Massachusetts is considered as one of the most innovative economies in the United States and is right there at the top and counted amongst the leading technology states. Innovation and technology are actually responsible for driving the state’s economic development, along with boosting wage growth and creation of jobs. In the recent times, there has been a steady rise in the number of start-up companies in Massachusetts in several sectors including telecommunication and technology, financial services, manufacturing of computer and electronic products, manufacture of communication equipment, and fabricated metal products among others.

Business Growth Incentive for New Businesses

Massachusetts is home to some of the top companies and brands in the world including General Electric, Dell EMC, The TJX Companies, Staples, Raytheon, Liberty Mutual Insurance, Civitas Solutions, Marshall’s Inc, Harvard University, and The Boston Consulting Group among others. Whether you are planning to register a new company in Massachusetts as an LLC or a Corporation, there are distinctive advantages that your business can benefit from. Let’s take a look at some of them.

Advantage#1: The benefits of Incorporation or LLC formation

Corporation

• Business Tax Credit: If you register a new company in Massachusetts as a C or S Corporation then you can benefit from different types of tax credits. The most popular amongst all include the Investment Tax Credit and the Economic Development Incentive Program Credit (EDIPC).
• Independent Life: One of the salient advantages of an S Corporation in Massachusetts is that it enjoys an independent life. This simple means that the business entity will continue operation undisturbed even if it is faced with the death of one of its stockholders or incapacitation of one or more stockholders.
• Pass through taxation: If you register a new company in Massachusetts as an S corporation then the corporation or firm will not pay any income tax. Instead, the income or loss of the corporation will be passed on to the stockholders.

LLC

• Tax Breaks: If you register a new business in Massachusetts as an LLC, you can benefit from several types of state and local tax breaks with the most popular being those provided under the Economic Development Incentive Program.
• Limited Liability: As an owner of a Massachusetts LLC, you will be able to enjoy limited liability protection quite similar to what a corporation enjoys.
• Flow through Taxation: When you register a new company in Massachusetts as an LLC, it can benefit from the process of flow through taxation that will ensure there are no double taxations.
• Flexible Profit Distribution: A Massachusetts LLC has the benefit of being able to select different ways of distribution of profits unlike in a partnership where the distribution is 50-50.

Advantage#2: Incentive Programs for Massachusetts Businesses

Once you register a new business in Massachusetts, you will be able to qualify for different types of business incentive programs introduced by Federal, state, and other local agencies. Let’s take a quick look at some of the top programs that your business will benefit from:

• Economic Development Incentive Program Credit (EDIPC): The EDIPC program has been created to ensure businesses can leverage tax incentives by stimulating job creation in distressed areas, expand the existing business, create jobs, and have a positive impact on overall economic development. The credit amount can vary from 10% to 40% and counts against the corporate excise liabilities or taxpayers’ income tax. Businesses that qualify for this program can receive an additional credit of almost $5,000 per job created.
• Economic Opportunity Area Credit (EOAC): The EOAC is an integral component of the Economic Development Incentive Program (EDIP) and can be leveraged by Individual owned startup company Massachusetts, partnerships, or corporations. The maximum credit in a tax year is 50% of the corporate excise liability or personal income tax although unused credits can be carried over for a period of 10 years.

Apart from these, there are several other business incentive programs like Employer Wellness Program Credit (EWPC), Investment Tax Credit, Research Credit, Community Investment Tax Credit (CITC), and Brownfields Tax Credit (BTC) among others. You can qualify for these programs only after you register a new company in Massachusetts.

Are there any Disadvantages of Incorporating in Massachusetts?

When you register a new business in Massachusetts, you can be rest assured that there is a wide variety of business incentives to leverage but are there any disadvantages? There are few disadvantages that are dependent on the type of business you register. For example, the disadvantage of an LLC is that it will get dissolved when a member dies or if it undergoes bankruptcy. Similarly, incorporation may lead to higher overall taxes. These disadvantages are far outweighed by the benefits and advantages of forming a business in Massachusetts.

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The Commonwealth of Massachusetts has played an all important commercial as well as cultural role in shaping the history of the United States and is home to the oldest institution of higher learning, which is Harvard University in Cambridge. The old economy of the state was dependent primarily on agriculture, fishing and trade but the modern economy shifted first to manufacturing and then to services. As more and more people set up companies in Massachusetts, it became a global leader in engineering, biotechnology, finance, higher education, and maritime trade.

Why Choose Massachusetts for Incorporation?

Whether you are planning to form a corporation or a limited liability company in Massachusetts, it is a known fact that small businesses and entrepreneurs play a key role in boosting the economy of the state. Business incorporation in Massachusetts will provide you with the opportunity to benefit from various incentive programs.

A major benefit that small businesses can take advantage of is the Economic Development Tax Incentives Program. This program includes a variety of tax incentives for corporations and LLC’s. Some of them are:

• Massachusetts Investment Tax Credit (ITC): If you set up a company in Massachusetts and qualify for this program then your business can benefit from a three-percent credit to offset your Massachusetts corporate excise tax.
• Massachusetts Research & Development Tax Credit: This is a tax incentive offered to small and medium sized enterprises for investment in research and development.

