Massachusetts corporations employ approximately 1.4 million people in the state.
Some of the most well-known companies in Massachusetts include TJX Companies, General Electric, The Enterprise, and National Amusements. Lots of foreign corporations also choose to do business in the state.
The following guide will show you how to start a corporation in Massachusetts.
1. Select a name for your corporation
The first step in starting a business in Massachusetts is deciding on a corporate name. You’ll need to adhere to Massachusetts naming guidelines which can be found below:
General corporate name guidelines
- The name you decide on for your Massachusetts corporation should not imply that it is organized for illegal purposes or any other purposes other than what’s outlined in your corporation’s Articles of Organization
- The name should not be similar to any other domestic or foreign business entity in the state
- The Massachusetts Corporation name must contain the words Inc., Company, Limited, Corporation, or any other abbreviation of those words.
For additional guidance on choosing a name for your corporation in the state of Massachusetts, refer to the Massachusetts state statute.
It’s also recommended that you conduct a name availability check by searching the business name database as well as the reserved names database, which you’ll find on the Massachusetts Secretary of State’s website, also referred to as the Secretary of the Commonwealth.
One of the ways to differentiate one business from another is to trademark your business name. This also ensures that customers are not confused about who they are conducting business with.
Additionally, it ensures that corporation owners are not faced with unfair competition from companies using the same or a similar name or logo. The first step in registering your Massachusetts corporation name as a trademark is checking that another business entity hasn’t already trademarked the name.
A business entity name is the legal name that the state identifies with your business. It is also the name that is included in all legal formation documents.
DBA (Doing-business-as) name
If you plan on conducting business under any name aside from your entity name, you need to register for a DBA or (Doing Business As) name. Filing procedures differ from one locale to another, so you should check with your local county clerks and city offices on how to file for a DBA in Massachusetts.
2. Nominate a registered agent
Every Massachusetts corporation will need to appoint a service of process agent, also referred to as a registered agent. This individual is tasked with accepting legal correspondence from the state on your corporation’s behalf.
The service of process agent can be any individual as long as they meet the following requirements:
- The service of process agent must be at least 18 years or older
- The service of process agent must maintain availability during normal business hours
- The service of process agent must contain a physical street address in the state of Massachusetts where business activities are conducted. This cannot be a P.O. Box address
- The service of process agent must consent to the appointment
This is an essential step in the process, and corporations that do not designate a service of process agent stand to face the consequences in most states. Not having a registered agent means that your business could be faced with fines and lawsuits and lose its good standing with the state.
3. Appoint initial directors at the organizational meeting
Prior to submitting your Articles of Organization, an organizational meeting will need to be held. Some of the tasks that must be completed before the initial meeting include: creating and approving bylaws, nominating an incorporator, selecting initial board of directors, and executing the incorporator’s statement.
As per state law, Massachusetts corporations must include at least one initial director responsible for overseeing the corporation until the first shareholder’s meeting is held.
Additionally, a president, treasurer, and secretary will need to be nominated to serve as the corporation’s officers.
A corporate director will be in charge of the repeal, amendment, and adoption of operational bylaws and supervising, electing, and removing officers on the board.
The individual elected as the incorporator should sign the incorporator’s statement. The statement must include the names and addresses of the initial director, and the document must be stored in your organization’s corporate records book.
4. File Articles of Incorporation
In order to incorporate your business in the state, the Massachusetts Articles of Organization must be filed with the state. The articles officially create your Massachusetts corporation.
Secretary of the Commonwealth
One Ashburton Place, 17th floor
Boston, MA 02108
The Massachusetts articles must include the following information:
- Incorporator’s name, address, and signature
- Corporate officers’ and directors’ names and addresses
- The effective date of formation
- Possible restrictions on the transfer of authorized shares
- Relative rights, limitations, and preferences of each share class
- The number of shares the business is allowed to issue
- Name and principal office address of the registered agent
- A statement of purpose, including the corporation’s name and street address
5. Create and approve bylaws
Your Massachusetts corporation needs to create and approve important governing documents determining how the business will be operated. It’s basically the Constitution for your corporation and ultimately clarifies the priorities and rules to everyone involved in your business.
The corporate bylaws must include the following information:
- The duties to the corporation keeping in mind that the best interest of the corporation must come first at all times
- The process of negotiating contracts
- The date the annual shareholders meeting is held
- How governing documents will be added and amended moving forward
- The process of handling corporation disputes
- The process of recording and managing corporate records
- The process of holding meetings, voting, and electing directors and officers
- The role and responsibilities of directors and officers
- How the corporation will be governed
Additionally, you need to include a quorum for voting purposes in your bylaws. A quorum is basically the minimum number of members needed to be present in order to make the meeting valid.
