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Massachusetts Business Checklist Download:
Download this useful business checklist in PDF format to start your business in Massachusetts.
Download NowHow to Start a Business in Massachusetts:
Massachusetts is a great place to start a business because the state directs finances towards its small business ecosystem, which means start-up funds are available. With a number of thriving industries, especially tech, there is a lot of business opportunity and many are looking to invest in up-and-coming businesses.
While the state often ranks highly for its quality of life, it is quickly becoming known for the support its citizens give to small, local businesses. Follow our step-by-step guide to start your business in Massachusetts.
Form your business.
Review Massachusetts formation options.
Massachusetts offers 6 main ways of forming your business, which we'll cover in detail below. Review these closely and pick the one that fits your business best.
Name your business.
In Massachusetts, your business name is registered with the Secretary of the Commonwealth when you file your formation documents and pay the requisite fees. You will not be allowed to register your business if the name is already taken. The law in Massachusetts states that a business name may not be the same or even too similar to an existing business's name. To prevent this from happening, there is an easy process to follow.
If you need help finding a business name, be sure to check out NameSnack's free business name generator.
Check if the name is available.
Search the state's corporate database.
Search the state's reserved names.
Search the state's trademark database.
If available, reserve the name for 60 days.
Fill in an Application of Reservation of Name.
Pay the filing fees of $30.00.
For a sole proprietorship or a partnership whose business name is different from the owner or individual partners, you will need to file a notarized assumed name certificate with the city or town where your business is situated.
Get an employer identification number.
Nearly all businesses will need to register for federal taxes by applying for an employer identification number.
Register your business in Massachusetts.
In Massachusetts, sole proprietorships and general partnerships do not need to file any formation documents, but to form a corporation, limited liability company, or limited partnership you need to file specific documents with the Secretary of the Commonwealth of Massachusetts. This can be done online. The cost of formation depends on what business structure you decide on.
To register a corporation you need to file Articles of Organization. There is a minimum fee of $275.00.
To register a limited liability company you need to file a Certificate of Organization. There is a minimum fee of $500.00.
To register a limited partnership you need to file a Limited Partnership Certificate. There is a minimum fee of $200.00.
Obtain necessary permits and licenses.
Check the Massachusetts government website to see if your business will need any professional licenses or permits.
Common licenses include:
Register your business for taxes.
Register for Sales and Use Tax.
All businesses selling tangible goods in Massachusetts must apply for the Sales and Use Tax Permit to collect sales tax. Sellers collect 6.25% of the sales price or rental charged and hand that over to the Massachusetts Department of Revenue (DOR).
The tax must be charged separately on all bills, invoices, contracts, etc.
Register with the Department of Revenue through their online tool, MassTaxConnect.
Wait for an email from the DOR confirming your registration request.
In the second email from the DOR, you will find a link to MassTaxConnect along with an authentication code.
Login to complete your registration.
Register for Withholding Tax.
Employers in Massachusetts are responsible for withholding employee personal income taxes. Employers must register with the Department of Revenue to collect Massachusetts withholding taxes.
Calculate the personal income tax to be withheld from each employee using the latest Massachusetts Circular M.
Register with the Department of Revenue through their online tool, MassTaxConnect.
Wait for an email from the DOR confirming your registration request.
In the second email from the DOR, you will find a link to MassTaxConnect along with an authentication code.
Login to complete your registration.
Register to collect sales tax on meals.
Any business selling meals must add a 6.25% sales tax to the price of meal sold and collect the tax on behalf of the Department of Revenue. Business owners must register to collect the meals tax.
Register with the Department of Revenue through their online tool, MassTaxConnect.
Wait for an email from the DOR confirming your registration request.
In the second email from the DOR, you will find a link to MassTaxConnect along with an authentication code.
Login to complete your registration.
Hire employees and report them to the state.
Visit the Massachusetts government website.
All employers, regardless of the number of employees or contract type, must report within 14 days any new hires, contractors, and former employees returning to work. You as a business owner can report your new hires to the New Hire Reporting Program online using your MassTaxConnect account.
You can also download a New Hire and Independent Contractor Form to fill out and mail or fax it to the Massachusetts Department of Revenue.
Contribute to Unemployment Insurance.
There are a few exemptions, but if your business has more than one employee and you pay more than $1,500 in a calendar year, it will have to contribute to the Department of Unemployment Assistance's Unemployment Insurance Program. The program includes the unemployment insurance contribution, Employer Medical Assistance Contribution, and Workforce Training Fund.
Submit your employment and wage detail report.
Submit it using the DUA's reporting tool, UI Online.
UI Online will calculate the balance due.
Pay the balance.
Obtain workers' compensation insurance.
All employers in Massachusetts must have workers' compensation insurance for their employees. This is to ensure that employees are financially supported in the event of injury or loss of employment due to a workplace accident. Employers must register with the Department of Industrial Accidents.
All employers must display this poster in the workplace. To download the poster in other languages, visit the Massachusetts government website.
Massachusetts Business Types:
1. Sole Proprietorship.
Sole proprietorships are small businesses with a single owner who owns the business's assets and is responsible alone for the business's debts, obligations, and liabilities.
In Massachusetts, sole proprietorships pay personal income tax on business profits, as the business's finances and those of the business owner are not considered separate.
Read more about sole proprietorships in Massachusetts.
2. Partnership.
When two or more people or organizations decide to go into business together, a partnership is formed. The nature of the partnership is usually defined by a partnership agreement and there is no need for partnerships to file with the Massachusetts Secretary of State.
In Massachusetts, each partner of the partnership is taxed according to their share of profits. Read more about partnerships in Massachusetts.
3. Corporation.
Most large companies register as corporations. They are usually owned by several shareholders, but corporations are single entities. Shareholders play a limited role in running corporations but appoint directors to manage them. Each shareholder is liable for the business's debts and obligations only to the extent of their investment.
There are four kinds of incorporation in Massachusetts: domestic profit, foreign, professional, and nonprofit.
Massachusetts corporations are created by filing Articles of Organization with the Secretary of the Commonwealth of Massachusetts. They can be filed online through the Corporation Online Filing System.
4. Limited Liability Company.
A limited liability company (LLC) is a type of entity that has the characteristics of a corporation and a partnership. Many small businesses choose to register as LLCs because this type of structure offers a greater degree of financial protection from liabilities and debts, more flexibility in terms of management structures, and pass-through tax.
In Massachusetts, LLCs can choose whether to pay their taxes as a corporation, or individual.
Massachusetts LLCs are created by filing certificates of organization with the Secretary of the Commonwealth. This can be done online through the Corporations Online Filing System.
5. Limited Partnership.
A limited partnership is a general partnership wherein one of the partners is fully liable for the business's debts and obligations, and the other enjoys limited liability. The partner with limited liability often has no management powers.
Massachusetts limited partnerships are created by filing a Limited Partnership Certificate with the Secretary of the Commonwealth. This can be done online through the Corporations Online Filing System.
6. Limited Liability Partnership:
A limited liability partnership is a limited partnership offering limited liability to all the general partners. There are no forms for limited liability partnerships in Massachusetts.
To become an LLP, one of the partners needs to file a certificate of registration, authorized by most of the partners, with the Secretary of the Commonwealth Corporations Division. There is a fee of $500.00.
Massachusetts Business Formation Fees:
Fee Type | Cost |
|---|---|
Name reservation | $30.00 |
Articles of Organization for Domestic Corporations | $275.00 min. |
Certificate of Registration for LLC | $500.00 |
Limited Partnership Registration | $200.00 |
Limited Liability Partnership Registration | $500.00 |
