How to Start a Business in Massachusetts
In Massachusetts, small businesses (firms with fewer than 500 employees) make up approximately 99.5% of businesses. As of 2022, the Bay State had 718,67 small businesses and 1.5 million small business employees. According to the U.S. Small Business Administration Office of Advocacy, the Professional, Scientific, and Technical Services industry accounted for most businesses (124,312 businesses), followed by Construction (77,990 businesses), Transportation, and warehousing (72,754 businesses).
Massachusetts Economy Trends
- In 2022, Massachusetts’ GDP grew to $688 Billion, the highest in the New England region.
- The largest companies by employment are Massachusetts General Hospital, the State of Massachusetts, and the University of Massachusetts System.
- Over 5 million residents live in coastal portions.
- Coastal Massachusetts earns over $206 billion annually (more than $460 billion in GDP)
Starting a business in Massachusetts is a multi-step process that involves everything from developing a business plan and choosing a business structure to registering the business and meeting state obligations. It also comes with several compelling benefits. The process for starting a business can be summarized thus:
- Step 1: Perform Market Research
- Step 2: Prepare a Business Plan
- Step 3: Obtain a Business License
- Step 4: Get the Required Funding
- Step 5: Choose a Business Structure
- Step 6: Select Appropriate Location
- Step 7: Register the Business
Step 1: What Kind of Business Should I Start in Massachusetts?
Thousands of businesses thrive in Massachusetts. Deciding on the type of business to start in Massachusetts will depend on various factors, including available skills, experience, market demand, and capital.
Some of the common businesses launched in Massachusetts include:
- Food and Beverage businesses (cafes, food trucks, restaurants)
- Online businesses (e-commerce, online stores)
- Technology startups (software development firms, Saas agencies)
- Fitness and wellness (yoga center, fitness studio, dance classes, wellness spa)
- Pet services (dog walking, pet grooming, pet spa)
- Education and tutoring (local and online tutors)
How to Do Market Research
The first step to effective market research is identifying the research goals. Market research provides invaluable insight into different factors, such as the needs and buying patterns of potential customers. It also provides a clearer picture of market trends, local competition, and the challenges businesses face.
Some of the questions that may be covered during market research include the following:
- Who are the consumers?
- What do the consumers want?
- What are their purchase triggers?
- What are the purchasing barriers?
Businesses in Massachusetts conduct market research using various methods, some of which include:
- Phone research
- Face-to-face interviews
- Local surveys
- Social media surveys
- Qualitative listening
- Sales data analysis
Step 2: How to Write a Business Plan
Almost any business will benefit from a business plan. For entrepreneurs, startups, and small businesses, writing a business plan helps in crystallizing business ideas while creating a roadmap of the steps that need to be taken to achieve different objectives. Business plans also help in determining a budget. Furthermore, business plans can be helpful when sourcing financing from a lender or investor.
A good business plan should include details of all the major aspects of the business, starting from the type of service or product that will be offered to marketing and financing plans. Business plans aren’t static documents. A small business owner can update theirs to include new information, such as new milestones or goals as the business grows.
Key Elements of a Business Plan
While the contents of a business plan vary, the steps to creating a business plan are largely similar, regardless of the project.
- Create an Executive Summary
An executive summary provides a broad overview of the main points in the business report. It should include a brief description of the services offered and a short explanation of the marketplace. Executive summaries should also have a mission statement.
- Create a Company Description
After the executive summary, a good business plan should have a company description, which outlines the main structure of the company (partnership or joint business). The company description should also include the name of key employees and registered addresses. Finally, a good company description should include a history of the company’s growth.
- Business Goals
Business goals are a core feature of any business plan. Companies and businesses use goals to assess how well the company is hitting set targets. Business goals are also useful when attempting to source for outside investment. Business goals may be intangible (such as getting a five-star review) or number-based (such as hitting a specific sales figure). The goals do not have to be limited to future milestones. They should include a mix of near-term and future objectives.
