How to Start an LLC in Massachusetts (Step-by-Step Guide)

When starting a new company, choosing a business entity is the most important decision that the founders must make. For most businesses with more than one founding member, forming as an LLC is often the best option for a number of reasons.

An LLC is an uncomplicated business structure that affords business owners legal protection by separating personal assets from business debts. Moreover, LLCs often enjoy a lower tax rate than corporations. Nevertheless, creating an LLC can get complicated depending on where you are based, with the formation process, filing fees, and continuing legal obligations differing from state to state.

Forming an LLC in Massachusetts follows a similar procedure compared to those in other states. However, the state uses the term “Certificate of Organization” rather than the more commonplace “Articles of Organization” when referring to an LLC’s formational document, and state government filing fees are some of the highest in the nation.

1. Select a name for your Massachusetts LLC

Follow naming requirements

There are two major guidelines to follow when naming your LLC in the state of Massachusetts:

1. An LLC’s name must be distinguishable from the names of existing businesses on file with the Massachusetts Secretary of the Commonwealth Corporations Division.
2. An LLC’s name must contain one of the following phrases or abbreviations: “Limited Liability Company”, “Limited Company”, “L.L.C.”,  “LLC”, “L.C.”, or “LC.”

Need help coming up with a business name? Check out our free business name generator.

Reserve your LLC name with the Secretary of the Commonwealth Corporations Division

After selecting a name for your LLC, you may reserve it with the Massachusetts Secretary of the Commonwealth Corporations Division so that another business entity doesn’t use it before you file your LLC’s Certificate of Organization.

First, check your LLC name’s availability using the Secretary of the Commonwealth Business Entity Search and the Name Reservation Database. If the name is available, file an Application for Reservation of Name to reserve it for up to 60 days. The application must be filed by mail, and the reservation fee is $30.

In the case that 60 days is not a long enough period, the reservation may be extended another 60 days through the payment of another $30 fee before the initial reservation period expires.

2. Designate a registered agent

As in every U.S. state, forming an LLC in Massachusetts requires the appointment of a registered agent service to handle state and federal legal documents and service of process on the business’s behalf.

The registered agent must either be a state resident or business entity with a street address in Massachusetts OR if the individual or business is based out-of-state, they must have a business office in Massachusetts.

3. File a Certificate of Organization

An LLC is formed in Massachusetts by filing a Limited Liability Company Certificate of Organization with the Massachusetts Secretary of the Commonwealth Corporations Division.

A Massachusetts LLC’s Certificate of Organization must provide the following details:

• LLC name and street address
• Registered agent’s name, address, and signature
• Federal EIN (if applicable)
• The date the LLC is set to dissolve (if applicable)
• The LLC’s general purpose
• LLC manager(s) name(s) and address(es) (if applicable)
• Names and addresses of those authorized to execute documents on the LLC’s behalf if the LLC has no manager

The certificate may be filed online or sent through the mail. The online filing fee is $520 and the hard copy filing fee is $500.

4. Create an operating agreement

Although not a legally mandated step for forming an LLC in Massachusetts, drafting a comprehensive LLC operating agreement is strongly recommended for all nascent limited liability companies.

The operating agreement should do the following:

1. Describe the LLC’s business structure
2. Establish the individual responsibilities and obligations of LLC members
3. Detail how the LLC will be run

Without an operating agreement clarifying the specific duties of its members, an LLC may face significant legal and operational difficulties.

5. Obtain an IRS Employer Identification Number (EIN)

All newly formed LLCs in the United States must acquire an Employer Identification Number (EIN) from the Internal Revenue Service (with the exception of single-member LLCs). The nine-digit EIN is like a social security number for a business and is necessary to pay income tax, file tax returns, open business bank accounts, and perform many other important functions.

You can apply for an EIN online on the IRS website without paying a filing fee.

6. Fulfill your legal obligations

Once an LLC is registered, its members must devote attention to fulfilling legal requirements that apply for the duration of the company’s existence.

File Annual Reports

Every year, all LLCs active in Massachusetts are required to file an annual report with the Massachusetts Secretary of the Commonwealth Corporations Division. Reports are due by the anniversary of the LLC’s formation and the filing fee is $500.

• Massachusetts LLCs – Limited Liability Annual Report
• Foreign LLCs –  Foreign Limited Liability Annual Report

The annual report can be filed online or by postal mail.

Obtain business licenses and permits

A Massachusetts LLC may be required to obtain one or more state or locally-issued business licenses, permits, or certifications depending on its location and the nature of its business.

• Visit Mass.gov’s Business Licenses & Permits page for information and resources on state-issued occupational permits and licenses.
• Contact a clerk or local government representative in the city or county where your LLC is based for information on fulfilling local business license requirements.

Understand state taxes

Massachusetts has a 5.0% tax on both earned (salaries, wages, tips, commissions) and unearned (interest, dividends, and capital gains) income as of 2023. As a small business owner, you’ll pay income tax on all money earned by your company for the calendar year.

