Here is an outline of the steps you need to follow in order to form a corporation (specifically, a "C corporation") in Massachusetts. You should also read the general section on forming a corporation for information that is applicable in any state. Additionally, you should familiarize yourself with the Secretary of the Commonwealth, Corporations Division website, which has helpful resources and information.
1. Choose a business name for the corporation and check for availability.
- Please see our section on choosing and checking the availability of a name for your small business, as well as our section on the trademark law aspects of choosing a name.
- Massachusetts law requires that a corporation name contain the word "corporation," "incorporated," "company," or "limited" or the abbreviation "corp.," "inc.," or "ltd.," or words or abbreviations of like import in another language. Additionally, your corporation name may not be the same as, or deceptively similar to, other names on file with the Secretary of the Commonwealth (limited exceptions apply).
- Although you are not required to do so, consider registering your business name as a federal and/or state trademark.
2. Recruit and/or appoint a director or directors for the corporation.
- Under Massachusetts law, a corporation must have a board of directors consisting of at least one person; there is no maximum limit on the number of directors.
- The number of directors that comprise the board should be specified in the corporation's articles of organization or bylaws. If the articles of organization or bylaws do not define the size of the board of directors, the Massachusetts default rules apply: if the corporation has three or more shareholders, the corporation must have no fewer than three directors. If the corporation has only two shareholders, there may be no fewer than two directors on the board. You can find the Massachusetts statute relating to directors of corporations at Mass. Gen. Laws ch. 156D, § 8.03.
- There is no minimum age requirement for directors.
- Directors need not be residents of Massachusetts or shareholders of the corporation, unless the articles of organization or bylaws so require.
3. Prepare and file articles of organization with the Secretary of the Commonwealth.
- The filing fee is $275. The Secretary of the Commonwealth, Corporations Division website provides a fill-in-the-blank form for the articles of organization. Alternatively, you can file articles online using the Secretary of the Commonwealth's online filing system. For general information on corporate articles of organization (usually called "articles of incorporation"), please see the Articles of Incorporation page.
- The form for the articles of organization asks for the names and addresses of the individual or individuals who will serve as the corporation's initial director(s), president, treasurer, and secretary of the corporation. If there is only one shareholder, one person can fill all of these roles. This information does not become a permanent part of the corporation's articles.
4. Create the corporation's bylaws.
- There is no set criteria for the content of bylaws, but they typically set forth internal rules and procedures for the corporation, touching on issues like the existence and responsibilities of corporate offices, the size of the board of directors and the manner and term of their election, how and when board and shareholder meetings will be held, who may call meetings, and how the board of directors will function. You are not required to file bylaws with the Secretary of State, but the corporation must keep a copy at its principal place a business. For general information on corporate bylaws, please see the Bylaws page.
- Even if you listed the names and addresses of the corporation's initial directors in the form for the articles of organization (see above), you should set forth in the bylaws the number of directors that will constitute the corporation's board of directors.
5. Hold an organizational meeting.
- See the Forming a Corporation page for details. You can find the Massachusetts statute relating to the organizational meeting at Mass. Gen. Laws ch. 156D, § 2.05.
6. Issue stock certificates to the initial owners of the corporation.
- See the Forming a Corporation section for details. The Massachusetts statute relating to issuance of stock certificates is located at Mass. Gen. Laws ch. 156D, § 6.25. Unless the articles of incorporation state otherwise, the board of directors has the authority to set the "consideration" (i.e., the amount to be received) for each share of stock.
7. Obtain any required local licenses.
- See the Forming a Corporation section for details.
8. Determine what tax and other regulatory obligations the corporation has, and take care of any necessary registrations.
- Request an Employer Identification Number (EIN) from the IRS. This can be done via its online application. There is no filing fee.
- If you have an employee or employees in Massachusetts (including corporate officers), you will need to register for Massachusetts withholding-payroll taxes using the Massachusetts Department of Revenue business registration page. If you have questions about business taxes, the Massachusetts Department of Revenue has many publications that should be able to answer your questions. The Guide to Employer Tax Obligations is especially useful.
- Whenever you hire an employee in Massachusetts, you must inform both the IRS and the Commonwealth of Massachusetts. You can find details of all the necessary steps, including verifying work eligibility and withholding allowances, on the Hiring Employees section of the IRS website. You can find state-level information on reporting new hires at the Massachusetts New Hire Reporting Center website.
- If you have employees in Massachusetts, you must carry workers' compensation insurance. The Department of Industrial Accidents administers this program.
- As a business owner or employer, there may be other informational returns that you have to file annually or semi-annually with the IRS. For more information, take a look at the IRS Guide To Information Returns.
- Massachusetts's current tax rates for corporations are 9.5% of gross income and .26% of net worth or tangible property (if any). Importantly, the combined minimum tax is $456, which is is separate from any personal income, self-employment, or payroll taxes. Sole proprietors, partnerships, and LLCs are not subject to this minimum tax.
9. Open a bank account for your business.
- It is a good idea to keep your business's finances separate from your personal accounts. A good way to do this early on is by opening a bank account for your corporation. You will probably need a Tax ID number (EIN), a copy of the articles of incorporation, and a resolution identifying authorized signers if those names are not listed in the articles. Here is one example of the documentation that banks ask for.
Other Notable Requirements for Maintaining a Corporation in Massachusetts
- Massachusetts corporations must file an Annual Report with the Secretary of the Commonwealth every year after the date of formation. The filing fee is $125. You can file the Annual Report online using the Secretary of the Commonwealth's online filing system.
- Massachusetts requires certain documents to be kept at a corporation's principal place of business. The required documents are described in Mass. Gen. Laws ch. 156D, § 16.01 and Mass. Gen. Laws ch. 156D, § 16.02.
Additional Steps and Information about Forming an S Corporation
- An S corporation has the same basic organizational structure as a regular corporation, but some of the tax advantages of a partnership or LLC. An S corporation pays no federal income tax, except for tax on certain capital gains and passive income. Instead, the corporation's profits and losses "pass through" to shareholders, and profits are taxed at individual rates on each shareholder's Form 1040. Certain requirements and additional obligations apply -- please see the S Corporation page for details.
- To form an S corporation, designate "S" status with IRS via Form 2553 within 2 months and 15 days of filing your articles of incorporation with Massachusetts. There is no additional paperwork that must be filed with Massachusetts to obtain "S" status.
- S Corportions must file Tax Form 355S with the Massachusetts Department of Revenue every year.
- While S corporation do not pay state income tax on corporate profits (unless gross receipts exceed $6,000,000), they are subject to the .26% net worth tax and the $456 minimum tax.