Registering your business in Massachusetts is the first concrete step toward bringing your entrepreneurial vision to life. The process involves several important tasks, from selecting your company’s legal structure to filing the necessary paperwork with state and federal authorities.
For many new business owners, these requirements can seem confusing at first glance. That’s why we’ve created this straightforward, step-by-step breakdown of the Massachusetts business registration process. With our guide, you can more confidently navigate this stage, putting you on the path to quickly launching your new business.
Related: Starting A Business In Massachusetts Checklist
Step 1: Choose a Business Structure
First on our list is setting up the business structure (also called a business entity), which refers to how a business is legally structured to operate. This is an important decision as it impacts the extent of personal liability, tax implications, and management structure.
In Massachusetts, some common business entities include sole proprietorships, general partnerships, corporations, and Limited Liability Companies (LLCs).
Related: Comparison of Business Structures
A sole proprietorship is an unincorporated business owned by one individual who has full control over all aspects of the business. With this structure, the business and owner are legally indistinguishable, which means the owner bears unlimited personal liability for the business’s debts and obligations.
The advantages of being a sole proprietor include ease of formation and minimal regulation, while the disadvantages involve personal liability and limited growth potential.
Related: How to Start a Massachusetts Sole Proprietorship
A general partnership is an informal business structure where two or more individuals own and manage the business together. Like a sole proprietorship, each partner has unlimited personal liability for debts and obligations incurred by the partnership.
Partnerships offer simplicity in formation and shared decision-making, but partners may face unlimited liability and potential disagreements in management.
A corporation is a more complex business structure and a separate legal entity from its owners (shareholders). It provides limited liability protection to shareholders and offers greater flexibility in terms of ownership and management structures than other entities.
The advantages of a corporation include limited liability, access to capital by selling shares of stock, and a more structured management system. The disadvantages are increased administrative requirements, board of directors meetings, appointing a Massachusetts registered agent, and more.
Related: How to form a Corporation in Massachusetts
A Limited Liability Company (LLC) is a hybrid structure that combines the limited liability protection of a corporation with the relaxed administration and pass-through taxation of a sole proprietorship or partnership. Owners (known as members) of an LLC are not personally liable for the company’s debts and obligations (unless they sign a personal guarantee to get a business loan) and can choose multiple ways to tax the business.
LLCs are more complex to form than sole proprietorships and partnerships, though typically easier than a corporation. In addition, there are ongoing fees and requirements, such as filing an annual report.
Related: How to form an LLC in Massachusetts
Step 2: Select a Business Name
Choosing a business name is a common step in the registration process, and the process varies depending on the business structure.
For sole proprietors and general partnerships in Massachusetts that plan to operate under a name other than their legal name(s), you’ll need to register it with your local town or city. This is done by filing a Massachusetts Business Certificate, commonly known as a “Doing Business As” (DBA) certificate.
For example, if John Smith wanted to run a bakery called “Sweet Treats Bakery” as a sole proprietorship, he would need to file a DBA certificate in his local municipality.
Corporations and Limited Liability Companies (LLCs) select their names during the formation process. These names must be unique within Massachusetts, so conducting a Massachusetts business name search is advisable before submitting formation documents to avoid delays in paperwork processing.
It’s important to note that registering a business name in Massachusetts doesn’t prevent others from using it. For stronger protection, you might consider applying for a trademark to protect your business name.
Step 3: Federal Employer Identification Number (FEIN)
After selecting your business entity and name, obtaining a Federal Employer Identification Number (FEIN), also known as an Employer Identification Number (EIN), is the next important task for many businesses. This unique nine-digit number, issued by the Internal Revenue Service (IRS), serves as a federal tax ID for your business.
You need an EIN if:
- Your business has employees
- Your business is structured as a corporation, partnership, or multi-member LLC
The owner’s Social Security number can be used for sole proprietorships or single-member LLCs without employees, but the owner can choose to get a FEIN if desired.
