Massachusetts is an incredibly popular place to live, find a dream job, or run your own business. If you want to begin taking the first steps to start your own company, registering a business in the Bay State is a relatively simple and straightforward process due to the state’s efficient and constant support for new businesses just starting out.
There are many different development centers in Massachusetts with the sole focus of helping entrepreneurs and those with existing small businesses develop, maintain, and succeed within their local community, throughout the state, nationally, and even on the international stage.
Starting a business in Massachusetts is not only an attractive proposition because of the many business benefits, but also because of the location of the state, being in close proximity to a multitude of consumer markets.
Massachusetts’ support for small businesses is evident in its approach to encouraging new businesses to register in the state. With access to a multitude of different business development plans, low corporate income tax rates, affordable homes, commercial space, an extremely high-rated education system, and competitive salaries, it comes as little surprise why so many people register a business in Massachusetts.
This is all supported with Massachusetts having the 9th largest economy in the U.S. Not only is Massachusetts pro-business, but it also boasts some incredible attractions, stunning landscapes, beautiful beaches, and of course, the iconic city of Boston.
How to Register a Business Name in Massachusetts – 7 Easy Steps
The Secretary of the Commonwealth of Massachusetts makes it reasonably easy to register your business name. There are three ways you can do this:
- 1. Do it yourself directly on their website.
- 2. Pay a document filing company that can register everything online for you – there is a modest fee for this but it saves a lot of time and ensures it is done correctly.
- 3. Hire an attorney or accountant to file and register your new company – there are higher fees associated with this.
Step 1 – Determine your registered name
Firstly, you must determine that your business name is unique and not being used by someone else. A business registration company can do this research on your behalf or alternatively, you can search directly on the Secretary of the Commonwealth of Massachusetts website.
Once you have established your name is available you can register a business name in Massachusetts directly on their website if you are comfortable with the process. Or, if you want a company to do this for you that specializes in this, you can use an online registration service to do it.
These document filing companies usually offer a free registered agent service for one year with most of their packages which is often a necessity for new businesses and those being registered by foreigners with no U.S. address.
Before doing any of this, you must decide on the right structure.
Step 2 – Choose the right entity
You need to choose the right type of business to register and the most common options are a limited liability company (LLC) or an incorporated company (Inc.). If you are keeping things really small and simple (one or two people), then you may consider a sole proprietorship or a general partnership.
Even if you plan to be a solopreneur, it is usually more beneficial for you to register a Massachusetts LLC to make sure, as the owner, you have limited liability under this structure, and so you can benefit from the pass-through tax advantages.
Here is a quick rundown of the various options and what they might mean to you:
- Limited Liability Company: A Massachusetts LLC is often the best route for most entrepreneurs because the structure comes with personal asset protection, no double taxation, is fairly easy to maintain and does not have high registration or annual renewal costs. Through LLC formation you have better tax flexibility and income can be taxed as a pass-through entity like a sole proprietor or partnership, or as a corporation.
- Incorporated Company: A Massachusetts Corporation offers personal asset protection and your company can own property, vehicles, incur liabilities, and is responsible for its own debts and can conduct business without the owners risking their personal assets such as their homes, cars, personal savings, retirement, etc. On the flip side, owners of sole proprietorships or partnerships face unlimited liability for both business and personal assets.
Step 3 – Make sure your name is not being used by another company
This may seem obvious, but if you check the Secretary of the Commonwealth of Massachusetts website and see that your chosen business name is available, that is all well and good, but that doesn’t mean someone else is not using that same or similar name, particularly in another state.
Many people register an “official business entity name” and trade under a different name. This is called a Massachusetts dba, or “doing business as” name or assumed trading name, and needs a separate DBA certificate.
You will want to do a Google search for your official name and your desired trading name (if different) to make sure no one else is using this name. Most importantly, you will want to make sure you can get an easy-to-remember website domain name that is not being used by someone else.
Having an awesome name or trading name for your business can be crucial to your success, so making sure the domain name is available too, and registering it right away, is equally as important.
