Form an LLC in Massachusetts

What is different about forming an LLC in Massachusetts

Massachusetts fixes the fees for the formation filing, the annual report and a foreign company's registration in the statute itself. M.G.L. c. 156C § 12(d) sets the certificate of organization at five hundred dollars and the annual report at five hundred dollars, and c. 156C § 48 sets the same amount for a foreign company's application for registration and each of its annual reports.

Filing electronically or by fax carries a second charge. The Corporations Division adds an expedited fee to every such filing, tiered by the order subtotal, and its Credit Card and E-check Processing Instructions state that "You will have to pay two fees: the filing fee and an expedited fee" and that "The filing fee and expedited fees are internally calculated. You cannot change these amounts." At a $500.00 subtotal the expedited fee is $20.00.

Filing the certificate of organization

Under c. 156C § 12(a), "one or more authorized persons must execute a certificate of organization," and it "shall be filed in the office of the state secretary." Chapter 156C imposes no publication requirement.

What the certificate must contain

Section 12(a) requires seven items:

• the name of the limited liability company;
• the address of the § 5 office in the commonwealth, which is a records office rather than a principal place of business;
• the resident agent's name and address, with the agent's "written consent to the appointment" either in the certificate or attached to it;
• "the latest date on which the limited liability company is to dissolve," if it is to have one;
• each manager's name and address, if the company has managers at formation;
• the name of any other person authorized to execute documents filed with the state secretary, "and at least one such person shall be named if there are no managers";
• "the general character of the limited liability company's business."

A member-managed company therefore still puts a named signatory on the public record. Members themselves are not listed.

Fees, forms and filing routes

The filing fee is $500.00 by every method. The expedited fee on fax and online filings runs $3.00 for a subtotal of $0.01 to $14.99, $3.50 for $15.00 to $24.99, $6.00 for $25.00 to $84.99, $10.00 for $85.00 to $149.99, $15.00 for $150.00 to $499.00, $20.00 at $500.00, and 4.5% of the subtotal over $500.

The Division's Certificate of Organization form carries no form number, and 950 CMR 112.07 states that "The use of official forms is optional," provided a substitute follows the format specifications in 950 CMR 112.00.

950 CMR 112.09 allows personal, courier and postal delivery to One Ashburton Place, Room 1717, Boston, MA 02108, plus fax and electronic transmission; the Filing Room is open Monday to Friday, 8:45 am to 4:00 pm. A fax filing must carry a bar coded Fax Voucher Coversheet as its only coversheet, usable once, and an online filing asks for a Customer ID Number and PIN issued by the Division; both are paid by credit card or e-check.

The Division publishes a turnaround figure for one filing method: "Your fax filing will generally be processed the same business day but in no event later than by the following business day." It publishes no figure for online, mail or walk-in filings.

Naming a Massachusetts LLC

Chapter 156C § 3(1) allows six endings: the name "shall contain the words 'limited liability company', 'limited company', or the abbreviation 'L.L.C.', 'L.C.', 'LLC' or 'LC'."

Under § 3(3) a name "may not be the same as, or deceptively similar to" the name of any corporation, limited partnership or limited liability company reserved or organized in the commonwealth, or licensed or registered here as a foreign entity. The only route past a conflict is the holder's written consent, "previously filed with the state secretary." Section 3 lists no restricted words beyond that bar.

The Division's Search for a Business Entity database checks availability. Under c. 156C § 4(b) the state secretary reserves an available name "for the exclusive use of the applicant for a period of 60 days" and "may extend the reservation for an additional 60 days upon written request." 950 CMR 112.12 sets the fee at $30.00, and the same for the extension.

Resident agent and the required Massachusetts office

Chapter 156C § 5(2) limits the resident agent to an individual resident of the commonwealth, a domestic corporation, or a foreign corporation authorized to do business here, and 950 CMR 112.13 requires a street address for the agent's office: "A post office address is not sufficient." A change of agent or address is made under c. 156C § 5A(a), which requires the new agent's written consent on or attached to the statement; the Division charges $25.00 on paper or by fax and no fee for an electronic filing. A resigning agent's appointment ends under § 5A(c) "on the thirty-first day following the date on which the statement was filed." More sits in the Massachusetts registered agent guide.

Alongside the agent, c. 156C § 5(1) requires an office in the commonwealth holding the records § 9(a) lists: a current list of each member's and manager's full name and last known address; the certificate and all amendments; three years of federal, state and local tax returns; and any then effective written operating agreements and three years of financial statements. Section 9(c) adds that the member list "shall be made available to the state secretary within five business days of receipt of a written request" tied to an investigatory or enforcement proceeding.

The annual report and what a missed filing brings

Chapter 156C § 12(c) requires an annual report "setting forth the information required in subsection (a)," the same items the certificate carried. 950 CMR 112.14 fixes the date: the report is due "on or before the anniversary date of the filing of its original certificate of organization" and "shall be accompanied by a fee of $500.00," so each company carries its own date.

Chapter 156C attaches no late fee, penalty or interest. The consequence it provides is administrative dissolution: under § 70(a) the state secretary may commence a proceeding where a company "has failed for 2 consecutive years to comply with the laws requiring the filing of annual reports," and § 70(b) sends written notice to the § 5(1) office address and then gives 90 days to correct the ground or to show that it does not exist. A company so dissolved "continues in existence, but shall not carry on any business except that necessary to wind up and liquidate its affairs."

