Massachusetts Corp: Everything You Need to Know
A Massachusetts corp is a legal entity that designates ownership through shareholders.3 min read
2. How to Form a Corporation in Massachusetts
3. Differences Between C Corporations and S Corporations in Maryland
4. Considerations for Massachusetts Corporations
A Massachusetts corp is a legal entity that designates ownership through shareholders. To form this type of business, a corporation's shareholders will need to select an incorporator who will go through the process of creating the corporation.
Cost of Starting a Corporation in Massachusetts
There are two primary fees when it comes to establishing a corporation in the state of Massachusetts. The first cost is to file the corporation's articles of incorporation, which will cost $275 for the filing fee. The other cost you will pay for your corporation comes if you issue more than 275,000 stock shares. If so, you will be charged a fee of $100 per 100,000 shares that are over that amount.
How to Form a Corporation in Massachusetts
Before your business can be considered a corporation in the state of Massachusetts, you must first file your Articles of Organization with the Massachusetts Secretary of the Commonwealth. It will take two days for the state to process your incorporation, in addition to the time it will take for mailing. If you will be filing your paperwork by fax, you will need to download a fax cover sheet from the Secretary of Commonwealth's website. Faxing requires an additional $25 processing fee, but it will allow your paperwork to be filed faster.
In the state of Massachusetts, there are many benefits to forming a corporation in the state. Two of the most popular benefits in Massachusetts for corporations include the following:
- No taxation on business inventory
- A flat tax for personal income
Differences Between C Corporations and S Corporations in Maryland
In Massachusetts, you can file your corporation as a C corporation or an S corporation. While both types of corporations have similarities in their structure, they are different in multiple ways, including ownership, share restrictions, and taxation. Some of the differences between C and S corporations include the following:
- The ownership:In a C corporation, shareholders are separate from the business entity and pay taxes on their distributions even though the income is already taxed at a corporate level. An S corporation employs "pass-through" taxation, which means all of the income passes through to the shareholders, who will pay taxes on their portion of the business income.
- Shareholder requirements: While a C corporation can have any number of shareholders, an S corporation must have 100 or fewer shareholders, may offer only one class of stock, and requires that stockholders be domestic individuals, trusts, or estates.
- Personnel requirements: Massachusetts does not set any age requirements on incorporators or owners but does require there to be at least three directors or shareholders for the business to be considered a corporation.
- Residency: There are no residency requirements for directors in the state of Massachusetts, but their name and address will need to be listed in the Articles of Organization.
- Registered agent: Your corporation must designate a registered agent who lives in the state and is authorized to conduct business there. The registered agent is required to maintain a physical address where vital paperwork and legal subpoenas can be sent if a legal action occurs against the company. The agent must be available during your established business hours and must be listed in your Articles of Organization.
Considerations for Massachusetts Corporations
Your Articles of Incorporation document is the starting point for creating your corporation. You need to include the following in your Articles of Organization:
- The number of shares that the corporation is authorized to issue
- The value of each class and series of shares along with any designation
- The street address of the businesses primary location
Aside from your Articles of Organization, you will be required to complete other paperwork to maintain your corporate status. Other paperwork and filings that you will need to consider include the following:
- Annual reports:You must file an annual report every year with the Massachusetts Secretary of State within two and a half months of the close of your fiscal year.
- An Employer Identification number:You must obtain an EIN from the IRS, which will serve as your company's identification for tax purposes and is often required by vendors and banks.
- Corporate bylaws: Massachusetts requires that your corporation adopt bylaws. Corporate bylaws will outline the operating rules as well as the responsibility of the directors, officers, and shareholders.
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