To form a corporation in Massachusetts, you need to take the steps set forth below. To find out what’s required to form a corporation in any other state, see Nolo’s 50-State Guide to Forming a Corporation.
1. Choose a Corporate Name
Your corporation's name must include either the word "Incorporation," "Incorporated," "Company," or "Limited" (or an abbreviation thereof) at its end.
Your corporation's name must be recognizably different from the names of other business entities already on file with the Secretary of the Commonwealth Corporations Division. Names may be checked for availability by searching the Massachusetts business name database. You may reserve a name for 60 days by filing an Application for Reservation of Name. The filing fee is $30. The reservation can be extended by an additional 60 days by paying an additional $30 fee before the initial 60 day period expires. The application must be filed by mail with the Secretary of The Commonwealth Corporations Division.
2. Prepare and File Articles of Incorporation
Your corporation is legally created by filing Articles of Organization with the Secretary of the Commonwealth Corporations Division. The articles must include the: corporate name and address; name and address of agent for service of process; number of shares the corporation is authorized to issue and their par value; any restrictions on transfers of shares; names and addresses of initial directors, president, treasurer and secretary of the corporation; fiscal year end; type of business.
The articles may be filed online or by mail. The filing fee is $275 for up to 275,000 shares plus $100 for each additional 100,000 shares or any fraction thereof.
3. Appoint a Registered Agent
Every Massachusetts corporation must have an agent for service of process in the state. This is an individual or corporation that agrees to accept legal papers on the corporation's behalf if it is sued. A registered agent may be an individual who resides in Massachusetts, or a domestic or foreign corporation authorized to do business in Massachusetts. The agent should agree to accept service of process on your corporation's behalf prior to designation.
4. Set Up a Corporate Records Book
Set up a corporate records book in which you keep all of your corporation's important papers, including minutes of director and shareholder meetings, stock certificates, and stock certificate stubs. Keep your corporate records book at the principal office of your corporation. You can use a three-ring binder as the corporate records book or you can order a special corporate records kit through a corporate kit supplier.
5. Prepare Corporate Bylaws
Bylaws are an internal corporate document that set out the basic ground rules for operating your corporation. They are not filed with the state. Your corporation is not legally required to have corporate bylaws, but you should adopt them because they (1) establish your corporation's operating rules, and (2) help show banks, creditors, the IRS, and others that your corporation is legitimate. For corporate bylaw forms, see Nolo’s website or Incorporate Your Business, by Anthony Mancuso (Nolo). Corporate kits also typically contain sample bylaws.
6. Appoint Initial Corporate Directors
The incorporator—the person who signed the articles—must appoint the initial corporate directors who will serve on the board until the first annual meeting of shareholders (when the board members who will serve for the next term are elected by the shareholders). The incorporator must fill in an “Incorporator’s Statement” showing the names and addresses of the initial directors. The incorporator must sign the statement and place a copy in the corporate records book. The statement need not be filed with the state. For a sample Incorporator's Statement, see Incorporate Your Business, by Anthony Mancuso (Nolo).
7. Hold Your First Board of Directors Meeting
The first meeting of the corporation's board of directors should be held at which the directors can appoint corporate officers, adopt bylaws, select a corporate bank, authorize issuance of shares of stock, set the corporation's fiscal year, and adopt an official stock certificate form and corporate seal. The directors' actions must be recorded in corporate minutes prepared by the incorporator or any of the directors. Additionally, if the corporation will be an S corporation, the directors should approve the election of S corporation status. It is usually necessary to prepare the minutes over one or two weeks, and then send them to all the directors for their signature. For corporate meeting minute forms, see Nolo’s website or refer to Incorporate Your Business, by Anthony Mancuso (Nolo).
8. Issue Stock
Issue stock to each shareholder. Although not legally required in most states, small corporations usually issue paper stock certificates. Enter each shareholder's name and contact information in the corporation’s stock transfer ledger.
A share of stock in your corporation is classified as a security under state and federal securities laws that regulate the offer and sale of corporate stock. However, the federal government and all states exempt most small corporations from these laws. For example, federal law exempts "private offerings": a non-advertised sale to a limited number of people (generally 35 or fewer). Most states have enacted their own versions of this SEC exemption. Visit your state securities office website for information about your state's securities laws. Links to all such offices can be found at the Contact Your Regulator web page of the North American Securities Administrators Association.
9. Comply with Massachusetts Annual Report Requirements
Every corporation authorized to transact business in the commonwealth must file an annual report with the Corporations Division within two and one half (2½) months after the close of the corporation’s fiscal year end. The report can be filed online, or by mail. The filing fee is $125.
10. Comply With Other Tax and Regulatory Requirements
Additional tax and regulatory requirements apply to your corporation. These include:
EIN: Your corporation must obtain a federal employer identification number (EIN). You may obtain an EIN by completing an online application on the IRS website. There is no filing fee.
S Corporation Filing: If the corporation wants to elect S corporation status for tax purposes, it must submit Form 2553 Election by a Small Business Corporation (signed by all the shareholders). The election should be filed within two months and 15 days after the beginning of the corporation's first tax year. See the IRS S Corporation Fact Sheet for details.
Business Licenses: Depending on its type of business and where it is located, your corporation may need to obtain other local and state business licenses.
11. Foreign Corporations Doing Business in Massachusetts
All corporations organized outside of Massachusetts must register with the the Secretary of the Commonwealth Corporations Division to do business in Massachusetts. Foreign corporations must appoint a registered agent for service of process physically located in Massachusetts. To register, file a Foreign Corporation Certificate of Registration. The form may be filed by mail or fax. The filing fee is $275 for up to 275,000 shares plus $100 for each additional 100,000 shares or any fraction thereof.