Massachusetts law makes it a priority to allow small business owners the chance to keep their personal assets protected in case your business is sued and something goes awry. It’s the kind of legal protection that’s usually offered to corporations, but you don’t have to incorporate to make it happen. All you have to do is register as a Limited Liability Company. The rules are pretty simple, the laws very clear, and the process is relatively painless. Once you file as an LLC, you are no longer legally responsible for any of the financial issues that might occur as a result of a lawsuit against your business. All of the paperwork you need to register as an LLC in Massachusetts is available on the Secretary of the Commonwealth of Massachusetts website.
Forming an LLC in Massachusetts
The process isn’t one that’s too difficult, but it does offer a few challenges along the way. So long as you are able to follow the laws required to register, you’ll find the process relatively seamless if not a little time-consuming.
- Choose a name for your LLC
- Choose a registered agent
- File a Certificate of Organization
- Apply for an EIN if necessary
- Obtain proper business licenses
- Register with the Massachusetts Department of Revenue if applicable
- File annual reports
Each step is required to be done in order according to Massachusetts law. Each one is a step toward the next, and each one must be finalized before you can provide any additional information to move on. The first step is choosing a name. You’ll need to check the Secretary’s website to ensure it’s not already registered to another business in the database, and then you’ll file a $30 fee along with an application to reserve a name for up to 60 days. Once you are approved for that, you choose your registered agent.
This is a person or business with a physical address in the state, and there is no law that requires you to choose an attorney or law firm. Many business owners do choose a legal professional to represent them in case of a lawsuit, but it’s up to you. Once you’ve confirmed your registered agent, you file your Certificate of Organization. You’ll need to include all the required information on this form from the Secretary’s website. Any missed information requires you re-file the paperwork and spend more time waiting on your approval. The filing fee for this is $520 if you choose to do it online. If you file by mail, you only pay $500.
There are a few other tax laws you must adhere to when you file your paperwork. If you have more than one member in your LLC, you need to have an Employer Identification Number from the IRS. This is easy to obtain, and it takes only a few moments on the IRS website. You must also have all the appropriate business licenses as required by your county for your type of business. If you sell goods and collect sales tax, your business must register with the Massachusetts Department of Revenue according to tax laws.
Once you become a registered LLC with the state, you have to file an annual report with a fee. The report is due when the reminder comes in the mail every year from the Secretary of the Commonwealth. It’s due along with a $500 filing fee.
Massachusetts is one of the more expensive states in which to become an LLC, but the cost is worth the protection you receive for your personal assets. There’s not much of a challenge filing to become an LLC, but many people do point out there is one major issue in the naming process. New companies can play with names until they find one not already registered. A company that’s been in business and is only now making the decision to become an LLC might find another company by the same name is already registered. This means choosing a new name, and that’s a problem for a lot of people who want to register. Additionally, all Massachusetts LLCs are required to file their name with “LLC” behind it.