How to Form an LLC in MA: Everything You Need to Know
In Massachusetts, you must file a Certificate of Organization with the Corporations Division of the Secretary of the Commonwealth to establish your LLC.4 min read
If you're wondering how to form an LLC in MA, you're not alone. A limited liability company (LLC) is a hybrid business which shares characteristics of both a corporation and sole proprietorship, so it offers many advantages.
An LLC shields its owners, who are called “members,” from personal liability for business debts. It boasts fewer regulations and restrictions than other types of businesses and offers a nice level of managerial flexibility. Plus, LLCs are pass-through tax entities, meaning that the business doesn't pay taxes; rather, the members declare gains on losses on their personal tax returns.
Draft the Certificate of Organization
In Massachusetts, you must file a Certificate of Organization with the Corporations Division of the Secretary of the Commonwealth to establish your LLC. View the Corporations Divisions' website for a Certificate of Organization template to help you draft the document.
The form will ask for your company's federal employer identification number (EIN), but since you cannot obtain an EIN until after forming your LLC, leave this field blank.
- Your LLC name must end with “Limited Liability Company” or one of its designators (“LLC,” “LC,” “L.L.C.,” “L.C.,” etc.)
- The name must be distinguishable from any existing name registered or reserved with the Secretary of the Commonwealth Certificate of Organization template
- The business name may contain your name or a name of another LLC member
- Avoid restricted words such as “University,” “Bank,” or “Attorney” when choosing your LLC name, as these require additional paperwork or specific licenses
- Do not include prohibited words which can confuse your LLC with a government agency, such as “Treasury,” “FBI,” or “Secret Service”
- Do not choose an LLC name that is deceptively similar to another business entity
When you've selected your LLC name, you can reserve it for 60 days by filling out an Application for Reservation of Name and paying a $30 filing fee. This allows you to reserve the name until you file your Certificate of Organization, but reserving the name first isn't required.
After finding an appropriate LLC name, go ahead and reserve a corresponding domain name. Even if you aren't ready to create your business website, it's best to purchase the domain name to prevent others from getting it first.
To make sure your LLC name is available, conduct an online search or contact the Corporations Division in Boston at (617) 727-9404.
Additional steps to completing the Certificate of Organization include:
- Indicating your LLC's physical address – this must be an address within the state of Massachusetts where your business records are maintained
- Describing your LLC's general character – provide a statement of your business objectives
- Stating the LLC's dissolution date – this is the latest date by which your LLC will cease to exist (you may leave this field blank)
- Designating a registered agent – this person must reside in Massachusetts and be available during business hours to receive legal documents on behalf of your business
- Providing additional contact information – if you have co-members or other managers for your LLC, include their names and addresses in the Certificate of Organization
- Completing optional sections – Massachusetts's Certificate of Organization template includes optional sections, which you may or may not complete according to your needs
- Signing the form – all those involved in forming the LLC must sign the Certificate of Organization
When the document is ready, file your Certificate of Organization and pay the $500 filing fee ($520 if filed online). You must file the document in duplicate.
Set Up the LLC
With the Certificate of Organization approved, you officially have an LLC. Now you can draft an Operating Agreement between members.
The Operating Agreement covers key details about the business, including:
- The roles of each member
- Individual voting rights
- How new members are added or existing ones removed
- Individual capital contribution
- How profits and losses are allocated
- How the Operating Agreement can be amended
Next, apply for an employer identification number (EIN) from the Internal Revenue Service. You will need an EIN to open a business bank account and pay state and federal taxes. Since you will need a separate bank account for your LLC, which keeps your business and personal finances separate, having an EIN is a must.
Finally, make sure you obtain all the necessary permits and licenses. You will need to contact your city or county clerk's office to see which business licenses and permits are required.
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