Form an LLC in Massachusetts.

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Your LLC’s Name

The name you select for your Massachusetts LLC must be different from any other authorized business entity registered or reserved with the state. This applies to entities formed in the state, as well as those originally formed elsewhere but authorized to conduct business in Massachusetts.

The LLC’s name must include at its end the words “Limited Liability Company” or “Limited Company,” or the abbreviations “LLC,” “L.L.C.,” “LC,” or “L.C.” However, it is allowed to include the name of a member or manager.

An unused and therefore available LLC name can be reserved for 30 days for a $30 fee.

Articles of Organization

In order to form a Massachusetts LLC, one or more persons must execute (i.e., sign) a certificate of organization, which must be accompanied by a $500 filing fee. The persons delivering the certificate to the Secretary of the Commonwealth are called organizers; they may be either a natural person or a legal entity, and they do not have to be members of the LLC. Filings must be made with the probate judge of the county in which the LLC was organized, along with the appropriate state filing fee.

The certificate of organization must include:

  • The LLC’s name
  • The LLC’s federal employer identification number (EIN)
  • The street address of the LLC’s Massachusetts office where it will maintain its records
  • The general character of the LLC’s business (or you may use the phrase, “any or all lawful conduct for which a limited liability company may be organized”)
  • The latest date of dissolution if the LLC is to have a specified lifespan
  • The name and business address of the LLC’s agent for service of process (the agent must also sign the certificate)
  • The name and business address of each manager, if different from the office location
  • The name and business address of any person(s) besides the manager(s) who are authorized to execute (sign) documents for the LLC

Registered Agent and Office

Massachusetts LLCs must designate a registered agent in Massachusetts to receive official state administrative and legal correspondence. A LLC’s registered agent can be an individual resident of Massachusetts, a corporation, or a corporation originally formed in some other state that is authorized to transact business in the Bay State. It is allowable but not required for the registered office to be the LLC’s place of business.

Operating Agreement

After to its certificate of organization, an LLC’s most important document is its operating agreement, which can be amended or repealed as laid out in the agreement itself, or state law as applicable.

Just like a corporation’s bylaws, having an operating agreement isn’t mandated by the state, but it’s a very important internal document that officially states how the LLC will be run. It should list the LLC’s members, how much each one has invested, how the profits will be divided, and how much weight each member has when matters come to a vote.

The operating agreement may also specify requirements for meetings and so on, but it is not required to. Normally, however, the operating agreement does include state requirements, and it can contain limits on the members’ authority to adopt, change, or repeal an operating agreement. If the LLC has more than one member, the operating agreement must be initially approved by all the members in writing.

Membership in the LLC

The owners of an LLC are called “members” instead of “shareholders” or “partners” as in a corporation. An LLC must have at least one member, who may be an natural person or a business or legal entity. Members may acquire an interest in or become a member of the LLC when it is formed, in a method stated in the operating agreement, or when all the LLC’s members approve in writing.

A member normally needs to pay cash, make a contribution, or transfer property to the LLC in order to become a member. However, an individual may be admitted as a member without acquiring a membership interest if there is such a provision in the certificate of organization or operating agreement, or if all the LLC’s members consent and the admission is documented in the official records.

A member can only resign from the LLC in the way laid out in the certificate of organization or operating agreement. The operating agreement may even prohibit members from resigning, or the agreement may specify a minimum period of time a member can be a member before being allowed to resign. If no time period is specified, members must give the other LLC members six months’ written notice before resignation.

If a member breaches (violates) the operating agreement, the LLC may have the option of seeking compensation for damages caused by that breach.

Ongoing Requirements

All Bay State LLCs must file an annual report with the Corporations Division on or before the anniversary date of the filing of the LLC’s original certificate of organization. The report shall contain all the information in its original certificate of organization, as well as any other information the authorized person chooses. The filing fee for the annual report is $500.

Additionally, your LLC must keep the following information and records available for inspection at its main office:

  • . The name and address of each member and manager
  • . A copy of the certificate of organization and any amendments and related powers of attorney
  • . Copies of the LLC’s federal, state, and local income tax returns for the last three years
  • . Copies of current and previous operating agreements and financial statements for the past three years
  • . The amount of cash and a statement of the agreed-upon value of property or services contributed by each member and which each member has agreed to contribute
  • . The times or events that will trigger any additional contributions
  • . Any right of a member to receive, or of a manager to make, distributions to a member
  • . Any events upon which the LLC must be dissolved and its affairs concluded

It’s also a good idea for your LLC to keep handy minutes of board proceedings and member/owner committees.

