Massachusetts Corporation: Everything You Need to Know
A Massachusetts corporation is a legal entity that's established by its shareholders. 3 min read
What Is a Corporation in Massachusetts?
A Massachusetts corporation is a legal entity that's established by its shareholders. It offers its owners a limited form of liability in that only the assets of the corporation are eligible for use to pay financial obligations taken on by the corporation. Shareholders elect to have an incorporator take the action to create a Massachusetts corporation in order to protect their personal assets. There are different types of stocks for corporations. They're known as classes or series and can have voting rights or none at all. Corporations are subject to a state tax of 9.5% with a minimum payment of $456. Business inventory is exempt from taxes.
How Do I Form a Massachusetts Corporation?
In order to form a corporation, you need to file Articles of Organization with the Massachusetts Secretary of the Commonwealth (SOC). It takes about two to three business days for the SOC to process the articles outside of mailing time. When you file forms for incorporation, they must have original signatures. Following are some of the other requirements that come with filing for incorporation:
- The words or shorthands of Inc., Corporation, or Incorporated have to be at the end of the business name.
- The corporation can be used for any lawful purpose unless you state what the business is involved in specifically.
- The number of shares you want to authorize.
- Share classification.
- The par value of individual shares or class of shares and their designation, or a statement of no par value.
- If there are multiple classes of stock, the articles have to provide a distinguishing designation for each class. Before shares are issued, the articles have to state the preferences, limitations, and rights relative to that series of class of shares.
- Street address of the corporate office.
- Board of directors and officers that includes the president, secretary, and treasurer.
- Date you want the organization to be effective; otherwise, the corporation is effective when the articles are filed.
- Fiscal year-end.
- Name, address, and signature of registered agent.
- Principal address of the corporation and Massachusetts address where corporate records are to be kept.
There are no age requirements to form a corporation, nor are there requirements that directors have to live in the state.
Giving Your Corporation a Name
Before filing the articles of incorporation, you want to make sure that your choice of corporate name is available. You can do this by checking for availability online at the Secretary of the Commonwealth's website or calling that office. You can reserve your chosen name for up to 60 days by submitting a form to the secretary's office. A 60-day extension is available if you cannot secure the name in the original time frame. The name of your corporation cannot be the same as an already reserved name, the name of another lawfully operating company doing business in Massachusetts, or a service mark or trademark registered in the state. The name cannot be similar to another company to the degree that your name could be mistaken for that company. And you cannot use a name that might lead the public into thinking your company is a bank or insurer if you are not operating as such.
Ongoing Requirements for Massachusetts Corporations
Once your corporation is formed, you have to undertake steps on an annual basis in order to keep your business in compliance. These steps are important to preserve the limited liability provided by a corporation to its owners. A Massachusetts corporation has to keep complete corporate records at its principal business office. The state requires all corporations to file an annual report. The report is due on or before the 15th day of the third month after the close of the corporation's fiscal year. The filing fee is $125 when paid by mail and $109 when paid by fax or online. Failure to file the annual report could result in the corporation losing its ability to operate in Massachusetts.
In the event your corporation hires employees, the state requires an EIN (Employer Identification Number). However, Massachusetts does not have or require a state tax identification number. Most businesses are required to have a license and/or permit to operate.
If you need help with forming a corporation in Massachusetts, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.