Starting a limited liability company (LLC) in Massachusetts

Learn about LLCs, state requirements to start one, and your tax obligations.

Table of Contents

What is a Limited Liability Company (LLC)?

A Limited Liability Company (LLC) is a business structure that protects its owners from being personally responsible for its debts. For example, if your LLC goes bankrupt, your assets can't be used to pay your creditors. 

According to the Small Business Administration (SBA), LLCs can be a good choice for medium- or higher-risk businesses. LLCs are quick to set up and offer a fair amount of flexibility in how you can run one. 

Establishing an LLC in Massachusetts

1. Make sure your business name is available

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. Create an operating agreement

An operating agreement is a legal contract that outlines how your business will operate. It is signed by all members and establishes rules, structure, and helps address issues during business operations.

3. File with the Secretary of the Commonwealth

To start an LLC, you'll file a Certificate of Organization with the Secretary of the Commonwealth. The filing fee for the Certificate is $500. An LLC only legally exists after the state approves its certificate of organization, which provides a public record of its name and contact information.

4. 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 within 90 calendar days. 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). 

Some types of businesses 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 with FinCEN website

5. Decide if you need a business certificate (DBA)

If your company name differs from your legal business name, you must apply for a business certificate (sometimes called a DBA or “doing business as” name) with the town or city where your business is located (M.G.L. ch.110 §5). The official name used when incorporating your business is its legal name.

For example, imagine you have a business called, “Smith Printing, LLC." However, you think you'll get more clients using the name "Creative Printing Services." 

Note: In other states, this is sometimes called a "Trade Name," "Doing Business As (DBA)," or "Assumed Name."

Check your city or town requirements

A business certificate is not a license to do business within the town or city you’re located in. The document creates a public record of the business owner(s)’s name and address. The application process isn’t the same in every city or town but often involves the clerk’s office.

You can find the contact information for your clerk’s office below, where you can learn more about the business certificate application process and any other local requirements.

The town of Monroe doesn't have a website. If you're doing business in Monroe, visit the town offices at 3 C School St, Monroe, MA 01350.

6. Get an EIN (Employer Identification Number) from the IRS

Many LLCs 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.

If you’re a single-member LLC and answer yes to any of these questions, you must get an EIN. If you answer no to the questions, you will use your Social Security Number to identify your LLC.

7. Register your business 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.

Important: If you're a single-member LLC that doesn’t require an EIN, you’ll register with a Social Security Number.

Taxes and LLCs

According to the IRS, an LLC can choose to “pass through” profits and losses to each member. Members report their share of income or losses on their tax returns and pay self-employment taxes for Medicare and Social Security. Learn more about self-employment tax.

Members may also decide that they'd like to be taxed as a corporation. In this case, the LLC will file a separate tax return and pay corporate excise tax. Corporate excise tax is made up of net income and either tangible property or net worth. 

You can determine your tax filing requirements by understanding how your LLC is treated for tax purposes.

LLCs are classified for Massachusetts tax purposes the same way they are for federal income tax purposes.

Additional operating requirements

LLCs must file an annual report with the Secretary of State by the anniversary of the LLC's original filing. The filing fee is $500.

Date published: June 20, 2024
Last updated: June 20, 2024

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