Forming a Massachusetts Limited Liability Company
Best Practice Summary

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Massachusetts General Laws Chapter 156C govern the organization and operation of Massachusetts limited liability companies.

LeapLaw's 50 state pages summarize LLC formation/registration requirements in all 50 states.

LeapLaw's LLC Checklist may be useful in order to determine information necessary in forming an LLC.

Formation Process

Name Requirements
The name of the LLC must be available in the Commonwealth of Massachusetts and should not be deceptively similar to any other business name in the same geographical area or market. State law requires that an LLC name contains "limited liability company'' "limited company'' "L.L.C.'' "L.C.'' "LLC'' or "LC''. You may check for name availability online using LeapLaw's LLC Connection. When the name will be registered in several jurisdictions, using a service company is likely the most time-efficient solution.

Name Reservation

If the name is available, reserving it may be wise if the filing will be made at some later date. The name may be reserved for 30 days for a fee of $15.00 via your preferred service company. Reserving the name with the same service company you plan avoid later confusion.

Note: A secretary of state's acceptance of a business name does not mean the name is an available trademark or service mark. Other searches may be required if the company plans to determine any potential trademark or service mark issues. It is good practice to verify with the responsible attorney if the company will require a trademark search and/or domain name registration prior to reserving the name in any states.

Preliminary Trademark Searches
Trademark searches may be performed to assure that a proposed company name is not deceptively similar to an existing mark. Preliminary searches for registered trademarks may be performed for free on the LeapLaw's Intellectual Property Connection.

Note: A trademark or service mark does not have to be registered to be protected. Simply using the mark in commerce gives rise to a claim.

The popular "full" trademark search provides a comprehensive search of a proposed trademark against current federal, state and common law trademarks and domain names. Full searches may be ordered from a trademark search company. The report provides extensive information regarding trademark availability. For more information on trademarks and service marks, see LeapLaw's Trademark Best Practice Summary.

Domain Names
Domain names are registered web site addresses or "URLs". When registering domain names it is best practice to reserve all possible applicable name indicators if the name will serve as the main business name. Domain names may be checked for availability and obtained at Network Solutions. Network Solutions WhoIs can assist in determining current owners of a domain name. Checking the availability of the domain name simultaneous with checking the corporate name availability and trade name status is good practice if the company name is to be a trade name for the business.

Certificate of Formation

An LLC does not exist until a Certificate of Organization is filed with the Massachusetts Secretary of State. The filing fee for the certificate is $500. You may file online , in person, via mail or via fax. Fax filing instructions and cover sheet can be found on the Massachusetts Secretary of State's web site.

Operating Agreement

The operating agreement defines the structure of an LLC and is drafted around Chapter 156C of the Massachusetts General Laws. The flexibility permitted in drafting the operating agreement is a major benefit of the LLC structure. An LLC may use a simple format providing for control by a single managing member with a partnership tax structure; or it may have a more complex corporate-like structure with classes and series of members, a board of managers with classes and committees, complicated tax advantages and other provisions that result in a lengthy document.

Note: The provisions of the agreement governing members'' contributions, allocation of gains and losses and distribution of assets must comply with applicable tax laws and regulations for the LLC to maintain "flow-through" tax treatment.

LeapLaw provides a very basic sample single member operating agreement.


An LLC operating agreement provides for the management structure of the LLC. It may provide that the company be managed by:

  • A single manager or managing member who is responsible for all of the day-to-day activities of the LLC, much like the managing partner of a partnership or the sole general partner of a limited partnership.

  • A board of managers or managing members, much like a board of directors of a corporation, where action is taken by majority or super-majority vote.

  • A slate of officers appointed by the managers or members.

  • Any combination of the above desired by the members.

The exact powers, duties and responsibilities of each position will be defined in the operating agreement. If the LLC structure is similar to a corporation, the role of managers will be similar to the role of directors of a corporation (although, unlike a corporation, an LLC may grant different numbers of votes to different individuals). If the LLC structure is similar to a limited partnership, the role of the manager may be similar to that of a general partner. The operating agreement should provide details regarding the votes needed for each type of action to be approved.

The managing members, manager or board of managers will take an initial vote upon formation in order to authorize basic business necessities such as the opening of a bank account and foreign qualifications. The initial manager vote may also fill the offices provided for in the operating agreement, if any.

Sample Initial Consent of Managers

Members; Membership Interests

The equity owners of an LLC are called members. The equity securities of LLCs are known as membership interests. Members can be individuals or business entities. Massachusetts law provides for single member LLCs.