Finally, if you go to the Secretary of the Commonwealth of Massachusetts website and discover that someone else has registered the name you would like, you can search for variations of that name by adding a word before it or after it, or using some other variations until you find a name that is available and acceptable for you.
Step 4 – Request an Employer Identification Number (EIN)
Once you have registered your new business in Massachusetts you will need to get an EIN for a number of reasons. These include paying taxes for your business, opening a bank account, obtaining credit cards or lines of credit, establishing terms with vendors and suppliers, hiring employees, and more.
There are only a few instances where you likely won’t need an EIN. More often than not, many business activities are just not possible without having an EIN.
An EIN is the business equivalent of a social security number and is used to track your business dealings. Even if you do not intend to hire employees, you will almost certainly still need an EIN for your Massachusetts company and it protects you from having to use your social security number.
For more information on how to get an EIN number in Massachusetts use our guide where you will find downloadable forms and links to the online process.
An EIN (also known as a federal tax id) is free to obtain from the IRS and you can apply online but if you are not comfortable filling in forms you can use a third-party document filing service to do this for you for a small fee. This ensures you are 100% compliant with the law and they handle everything with the IRS.
Step 5 – Obtain the Required Business Licenses and Permits
To operate your business in Massachusetts you must comply with federal, state, and local government regulations. Massachusetts law does not require a small business owner to have a “general” license to operate.
You will, however, need specific permits for specific businesses. For example, if you open a restaurant or similar food-related business you will most likely need a health permit, sales tax permit, facilities permit, and others. If you plan to sell alcohol, you will need a liquor license, essentially it all depends on the type of products and services your business is going to offer.
The business licenses you will need to acquire in order to register a business in Massachusetts will also differ depending on the location of the business too.
You must find out how to obtain the necessary Massachusetts business licenses and permits, this link will allow you to personally search for your type of business in order to familiarize yourself with the permits and licenses your business may require to operate in Massachusetts, offering the appropriate forms.
Alternatively, you could hire a professional document filing company to do this for you. It eliminates a lot of time and hassle and ensures you are correctly complying with Massachusetts law. After all, Massachusetts has no single generic business license that will ensure compliance with all requirements.
Step 6 – Determine Your Business Employer Requirements
There are several things you need to check regarding your responsibilities as an employer in Massachusetts because there are requirements you must meet at the federal and state level. These could include various workforce commissions, safety, and state tax obligations, as well as labor law requirements including the minimum wage in Massachusetts and employee rights and remedies under the Massachusetts minimum wage act.
To learn more about Massachusetts employer resources take a look at the Massachusetts Department of Labor website.
Step 7 – Open a Business Bank Account for your Massachusetts Company
As a new business owner, you should seriously consider separating your personal and business bank accounts to make it easier to track and account for your income and expenses. For certain business types, such as an LLC or a Corporation, it is essential that you open a separate business bank account to maintain your liability protection.
Once you have your EIN and your company registration documents, coupled with your driver’s license, you are ready to go to the bank and open your checking account.
Don’t worry, this won’t be expensive or leave you burdened with hefty monthly fees to pay – there are many free business bank accounts out there for you to choose from. Each has its different features and benefits, so you can decide what bank and checking account best suits your needs.
Summarizing Registering a Business in Massachusetts
Massachusetts has one of the top business ecosystems in the country for businesses large and small, and it is constantly developing too! With an increased focus on aiding small businesses over the past several years with multiple development centers and support systems offering free support, Massachusetts is becoming a more and more attractive proposition to register a business in.
Small Businesses thrive in Massachusetts because of its manageable state tax burden (8% corporate income tax rate), ever-growing and stable economy (9th largest in the U.S.), an abundance of readily available office space, supportive local communities, the state’s close proximity to a number of huge consumer markets, the best education system in the nation (51% college-educated), and a highly-skilled workforce.
The state fee for registering a business in Massachusetts is $500 for an LLC and $275 for a corporation. The annual filing fee to maintain your company in Massachusetts is $125 for a corporation and $500 for an LLC.
The Bay State is committed to your success and has many resources at your disposal that you can take advantage of.