Massachusetts has a 6.25% state sales tax rate and does not levy local sales taxes. Be aware you’ll need to charge sales tax on your items.

How LLCs are taxed: One of the benefits of an LLC is its exemption from corporate taxes. LLCs are pass-through entities, meaning you won’t file business taxes and instead will pass your income and expenses to your personal tax filing. Your income is taxed once as personal income, as opposed to a corporation, which is taxed at the business level and again at the personal level.

Register with the Massachusetts Department of Revenue: As an LLC doing business in Massachusetts, you must register with the state’s Department of Revenue to fulfill state tax obligations. Once you create an account, you can register with the Massachusetts DOR online using the MassTax Connect.

File BOI Report

As of 2024, all businesses must file a Beneficial Ownership Information Report. This new report, which is required as part of a new law passed by Congress, asks businesses to report all owner’s and stakeholders’ names and contact information. The report is part of a new initiative to cut down on financial crimes like money laundering or hiding income in shell companies.

The report is filed online through FinCen.gov website, or the Financial Crimes Enforcement Network.

Learn more about BOI reporting.

Post LLC tasks

Open business bank accounts

Your business should have its own accounts separate from your personal ones. At the very least, you’ll need a business checking account, but a savings account and a credit card are helpful, too. You’ll need an EIN or Federal Employer Identification Number from the IRS to open a bank account. LLC owners can obtain that nine-digit number instantly online through the IRS website and need to do any kind of business banking.

Wondering why you should keep your accounts separate? With a business bank account, you:

• Streamline tax preparation
• Establish business credit
• Protect yourself from business debt liability
• Look more professional
• Check on your company’s financial health

Take some time to consider the bank you’ll choose for your new business. While a local branch or credit union might be familiar, there are many online options that offer more business-friendly services, like the ability to send invoices and pull reports. Consider banks like Found, Relay, and Mercury.

Request a Certificate of Good Standing

Once registered with the state, you can request a Certificate of Good Standing, which shows your LLC is legally established and ready for business. You may need this certificate when you apply for a loan, or a vendor may ask to see it when you’re negotiating a new deal. You can request the certificate online through the Secretary of State.

Set up a business website

Whether you’re looking for a basic website that explains your products and provides contact information or a fully functioning website with an online store and blog, you can get a website up and running on your own. Many LLC owners choose a website builder like Domain.com or GoDaddy to help them establish an online presence. These platforms offer a variety of DIY tools that make it easy for a business owner with no coding experience to set up a site.

When you’re ready to get a site set up, follow these steps:

1. Search for and buy a domain name.
2. Obtain web hosting.
3. Use a web builder like Domain.com or GoDaddy to get started.
4. Customize your site to your business and audience.
5. If you’re selling goods, add an e-commerce section to your site.
6. Review and test your site.
7. Publish it.

Domain name availability: It’s best to check on name domain name availability when you’re naming your business. Ideally, your domain name and your business name are similar. It’s best to know if a domain name is available before you submit your LLC formation documents.

Set up social media channels too: While you’re working on your social presence, set up your social channels too. Aren’t sure which ones to choose? Think about your audience rather than setting up a business page on all of them. Which platforms do they use? If your target is older, set up a Facebook page. If your target is young, TikTok might be a good choice.

Think about the type of content you plan to create, too. If your product or service is best featured via video, you might lean on video channels like YouTube.

Costs to set up an LLC

Average cost to set up a business in Massachusetts: $1050-$1200

Registering an LLC is the start of something big. While there are many ongoing expenses to consider, like rent, utilities, insurance, and taxes, you’ll have a handful of costs associated with registering your business. Costs will include:

• Incorporation fees: To incorporate a business, you must file LLC formation documents with the state. When you submit these forms electronically, you’re also required to pay a filing fee. The filing fee is $500.
• Annual Report filing fees: Each year, you’ll file an Annual Report and, again, pay a filing fee. The Annual Report is essentially an updated version of your formation documents. You’ll submit the documents along with a $500 filing fee.
• Registered agent fees (optional): Every Massachusetts business must list a registered agent, someone who will receive confidential paperwork on behalf of your company. You can choose to use a registered agent company, which costs anywhere between $50 to $200 a year.

Foreign LLCs doing business in Massachusetts

LLCs formed in states other than Massachusetts that intend to do business in the state must register with the Massachusetts Secretary of the Commonwealth Corporations Division.

Follow these steps to make your foreign LLC eligible to operate in the state:

1. Comply with Massachusetts LLC naming guidelines and confirm your LLC name’s availability using the Secretary of the Commonwealth Business Entity Search.
2. Appoint a registered agent authorized to work in Massachusetts.
3. File a Foreign Limited Liability Company Application for Registration with the Massachusetts Secretary of the Commonwealth Corporations Division by fax or postal mail. You must include either a certificate of good standing or a certificate of existence from the state where the LLC was formed along with the application. The filing fee is $500 ($520 for fax filing).