Dissolution

A Massachusetts LLC will be dissolved when any of the following events occur:

  • . A time specified in the operating agreement
  • . Event(s) specified in the certificate of organization or operating agreement that require dissolution
  • . Written consent of all members to dissolve
  • . An event that makes it illegal for the LLC to continue
  • . A judicial decree orders dissolution

Taxes

An LLC has some tax advantages compared to a corporation, including more potential tax deductions. Also, an LLC does not have to be a separate tax entity like a corporation; instead, it can be a “pass-through entity” when it comes to taxes, so that the LLC owners report business losses or profits on their personal tax returns, in the same way that a partnership does.

The tax rate for Massachusetts LLCs varies, based on Massachusetts taxable net income.

Learn more about forming an LLC in Massachusetts

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silver

$49

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The Basics To Get You Started Preliminary company name clearance and filing of Articles of Organization.

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$149

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EIN / Tax ID Number Providing an EIN is required to open a
business bank account and is required to
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Personalized Operating Agreement Includes most common provisions to protect members from liability

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$299

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Expedited Filing Expedited processing speeds the turn- around time for your order.

Customized LLC Kit Personalized slip binder and embossed seal with your company name and date of fomation.

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Commonly Asked Questions For Starting a Massachusetts LLC

How is an LLC Taxed?
For federal income tax purposes the profits of an LLC (Limited Liability Company) "pass through" to the personal income of the members/owners. In the case of a single member LLC it is taxed the same as a sole proprietorship (i.e. typically filed on the schedule C of the owner's personal income tax filing). In the case of a multi member member it is taxed the same as a partnership (i.e. a 1065 partnership return is filed with the IRS, with a schedule K-1 being supplied to each partner/member showing the proportional profit/loss allocated to them, with this being filed on the schedule C or E).
NOTE: These are general tax explanations and may not apply to everyone. You should confer with the appropriate accounting/tax specialists to make sure you understand your personal tax liability.
What is the Management Structure of an LLC?
An LLC is typically managed by its members/owners (referred to as member-managed). In that respect an LLC is unlike a corporation, which has a much more rigid and defined management structure, including directors and officers. All owners of the LLC are typically referred to as members, and they can have control and voting interest proportional to their ownership interest, or in proportions different from their ownership interest; however the members agree.
Are Non-US Residents allowed to own a Corporation of LLC?
There are no citizenship or residence requirements for ownership of a C Corporation or an LLC. The S Corporation however does not allow nonresident aliens to be shareholders (owner), but any US citizen or resident alien may be a shareholder (owner). You would, of course, require an in state street address for the state to forward official legal and tax correspondence including service of process, known as the registered agent address, but neither residency nor citizenship is required for ownership of a C Corporation or an LLC.
Can I form an LLC with just one member?
There was a time when almost every state required the LLC to have two or more members, but that is no longer the case. This important change came in response to revised IRS regulations that clearly permitted single-member LLCs. As a result, in most states, if you plan to be the sole owner of a business and you wish to limit your personal liability, you can choose between forming a corporation or an LLC.
What is an Operating Agreement?
The operating agreement is akin to a partnership agreement for a General Partnership or Limited Liability Partnership (LLP). It is an internal contract amongst the members/owners of the LLC, and it lays out such things as ownership interest, member responsibilities, accounting method, adding or removing members, terms for concluding the LLC, etc. It is generally not required by a given state for forming an LLC (with the exception of New York), although it is certainly recommended. When dealing with private companies for financing issues (loans, mortgages, etc.) it may be required by that company. A customizable operating agreement is included with the LLC/Corp Kit.
Can another business entity be a member of an LLC?

In the majority of states, The members of an LLC can be individuals, corporations, or other LLCs. These members of the LLC can be out of state residents or even foreign nationals. Furthermore there is no limit to the amount of members that an LLC can have.

The flexibility of an LLC in contrast to an S Corporation is stark considering the S corporations are limited to 75 shareholders who must either be United States citizens or Lawful Permanent Residents.

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