Key Takeaways

  • Steps for Sole Proprietorship in Massachusetts: The process involves choosing a business name, obtaining necessary permits and licenses, and acquiring an EIN.
  • Naming a Sole Proprietorship: The business name can be the owner’s legal name or a "Doing Business As" (DBA) name. If using a DBA, it must be registered with the city or town.
  • Licenses and Permits: Depending on the business type, certain licenses or zoning clearances may be required.
  • EIN Requirements: An Employer Identification Number (EIN) is required for businesses with employees but optional for sole proprietors without employees.

Massachusetts Sole Proprietorship Overview

Sole proprietorship Massachusetts refers to the business form known as the sole proprietorship, which is distinguished by having a single owner and a simple startup process in comparison to other business forms. Starting a sole proprietorship in Massachusetts does not deviate from this standard for simplicity.

Steps for Setting Up a Sole Proprietorship

To successfully set up a sole proprietorship in Massachusetts, follow these steps:

  1. Choose a Business Name: You can use your legal name or a "Doing Business As" (DBA) name. If you select a DBA, it must be registered with the city or town where you operate.
  2. File a DBA: If your business name is different from your legal name, file a DBA certificate with the city or town clerk. The registration must be notarized and renewed every four years.
  3. Obtain Necessary Permits and Licenses: Depending on the type of business, you might need local, state, or federal licenses and permits.
  4. Acquire an EIN: If you plan to hire employees, you will need to obtain an Employer Identification Number (EIN) from the IRS.

Naming a Sole Proprietorship in Massachusetts

There are only four basic steps necessary to establishing a sole proprietorship in Massachusetts, and the first of these is selecting a name for it.

Naming a sole proprietorship–or any business, for that matter–can be a very important step insofar as branding is concerned. In Massachusetts, a sole proprietor might consider using their own name or a trade name as their business name.

If a sole proprietor chooses to use their own name, they are not required to register it with the commonwealth, nor must they file any formation paperwork. If a trade name or assumed name is used, more requirements must be met, and they are:

  1. That the name be unique to your proprietorship–no duplication is allowed.
  2. That a “doing business as” certificate is filed at the town or city clerk’s office of every town or city in which the business may be established.

Additionally, you will want to choose a name that differs enough from any already registered business name so as to avoid running afoul of common and federal trademark protections.

To determine the availability of your desired business name, you can search the Massachusetts Secretary of State’s business name database or the database of the U.S. Patent and Trademark office.

Trademark Considerations for Your Business Name

If you plan to use a name other than your legal name, it's important to ensure that the name is available and doesn't infringe on existing trademarks.

  • Check Name Availability: Before finalizing your business name, conduct a search in the Massachusetts Secretary of State’s database and the U.S. Patent and Trademark Office’s (USPTO) trademark database to check for conflicts.
  • Consider Trademark Protection: If you intend to expand your business and brand, consider trademarking your business name to protect it from use by others in a similar industry.

Obtaining an Assumed Name Business Certificate

If a business name is used that differs from your legal name, obtaining an assumed name business certificate will be necessary. To do so, you will have to file with the town or city clerk wherever you are doing business, with the filing fee varying with location. This certificate must be notarized before filing and must be renewed every four years.

However, having your business name registered will not necessarily prevent it from being used in ways that could be detrimental to your business. As an additional step, you might also consider applying to the [U.S. Patent and Trademark Office[(https://www.uspto.gov/) (USPTO) for trademark protection for your business name. This can prevent others from using slogans, logos, or names that are associated with your service, product, or brand. If you think you might go down this route, you will want to check with the USPTO to see if your name is available before you register it with the state.

Ensuring Trademark Protection for Your Business Name

  • If your business name is not your legal name, registering it with the local city or town is essential, but you might also want to apply for trademark protection with the U.S. Patent and Trademark Office (USPTO).
  • Why Apply for a Trademark: Trademark registration protects your business name, logo, and slogans from being used by other companies in a way that could confuse consumers. This protection is critical if you plan to grow your business across state lines or on a national scale.

Obtaining Permits, Licenses, and Zoning Clearances

Depending on what kind of business your are operating, you may need to acquire various permits, licenses, or clearances before you can legally go into business. To discover which of these you will need to operate your sole proprietorship, the Massachusetts Business License, Permits, and Regulation website can help.

Additionally, local regulations, such as building permits, licenses, and zoning clearances, may apply. To check on these, contacting your county and city governments will be necessary. 

Examples of licenses or permits you may need to acquire include:

  • Sales Tax Vendor Registration. The sale of services is generally not taxed in Massachusetts, while the sale of physical products is. Therefore businesses that sell physical products must apply through the Department of Revenue for a Sales and Use Tax Registration Certificate.
  • Occupational and Professional Licenses. Certain professions, such as those involving law, medicine, and some of the trades, require one to be licensed before they can be in business. Likewise, business in some industries, including food and daycare, require licenses to operate.
  • Local Business Licenses. Most town, cities, and counties in Massachusetts require a business to register with them, including some home businesses.

Additional Requirements for Certain Business Types

Some industries require additional certifications or specific permits. For example:

Health and Food Services: If you plan to run a food-related business, a food establishment license from your local health department may be required.

Professional Services: Professions such as law, accounting, and medicine require state-issued professional licenses.

Check the Massachusetts Business License & Permits website for a detailed list of requirements based on your business type.

Obtaining an EIN

An EIN, or Employer Identification Number, is a nine-digit number used by the IRS to identify businesses, just as they use the Social Security Number to identify individuals. Acquiring such a number may be the last step necessary to establish your sole proprietorship in Massachusetts.

If you do not intend to have employees, then acquiring an EIN may not be necessary. If you think employees will be in your future, then you should apply for an EIN with the IRS, as you will not be able to operate your business without it. This application can be made for free through the IRS’s website.

When You Don’t Need an EIN

  • If you operate a sole proprietorship without any employees, you are not required to obtain an EIN. Instead, you can use your Social Security Number (SSN) to file your taxes.
  • However, an EIN is recommended even for sole proprietors without employees to avoid identity theft, especially when opening a business bank account.

Frequently Asked Questions

  1. What is the process for starting a sole proprietorship in Massachusetts?
    To start a sole proprietorship, choose a business name, register it with the local city or town, apply for necessary permits and licenses, and obtain an EIN if you plan to have employees.
  2. Do I need a DBA for a sole proprietorship in Massachusetts?
    A DBA is required if you use a name other than your legal name. It must be registered with the city or town where you do business.
  3. Is an EIN necessary for a sole proprietorship in Massachusetts?
    An EIN is required if you have employees. If not, you can use your Social Security Number for tax purposes, though obtaining an EIN is recommended for privacy and business reasons.
  4. Can I trademark my sole proprietorship’s business name in Massachusetts?
    Yes, you can apply for a trademark through the U.S. Patent and Trademark Office (USPTO) to protect your business name from being used by others.
  5. What types of permits might I need for a sole proprietorship in Massachusetts?
    Permits vary depending on your business type. Common permits include sales tax registration, professional licenses, and health department permits for food-related businesses.

Once this step is done, you should then be able to begin operating your sole proprietorship in Massachusetts. If you need help understanding how to set up a sole proprietorship in massachusetts, you can post your legal need on UpCounsel’s marketplace. UpCounsel accepts only the top 5 percent of lawyers. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.