The limited liability company, or LLC, is a very useful format to choose when you are starting a business. Among other advantages, it protects your personal finances from the debts of the business.
In this blog post, we will briefly look at the steps you must take to form an LLC under Massachusetts law.
Choose your business name
- Massachusetts requires your LLC name to include “limited liability company,” “limited company,” or their abbreviations (LLC, L.C., etc.)
- Conduct a name search to ensure availability through the Secretary of the Commonwealth’s website. Your business name cannot be the same or substantially similar to that of any other registered business.
- If you have the perfect business name, but you’re not quite ready to launch your LLC, consider reserving your desired name from the Secretary of the Commonwealth for a small fee.
Appoint a registered agent
- Every Massachusetts LLC must have a designated agent who is available to receive legal documents when necessary.
- The registered agent can be an individual residing in Massachusetts or a registered agent service.
File a certificate of organization
- This is the official document establishing your LLC with the Commonwealth of Massachusetts.
- The filing fee is $500 for a paper filing and $520 for an online-only filing.
Obtain an Employer Identification Number (EIN)
- This federal tax ID number is necessary for opening a business bank account, hiring employees and filing tax returns
- You can apply for an EIN for free on the IRS website.
Business licenses and permits
- Depending on your industry and location, additional licenses and permits might be necessary.
Create an operating agreement
- Though not required by law, an operating agreement is highly recommended, especially if you have co-owners.
- This internal document can outline the duties and responsibilities of the owners, profit and loss sharing. It can also provide procedures for resolving disputes between partners and for dissolving the LLC, if this becomes necessary.
Other considerations
- Taxation: Massachusetts LLCs are treated as partnerships by default for tax purposes. However, you can elect to have your LLC taxed as a corporation if that works better for your business..
- Annual reports: Every LLC must file an annual report with the Secretary of the Commonwealth by the due date to maintain good standing. This comes with a $500 filing fee.
