To set up a business in Massachusetts, entrepreneurs need to file official paperwork with the state and select a registered agent. The process to legally establish a business in the state isn’t difficult, but if you’re not familiar with the process – it can be a bit confusing.
Entrepreneurs have to accomplish a few things before filling out the LLC formation paperwork, like selecting a company name and picking a registered agent. A registered agent is a person or company that accepts official documents for your company. The person or company that holds this position should be trustworthy and reliable. This person will likely receive sensitive documents that might pertain to your company’s financial or legal situation, so it’s important to be selective.
To help new business owners set up a Massachusetts LLC and select a qualified registered agent, this guide answers frequently asked questions on the topic.
How is an LLC formed in Massachusetts?
To form a Massachusetts LLC, you need to file LLC formation paperwork. In Massachusetts, these documents are called Certificate or Organization. In other states, they’re referred to as Articles of Organization, but the meaning behind them is the same. They legally establish a business in the state.
Before filing this document, entrepreneurs need to do the following:
1. Name the company
What do you plan to name your company? Whether you have a name picked out or are still trying to decide what’s best, entrepreneurs should run ideas through the state’s business database to check availability. No two businesses in the state can have the same name, so you’ll need to see if the name you want is available before moving forward. The Secretary of the Commonwealth of Massachusetts has a website set up for this purpose.
On the same website, entrepreneurs can also reserve a company name for up to 60 days. For those who aren’t quite ready to set up their business, this is a great option. To reserve a name, simply fill out a form and pay $30.
In addition to checking the availability of a name, the state has several naming rules that you should be aware of:
- The company name must include “Limited Liability Company” or “LLC.”
- The company name shouldn’t confuse the public into believing it has anything to do with the government.
- Some names may need additional approval from state officials.
Now is also a good time to check on the availability of a company domain. If a domain matching the company name is already taken, is that problem? Most companies want the domain to match the name, so if it’s not available it could weigh into your naming decision.
2. Pick a registered agent
Every LLC in Massachusetts must name a registered agent on its LLC formation paperwork. As mentioned, a registered agent is a person or company that receives documents for the company. These documents could be tax notices or service of process papers that are filed during a lawsuit.
The owner can be his or her own registered agent, but there are other options. An employee, board member, or neighbor can fill this role too. As can a registered agent service. A registered agent service is a professional company that becomes a registered agent for your company. Further discussion of who can and can’t be a registered agent is below.
3. File the Certificate of Organization
With a name selected and a registered agent in mind, it’s time to file the LLC formation documents. To do so, entrepreneurs can go online and apply or do so by mail. The Certificate of Organization will ask for the company name and address, the name and address of the registered agent, managing members, a list of products offered, and the signature of the LLC organizer.
The Certificate of Organization is filed with the Secretary of the Commonwealth. Be prepared to pay $520 to file online and $500 to file by mail. This is one of the more expensive filing fees in the nation, so it’s best to know this ahead of time.
Once approved by the state, your business is officially established in Massachusetts.
4. Create a company operating agreement
After submitting your LLC formation documents, it’s time to create a company operating agreement. An operating agreement explains to all interested parties how the company will run. It’s meant to explain how decisions are made, who’s in charge, how investors are involved, and how profits and losses are managed. An operating agreement can prevent problems from arising in the future, so it’s a good idea to create this contract before opening the business to the public.
The State of Massachusetts doesn’t require the agreement to be submitted with the LLC formation papers.
5. Obtain an EIN
To open a bank account, pay employees, or file business taxes, entrepreneurs need an EIN or an employer identification number. The IRS issues the EIN on the federal level. You may also need a state EIN.
To obtain the EIN from the IRS, simply go to the IRS website, answer a few questions, and you’ll receive the nine-digit number instantly.
6. File an annual report
Massachusetts LLCs must file an annual report. The report is due by the company’s anniversary date each year. The cost to file this report is $500. The report is filed with the Secretary of the Commonwealth Corporations Division.
What is a Massachusetts registered agent?
A Massachusetts registered agent is a person or company that accepts documents, some of which are sensitive in nature, for a company. The documents could include tax notices, government correspondence, or documents served during a lawsuit.
Do I really need a registered agent in Massachusetts?
Yes. The State of Massachusetts requires all LLCs to list a registered agent on its Certificate of Organization.
Can I be my own registered agent in Massachusetts?
Yes. An owner can be the company’s registered agent. It’s common for the owner or another employee to serve in this role. However, there are other choices, including hiring a registered agent service to collect the documents for the company and notify the owner when they arrive.
Who can be a registered agent in Massachusetts?
In Massachusetts, a registered agent can be any resident or company in the state with a physical street address. A P.O. box isn’t allowed. The person or company should be available during regular business hours as well, to accept mail and documents that are delivered in-person.
Why would a company choose to work with a registered agent service?
Wondering why someone would hire a registered agent service as opposed to assigning the job to the owner or an employee? Here’s a look at why some owners decide to hire this out:
- Peace of mind. The documents that a registered agent receives are important, and for some owners it provides peace of mind knowing that a reputable company is handling this task.
- Availability. Not every owner is available during regular business hours. Some owners work from the company office, so being the company’s registered agent makes sense. Others, however, travel or have frequent offsite meetings that prevent them from staying in one location during the day. For busy, on-the-go owners, a registered agent service is easier.
- Privacy. If your company is sued, the registered agent is “served” with the papers. While no company plans to get sued, if it does happen some owners prefer that it be handled offsite for privacy reasons.
List of Massachusetts registered agent services
There are many qualified registered agent services in Massachusetts to choose from. Each one offers different features and varying pricing. To give you an idea of what’s out there, here’s a look at several possible choices. Each of these companies also offer a-la-carte business services that may come in handy at a later date.
- Incfile.com: Incfile.com can help entrepreneurs file their LLC formation paperwork and serve as the company’s registered agent. The online company offers a host of beneficial business services that includes filing reports and other necessary documents with the state. The first year is free. After that, it’s $119 a year.
- Northwest Registered Agent: For $125 a year, Northwest Registered Agent offers an online portal, real-time updates when mail is received, and pricing that remains the same each year. The company offers its services in several states and has years of experience in the field. Additional business services are also offered.
- Swyft Filings: Swyft Filings offers registered agent services that start at $149 a year. Users get an online dashboard, report and filing reminders, and secure document storage for this fee. In addition, the company has a buffet of other business services available when you have a need.
How much does a registered agent service cost in Massachusetts?
The cost of a registered agent service will vary. Cost depends on how involved you want the company to be. If you simply want the company to serve as your registered agent and notify you of any documents that come in, it’s a fairly affordable situation. Expect to pay roughly $50 a year. For more involved services, like help filing annual reports and access to file storage, expect to pay $100-250 a year.
How does an owner select a registered agent in Massachusetts?
The owner lists the registered agent on the Certificate of Organization. The person or company’s name and address are needed.
Can a company change its registered agent?
Yes. To do so, you must submit a Statement of Change of Registered Agent form with the Massachusetts Secretary of the Commonwealth. There is a $25 filing fee.
What’s a statutory agent?
A statutory agent is another name for a registered agent. The title varies by state. In Arizona, for example, the term statutory agent is used, while other states like Massachusetts use the title registered agent. Registered agent is the most common title.
What’s a commercial registered agent?
A commercial agent is a registered agent service. Since you’re paying the company to fill this role, it’s considered commercial. If a person, like an owner or another employee, is serving as the company’s registered agent, they’re considered non-commercial agents.