If you want to start and run a Massachusetts limited liability company (LLC), you'll need to prepare and file various documents with the state. This article covers the initial filing and the most important ongoing reporting and state tax filing requirements for Massachusetts LLCs.
The first essential state filing for any Massachusetts LLC is the certificate of organization. You must file the certificate of organization with the Corporations Division of the Secretary of the Commonwealth in order to create your LLC. The certificate is a fairly simple document where you provide the name and official street address of your new LLC, the name and address of the LLC's registered agent, a brief statement of the LLC's purpose or character, and a few other basic details.
The Corporations Division has a blank certificate of organization form available on its website. The form is in PDF format and you can type in the required information on your computer (you will have to print it out in order to sign it). The current filing fee for the certificate of organization is $500 by mail and $520 for online filing.
Note: Before filing, you should make sure the name you want for your LLC isn't already taken by someone else. The first place to check is the Corporation Division's website, where you can do a search for reserved business names. You also can find out more about checking business name availability in the Business Name, Location & Licenses section of the Nolo website. For a fee of $30, you can reserve a name for an initial 60 days by filing an Application for Reservation of Name with the Corporations Division. You can also extend the reservation for another 60 days if you pay any additional $30 fee before the original reservation expires.
The State of Massachusetts requires you to file an annual report for your LLC. You can mail in the report or complete it online at the Corporations Division website. You'll need a customer ID number and PIN to access the online form. Only a few pieces of information, such as the LLC's official name, the location of its principal office, and the name and street address of the resident agent, are required to complete the report.
The annual report must be filed each year on or before the anniversary date of the filing of the original certificate of organization. The annual report filing fee for a Massachusetts LLC is $500.
When it comes to income taxes, most LLCs are so-called pass-through tax entities. In other words, the responsibility for paying federal income taxes passes through the LLC itself and falls on the individual LLC members. By default, LLCs themselves do not pay income taxes, only their members do. Some states impose a separate tax or fee on LLCs for the privilege of doing business in the state. Massachusetts, though, is not one of those states.
However, in some cases, the owners of an LLC choose to have their business treated like a corporation for tax purposes. This choice is made by filing IRS Form 2553 with the IRS. (See the IRS website for the form.) Unlike the default pass-through tax situation, when an LLC elects to be taxed as a corporation, the company itself must file a separate tax return. The State of Massachusetts, like almost every other state, has a corporation income tax. In Massachusetts, the tax generally is calculated based on taxable tangible property plus 8% of income attributable to Massachusetts sources, or else a minimum tax of $456. If your LLC is taxed as a corporation you'll need to pay the corporation income tax. The state's corporation tax return (Form 355) is filed with the Massachusetts Department of Revenue (DOR). For more details, check Nolo’s article, 50-State Guide to Business Income Tax, or the DOR website.
Does your LLC have employees? If so, you'll need to pay employer taxes. Some of these taxes are paid to the federal government (the IRS) and are not covered here. (But note that federal employer tax obligations start with obtaining a federal employer identification number (EIN).) However, Massachusetts employers also must pay taxes to the state.
First, you'll need to withhold and pay employee income taxes. The DOR website has details on how to register your LLC and pay these taxes. Employers must register online. Once you've registered, you'll need to file income tax withholding on a periodic basis (typically quarterly or monthly) using the appropriate version of Form M-941.
In addition, you'll probably need to register online with the Massachusetts Department of Unemployment Assistance (DUA) and then make quarterly unemployment insurance (UI) contributions to the DUA using the UI Online system. Check the website for the Office of Labor and Workforce Development for more details.
If your LLC will sell goods to customers in Massachusetts (you are a so-called sales tax vendor), you will need to collect and pay sales tax. This means you'll have to register for this purpose with Department of Revenue and then make annual sales tax payments. First, register online on the DOR website. After you've registered, you'll be issued a Sales and Use Tax Registration Certificate (Form ST-1) for each of your business locations. Then, each year, you'll have to file a state sales tax return. You can do the return online using the WebFile system if your business is registered with the DOR. Otherwise, you can download Form ST-10 from the DOR website.
If you will be doing business in states other than Massachusetts, you may need to register your LLC in some or all of those states. Whether you're required to register will depend on the specific states involved: each state has its own rules for what constitutes doing business and whether registration is necessary. Often activities such as having a physical presence (a business location) in a state, hiring employees in a state, or soliciting business in a state (such as by telephone, print ads, mail, or the Internet) will be considered doing business for registration purposes. Registration usually involves obtaining a certificate of authority or similar document.
For more information on the requirements for forming and operating an LLC in Massachusetts, see Nolo’s article,50-State Guide to Forming an LLC, and other articles on LLCs in the LLC section of the Nolo website.