How to start a Massachusetts LLC

An LLC is a type of business that helps protect its owners (called members). This means that if the business owes money or gets sued, the members' personal assets, like their house or car, are usually safe. 

In the state of Massachusetts, an LLC is defined as “an unincorporated organization formed under this chapter and having 1 or more members.” (Massachusetts General laws, chapter 156C section 2). That means an LLC in Massachusetts is a company created within the state or a company that becomes subject to Massachusetts' state regulations surrounding LLCs (Chapter 156C).

If that sounds like a lot of legal jargon - that's because it is! What you need to know is that LLCs are popular with business owners because they are simple and flexible to run. They have fewer rules compared to comportations and the owners can choose if they want to manage the business themselves or appoint managers to do it. 

Another benefit is how taxes work: LLC owners can pay taxes through their own personal tax returns, or they can choose to have the business pay taxes separately, like a corporation. This gives owners more choices in how they handle taxes as their business grows.

Why should I register for an LLC in Massachusetts?

You may want to register for an LLC in Massachusetts when:

• You own or want to start a business in Massachusetts, or want to expand an existing business into Massachusetts, and want to stay legally compliant. 
• You own or want to start a business, and want more flexibility on how you will manage the business or pay taxes than a corporation would provide.
• You want to protect your personal assets from potential liability resulting from business you conduct in the state of Massachusetts. 
• You own or want to start a business, and want to register in Massachusetts to open accounts, lease or buy property, secure funding, or hire employees.

Do I need to file my LLC in Massachusetts if I live in another state?

Any LLC that does business in Massachusetts must register with the state. Massachusetts includes the following activities, among others, in the definition of doing business:

• Owning or leasing real estate in the commonwealth.
• Engaging in the construction, alteration or repair of any structure, railway or road or engaging in any other activity requiring labor.

LLCs based in Massachusetts are called "domestic LLCs," and out-of-state LLCs are called "foreign LLCs." Foreign LLCs and domestic LLCs may have different filing and compliance requirements -- Rocket Lawyer can help you navigate foreign LLC registration, regardless of where you live.

How to start an LLC in Massachusetts

1. Find a unique name for your Massachusetts LLC

The state of Massachusetts says that the names of all LLCs in the state:

• Shall contain the words ''limited liability company,'' ''limited company,'' or the abbreviation ''L.L.C.,'' ''L.C.,'' ''LLC,'' or ''LC."
• May contain the name of a member or manager.
• Cannot be too similar to existing LLCs in the state. You can search the Commonwealth of Massachusetts' database of business entities in the state to make sure your name is unique.

Rocket Lawyer can help you determine whether your business' name is eligible for registration in Massachusetts and may be able to help you reserve the name before you file your LLC.

2. Include your other LLC members (if any)

In Massachusetts, you can in fact form as a one-person LLC. In this case, the LLC would be referred to as a single-member LLC (SMLLC), whereas if there is more than one owner, the LLC may be called a multi-member LLC. 

The main difference between single-member and multi-member LLCs lies in ownership structure and management. With a single-member LLC, you have full control over the business. In contrast, a multi-member LLC has multiple owners, each with a specific percentage of ownership as defined in the operating agreement. This means that in a multi-member LLC, owners share profits, losses, and tax responsibilities based on their ownership percentage.

3. Provide a Massachusetts address

This will be used as your official LLC address. The address that you list may either be your home, an office, or another physical location, but it cannot be a PO box.

4. Choose a Registered Agent

A Registered Agent is the person or business responsible for receiving tax, legal, and government documents during regular business hours. It's important that every business has one. You can either serve as your own registered agent (if you have a Massachusetts address) or choose one to do that service for you (if you are not located in Massachusetts or would like an extra layer of privacy).

5. Register your LLC with the state of Massachusetts

Once you have a business name and registered agent, you can register your business as a Massachusetts LLC with the state of Massachusetts by filing your Certificate of Organization. In other states, this document may be called a "Certificate of Formation," "Certificate of Filing," or "Articles of Organization."

6. Get an Employer Identification Number (EIN)

Massachusetts LLCs are required to have a Federal EIN tax number. Think of your tax ID as the social security number for your company. It will be important for business contracts, tax filings, and all manner of documents down the line. Every company should have one to remain in good standing.

7. Pay the state filing fee

Every state has different fees for forming an LLC, which can also vary from one year to another.

Congratulations! After you have completed all these steps, you have formed your Massachusetts LLC.

What to do after forming a Massachusetts LLC

There are a few steps you need to take to maintain your Massachusetts LLC:

1. Create an Operating Agreement: we can help you create your Massachusetts LLC Operating Agreement online.
2. Hold a meeting: a first meeting with members of an LLC is not required by law, but it is highly suggested in order to get organized. Also, unlike corporations, LLCs are also not required to maintain Meeting Minutes, but these documents are also recommended as they provide records for important decisions made.
3. Pay taxes according to how you chose to be taxed: traditionally, LLCs are "pass-through entities." This means that you pay your business taxes on your personal tax form. That said, you can elect to be taxed like a corporation, if you choose to do so.
4. File an Annual Report: Massachusetts requires LLCs to submit an Annual Report every year.

What is needed to keep records for my Massachusetts LLC

Massachusetts does not specify certain records that need to be kept, apart from those required for tax and employment purposes. However, it is advised to keep thorough records of your LLC because the State of Massachusetts requires that all LLCs grant access to its members, agents, and their attorneys any of its documents at a reasonable location which is specified in the Operating Agreement. 

This access includes previous members and their attorneys to records that are pertinent to their time as members in the LLC and it entails the ability to inspect and copy any records during ordinary business hours.

Still have questions? Rocket Lawyer can help you with the process of forming a Massachusetts LLC. Get started today!

  

Key takeaways Registering an LLC in Massachusetts can give you a lot more flexibility than a corporation, as well as protection for your personal assets from potential liabilities. Even if you live in another state, you must register your LLC in Massachusetts if you do regular business there, like selling things or having employees. After starting your LLC, it's advisable to create an Operating Agreement and hold a first meeting. You will also need to file an Annual Report every year. Keep records of your Massachusetts LLC, like the names of all members, tax documents, and your business rules. These help you stay organized and follow the law.

Additional resources

Learning how to enforce a contract is just one step. Explore these additional topics to learn more and take the next steps.

• What is an LLC
• How are LLCs taxed
• How to start an LLC
• Do I Need a Registered Agent?
• How and when to file an Annual Report