Massachusetts S Corporation Formation Attorneys & Lawyers

Why use UpCounsel to form an S Corporation in Massachusetts

Starting an S Corporation in Massachusetts with a business startup attorney on UpCounsel is easy, informative, and cost-effective. In just three simple steps, our S Corporation attorneys will help you protect your business and personal assets, and help you organize your business for state and federal compliance for an S Corporation.

When forming an S Corporation in Massachusetts with UpCounsel, the attorney you choose to help you will conduct a business name search for your Massachusetts S Corporation and assist you in preparing your S Corporation Operating Agreement, along with providing other legal services based on your needs. Once your Articles of Incorporation have been prepared and successfully filed with the Massachusetts Secretary of the Commonwealth Corporations Division, your Massachusetts S Corporation has been formed and begins its existence as a corporate entity.

However, a corporation does not register as an S Corporation with the Secretary of the Commonwealth Corporations Division. It registers as a corporation with the state and then may file for S Corporation status with the IRS. S Corporation status is a taxation category which provides income tax advantages to small businesses.

Choosing a Company Name for Your S Corporation

One of the first steps in the process of forming your S Corporation is to choose your business name.

The business name that you choose must include either the word "Incorporation", "Incorporated", "Company", or "Limited" (or an abbreviation thereof) at its end. It must be distinguishable (not the same as or deceptively similar to) the name of an S Corp or foreign S Corporation reserved or registered.

Your S Corporation name may contain the name of one or more members.

By using UpCounsel, you can choose several business names in order of preference. Your attorney of choice can then conduct a name check for your Massachusetts S Corp before filing to see which names are available. Once you have chosen an available name, your chosen S Corporation attorney can help you properly register your name with the State of Massachusetts.

Requirements for Forming a Massachusetts S Corporation

Articles of Incorporation: When forming an S Corporation in Massachusetts, the Articles of Incorporation must be filed with the Massachusetts Secretary of the Commonwealth Corporations Division. Massachusetts state law requires that certain information be included in your Articles of Incorporation when forming your Massachusetts S Corporation.

This information must include:

1. The S-Corp's name and address.
2. The S-Corp's purpose and general character.
3. The S-Corp's registered agent's name, address, and signature.
4. The number of shares the S Corporation is authorized to issue, their par value, and any restrictions on transfers of share.
5. The names and addresses of initial directors, president, treasurer and secretary of the corporation.
6. The S-Corp's fiscal year.
7. The type of business of the S Corporation.

Additionally, a Massachusetts S Corporation formation generally requires inclusion and/or consideration of the following:

S Corporation Qualification Requirements: For a corporation to qualify as a S Corporation for tax purposes, it must meet the following requirements:

1. Must be a domestic corporation.
2. Have only allowable shareholders including individual, certain trusts, and estates; and may not include partnerships, corporations or non-resident shareholders.
3. Have only one class of stock
4. Have no more than 100 shareholders
5. Not be an ineligible corporation (i.e. certain financial institutions, insurance companies, and domestic international sales corporations).

Additionally, a Massachusetts S Corporation formation generally requires inclusion and/or consideration of the following:

S Corporation Operating Agreement: Although the S Corporation Operating Agreement is not required with the Articles of Incorporation, it is a good idea for every S Corporation with more than one member to have one. The Articles of Incorporation may contain restrictions or prohibitions on the power of the members to adopt, amend, or repeal an operating agreement.

Membership: A S Corporation must have one or more members.

Eligibility Requirements: A natural person or an entity.

Procedure for Membership: The member may acquire an interest in the S Corporation directly from the S Corporation at the time of formation and, after formation, at the time provided in and upon compliance with the Articles of Incorporation or the operating agreement or, if not provided, only upon the vote of a majority in interest of the S Corporation members, excluding the vote of the person acquiring the membership interest, and only when the person becomes a party to the S-Corp's operating agreement.

Resident Agent needed for a Massachusetts S Corporation

Remember every Massachusetts S Corporation must have a registered agent in the state, which is the person or office designated to receive official state correspondence and notice if the company is "served" with a lawsuit. The statutory agent may be an Massachusetts resident or business entity authorized to do business in Massachusetts. However, the registered agent must have a physical Massachusetts street address.

Massachusetts Secretary of the Commonwealth Corporations Division

Once you create an S Corporation in Massachusetts, the Massachusetts Secretary of the Commonwealth will require that certain recurring responsibilities and duties be fulfilled. The most important of these are explained below.

For further information, contact the Massachusetts Secretary of the Commonwealth.

Recurring Responsibilities and Duties for Massachusetts S Corporation

Annual Report: Each S Corporation shall provide an annual report to the Massachusetts Secretary of the Commonwealth Corporations Division regarding its financial condition to each of its members. It must be received by the S-Corp's anniversary month of its' filing and has a $500 annual fee.

Records: Each Massachusetts S Corporation must keep complete corporate records open to inspection at it' principal office.

Business Licenses: Business licenses and/or permits are required for most businesses. Contact the Massachusetts Secretary of the Commonwealth for specific licenses.

Incorporator's Statement: A signed "Incorporator's Statement" showing the names and addresses of the initial directors who will serve on the board until the first annual meeting of shareholders.

Filing Fees for a Massachusetts S Corporation

The filing fee of the Articles of Incorporation is $275 for up to 275,000 shares plus $100 for each additional 100,000 shares or any fraction thereof. Also, the filing and reservation of the S-Corp's name is $30. These fees can change so it would be best to check with the Massachusetts Secretary of the Commonwealth on what the latest fees are. You may pay these fees in many different forms including cash, check, money orders, or debit and credit cards.

Taxes for a Massachusetts S Corporation

A Massachusetts S Corporation is a special type of corporation created through an IRS tax election. An eligible corporation can avoid double taxation (once to the corporation and again to the shareholders) by a corporation with a Subchapter S designation by the IRS. A corporation must file a Form 2553 to elect "S" status within two months and 15 days after the beginning of the tax year.

Owners of the S Corporation report business losses or profits on their personal tax returns, and therefore the business itself is not taxed. Each shareholder is responsible for paying taxes on their pro rata share of the S corporation's items of income, deductions, and credits (through a Schedule K-1 form).

Massachusetts state law follows federal law for income tax purposes. Therefore if a corporation is classified as an association taxable as a S Corporation for federal income tax purposes, so will it be taxable as a corporation for state tax purposes.

Federal Income Tax: An S Corporation does not pay federal income tax.

Massachusetts State Income Tax: Massachusetts S Corporation must pay a minimum excise tax of $456 to the Commonwealth. If an S Corporation.'s annual receipts exceed six million dollars, the entity could become liable for substantial state income taxes

Federal Tax Identification Number: Your corporation will need to obtain a federal tax identification number, which is also known as an Employment Identification Number (EIN). You do not need to get a new EIN after the corporation choose to become a S Corporation. An EIN is similar to an individual's social security number. You will need an EIN for your S Corporation as long as there is one member, even if the S Corporation does not have employees. For certain tax filing requirements the attorney you choose on UpCounsel can help prepare your Federal Tax ID Application, if you have not done so already.