Form a Massachusetts LLC
At LawInc we are Massachusetts LLC formation experts who can help you form a Massachusetts LLC, the right way. We file the Massachusetts LLC Certificate of Organization with the Massachusetts Secretary of Commonwealth and prepare a customized operating agreement. We can also obtain the Massachusetts LLC’s EIN, in an quickly as 24 hours.
Massachusetts LLC Name
The first step in forming a Massachusetts Limited Liability Company is selecting the business name. Massachusetts LLC names:
- Must end with “Limited Liability Company,” “Ltd. Liability Co.,” “LLC” or “L.L.C.”
- Cannot contain language indicating or implying that it’s organized for anything other than a legal business purpose.
- Cannot contain the following words or their abbreviations: corporation or incorporated.
- Cannot contain a word or phrase that indicates or implies that it is organized for non-legal business purpose.
- Must be distinguishable from the name of any domestic or foreign LLC, limited partnership on file with the Massachusetts Secretary of Commonwealth.
LawInc.com permits you to choose up to three names and will conduct a name search for your Massachusetts LLC, prior to filing.
Massachusetts LLC Formation
When forming a Massachusetts LLC, the certificate of organization must be executed by at least 1 person organizing the LLC and filed with the Secretary of the Commonwealth, Corporations Division. The filing fee is $500.
After filing, it is highly advised that an operating agreement is drafted which dictates the LLC internal affairs and management. There is no set criteria, but a Massachusetts LLC operating agreement should reference how the LLC is managed, allocation of profits and losses and member capital contributions. The operating agreement does not need to be filed.
Massachusetts LLC Post-Filing Requirements
Massachusetts Annual Report: All Massachusetts LLCs must file an annual report with the Corporations Division on or before the anniversary date of formation. The annual report must contain all of the information included in its certificate of organization and any other matters the authorized person determines to include. The Massachusetts annual report filing fee is $500. For more information, visit: http://www.sec.state.ma.us/cor/coridx.htm
Massachusetts LLC Taxes
Massachusetts LLCs are classified for Massachusetts tax purposes based on their federal income tax classification. For more information, visit: http://www.mass.gov/
Federal Income Tax: An advantage of the LLC is its tax flexibility. LLC members are allowed to select how the entity will be taxed. An LLC may be classified for federal income tax purposes as either a:
- Sole proprietorship
- Partnership, or
Single member LLCs are treated the same as sole proprietorships. Profits are reported on Schedule C as part of your individual 1040 tax return. Self-employment taxes on LLC net income must be paid just as you would with any self-employment business.
Most multi-member LLCs elect to be treated as partnerships by the IRS and file IRS Form 1065. On this form, LLC profits are reported and allocated to each of the owners according to the LLC’s operating agreement. Each owner is given a Schedule K-1, which shows each owner’s share of LLC income or loss. The owner then reports and pays taxes on this income on the owner’s annual 1040 income tax return. It is important to note that as with sole proprietorships, all LLC profits are taxed to the owners, even if they are not actually distributed by the LLC. This situation can arise when the LLC needs to use its profits to pay ongoing expenses.
If pass-through taxation is not desired, an LLC may elect to be taxed as a corporation by completing IRS Form 8832. If this election is made, the LLC is taxed as a C corporation by the federal government. Because the corporate income tax rates for the first $75,000 of corporate taxable income are lower than the individual income tax rates that apply to the taxable income of non-corporate taxpayers, it is possible a net income tax savings can result from this tax election. Additionally, an LLC can be taxed like an S corporation by filing IRS Form 2553.
Federal Tax Identification Number/Employer Identification Number (EIN): The Federal Tax Identification Number, also known as the Employer Identification Number (EIN) is a number that is assigned to a business by the Internal Revenue Service. An EIN is like a Social Security Number for a business. It is a requisite for certain business functions such as opening bank accounts or hiring employees. An EIN will be required if the LLC has more than one owner, or any employees.
Massachusetts LLC Cancelation
When you cancel your Massachusetts LLC you must do so with the Commonwealth of Massachusetts and the federal government.
Massachusetts LLC Cancelation Requirements: In order to cancel a MA LLC, a certificate of cancellation must be filed with the MA Corporations Division, which sets forth the Federal EIN, LLC name, original certificate of organization filing date, reason for cancellation and effective date. The certificate of cancellation can be executed by any manager, authorized person, or receiver, trustee or court appointed fiduciary. The filing fee is $100. The LLC should also be cancelled with the MA Department of Revenue.
Federal/IRS Cancelation Requirements: A final tax return should be filed with the IRS