How to Start an LLC in Massachusetts

Before you start to fill out paperwork, your business needs a name to file under. Choose a name that is both catchy and distinctive, easily understandable, and wholly representative of your business. Brainstorm a few alternatives too, just in case your top name is not available for registration in Massachusetts.

There are a few rules that Massachusetts Limited Liability Companies must observe to register a name.

1. To prevent fraud and misrepresentation, the name you choose cannot be "deceptively similar" to the name of another Massachusetts business. Use the Massachusetts Secretary of the Commonwealth's business entity database to search for exact matches or possible similarities. You may search for reserved business names by business entity name or using a requestor name. Don't forget to check for variations or different spellings, as those can also lead to rejection.

   Alternatively, use MyCorporation's business name search service. We'll run an in-depth search on your name and respond with our research. MyCorporation also offers a free business search when you trust us with your LLC filings.

2. Your business name must acknowledge that it is a limited liability company. To pass, include the words "limited liability company," "limited company," or the abbreviations "L.L.C.," "L.C.," "LLC," or "LC."
3. Your name must not contain restricted words unless you obtain permission from the Massachusetts government. Most restricted words in Massachusetts stem from government and law enforcement. These words include "Army," "Navy," "Government," "State," and "Federal."

Now, you'll have to decide how you plan to manage your LLC. You can choose for your LLC in Massachusetts to be "member-managed" or "manager-managed."

Before we move on, keep in mind that owners of an LLC are known as "members". A single-member LLC has just one owner/member, while a multi-member LLC is owned by two or more members.

Law requires all LLCs to designate an individual or group of individuals to manage daily business operations. Members manage the business within member-managed LLCs, while manager-managed LLCs utilize a professional manager appointed by members to run the business. Member-managed LLCs are the default selection in most states, but some LLCs may be considered manager-managed LLCs.

The main difference between the two styles lies in who has decision-making power within the business. In a member-managed LLC, each member has equal power to make business decisions. Manager-managed LLCs may appoint a board of managers to exercise control over the LLC. This board is similar to a board of directors in a corporation and takes significantly more responsibility for the LLC's operations.

Keep in mind the manager can be one of the LLC's members or someone entirely outside the ownership group.

When forming a Massachusetts LLC, the Secretary of the Commonwealth requires you to designate a registered agent for your business. Registered agents communicate with the state on behalf of your business and receive legal and official documents related to your business.

Registered agents can be anyone, as long as they follow state requirements. They must be a Massachusetts resident, have a physical street address in your state of business, and must be available at the given address during regular business hours to accept service of process. Any member of your LLC can act as a registered agent, or you can hire a third-party registered agent service like MyCorporation.

The state of Massachusetts requires you to file a Certificate of Organization to finalize your LLC. This three-page form contains all the basics of your business required for registration and comes with a $500 filing fee. Your business is officially formed once the Commonwealth of Massachusetts accepts and processes your filing.

What Information Should You Include in the Certificate of Organization?

Massachusetts requires you to include your LLC's name, street address, and general character of the business, plus the name and street address of your resident agent and managers in your Certificate of Organization. The Certificate of Organization must have the signature of the authorized signatory, consent of resident agent, and contact information including telephone number and email address.

Operating agreements solidify an LLC's financial and functional rules, such as regulations, provisions, and responsibilities.

Massachusetts does not require you to file an LLC operating agreement under state law. We do, however, highly recommend you form one to protect your LLC status and keep finances and management consistent. Additionally, governance will default under the state's general laws for LLCs if you don't.

What Kind of Information Should You Include in a Massachusetts Operating Agreement?

Since operating agreements are not required, there's nothing you absolutely need to include in your agreement. That said, there are a few things you should include if you plan to write one. Some common information includes:

• Basic contact details: This includes your LLC's name, principal business location address, and frequently includes the address of your registered agent
• The business purpose: Similar to the certificate of organization, this should be a simple description of what your LLC does. New LLCs often keep the description general to allow more flexibility as the business grows
• Member rights: Specifications about the rights of each individual member. Examples of this include members' percentage interests in the LLC, guidelines for meetings and holding votes, and rights and responsibilities of each LLC member.
• Tax structure: This indicates the way the Massachusetts LLC will choose to be taxed. Popular options include taxation as a sole proprietor or a partnership. The LLC may also choose to file for an S Corporation election to be taxed as a corporation.

All Massachusetts businesses need a general business license before they operate. Towns and cities each issue their own license, and the requirements of a business license vary by municipality as well as by industry. Additionally, if you plan to operate in multiple cities, you'll need a separate business license for each location.

Check with your city to find out about the specific licenses applicable to your business. MyCorporation also offers a business license compliance package where our professionals identify your business's required licenses and profile all the information you need to file for proper business licenses and/or permits..

For a full list of Massachusetts municipalities, check out this database from the Massachusetts Municipal Association.

The final step to starting your LLC in Massachusetts is obtaining an EIN, or employer identification number. This is also known as a federal tax ID. The IRS issues newly registered business an EIN to identify the company for tax purposes. An EIN is similar to a Social Security Number (SSN) in that it is a nine-digit, unique number. It is much less sensitive to use than an SSN and is often used as a safeguard on business documentation.

You need your EIN to:

• Open business bank accounts (for checking, savings, or investment)
• File your LLC's tax return
• Apply for a corporate credit card and build credit for your business
• Apply for or renew business licenses
• Register employees for federal and state taxes
• Complete payroll for employees

Filing an EIN only requires a few bits of information about your business. This includes the name of your LLC, the name of your manager or the owner, and your physical street mailing address. You can file for an EIN complete an EIN application.