6. Select a share structure
Massachusetts corporations may have different types of stock referred to as series or classes. Each type of stock comes with a different set of advantages. That is, while one can offer voting rights, the other may not.
If your corporation issues one share of stock to the shareholder, for example, then the stock owner or shareholder owns 100% of the corporation. Therefore, each stock represents the percentage of ownership of the corporation.
7. Obtain an EIN
Your Massachusetts corporation will need a tax ID number to pay business licenses and fees. However, the tax ID number has several other benefits. It’s also referred to as an Employer Identification Number or social security number for your business.
This number is assigned by the Internal Revenue Service and is used as a form of identification for businesses in each state.
Aside from paying business licenses and fees, your Employer Identification Number is useful in the following instances:
- Making applications for business licenses
- Applying for business finance
- Managing payroll
- Submitting tax documents and reports
- Opening corporate bank accounts
An Employer Identification Number is also necessary if you plan on:
- Hiring items or selling products that are protected or fall under the sales tax legislation
- Establishing a pension plan
- Hiring workers for your corporation
Additionally, you will not be eligible for a state tax ID if you haven’t already obtained your EIN.
The best way to obtain an EIN in Massachusetts is to fill out the IRS Form SS-4. The application may be submitted by phone, fax, via mail, or online.
The online option is the quickest as you’ll receive your EIN immediately. Alternatively, you can call the IRS business and specialty tax line at 800-829-4933.
8. File Massachusetts state taxes
The following state corporate taxes are relevant to all Massachusetts corporations doing business and hiring workers in the state:
- Corporate excise tax: Massachusetts corporations are subject to Massachusetts corporate excise tax. This is based on both the income and net worth of the corporation.
- Massachusetts unemployment tax: All Massachusetts corporation owners who have one or more persons working on either a part or full-time basis are liable for the state unemployment tax.
- Employment tax: All business owners in Texas must comply with workers’ compensation and unemployment insurance taxes.
- Withholding tax: Massachusetts corporation owners must withhold personal income taxes from all employees’ wages in order to pay employees’ personal income tax to the Massachusetts government.
9. Massachusetts business licenses and permits
The following permit must be obtained prior to conducting business in the state:
- Sales and use tax: One of the main permits or licenses at the state level in Massachusetts is the sales and use tax certificate. It’s often referred to as a seller’s permit.
Anyone who engages in business in the state or sells goods and services needs to apply for this license before conducting business. Apply for the seller’s permit online at MassTaxConnect, also known as the Massachusetts Department of Revenue.
10. Annual report requirements in Massachusetts
Any type of business in the state of Massachusetts authorized to conduct business in the Commonwealth must submit an annual report with the Corporations Division. This report must be submitted approximately 2 1/2 months after the close of the corporation’s fiscal year-end. Feel free to file the annual report online.
11. Costs of starting a corporation in Massachusetts
The filing fees below apply to all Massachusetts corporations:
- DBA name: $25 per county
- Articles of Organization: $275
- Annual report: $125
- Massachusetts Certificate of Good Standing: $0
Next steps after forming a corporation
Your Massachusetts corporation is up and running, and you’ve got the tedious steps out of the way. Now it’s time to ensure that you keep your business in good standing with the state. The following steps will assist you in maintaining your Massachusetts corporation status.
Set up a corporate bank account
Your Massachusetts corporation must have its own separate bank account simply because it is a legal entity. When setting up or opening up a corporate bank account, your banking institution may require copies of certain documents such as the Articles of Organization and insist that certain banking resolutions be passed. Additionally, authorized signing offices will need to complete forms at the bank before being allowed to access the account.
Purchase a corporate seal
While purchasing a corporate seal or having one is no longer a legal requirement, many corporations still choose to use it to emboss legal documents. In fact, you may also find that lots of banks will insist on having all the agreements made with your corporation officially sealed. So to avoid any potential hassles, it’s best to purchase a corporate seal.
One of the easiest ways to look up a nonprofit corporation in the state of Massachusetts is to log on to the Internal Revenue Service website. Thereafter, select “check website” and search the nonprofit’s name or EIN. Additionally, if you’d like to check the nonprofit’s status, you can search the Revocation database on the IRS website.
Anyone that has the authority to create, prepare and submit business filings in Massachusetts is allowed to file the annual report. Most corporations choose to designate this task to the incorporator.
It can take as little as 24 hours to form a Massachusetts corporation when filing online. However, filing by mail can take anywhere between five to seven days. Although the amount of time it takes to incorporate varies from state to state, it should not take more than ten business days.
The quickest way to lookup an LLC or limited liability company in Massachusetts is to head over to the Massachusetts Secretary of the Commonwealth and enter your desired LLC name into the corporation’s database.
A Massachusetts corporation is a legal business entity that has shareholders instead of owners. Therefore, the corporation is separate from its owners and is entitled to many of the same rights as individuals.