1. Business in Massachusetts Overview
2. Some Conditions for Doing Business in Massachusetts
3. Filing an LLC in Massachusetts
4. Taxation

A Massachusetts company registration is essential for businesses to take advantage of the business-friendly environment the state of Massachusetts has created for the companies.

Business in Massachusetts Overview

Massachusetts has made changes to decrease the strictness of official rules and formalities governing businesses and improve the simplicity of doing business there. It's a base for a variety of traditional industries like technology, higher education, financial services, tourism, and health care. It's also home to companies in the emerging industries like clean energy, life sciences, and the creative economy.

Massachusetts holds the twelfth largest economy in the U.S. and hosts the headquarters of some of the biggest companies in the country, including Staples, Liberty Mutual, Mass Mutual, Raytheon, and TJX. Startup businesses also make up an important part of the economy. About 1.4 million people are employed by 607,000 startup businesses in Massachusetts.

Some Conditions for Doing Business in Massachusetts

Massachusetts allows the principal office of an LLC to be situated outside of the state, though businesses are required to have a Massachusetts address where they keep their LLC records. Massachusetts doesn't demand that businesses publicize their organization's formation. It also doesn't require follow-up filing.

By law, Massachusetts requires an LLC to include the following phrases, words, or abbreviations in its name:

  • Limited company
  • Limited liability company
  • LLC
  • L.L.C.
  • L.C.
  • LC

The name of the company may also include the name of a manager or member.

Using the name of another existing limited partnership, corporation, or limited liability company is forbidden by the state of Massachusetts, even if the names are only very similar. The only exception is if the new business officially acquires the permission of the existing business to use a name close to theirs.

Businesses aspiring to register in Massachusetts may verify if their chosen business name is available on the database of business names in Massachusetts. A business can keep a chosen corporate name reserved for 60 days by paying $30. The name reservation can be continued for an extra 60 days by paying an extra $30.

Filing an LLC in Massachusetts

To create an LLC in Massachusetts, an entity has to file a Limited Liability Company Certificate of Organization with the Secretary of Commonwealth Corporations Division. Filing costs $520 for an online application and $500 for a paper application. An agent for service of process is required for every LLC in the state of Massachusetts. Such an agent could be a business entity or an individual who officially receives legal documents on behalf of an LLC when issued. The registered agent can be a foreign or domestic corporation that legally operates in Massachusetts or an individual who resides in Massachusetts. In other words, they must have a physically reachable address in Massachusetts.

Though highly recommended, an LLC operating agreement isn't a requirement in Massachusetts. The formation of an operating agreement, though not compulsory in Massachusetts, is a crucial requirement in creating a corporation because it's the set of guidelines that will be used to govern the corporate affairs of the business. A business doesn't need to file its operating agreement with its Certificate of Organization.

Additional requirements of tax and regulations may apply to an LLC in Massachusetts. For instance, if an LLC has employees or sells goods and is liable to pay employee or sales taxes, it needs to register with the Massachusetts Department of Revenue (DOR).

Taxation

From the onset, your corporation will pay taxes as a C corporation. Some companies, especially small-scale ones, can take advantage of the tax benefits that result from filing as an S corporation. A C corporation carries the burden of double taxation. It pays taxes at the corporate level, and its members pay at the individual level.

If profit is greater than $250,000 for each owner, the business provides benefits for employees, or reinvests most of its profit, it is called “retained earnings” and can lead to lower tax rates for C corporations.

The S corporation treatment disallows double taxation. This is the most beneficial option for small-scale businesses. In order to achieve this, a business must send a completed Form 2553 S Corp Election to the IRS.

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