Setting Up an LLC in MA: Everything You Need to Know
Following are tips to help you form your LLC so you can operate as a business without the stress of exposing your personal assets.3 min read
Setting up an LLC in MA is easy and affordable. You register with the Secretary of the Commonwealth Corporations Division (SCCD) by filling out the required forms, paying the fees, and meeting all formation requirements. Following are tips to help you form your LLC so you can operate as a business without the stress of exposing your personal assets.
Overview of Setting up an LLC
A Limited Liability Company is sometimes called a hybrid business structure in that it brings in elements of a corporation and sole proprietorship under one structure. It lets its owners do things like:
- Shield themselves from personal liability from business debts.
- Doesn't require payment of separate business taxes as the tax passes through to owners.
- Allows flexibility in terms of its organizational structure.
- Has less regulation and restrictions than other types of business structures.
It's a straight forward process to establish an LLC in Massachusetts in order to gain these protections.
Steps to Set up an LLC
Begin by selecting a name for your LLC. This may seem obvious, but it's an important first step in starting the company. You have to research the state's LLC database to make sure the name isn't in use and that it's suited to your business. You need to follow the state naming guidelines in that the name has to contain one of the following:
- Limited Liability Company.
The state has a list of prohibited words that cannot be used under any circumstances. An exception may be allowed for some restricted words provided permission is granted by the proper authority.
Once you do your name search and are certain that it's not already in use, you can reserve the name for up to 60 days by filing a name reservation application. There is a non-refundable $30 fee that comes with filing the application so make sure to lay claim to the name or risk losing your fee. In the event you can't form your company right away and you want to retain the name, you can extend the reservation for another 60 days for an additional fee of $30. You have to file the extension before the first 60-day period expires. You can get this process done by mail or in person.
The second step is to choose a Registered Agent. All LLCs have to nominate a Registered Agent in order to operate in Massachusetts. The Registered Agent is a person or business who agrees to send and receive legal papers on behalf of the company. They agree to accept and send service of process of legal action, state filings, and other documents that pertain to the operation of the business. The Registered Agent has to be a Massachusetts resident or a corporation that has authority to conduct business within the state. An individual in the company, including the owner, can be elected as the Registered Agent but the company cannot be its own Registered Agent.
The third step is filing the Certificate of Organization. But prior to filing, you have to obtain an Employer Identification Number (EIN) from the IRS before you file. There is no charge to get an EIN from the IRS.
Obtain a form or PDF of the Certificate of Organization from the website of the SCCD. The certificate has to contain the following information:
- LLC name and address.
- General operating character of the business.
- Date of dissolution if applicable.
- Duration in the event the LLC is only to last a certain amount of time.
- Name and address of Registered Agent.
- Name and address of member or manager names and their signatures.
- Signature of a minimum of one authorized signatory.
- LLC contact phone number, address, and email.
All relevant documents have to be done in duplicate and accompanied by a filing fee of $500. You can file online, in person, by mail, or by fax. The usual turnaround time for processing of the Certificate of Organization is three to five business days and does not include mailing time. Once the state processes your documents and accepts the filing fee, your LLC becomes extant and you are free to conduct business under the umbrella of the LLC.
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