1. Information for Incorporating in Massachusetts
2. Benefits of Incorporating in Massachusetts
3. Corporation Taxes
4. Process for Incorporating in Massachusetts

Incorporating in Massachusetts is a process allowed in the state that provides professionals, such as doctors, lawyers, and accountants, the option to form a corporation.

Information for Incorporating in Massachusetts

If you are considering forming a corporation in Massachusetts, it is recommended that you review the laws and regulations of the state that apply to your business structure. This helps ensure that before you begin filing the paperwork, you'll know from the start what is expected to form a legal corporation in Massachusetts. This will save you time and money. It is also a good idea to discuss your plans to form a corporation with a qualified attorney familiar with corporations.

Benefits of Incorporating in Massachusetts

Businesses incorporated in Massachusetts enjoy several benefits, such as:

  • Limited liability protection provided by a corporation.
  • A Massachusetts corporation protects your personal assets since they cannot be used to satisfy a corporation's debts and liabilities.
  • The limited liability protection also protects its shareholders from claims that arise from a lawsuit.
  • The board of directors and its officers who are part of a Massachusetts corporation are also covered by limited liability protection.
  • With a corporation structure, it can make things easier to get funding and additional capital when needed versus other types of business structures.
  • It is also possible to sell stock or other financial instruments.
  • Massachusetts corporations are easily transferred by transferring or issuing stock.
  • A Massachusetts corporation can attract top talent and retain that talent with offers of bonus plans and stock options.
  • As a career platform, a corporation is an attractive business structure for employees who are eligible for benefits such as profit sharing, insurance, and retirement plans.
  • As a separate perpetual legal entity, a Massachusetts corporation does not cease to exist upon the death of a shareholder. This occurs with other business types.

Corporation Taxes

A Massachusetts corporation allows owners to retain and protect more of its income since the tax rate for its income tax is generally lower than that of an individual. The individual shareholders report and pay their personal income taxes only on the monies the corporation pays them.

Shareholders must pay taxes on any dividend income paid by the corporation, even with income tax already paid by the corporation. This is referred to as "double taxation." The owners of a Massachusetts corporation can elect to have what is known as "pass-through" tax status by filing Form 2553 with the IRS.

A corporation located in Massachusetts must register in any other states where it plans to do business as a foreign entity. In Delaware, corporations are subject to an annual franchise tax even if your business does not do business in that state. A Massachusetts corporation must also pay taxes in each state where it does business or has a physical presence. The corporation will pay annual maintenance fees in each state where it is registered as a foreign entity.

Process for Incorporating in Massachusetts

You must choose a unique brand name that is not too similar to another registered name. It also cannot contain restricted words set forth by the state or use symbols in the company name.

A name search can be conducted via a business entity search from the Secretary of State website. If there are any concerns about trademarks, these can be searched through the TESS system via the U.S. Patent Office.

One of the following must be included at the end of the corporation name:

  • Co.
  • Corp.
  • Company.
  • Corporation.
  • Inc.
  • Incorporated.
  • Ltd.
  • Limited.

The words "U.S.," "Veteran," and "United States" imply an association with the government. They are therefore not allowed to be used in a corporation name.

You will select a person or an organization who either resides or has a registered business in the state as the registered agent for the corporation. They have the responsibility of receiving/filing documents. Information to be disclosed to the public about the corporation will be available through the articles of organization, which are filed with the Secretary of State's office.

Appoint a minimum of three directors of legal age to oversee the corporation. Prepare an incorporator statement with the names and addresses of each director. File these in a corporate records book along with other important documents. Once directors are in place, initiate a meeting to create bylaws mandated by Massachusetts along with recorded minutes.

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