How to Incorporate in Massachusetts (August 2024 Update)

Incorporating your business in Massachusetts establishes it as a legal entity separate from its owners. This protects your personal assets in case the business is sued or goes bankrupt. It also makes your company seem larger and more established to potential customers and partners. However, incorporating does come with administrative requirements and fees that sole proprietors don’t deal with. This article will walk you through the key steps for incorporating in Massachusetts.

Choosing a Business Structure

The first decision you need to make when incorporating is whether to structure your business as a corporation or a limited liability company (LLC). Both separate your personal assets from the company's finances, but they have some key differences:

• Corporations have more complex reporting requirements, like issuing stock certificates to shareholders and holding annual shareholder meetings. LLCs are simpler, with fewer administrative tasks.
• Corporations come in two taxation styles: C-corps are taxed at the corporate level, while S-corps pass income directly to owners’ personal returns. An LLC offers more flexibility, with the option to be taxed as a sole proprietor, partnership, S-corp or C-corp.

If you plan to take on investors or eventually go public, a corporation is the better fit. Otherwise an LLC offers liability protection with fewer reporting requirements.

Naming Your Massachusetts Corporation

Your corporate name must include a business designation like "Corporation," "Incorporated," "Limited," or their abbreviations. It cannot conflict with any existing names registered in the state, so first check name availability by searching the Secretary of State’s database.

You can optionally reserve your name for 60 days for a $30 fee while you complete the rest of the paperwork. Make sure to follow all naming suffix requirements detailed in Massachusetts General Laws Chapter 156D, Section 4.01.

Appointing a Registered Agent

A registered agent handles all official correspondence between your business and the state of Massachusetts. By law, corporations and LLCs must designate a registered agent when incorporating. Your options include:

• Yourself or a company owner
• A trusted employee or friend
• A registered agent service

Using a third-party service can save hassle and keep your address private. Make sure your registered agent meets all Massachusetts requirements, like maintaining a physical in-state office open during business hours.

Filing Articles of Incorporation

The articles of incorporation legally establish your business as a Massachusetts corporation. Prepare this document carefully following all requirements detailed in the state’s General Laws Chapter 156D. You’ll need to include information like:

• Proposed corporate name
• Names and addresses of directors
• Number and type of stock shares
• Registered office address
• Registered agent name
• Principal business address

File your articles by mail, fax, or through the state's online filing system. Fees start at $275 for up to 275,000 shares. Publication of notice in a local newspaper is also required within 60 days.

Obtaining Licenses, EINs and More

Even after incorporating, there are a few more steps to complete:

• Apply for your federal employer identification number (EIN) from the IRS to handle payroll taxes and open a bank account. For more information, take a look at our article on the key benefits of business checking accounts.
• Register for state tax accounts through the Department of Revenue’s MassTaxConnect system.
• Research whether you need any business licenses or permits to operate legally. Requirements vary widely by location and industry.

Writing Massachusetts Corporate Bylaws

Bylaws act as an operating agreement, laying out internal rules for your corporation like:

• When shareholder and board meetings will be held
• How company finances and record-keeping will be handled
• How to elect company directors and officers
• Share voting procedures
• Policies for issuing dividends

Bylaws aren’t filed with the state but rather kept with your other business records. Take time to carefully consider and draft these documents.

Holding an Organizational Board Meeting

After your articles of incorporation are filed, the incorporator or board of directors must hold an initial organizational meeting. Use this meeting to formally adopt the bylaws, appoint officers, issue stock certificates, and handle any other startup tasks.

Be sure to document the meeting with official minutes, including resolutions passed and actions taken. Store these records permanently along with your signed articles of incorporation.

Ongoing Compliance

After successfully launching your Massachusetts corporation, staying compliant requires some recurring paperwork:

• File an annual report with the Secretary of State within 2.5 months after your fiscal year-end. This incurs fees starting around $100 per year.
• Submit required state and federal tax returns, like the MA corporate excise and federal income taxes. Some business taxes apply whether or not you make a profit in a given year.
• Renew any business licenses, permits and registrations when needed. Mark your calendar so you remember important deadlines!

Conclusion

Incorporating in Massachusetts involves several administrative steps, but offers serious legal protections plus tax and fundraising advantages later on. For help launching and maintaining your corporation seamlessly, consider hiring an incorporation service or business attorney. They handle all the state filings and paperwork so you can focus on building your company!