Obtaining an EIN is a straightforward and cost-free process. The most efficient method is to apply online through the IRS website, which usually takes only a few minutes. Alternatively, you can submit Form SS-4 by mail or fax, though these methods require more time.
Step 4: Professional Licensing
Several occupations in Massachusetts require professional licensing before legally offering certain services. The Massachusetts Division of Professional Licensure oversees the regulation of numerous professions, including:
- Plumbers
- Cosmetologists
- Electricians
- Home inspectors
These are just a few examples; many other professions also require licensing. Each profession has its own specific requirements, fees, and application procedures.
Visit the Massachusetts Division of Professional Licensure for detailed information on professional licensing requirements, including application processes and associated costs.
Step 5: Massachusetts Sales Tax Permit
Businesses selling tangible goods or certain services in Massachusetts are required to register for a Sales Tax Permit with the Massachusetts Department of Revenue (DOR). This registration is mandatory for:
- Retailers of physical products
- Service providers whose offerings are subject to sales tax
- Out-of-state sellers meeting specific economic thresholds in Massachusetts
Businesses can register with MassTax Connect, the DOR’s online portal. Upon successful registration, you’ll receive a Sales and Use Tax Registration Certificate, which must be displayed at your place of business. This certificate authorizes you to collect sales tax and sets up your account for filing returns and making payments to the DOR.
Register for a Massachusetts Sales Tax Permit
Step 6: Resale Certificate
A Massachusetts Resale Certificate is a valuable tool for businesses that purchase inventory to resell. This certificate allows these businesses to buy goods without paying sales tax at the time of purchase.
Who needs a Resale Certificate?
- Retailers
- Wholesalers
- Manufacturers who resell finished products
To get a Resale Certificate, businesses must first register for a Sales Tax Permit with the Massachusetts Department of Revenue. Once registered, they can generate a Resale Certificate through their MassTaxConnect account.
Step 7: Local Business Licenses
While Massachusetts doesn’t require a general state business license, many cities and towns have their own licensing requirements. These local regulations vary based on the municipality and the nature of your business activities.
Some municipalities require all businesses to obtain a general business license or certificate, while others may only require licenses for specific types of businesses. Here are a few examples of local licensing requirements in Massachusetts:
- Boston: The Boston City Clerk’s Office mandates all businesses within city limits to apply for a Business Certificate. This certificate, valid for four years, establishes a public record of the business’s name and owner.
- Worcester: Businesses operating in Worcester must obtain a Business Certificate from the City Clerk’s Office. This requirement applies to all business types, including home-based enterprises.
- Springfield: The Springfield City Clerk requires all businesses within the city to register for a Business Certificate. This applies to both brick-and-mortar establishments and home-based businesses.
Given the differences in requirements between municipalities, it’s important to check with your local city or town hall to understand the specific requirements for your area.
Step 8: Local Building & Zoning Permits
When setting up a business location in Massachusetts, it’s important to understand and comply with local building and zoning regulations. These rules ensure that businesses operate in appropriate areas and meet safety standards. Before committing to purchase or lease a property, consider the following:
Zoning Laws: Each municipality in Massachusetts has its own zoning ordinances that dictate where different types of businesses can operate. Check with your local zoning board or planning department to confirm that your intended business activity is permitted at your chosen location. Some areas may require special permits for certain business types, including some home-based businesses.
Building Permits: If you plan to construct a new building or modify an existing one, you’ll likely need building permits. These ensure that any construction or alterations meet local building codes and safety standards. After construction or modifications are complete, you’ll likely need to obtain a Certificate of Occupancy to certify that the building is safe for occupancy and complies with all relevant codes.
Signage Regulations: Many municipalities have specific rules about business signage, including size, placement, and lighting. Check with your local planning or zoning department for these regulations before designing and installing any signs for your business.
Addressing these building and zoning requirements early in the process of establishing your business location can avoid potential delays or issues that could affect your business registration and operations.
For only $99, you can save a lot of time and know your business complies with local, state, and federal requirements.