What is a corporation?
A corporation, sometimes called a C corporation, is a legal entity separate from its owners, according to the Small Business Administration (SBA). This protects owners, or shareholders, from business debts and liabilities. Both the corporation and shareholders may be responsible for paying income taxes, depending on the type of corporation.
Massachusetts corporations are created by filing Articles of Organization with the Secretary of the Commonwealth.
Types of corporations
There are four types of corporations recognized by the state:
- Profit
- A corporation formed to perform business for profit
- Non-profit
- A corporation formed to do charity, education, religious, literary, or scientific work
- Professional
- A corporation owned by licensed professionals providing professional services. Licensed professionals are anyone required to be licensed by a state regulating board.
- Foreign entities
- A for-profit or non-profit corporation incorporated outside of Massachusetts
S corporations
While not a business structure, S corporations are a tax classification that allows corporations to pass income and losses to their owners or shareholders, much like a partnership or limited liability company (LLC).
If you plan to start an S corporation, you'll first need to complete filing as one of the corporation types above.
Learn more about establishing an S corporation with the IRS.
Establishing a corporation in Massachusetts
1. Make sure your business name is available
Make sure to review Massachusetts laws about corporate names.
The Secretary of the Commonwealth lets you search for a Business Entity to make sure the name you want is available.
Consider also searching for businesses with names similar to yours to see what kinds of businesses might appear next to yours. For example, 2 businesses with very similar names might compete for search engine rankings.
2. File with the Secretary of the Commonwealth
To start any type of corporation in Massachusetts, you must file Articles of Organization with the Secretary of the Commonwealth.
There are 4 different corporation types, each with different filing requirements and fees.
| Corporation type | Filing fee |
|---|---|
| Profit | $275 for up to 275,000 shares; ($100 for each additional 100,000 shares) |
| Non-profit | $35 |
| Professional | $275 for up to 275,000 shares; ($100 for each additional 100,000 shares) |
| Foreign entities | $400 |
You can file your paperwork with the Secretary of the Commonwealth online, by fax, in person, or by mail.
3. Report beneficial ownership information (BOI)
After the Secretary of the Commonwealth accepts your filing, you may have to file a beneficial ownership information (BOI) report. Filing is free and submitted to the U.S. Department of Treasury’s Financial Crimes Enforcement Network (FinCEN).
Your BOI report must include information about your business (like its name, location, and tax ID number) and its ownership (like names, dates of birth, residential addresses, and proof of ID).
Many nonprofits and certain other businesses on this list don't have to file a BOI report.
For businesses created during/after 2024: You'll report information about your business’s company applicant(s). There will either be 1 or 2 company applicants. The first is the person who first registered with the Secretary of the Commonwealth. You may need a second if more than 1 person was involved in registering: The second is the person responsible for directing or controlling the filing.
Here are some examples of company applicants:
- 1-person example: You're starting a business. You register with the Secretary of the Commonwealth. You're the only company applicant.
- 2-person example: You're starting a business. You ask your administrative assistant to file with the Secretary of the Commonwealth. You and your administrative assistant are both company applicants.
You can learn more or file online at the FinCEN website.
4. Decide if you need a business certificate (DBA)
You must file a business certificate (sometimes called a DBA or “doing business as” name) if your business operates under any name other than its legal name. The “legal name” is the official name used when incorporating.
For example, imagine you have a business called, “Smith Accounting Services, Inc." However, you think you'll get more clients using the name "FastTax Solutions, Inc."
You'll file your business certificate in the city or town where your business is located.
Learn more about if your business needs a business certificate and how to get one.
5. Get an EIN (Employer Identification Number) from the IRS
All corporations must get an Employer Identification Number (EIN) from the Internal Revenue Service (IRS). This is sometimes called a Federal Tax Identification Number and the application is free.
6. Register with MassTaxConnect
If your business is responsible for collecting and paying taxes to the state, you'll need to create a MassTaxConnect account. An EIN is required to register. You can pay business taxes to the Department of Revenue through MassTaxConnect.
Taxes and corporations
Generally, for-profit corporations are responsible for paying corporate excise tax. Corporations are required to file returns and pay taxes electronically.
Depending on the products or services your business offers, it may also have to collect other business taxes outlined by the Massachusetts Department of Revenue.
An S corporation won't be taxed on any profits or losses since those will be passed on directly to the shareholders, according to the IRS. Shareholders will report any income or losses on their personal tax filings.
Non-profit corporations are generally tax-exempt.
Federal tax forms for corporations
Federal tax filing responsibilities depend on your corporation type.
Additional operating requirements
Check if you need workers' compensation insurance
All Massachusetts employers must carry workers’ compensation insurance. This is required no matter how many employees you hire. This also applies to you if you’re going to be an employee of your business.
Annual reporting with the Secretary of the Commonwealth
All corporations must file an annual report with the Secretary of the Commonwealth. Due dates depend on the type of corporation and fiscal calendar year.
| Type of corporation | Annual report due | Fee |
|---|---|---|
| Profit | 2½ months after close of fiscal year | $125 ($100 if filed electronically) |
| Non-profit | Nov. 1 | $15 |
| Professional | 2½ months after close of fiscal year | $125 ($100 if filed electronically) |
| Foreign entities | 2½ months after close of fiscal year | $125 ($100 if filed electronically) |
Certificate of good standing
A certificate of good standing proves your business is in compliance, or "good standing," with all state requirements.
There are many reasons your business might need one, including:
- Opening a business bank account
- Applying for funding
- Pursuing an investor
- Registering to do business in another state
You can order a certificate of good standing from the Secretary of the Commonwealth for $15 and receive it by mail or email.
Check the Secretary of the Commonwealth's corporations page for other filing requirements to ensure your business remains in good standing.
| Date published: | June 20, 2024 |
|---|---|
| Last updated: | November 5, 2024 |