Finding out the cost of forming a limited liability company (LLC) in Massachusetts is an essential first step. Without this information, you’ll risk underestimating your incorporation budget as well as your ongoing expenses.
An LLC is a popular choice for new business owners because this business entity type combines the benefits of a corporation (limited personal liability) and a sole proprietorship (pass-through taxation).
This post focuses only on the expenses. But you can get extra details on how to form a Massachusetts LLC from a dedicated guide. It covers everything from choosing a business name and opening a business bank account to applying for an employer identification number with the IRS and writing the LLC operating agreement.
Massachusetts LLC formation cost: $500
The Certificate of Organization is the most expensive form you’ll file to start your LLC. It’s the official document that gets your company registered with the Massachusetts Secretary of the Commonwealth. In other states, the same form is called “Articles of Organization.”
Domestic and foreign LLCs pay a $500 filing fee if you file in person and $520 if you file online or by fax.
Faxed and online filings are processed within one business day. In-person applications can take up to 7-10 business days. Unfortunately, Massachusetts doesn’t have an expediting process for paper applications.
Extra Massachusetts LLC costs to account for
The Certificate of Organization filing fee isn’t the only state fee you’ll have to pay. Soundly, other administrative documents are optional and have a lower price tag.
Registered agent costs
A registered agent, also known as a resident agent, plays an important role in your LLC formation — and later operations — process.
The appointee is responsible for receiving sensitive legal documents and tax notices on behalf of your small business. You don’t want to have these misplaced!
Massachusetts requires all LLCs to have a resident agent. There’s no fee to appoint your initial registered agent because you’ll include this information on your Certificate of Organization.
But if the time comes to change agents or update information, there are some nominal costs to be aware of.
|Massachusetts registered agent filing fees|
Change registered agent
Change registered agent contact info
|Resignation of registered agent||$25||$31|
Massachusetts allows you to be your own resident agent.
But that adds to your workload and requires you to be available 9-5 year-round at the registered street address, effectively making it impossible to take time off.
Sometimes it’s better to hand off this responsibility to a professional. Registered agent services will accept service of process on your behalf and keep your company compliant by reminding you of important filing deadlines to avoid late fees and penalties.
Professional service will cost between $100 and $300 a year, depending on the level of service they provide you.
Trade name registration
When you want to use a name that’s different from your legal business name for marketing or branding purposes, you’ll want to register a trade name, also known as a DBA (doing business as) or an assumed name.
In Massachusetts, trade names are registered at the city or town level, NOT with the Corporations Division at the Secretary of State where you filed your Certificate of Organization.
Each city has its filing requirements and fees.
For example, Boston charges $65 for residents and $100 for non-residents. In Cambridge, the fee is $50 for everyone. Generally, you can expect to spend between $50 and $100 on a trade name registration.
Massachusetts LLC name reservation
If you have the perfect business name but aren’t ready to file your formation documents. You may want to reserve it. Name reservations aren’t required to form an LLC, but it’s a convenient option if you’re concerned about someone else registering it.
You can reserve a name for 60 days for a cost of $30 by filing a state form.
Certified document copies
You may want or need certified copies of your formation documents. Unfortunately, in Massachusetts, these come with a price tag.
Most certified documents will cost $12 or $7 for the first page + $2.00 for each additional page.
Business permits and licenses
One advantage of incorporating in Massachusetts is no general business license requirement. But for certain regulated industries like medicine or real estate, you’ll need a specialty license to operate.
These specialist licenses vary in price and are usually a few hundred dollars a year. Mass.gov website provides extensive information on business license application obligations and requirements.
Sales tax license
If you sell taxable goods in Massachusetts, you’ll need to collect sales tax. To do that, you’ll need to request a sales tax license from the Massachusetts Department of Revenue. You can apply online, and best of all, it’s free.
Does Massachusetts have an annual LLC fee?
Yes, an annual report is required to keep your LLC in good standing with the State of Massachusetts. It also comes with a $500 fee. If you want to file your yearly report online or by fax, there’s an additional $20 expedited processing fee. The annual report is due by the anniversary date of your LLC incorporation.
What taxes do LLCs pay in Massachusetts?
Your LLC will have to deal with and pay taxes in certain circumstances. We’ll discuss the most common ones.
Sales tax: 6.25%
When you sell taxable goods in Massachusetts, you’ll need to collect a state sales tax of 6.25% from your customers. Individual cities and counties don’t impose extra local surcharges.
Employment tax: up to 14.37%
When you have employees, it comes with the additional responsibility of paying some payroll taxes. Massachusetts charges employers an unemployment insurance tax on the first $15,000 of each workers’ wages with rates that range from 1% up to nearly 15%.
Minimal annual franchise tax: None
One perk about operating your Massachusetts LLC is that you don’t have to pay any minimal corporate income taxes for the privilege of doing business in the state. You do, however, require to pay state corporate income taxes if your LLC elects to report federal taxes as a C-corporation.
Conclusion: How much does an LLC cost in Massachusetts?
Massachusetts is the most expensive state to form an LLC due to its $500 filing fee for getting a Massachusetts Certificate of Organization. But your startup costs may be higher if you also need to register a trade name or need a specialty license to operate.
Here’s a summary of expenses you may incur when forming your LLC in Massachusetts.
|Expenses to start a Massachusetts LLC|
Certificate of Organization (formation document)
|$500 – $520|
Registered agent, if needed
|$100 – $300||$100 – $300|
Trade name registration, if needed
|$50 – $100|
$50 – $100
Name reservation, if needed
Certified documents, if needed
|$12 – $31|
Specialty license, if needed
|$100 – $500|
$100 – $500
Annual report fee
|Total||$1,292 – $1,981|
$750 – $1,400