Registering a Business in Massachusetts
1. Name Your Massachusetts Business
Before you register your new business, there is one critical step you must take — you will need to decide on a name. While naming your new company may seem straightforward on the surface, it is actually one of the most critical and demanding steps you will take throughout the business launching process.
Your business’s name should be memorable and catch consumers’ attention, but it represents much more than that. It should send a clear message regarding what products you sell and/or what services you offer. Your business’s name introduces the public to your brand and will potentially share a message about your company and what it stands for.
Brainstorming Your Name
While many entrepreneurs are tempted to rush through the naming process, you should take as much time as you need to explore all naming possibilities. Take several brainstorming sessions and use the free online business tools available today to help come up with a number of possibilities, narrowing down your options as you go.
Our business name generator is an excellent, industry-specific brainstorming tool that will not only assist you in coming up with the perfect name, but it automatically checks domain name availability as well. If you’re still not sure where to start, our naming guide can help you define your brand and offers practical tips to utilize doing your brainstorming sessions.
Massachusetts Name Search
The Commonwealth of Massachusetts has a business entity search tool that can help you search business entities by name. You’ll also want to check to make sure that your name isn’t too similar to that of any other business in your state. This will help avoid confusion and potential legal hassles down the road.
Once you have come up with a name that accurately represents your brand, it’s time to start legitimizing your business. These next steps will vary depending upon your business structure and your state’s legal requirements. We will go over the different business structures in the next section.
If you decide to use a “doing business as” (DBA) name, known as a business certificate in Massachusetts, our DBA guide will help ensure you are properly registered on a state, county, and/or city level. There are several benefits to registering your business certificate with the state. It offers a layer of protection against other Massachusetts businesses, proves your company’s legitimacy, and may be required by some vendors, banks, and lenders.
2. Choose a Business Structure for Your Massachusetts Business
Now that you have chosen the appropriate name for your brand, it is time to start the process of legalizing your business. Before you begin the registration process, you will need to determine which business structure best fits your needs. Each comes with its own set of advantages, disadvantages, and tax benefits.
A sole proprietorship is the most unambiguous of all business structures. This informal entity was designed for entrepreneurs who do not plan to have any business partners. It does not offer any personal asset protection and does not require a state filing.
Your sole proprietorship automatically operates under your surname unless you file for a business certificate. You can register for a Massachusetts DBA in the city your business operates out of. To learn more about the application process and fees, contact your city clerk directly. For a full list of contact information, visit the Massachusetts City and Town Directory.
Much like a sole proprietorship, a general partnership is an informal entity designed for entrepreneurs who are entering a partnership with at least one other person. The business can operate under you and your partners’ surnames, or you can acquire a DBA name. The profits and losses would be claimed under your (and your partners’) personal tax return, and there is no personal asset protection.
In Massachusetts, some partnerships (such as limited partnerships and limited liability partnerships) must file official paperwork with the state along with a filing fee.
If you do not plan to go public in the next few years, a limited liability company (LLC) may be the best fit for you. It offers more flexibility and protects your personal assets in the event of a lawsuit.
The State of Massachusetts requires that all LLCs appoint a resident agent (also known as a registered agent) who will accept legal documents on behalf of the organization. Your resident agent must be a qualified resident of Massachusetts or a corporation that is authorized to conduct business in Massachusetts. Many new LLCs elect to appoint a registered agent service, which costs between $39 and $300 annually.
Massachusetts also requires you to follow certain naming requirements and file a Certificate of Formation, which provides key details about your company.
A corporation is a business entity designed for those who have (or plan to have) shareholders. So, if your future plans include going public, this may be the best option for you.
Like LLCs, corporations must appoint a resident agent to accept paperwork in case of legal disputes, compliance documents, and government correspondence on the organization’s behalf. Also like an LLC, your resident agent can be a professional service, a business entity, or an individual.
In addition to getting a resident agent, you will also need to file a Articles of Organization with the state.
Recommended: Read our full guide on choosing a business structure.
3. Determine if You Need to Register Your Business in Massachusetts
Once you have determined your formal business structure and registered your new business name, you will want to check with your state to determine the business registration requirements. Each state has its own set of guidelines, and you must follow them precisely.
In most cases, informal business structures like sole proprietorships and general partnerships do not have to officially register with the State of Massachusetts. Check with your local government to see if you must register your sole proprietorship or general partnership at a county or city level.
Additionally, some businesses (e.g., sole proprietorships and single-member LLCs that don’t have employees) are not required to register and file for a Tax ID Number, also known as an Employer Identification Number (EIN), with the IRS. Even if this is not a requirement for your business, you will want to consider registering anyway as there are several legal and tax benefits.
Even if you aren’t required to register your business, note that registering an LLC comes with an abundance of legal and financial benefits. As a sole proprietorship or a partnership, your business debts are considered personal debts. This means that your personal assets can be seized in the event of a lawsuit. LLCs offer personal protection, legally protecting your personal assets and limiting your personal liability.
In addition to this personal protection, LLCs enjoy several other benefits, including:
- Flexibility in profit distribution, decision-making, and business management
- “Pass-through” taxation, which allows for the LLC’s income and expenses to pass through to the owners’ personal income tax returns with no restrictions regarding the number and type of owners
- Limited requirements regarding annual meetings, paperwork, and record-keeping
If you lack the time and/or knowledge needed to form your new LLC, there are a number of reputable LLC filing services that will help you launch your business. Because we understand how challenging it can be to sift through the dozens of available options, we have reviewed and ranked the five best LLC filing services. Our LLC service review offers a side-by-side comparison of each, ensuring you partner with a service that saves you both time and money.
4. Register for Taxes for Your Business in Massachusetts
The IRS uses EINs as a way to distinguish businesses for tax reporting. All businesses with employees are required to have one. Our EIN guide will help you determine your business structure’s EIN requirements and walk you through each step in the process.
Once you have your EIN, you will need to register for state income tax and employer taxes. Businesses selling tangible items and/or taxable services are required to obtain a seller’s permit and collect sales tax on all sales.
Depending upon your industry and location, your new business may be subject to additional taxes, either through the state, county, or city in which your company is located. Check out Massachusetts’ business tax page to find a full list of potential taxes and registration requirements.
5. Obtain Permits and Licenses for Your Massachusetts Business
While Massachusetts does not require a general business license, the state requires that certain professions or industries obtain industry-specific business licenses or permits. For example, a dental office will need to obtain permits from the state’s Board of Registration in Dentistry. Visit the Professional Licenses & Permits section of the Mass.gov website for a full list of all professions that require additional licenses.
Additionally, some companies are regulated under a federal agency and require federal licenses and/or permits. For instance, a liquor manufacturer would be subject to rules and guidelines created under the FDA. You can learn more about federal permit requirements and fees by visiting the Small Business Administration (SBA) website.
To assist you in determining your federal, state, and county license and permit requirements, we have developed a business license search. To use this free guide, simply choose your state from the dropdown menu, and you will be redirected to a list of everything you will need to consider when launching a business in the state of Massachusetts.
Still feeling uneasy about the process? We’ve also compiled a list of our top five business license services that can help you get set up and ensure your business meets all compliance requirements.