Membership interests are generally expressed either in "units" or as "percentage interests" in the LLC. Please note that a percentage interest may represent an equity percentage, a voting percentage, or both, depending how it is defined in the operating agreement. Unlike shares of stock, the characteristics of membership interests are completely flexible and the membership interests of different members may combine economic ownership and voting power in different combinations as agreed to by the members.

A member of an LLC may purchase a membership interest in exchange for cash, property or services rendered. The interest comes with certain rights and restrictions as provided in the operating agreement (although certain applicable state laws may apply as a "default" if there is no operating agreement). Membership interests may or may not be evidenced by a certificate. Interest issuances and transfers may be tracked on a ledger similar to a stock ledger, or simply set forth in the operating agreement and subsequent amendments.

Sample LLC Unit Subscription
Sample Unit Certificate
Sample LLC Ledger

Federal Identification Number

The Internal Revenue Service issues federal identification numbers (FIN) also known as an Employer Identification Number (EIN) to new corporations. To apply for an FIN, an IRS Form SS-4 (pdf) must be filed with the IRS. As of January 2, 2002, Form 2848, Power of Attorney is no longer necessary for third-party designees. Completing the the new "Third Party Designee" section on the Form SS-4 will suffice.

Tax identification numbers may be provided:

  • Online in just a few minutes.

  • Via telephone to a third party by calling (866) 816-2065 Monday through Friday, 7:30 a.m. to 5:30 p.m. so long as the Third Party Designee section has been completed.

  • Via fax to certain IRS Service Centers. The number will be supplied within a few days via telephone.

  • Via mailing Form SS-4 to the designated IRS Service Center.

LeapLaw's Federal Identification Number Checklist provides a list of information for completing the Form SS-4. LeapLaw's Federal Identification Number Best Practice Summary provides more information regarding federal identification numbers.

Entity Classification
For federal tax purposes, an LLC may be classified as a sole proprietorship (referred to as an entity to be disregarded as separate from its owner), partnership or a corporation. If the LLC has only one member, it will automatically be considered to be a sole proprietorship (referred to as an entity to be disregarded as separate from its member), unless an election is made to be treated otherwise.

If the LLC has two or more members, it will automatically be considered to be a partnership unless an election is made to be treated as a corporation. If an election to classify is not made, a default classification of partnership (multi-member LLC) or sole proprietorship (single member LLC) will apply.

An election is made by using Form 8832, Entity Classification Election. If the company desires to be treated as an S Corporation, it must file a Form 8832 together with a Form 2553, Election By a Small Business Corporation. These filings should be sent via certified mail to the IRS Address in Philadelphia, PA.

Got a Double EIN? When requesting an EIN for an LLC, you may have 2 numbers assigned. This happens when a single member LLC has employees. Since the LLC isn't responsible for withholding taxes, the IRS does not cross-reference the member's social security number. Instead, they issue an additional EIN which the IRS refers to as the "sole proprietor number" for withholding purposes.

Foreign Registrations

Foreign registrations must be filed in states in which the LLC will be doing business other than the state of organization, and are governed by the laws of such states. Failure to register as a foreign LLC in a state while doing business in that state will subject the LLC to possible penalties and fines. See LeapLaw's Foreign Qualification Best Practice Summary for more information on foreign qualification requirements and procedures.

Record Keeping

State laws require that limited liability company records be maintained at the principal address of the business. The company records book should contain original copies of:

  • Certificate of formation or organization of the LLC and any amendments thereto
  • Operating agreement and any amendments or restatements
  • Actions by members or managing member in chronological order
  • Actions by manager or board of managers in chronological order
  • Copies of any foreign qualification certificates
  • Annual reports
  • Form SS-4 together with Form 8832 (if any)
  • Names and addresses of each member and manager
  • Information regarding capital contributions and dates when such contributions were made
  • Any information regarding dissolution of the LLC

Sample Company Records Index

Additional information on creating and maintaining a company records book may be found at LeapLaw's Minute Book Best Practice Summary.

Annual Reports

Massachusetts requires that LLCs file annual reports with the Massachusetts Secretary of State in order for the LLC to maintain its good standing. The report is due as of the anniversary date of filing and the filing fee is $500. LeapLaw's 50 State Periodic Reports Chart provides a quick reference to LLC annual report requirements in all 50 states.

Related Best Practice Summaries

Federal Identification Number
Filing Mechanics
Limited Liability Companies
Forming a Delaware LLC
Minute Book
Name Reservation
Service Companies/Registered Agents
Trademarks and Service Marks

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