How to start an LLC in Massachusetts in 5 easy steps
From General Electric to Dunkin’ Donuts, Massachusetts is the home to a whole host of incredible, successful businesses, and yours just might be next. If you’re thinking about starting a small business in Massachusetts, you might be asking yourself, “Is LLC formation right for my business?” or “How do I even go about starting my LLC?”
For many business owners, getting an LLC means limiting personal liability over their business. Basically, if the business goes under or is sued, no one can seize their personal assets.
Having an LLC also helps you at tax time. The LLC isn’t viewed as a separate business entity the way a business structure like an S corporation would be, so you would file your profit and loss with your personal federal income tax returns.
Creating an LLC can be relatively simple, though each step in the process requires great attention to detail to ensure your business formation goes smoothly and your LLC starts in good standing. Below are some tips to help you get started!
1) Check if your business name is available
One of the first steps you’ll take when you start your business is to make sure you have the perfect name. You’ll need something unique, easily searchable by your customers, and that complies with the State of Massachusetts naming requirements.
First, your business name is required to include the term “limited liability company” or its abbreviations (LLC, LC, L.C, L.L.C).
Also, no names that could confuse your LLC with a government agency. (Sorry, IRS Cupcake Emporium, it’s back to the drawing board.)
To use a restricted title in your LLC name (a name or title that requires licensing, like “therapist,” “hospital,” or “University”), you may need to provide legal documents that show a licensed professional of that industry will be involved in the LLC.
Once you have your name, make sure to run it through the Secretary of the Commonwealth’s LLC search database to double-check that the name is free and clear to register.
Massachusetts Secretary of the Commonwealth allows you to hold your desired business name for 60 days while you complete the rest of your LLC filing with an Application of Reservation of Name and a $30 filing fee.
2) Find a resident agent
A resident agent (also known as a registered agent) is a person or entity that will serve as your point of contact with the State of Massachusetts. Any legal document, service of process, or other governmental or legal communication will go through your resident agent.
To appoint your resident agent, they’ll need to be a Massachusetts resident with a street address (no P.O. boxes) that is legally authorized to do business in the state.
You can act as your own resident agent, and it might seem like the most cut-and-dry solution, but it can come with some drawbacks.
A resident agent is expected to be available during normal business hours so that they’re available to receive any documentation needed. For some businesses, those hours are undesirable, if not outright impossible. (A daytime-only bar probably won’t be in business for very long).
Also, if you get served a warrant or receive a visit from the IRS, and you’ve registered your business address to receive these, things can get pretty awkward if this happens in front of customers.
There are registered agent services you can use if you don’t want to take on the responsibility of being your own resident agent. This professional service will keep any government or legal mail secure in their offices and alert you when anything arrives.
Some services even have digital mailboxes, so you can review any legal documents without having to make a trip to the registered agent’s office. These services can also act as your business’ office address if you have a primarily online presence.
3) Write your LLC operating agreement
An operating agreement outlines your business structure, showing how ownership and operating procedures will work inside your business. This helps keep all company members on the same page and can help prevent some serious infighting or even legal trouble in the future.
LLCs in Massachusetts aren’t required to file an operating agreement, and single-member LLCs may not find very much use in one, but an operating agreement is still a good thing to have for many reasons.
Even for a single-member LLC, having an operating agreement can help you make sure your LLC doesn’t too closely resemble a sole proprietorship, which comes with its disadvantages, most notably, personal liability.
Some states do require an LLC operating agreement on file, so if you decide to extend your business to another state (also known as setting up a foreign LLC), make sure to read up on their policies regarding the document.
4) File your LLC Certificate of Organization
Now it’s time for the actual LLC registration!
The Secretary of the Commonwealth Corporations Division handles LLC registration, and you’ll be filing a Certificate of Organization with all the necessary information to become an authorized business in Massachusetts.
The Certificate of Organization is a pretty straightforward application; here’s what you’ll need to make sure it’s filled out correctly.
- Federal Identification Number. Also known as an Employer Identification Number. You might not have one yet, which is fine. We’ll get into more detail about that later.
- The full and exact name of your business. Make sure “LLC” is a part of it!
- The name and street address of your resident agent. (No P.O. boxes.)
- The general character of your business. Basically, what kind of business are you running, and who’s involved. If your LLC provides a professional service, like massage therapy, you’ll need additional documentation to show that someone licensed in that profession will be a part of your LLC.
- Your LLC’s street address. This is where your business records will be maintained and must be within the commonwealth.
- Latest date of dissolution. You should only fill this out if your LLC will have a firm end date. If you don’t have an end date in mind, keep it blank.
- Names and addresses of all managers or owners.
- Names and addresses of anyone (besides managers) authorized to execute documents with the Corporations Division.
- Names and addresses of anyone authorized to execute real estate transactions. (This is only applicable to businesses that are actually in the real estate industry.)
The application will then need to be signed by both the person forming the LLC and the resident agent.
The filing fee for a mail-in application is $500. Online filing is available but has an added processing fee of $20.
Once the commonwealth receives your application, your LLC should be approved within 4 hours if you’ve applied online and can take up to 4 business days if you applied by mail. You won’t get a notification that it’s been approved, but you will get a letter of explanation if it’s been rejected for any reason.
If you haven’t gotten a rejection notice, and can’t find your LLC on the commonwealth database within 4 business days, check in with the Corporations Division to make sure it processed your application.
5) Get a Federal Employer Identification Number
To make sure everything goes smoothly come tax time, you’ll want to make sure you have an Employer Identification Number (EIN). This EIN is provided for free by the IRS and helps identify your business for tax purposes, essentially a business Social Security Number.
The Certification of Organization application may have asked you for this, though many businesses get an EIN after their LLC. It’s all right if you didn’t fill it out on the application; Massachusetts will have a record of it.
Having an EIN is essential, particularly for an LLC, since avoiding personal liability was probably your main motivation in getting one. You can open a business bank account and completely separate your personal and business finances with an EIN. An EIN also allows you to hire employees and properly file your business taxes.
Get your Massachusetts LLC insurance in minutes by following these steps
Your LLC is up and running, and business is looking good! Make sure that business stays good by getting LLC insurance with Huckleberry! After going through the LLC formation process, getting started with Huckleberry will be a breeze. Here’s how to get started:
- Head over to Huckleberry.com and hit the “Instant Estimate” button on the homepage.
- Start typing your industry, and see what specific coverages Huckleberry can offer you.
- Answer a few questions about yourself and your business, like your location, estimated payroll, and revenue estimates. Don’t worry about breaking out the business spreadsheet; we keep the estimate process as simple as possible.
- Within minutes, Huckleberry will have a quote generated with different coverage options perfect for your business.
- Still not convinced? Our quick rate estimator can get you a ballpark figure of what you’d pay for small business insurance.
Starting a new LLC is an exciting time in any business owner’s life. However, the work doesn’t stop with the LLC filing. Keeping your business in good standing and running smoothly can be tricky, with all the unforeseen hiccups that can occur along the way.
That’s why Huckleberry is here to help you get the best small business insurance coverage at rates way lower than with a legacy insurance company. From worker’s comp coverage to liability protection, Huckleberry gets you the quality coverage you need with lightning-fast speed, with most customers getting a quote back in just minutes.
Get a quote for your Massachusetts small business insurance today so you can get back to what you do best.