How to start a Massachusetts corporation

It might seem like a lot at first, but once you understand the steps, it’s very doable. This guide will walk you through everything you need to know to start your Massachusetts corporation.

How to start a corporation in Massachusetts

Incorporating means registering your business as a corporation so the law sees it as its own entity, separate from you. Each state has its own rules for how to do this, so the process can seem confusing. Let’s go through each step: 

1. Choose a name for your Massachusetts corporation

Your corporation’s name should be unique and make a statement about your business. Make sure it complies with the following Massachusetts requirements:

• Your name must end with "Company," "Incorporated," "Corporation," "Limited," or an abbreviation of one of these terms.
• Your name cannot be deceptive. If you're selling fried oysters, don't name your company "Ted's Massachusetts Dry Goods."
• Your name should be distinguishable from any other existing registered businesses in Massachusetts. 
• Your name cannot include any words that might mislead the public into thinking your corporation is a bank or an insurer unless you obtain special approval from the state.

Need help coming up with a business name for your corporation? Try the Rocket Copilot™ AI Business Name Generator, a free tool to help you brainstorm business names and get started registering your corporation.

2. Decide between a Massachusetts S-Corp and C-Corp tax designation

There are similarities between a Massachusetts S-Corp and a C-Corp regarding personal liability, management, structure, and compliance. The differences, however, come down to the following:

• Ownership Rules: A C-Corp is taxed as a separate entity from its shareholders, then shareholders report and pay taxes on what the corporation pays them. An S-Corp is taxed like a partnership with a "pass-through" tax structure. It's not doubly taxed because the corporation passes corporate income, losses, deductions and credits to its shareholders. Corporate owners pay taxes on their share of the corporation's profits, and they're taxed at their individual tax rates. To qualify as an S-Corp, your business must be a domestic corporation, provide only one class of shares, have no more than 100 shareholders, and your shareholders can include only individuals, certain trusts, and estates.
• Documents: If you want to form an S-Corp, you must file IRS Form 2553 to elect this status.

3. Appoint directors and shareholders for your Massachusetts corporation

Each state has its own personnel requirements for incorporating. In Massachusetts, corporations must have three or more directors if there are three or more shareholders. Otherwise, the number of directors is the same as the number of shareholders. 

Massachusetts also requires that the names and addresses of officers and directors be listed in the Articles Of Organization. There are no age or residency requirements.

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. File your Articles of Organization with the state of Massachusetts

Once you have a business name and registered agent, you can register your business as a Massachusetts corporation with the state by filing your Articles of Organization. This document may be referred to in other states as "Certificate of Organization," "Certificate of Filing," or "Articles of Incorporation."

Massachusetts also requires that corporations file additional paperwork with their Articles Of Organization. You must file an annual report with the Massachusetts Secretary of State two and a half months after the close of your fiscal year. Failure to provide this report could result in your company losing its ability to operate in Massachusetts.

6. Get an Employer Identification Number (EIN)

Before opening your doors for business, apply to the IRS for an employer identification number, or EIN. All corporations with employees in Massachusetts must have an EIN. An EIN is similar to your Social Security number, but it's for businesses. You'll also need an EIN to open your corporate bank account.

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

What to do after incorporating in Massachusetts

Massachusetts requires that your corporation adopt Bylaws. Bylaws set forth your company's operating rules, the responsibilities of its directors, the rights and powers of shareholders, and other corporate matters. Although you don't have to file your Bylaws with the state, you'll need them to demonstrate to banks, lending institutions, creditors, the IRS, and the courts that your corporation is valid and legitimate. Bylaws also help to establish rules so you can keep your corporate assets and debts separate from your personal ones.

Keeping Minutes of your director and shareholder meetings is also mandated by Massachusetts. Your Meeting Minutes should be maintained at your corporate office, along with your other company records, or with your designated agent. They are a historical record of your corporation's decisions, keeping track of all votes on important business decisions, as well as help secure your limited liability status.

Still have questions? Learn more about how to start your own business with Rocket Lawyer and get started today!
 

Key takeaways Starting a corporation in Massachusetts means following state rules, like choosing a unique name, filling out paperwork, and paying fees to make it official. One important choice is deciding how your corporation will be taxed in Massachusetts, either as an S-Corp or a C-Corp. This affects how the business and owners pay taxes, and the differences between the two change from state to state. After forming the corporation, it’s required to keep records – like Bylaws and Meeting Notes – to stay in good standing with the state and prove your business is real and operating correctly.

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 a corporation?
• What is an S-corporation?
• How are corporations taxed?
• How to start a corporation
• How to register a corporation by state