How Much Does an LLC Cost in Massachusetts (Fees to Pay)
Forming an LLC in Massachusetts and keeping it in the right standing involves paying filing fees and covering necessary expenses.
As an expert in Mergers and Acquisitions and a degree holder in tax law, I assisted several businesses and individuals in forming LLCs and establishing new joint organizations.
Working with our licensed business specialists in the state, we've summarized some of the most common requirements and fees to form an LLC in Massachusetts.
But if you don't want to take a chance at making an expensive error, your best choice is to get professional advice from the top LLC formation services in Massachusetts.
Quick Summary
- An LLC in Massachusetts costs \$500 to file the Certificate of Organization by mail and \$520 if done online.
- Upon approval of the LLC, additional expenses can be incurred through taxes, licenses and permits, and other business related documents.
- According to the Massachusetts Department of Revenue, businesses must collect a 6.25% sales and use tax on taxable goods.
- Based on my experience, LLCs tend to do well in Massachusetts because of the good economy of the state.
Cost to Start an LLC in Massachusetts
To legally conduct business in the state, there are mandatory fees and optional expenses that should be covered.
1. LLC Formation Filing Fee (\$500/Mail - \$520/Online - Mandatory)
The filing fee for a Massachusetts LLC is \$500 for mailing your Certificate of Organization and \$520 if you file online. The \$20 is treated as a convenience fee for online submissions [1]. According to the Secretary of the Commonwealth of Massachusetts, this fee structure has led to a notable increase in online filings, with over 60% of LLC formations now submitted through the state's digital platform, emphasizing the growing preference for the convenience of online services.
The standard processing time for a Certificate of Organization in Massachusetts is 2-3 weeks, but you can pay for the expedited shipping.
From what I learned, expedited service is only for submissions filed online and by fax. A client had to cover the \$20 expedited filing fee to process the documents within 1 business day.
2. Registered Agent Fee (\$80-\$300 – Optional)
The state requires all LLCs to designate a registered agent. A member or a professional service provider could act as a registered agent.
The price of registered agent services in Massachusetts might range from \$80 to \$300 per year, depending on the agent service you choose.
"In Massachusetts, the terms registered agent and resident agent mean the same thing, both describing an individual or business designated to receive legal documents and government notifications for a company."
- Jon Morgan, CEO, Co-Founder & Editor-in-Chief of Venture Smarter
3. Name Reservation Fee (\$30 - Optional)
If you've decided on a company name and are still not prepared to file the Certificate of Organization, you can hold the title for 60 days. The Massachusetts LLC cost for name reservation is \$30.
I had a client whose application was delayed because their intended name was already in use by another company. This is why I advise new business owners to verify the name before filing.
Expenses Following the Approval of Your LLC
Other LLC filing costs and fees for forming and running a Massachusetts LLC include the following:
1. Business License (Depending on the Line of Business - Mandatory)
Although the state does not require a general business license, certain industries and professional services have to obtain permits based on the nature of the LLC.
The cost varies depending on the nature of the business. I had a client in the real estate industry who was required to obtain a license, amounts to \$221 and an application fee of \$271.
2. Annual Report Fee (\$500 - Mandatory)
To keep the records of your Massachusetts LLC up to date, you must submit a yearly report. The filing fee for an annual report is \$500 which is paid yearly for the term of your LLC.
3. Sales and Use Tax (Depending on Income Bracket - Mandatory)
All business entities selling taxable goods in Massachusetts must collect the sales and use tax of 6.25% from the Corporations Division, according to the Massachusetts Department of Revenue [2].
Nevertheless, county or local municipal taxes and the flat state tax rate vary greatly depending on your jurisdiction. For example, municipal sales taxes of 0.75% may apply in some areas.
To avoid penalties, I remind clients to settle their taxes before it is due.
4. Operating Agreement ( \$100 - \$200 - Optional, but Recommended)
Creating an operating agreement is cost-free if you do it manually. Alternatively, you might pay around \$100-\$200 to use an LLC formation service.
For clients who have budget to spare, I advise them to hire a lawyer to draft the operating agreement to ensure its validity. The fee depends on the attorney’s individual legal rates.
5. DBA Name Registration (\$50-\$100 - Optional)
The costs and filing requirements vary by city; expect to pay anything between \$50 to \$100.
DBA name applications in Massachusetts are not submitted to the Corporations Division at the Secretary of State but at the municipal or town level.
6. Certificate Of Good Standing (\$25 - Optional but Recommended)
Obtaining a certificate of good standing in Massachusetts proves your LLC is legitimately established and meets all requirements to conduct business there.
I always ensure that the LLC of my clients are compliant with state business requirements.
This would allow them to file for a Certificate of Good Standing which in turn is an advantage when pursuing investors and clients or obtaining loans.
7. Certified Document Copies (\$7 + \$2 per additional page - Optional but Recommended)
Usually, a plain piece of paper costs \$0.30 per document page, and a state-certified copy costs \$7 for the first page and \$2 for each additional page.
Also, the Massachusetts Secretary of the Commonwealth charges a set price of \$12 for certified copies of the articles of the organization.
Certified copies are crucial for opening a business bank account, sourcing potential investors, or registering for a Massachusetts foreign LLC.
8. Employer Identification Number (\$0 - Optional but Recommended)
On the IRS website, you may apply for an EIN for free or hire a business and pay a filing cost of \$50 to \$100.
When asked about the relevance of an EIN, I tell clients that it is used to file state and federal taxes, register a business bank account, apply for business entity loans, or establish credibility.
FAQs
How Much is a Foreign LLC in Massachusetts?
A foreign LLC in Massachusetts is \$500, covering the Foreign Limited Liability Company Application for Registration. The cost is payable to the Massachusetts Secretary of the Commonwealth.
What is the Penalty for Late Payment of Massachusetts Income Tax?
The penalty for late payment of Massachusetts income tax ranges from 1% to 25% per month.
References:
- https://www.sec.state.ma.us/divisions/corporations/general-information/corporations-filing-fees.htm
- https://www.mass.gov/sales-and-use-tax-for-businesses#