How do you incorporate in Massachusetts?

What is the process of business incorporation in Massachusetts? What type of documentation is required? These are some of the common questions that you will be confronted with if you are planning to establish a new business in the state. The following steps will enable understanding of the entire process:

Business Type

What type of business do you want to set up in Massachusetts? If you want to set up a company in Massachusetts, you can choose to form Profit and Professional Corporations, Limited Partnerships (LP), Voluntary Associations, Limited Liability Partnerships (LLP), and Limited Liability Companies (LLC) among others. The type of business entity you want to form can be a domestic or foreign entity. The forms and fee will be different for each type of entity.

Business Entity Name

If you have already identified the type of business you want to set up then the next step towards incorporation in Massachusetts is to identify a name for your business entity. There are 3 steps towards business name formation and they are:

• Naming Requirements: The naming requirements for LLCs should be pursuant to 2006 Massachusetts Code – Chapter 156C — Section 3, while that of a business corporation should be pursuant to 2006 Massachusetts Code – Chapter 156D — Section 4.02. The name of each limited liability company must contain words like “Limited Liability Company” or abbreviations like “L.L.C.” or “LLC”. A corporate name must contain words like “corporation”, or “incorporated” or abbreviations like “corp.” or “inc.”
• Business name search: You need to search for a business name that is not in use currently. You can conduct a name search here.
• Name Reservation: Once you have identified a business entity name, you can reserve the name with the office of the Secretary of the Commonwealth for a period of 60 days.
• Name Registration: If you are a foreign entity planning to set up a company in Massachusetts and if your name is not available then you will be required to file or submit a DBA form.
  Application for DBA

Choose a Registered Agent

A domestic business entity as well as foreign entity authorized to transact business in the state of Massachusetts will have to maintain a registered agent pursuant to 2006 Massachusetts Code – Chapter 156D — Section 5.04 for corporations and 2006 Massachusetts Code – Chapter 156C — Section 5 for limited liability companies. We are one of the respected registered agents in Massachusetts and will be responsible for initiating incorporation in Massachusetts through processing of your “Articles of Organization” for domestic corporations and “Certificate of Registration” for foreign corporations.

Articles of Organization and Certificate of Registration

You will be required to submit “Articles of Organization” governed by M.G.L.A. c156D § 2.02; 950 CMR 113.16 if your business is a domestic corporation and a “Certificate of Registration” pursuant to M.G.L.A. c156D § 15.03 (2004); 950 CMR 113.48, if it is a foreign business entity. In order to streamline the process of incorporation in Massachusetts, we can file documents on your behalf through the online process or through an expedited process.

Date Stamped Copies

As a part of the process of company incorporation in Massachusetts, we will ensure, you receive date-stamped and filed copies that verifies the state has filed as well as formed your corporation.

Costs and Fees associated with Massachusetts Incorporation

What would it cost to set up company in Massachusetts? Check Fees here!

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Business Information & Rankings

• Massachusetts ranked 3rd in the Top States for Biotech Growth Index. (Laboratories of Innovation: State Bioscience Initiatives 2004)
• Massachusetts ranked 1st for both the number of high-technology companies per capita and the level of venture capital investment. (Development Report Card for the States: 2004, Corporation for Enterprise Development)
• Massachusetts offers one of the nation’s largest R&D tax credits. (2004 Index of the Massachusetts Economy)
• Massachusetts has produced half of all the Nobel Prize winners in the country.

Cost of Living Index

Crime Rate

Massachusetts has the 13th lowest crime ranking in the U.S. (FBI, 2004)

Fees & Taxes

Business Inventory Tax
Business inventory is exempt.

Corporate Income Tax
Massachusetts’ corporate tax structure consists of a flat rate of 9.5% on all corporate income. This rate includes a 14% surtax, as does the following: an additional tax of $7.00 per $1,000 on taxable tangible property (or net worth allocable to state, for intangible property corporations); and a minimum tax of $456.

Personal Income Tax
Massachusetts’ personal income tax system consists of a flat tax of 5.3% on all personal income.

Personal Property Tax
Taxable. All real and tangible personal property located within the Commonwealth of Massachusetts is taxable unless specifically exempted by statute.
Massachusetts imposes a 5.3% tax on any gains from the sale or exchange of capital assets held for more than one year. There is an exception for collectibles. The state’s long-term gains rate on collectibles is 12%.
The state also collects a 12% tax on interest (except interest from Massachusetts banks), dividends, and gains from the sale or exchange of capital assets held for one year or less (short-term capital gains).
Massachusetts is one of the 38 states that collect property taxes at both the state and local levels.

State Sales and Use Tax
Base Rate: 5.0%
Machinery Rate: None

There is a exemption for sales of machinery or replacement parts thereof used directly in farming, fishing, the actual manufacturing of tangible personal property to be sold, utilities, or research and development by a manufacturing constitution or a research and development corporation.

Unemployment Insurance
Massachusetts’ new employers’ rate is 2.53% for 2 years.