Like corporations, LLCs are created by filing a certificate of organization with the Secretary of the Commonwealth and paying a fee. Once created, LLCs function in accordance with the terms of the operating agreement, a document comparable to a partnership agreement. LLCs must also file an annual report with the Secretary of the Commonwealth.
An LLP is a partnership which, by registering with the Secretary of the Commonwealth, limits the personal liability of a partner for debts, obligations and liabilities of the partnership, whether in tort, contract or otherwise from negligence, wrongful acts, errors or omissions, except that a partner cannot eliminate liability for his own negligence. LLPs must also file an annual report with the Secretary of the Commonwealth.
See the Secretary of the Commonwealth website for additional information about becoming an LLP or LLC.
Classification of Limited Liability Companies and Limited Liability Partnerships for Massachusetts Income Tax Purposes
LLCs and LLPs are classified for Massachusetts tax purposes in the same manner as they are for federal income tax purposes. Accordingly, a single-member LLC will be disregarded as an entity separate from its owner for Massachusetts income tax purposes (and thus treated as a sole proprietorship, branch or division of the owner) if it is so disregarded for federal income tax purposes. An LLP or LLC will be treated as a corporation for Massachusetts income tax purposes if it is classified as such for federal income tax purposes. Similarly, an LLP or an LLC with two or more members will be treated as a partnership or as a corporation for Massachusetts income tax purposes, following the entity's federal classification.
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