Section 71 lets it apply for reinstatement "at any time," stating that the grounds did not exist or have been corrected. The Division requires every annual report owed to be filed first and charges $100.00. Winding up is covered in the Massachusetts LLC dissolution guide.

Operating agreement

Chapter 156C contains no provision requiring a limited liability company to have an operating agreement, and it is not among the filings the chapter directs to the state secretary. Section 2(9) defines one as "any written or oral agreement of the members as to the affairs of a limited liability company and the conduct of its business," so an oral agreement counts for the chapter's purposes. Section 24(a) supplies the default: "Unless otherwise provided in the operating agreement, the management of a limited liability company shall be vested in its members." More is in the operating agreement guide.

State taxes and registration with the Department of Revenue

The Commonwealth states that "LLCs are classified for Massachusetts tax purposes the same way they are for federal income tax purposes," taxing a single-member LLC as a sole proprietorship and a multi-member LLC as a partnership. Members may elect corporate treatment, in which case the company "will file a separate tax return and pay corporate excise tax." The Division's tax page states that "a corporation subject to Massachusetts tax owes both an income measure tax and a non-income measure tax or a minimum corporate excise of $456," and that a filing requirement "ceases only when the entity is legally dissolved by the Secretary." Registration runs through MassTaxConnect, which requires an EIN.

On income passed to members, c. 62 § 4(b) provides that "Part B taxable income shall be taxed at a rate of not less than 5 per cent," with the commissioner making "a final statement of the Part B tax rate for the following year" on or before December 15. Section 4(d) adds 4 per cent on the portion of taxable income exceeding $1,000,000 for tax years beginning on or after January 1, 2023, a threshold "subject to the cost-of-living adjustment" each year. Sales at retail are taxed at 6.25 per cent under c. 64H § 2, and c. 64H § 7 bars acting as a vendor without a registration "for each place of business." Employers withhold on wages under c. 62B § 2. The Massachusetts LLC tax guide goes further.

Business certificates for a trading name

Chapter 110 § 6 exempts a limited liability company "doing business under its true name" that has registered or qualified with the office of the state secretary. A company trading under any other title files under c. 110 § 5 with the clerk of every city or town where it has an office; that certificate runs four years, violations draw "a fine of not more than three hundred dollars for each month during which such violation continues," and c. 262 § 34(20) sets the clerk's fee at one dollar unless the city or town has set its own.

Companies formed to render a professional service

Chapter 156C § 6(c) puts three conditions on a company organized to render a professional service. Its certificate of organization or application for registration must "indicate the specific professional services which it shall render." It is "subject to any conditions or limitations established by any applicable regulating boards," including the liability insurance required by § 65. It must also file with the certificate "a certificate by the applicable regulating board which indicates compliance" by its members and managers with that board's eligibility standards.

Amendments, cancellation and foreign companies

A certificate of amendment under c. 156C § 13(a) states the company name, the date the certificate of organization was filed, and the amendment; the Division charges $100.00. Section 13(b) requires a manager, or any member where there is no manager, who becomes aware that the certificate is false in any material respect to "promptly amend" it. A certificate of cancellation under § 14 also costs $100.00, and 950 CMR 112.19 requires all annual reports to be filed and all fees paid first.

A foreign limited liability company files an application for registration "within ten days after it commences doing business in the commonwealth," with a certificate of legal existence from its home jurisdiction, and c. 156C § 48 sets the fee for that application and for each annual report at five hundred dollars. Section 54(a) fines it "not more than five hundred dollars" for each year the failure continues and bars it from maintaining an action in the courts of the commonwealth while it lasts, though its contracts stay valid. See the Massachusetts foreign LLC guide.

Getting an EIN

An EIN comes from the IRS rather than from Massachusetts, and the Commonwealth notes that one is required before a MassTaxConnect account can be created. The EIN guide covers the application.

Frequently asked questions

How much does it cost to form an LLC in Massachusetts?

M.G.L. c. 156C § 12(d) sets the fee for the certificate of organization at five hundred dollars. Online and fax filings carry a second, mandatory expedited fee on top of that, which the Corporations Division's schedule sets at $20.00 for a $500.00 subtotal.

When is the Massachusetts annual report due?

950 CMR 112.14 requires each limited liability company to file its annual report on or before the anniversary date of the filing of its original certificate of organization, accompanied by a fee of $500.00, so every company carries its own due date.

What happens if a Massachusetts LLC files its annual report late?

Chapter 156C attaches no late fee or penalty. Under c. 156C § 70, the state secretary may begin a dissolution proceeding after the company has failed for two consecutive years to file, and the company then has 90 days from written notice to correct the ground.

Who can serve as a resident agent in Massachusetts?

Under c. 156C § 5(2), the resident agent must be an individual resident of the commonwealth, a domestic corporation, or a foreign corporation authorized to do business in the commonwealth. 950 CMR 112.13 requires a street address: "A post office address is not sufficient."

Does Massachusetts require an LLC operating agreement?

Chapter 156C contains no provision requiring a limited liability company to have one, and it is not among the documents the chapter directs to the state secretary. Section 2(9) defines an operating agreement as "any written or oral agreement of the members as to the affairs of a limited liability company."

What must a Massachusetts certificate of organization contain?

Section 12(a) requires the name, the address of the c. 156C § 5 office, the resident agent's name, address and written consent, any latest date of dissolution, each manager's name and address, at least one authorized signatory where there are no managers, and the general character of the business.