fundamental information about your limited liability company and is used to formally create it. Because this form serves as the legal registration for your company with the state, it is essential that all of the details be accurate.

What info should be included on a Certificate of Organization?

When completing the Certificate of Organization for your Massachusetts LLC, you are required to give the following information:

• LLC’s name
• If the term of the LLC is permanent or restricted.
• The location of the main office of the limited liability company.
• The name and location of the registered agent for the limited liability company
• Location where the Sec of State should send notifications to the limited liability company (LLC) through mail.
• How the Limited Liability Company (LLC) will be run: by its members or by its managers
• Whether or whether the limited liability company will offer professional services
• Names and addresses of all of the organizers of the limited liability company, as well as
• The address and telephone number of at least 1 member or management who has direct knowledge of the activities of the limited liability company (LLC).

Submitting Your Organization’s Certificate of Incorporation

In the state of Massachusetts, a limited liability company (LLC) may be established by submitting a Limited Liability Company Certificate of Organization to the Corporations Division of the Massachusetts Secretary of the Commonwealth.

You have the option of filing the certificate online or sending it in the mail. The filing price for paper copies is $500 while the filing charge for electronic submissions is $520. Keep in mind that all checks should be made payable to the “Massachusetts Secretary of the Commonwealth.”

Foreign LLCs i.e. LLCs that have been founded in states other than Massachusetts and that plan to do business inside the state are required to pay a registration fee of $500 (or $520 if the filing is done through fax) and register with the Massachusetts Secretary of the Commonwealth Corporations Division.

4. Obtain a Certificate of Completion From the State

After the formation paperwork of the LLC has been submitted and authorized, the state will send you a certificate that proves the LLC’s official existence in response to a written request for a copy together with the appropriate amount of postage.

With this certificate, the limited liability company will be able to get an Employer Identification Number (EIN), as well as business permits and business bank accounts like Bluevine and Kabbage business bank.

5. Make an Operating Agreement for Your Company.

Even while establishing a detailed LLC operating agreement is not a legally required step for founding a limited liability company in Massachusetts, it is highly suggested for all new limited liability firms to do so.

The following items should be included in the operating agreement:

• Describe the business structure of the limited liability company.
• Determine the specific roles and responsibilities that each member of the LLC will have.
• Describe in detail how the limited liability company will be operated.

Without an operating agreement that specifies member obligations, a limited liability company (LLC) may face serious legal and operational hurdles.

6. Obtain your employer tax ID (EIN)

A federal employer identification number, commonly known as a tax ID number, will be required of many limited liability companies (LLCs). An Employer Identification Number (EIN) is a nine-digit number that identifies your company to the Internal Revenue Service. 

You need an EIN in order to pay federal employer taxes, open a bank account (in most situations), or recruit staff.

On the website of the Internal Revenue Service (IRS), which is accessible without charge, you may check to see whether you need an EIN and submit an application for one online. 

Single-member limited liability companies, which are an exemption to the rule that most firms are required to acquire an EIN, may instead use the owner’s Social Security number.

Business Licenses

Depending on the kind of company they run and where they are located in Massachusetts, certain limited liability companies (LLCs) may be needed to get one or more business licenses or permits from the state or from their respective municipal governments.

Look into the Massachusetts Start a Business Guide, which is made available by the Secretary of State, to get information on how to satisfy the criteria for obtaining a state business license. 

The Massachusetts License Directory allows for the search and retrieval of specific license information. Contact the municipal or county clerk where your LLC is situated for local licensing requirements.

7. Filing your Company Annual Renewals

The Massachusetts Annual Report comes with an exorbitant price tag of $500 (online submissions cost an additional $20). The report simply provides Massachusetts with current information on your LLC’s ownership and contact details. 

The state of Massachusetts is not one to joke around. If it has been more than two years since your last filing, the state will liquidate your limited liability company by administrative action.

Annually, on the day that marks the anniversary of the founding of the LLC, the report is due. If you established your limited liability company on June 7th, 2021, the due date for your report will be June 7th, 2022, and so forth. 

It is difficult to forget, unless you are the kind of person who tends to forget important dates like birthdays and anniversaries. Then it seems like you may need some assistance.

Fees and Next Steps?

Costs

The filing fee for a local or international Massachusetts limited liability company is $500. It is conceivable that in certain instances you may be able to spend an extra $20 to have the procedure completed more quickly, in addition to paying $30 to have your LLC name reserved with the Secretary of The Commonwealth Corporations Division.

Consider the following additional fees that may be incurred by an LLC:

• Reserving a Name for an LLC
• Renewals of Annual Reporting – A Fee of $500
• DBA name is short for “doing business as.”
• Certified document copies
• Proof of existence (certificate)

What comes next?

When you register a limited liability company (LLC), you establish a legal basis upon which to operate your firm. Companies should make it a priority to maintain their limited liability company in compliance with state regulations and in an active position on the state’s website.

In addition, having a registered limited liability company enables you to perform the following:

• Obtain any permissions or licenses required to run your company, such as those issued by the health department, the zoning department, the department of home occupations, the department of professional licensing, and others. Some states need a seller’s permission to conduct sales
• Register your company with the department of revenue in your state.
• Create a bank account for your company.
• Create a credit card account for your company.
• Invest in insurance coverage for your company.
• Create a trademark to protect both your company’s name and its logo.

DIY LLC setup or use a company creation service?

To establish a limited liability company (LLC), you are not required by law to consult a lawyer. The majority of states enable the establishment of LLCs via the process of registering the business entity on the website of the secretary of state and with the Internal Revenue Service (IRS).

If you are not acquainted with the process of forming an LLC, your best bet may be to hire a professional LLC provider so that you can be certain that the creation will go smoothly and quickly.

When entrepreneurs start a new firm, they may save startup costs and save valuable time by using a professional agency that specializes in company formations. 

They can take care of the things that you may not have time to think about for a price ranging from $50 to over $500, and some examples of such things are as follows:

• Generating a Certificate of Organization that includes information on the registered agent, management of the LLC, and the date the company was formed.
• Creating an LLC operating agreement that outlines who, what, when, where, why, and how (required in some states).
• Taking up the role of registered agent for your firm.
• Keeping careful records in the event that there are investigations or litigation.
• Payment of filing fees and registration with the appropriate parties.
• Registering the name of your firm and ensuring that the name you choose for your limited liability company is accessible.
• Finishing up and turning in all of the necessary legal and formation documentation.

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