- Description of Products and Services
A good plan should include a section that covers the services or products that will be offered. Some business plans include images within this section. Some of the things that may be included while describing products and services include:
- The target customer
- An explanation of how the product works
- Information on Research and Development (R&D)
- Marketing and sale strategy
- Production and manufacturing processes
- Market Analysis, Research, and Strategy
Market analysis provides a more precise assessment of the target market, including sales figures, competition, potential hurdles, buying patterns, and more. This section of the business plan may include identified gaps within the market that the product or service can fill.
Other things that may be featured include:
- A description of how the company intends to attract customers
- The type of media that will be used for advertising
- Distribution channels that will be used
- Financial Plans
The financial planning section contains fiscal planning and projections for a company. It includes information such as the following:
- Business operation cost including the cost to hire employees, employ professional services and rent/lease costs (for a brick and mortar business)
- Company budget
- Financial statements and balance sheets
- Other startup costs accrued from services like insureance (professional liability insurance, general liablity insurance and commercial property insurance), the cost of operating a separate business bank account or owning a business credit card, purchasing accounting software, running a website (for an online store or business model) and other similar expenses.
For businesses seeking out new investors, a good business plan should also include financial forecasts of expenses and profitability.
Step 3: Do I Need a Business License in Massachusetts
Massachusetts does not have a general state-level requirement for a business license. However, most businesses will need to obtain a sales and use tax registration issued by the Massachusetts Department of Revenue (DOR) to offer goods and services. In addition, businesses may need to obtain specific licenses based on the type of service offered. Some of the standard options include:
- Trade Professional License: The Massachusetts Division of Occupational Licensure (DOL) licenses and regulates over 100 trades and professions in the state. Some of the professionals that require a license to practice include home inspectors, electricians, architects, health care professionals, and engineers.
- Food Processing and Sales: Safety licenses and permits for food and beverages are managed by the Department of Public Health.
- Construction: The Massachusetts Board of Building Regulations and Standards issues licenses for Construction supervisors.
Some businesses may require more than one license in order to conduct business in the Commonwealth. For instance, in addition to trade-specific licenses, businesses may need environmental and local zoning/building permits.
Licensing requirements vary. Depending on the type of business and the city where the license is being obtained, some businesses may need proof of insurance to get a permit or license.
Residents can check their business license and permit status using the state’s online portal.
Interested parties can also obtain more information on licensing for professional trades by contacting the Division of Occupational Licensure at:
1000 Washington Street,
Suite 710, Boston,
MA 02118
Springfield
436 Dwight Street,
Springfield,
MA 01103
How Much Does a Business License Cost in Massachusetts
The cost of a Massachusetts business license varies, depending on the type of business and location. Massachusetts sales and use tax registration is free for all businesses. However, other business registration fees may apply. In addition, most trade and professional licenses range from $50 to $400. For instance, a fortune teller license costs $50, and a food permit license costs up to $200. Some licenses may cost even more. A general liquor license costs up to $3,500. The price of business licenses may also vary across different cities as a result of associated fees.
How to Register for a Sellers Permit in Massachusetts
Businesses in Massachusetts can register for a sales tax permit by either completing an online application with MassTaxConnect or submitting an in-person application.
Some of the information that’s required for registration include:
- The start date of the business
- The mailing addresses for the business
- The Employment Identification Number (EIN/FEIN) of the business entity
- Contact information for the owner/key officials
- Social Security Number (for sole-proprietary businesses with no employees)
Non-profit organizations who wish to register for a seller’s permit will need to provide an IRS determination letter asserting their status as a non-profit organization.
Massachusetts Department of Revenue
PO Box 7000,
Boston, MA 02204.
Step 4: How Much Does it Cost to Start a Business in Massachusetts?
The cost of starting a business in Massachusetts depends on different factors, such as the business structure, type of business, and location. According to the U.S Small Business Administration, most home-based small businesses in Massachusetts have a startup cost of between $2,100 and $5,100. Larger companies and corporations will require more to begin.
Some of the factors that affect how much it’ll cost to start a business in Massachusetts include:
- The number of employees
- Marketing expenses
- Rent and utilities
- Legal fees
- Permits and business licenses
- Business Insurance
- Land or building
As of 2023, filing an LLC costs $500 for mail orders and $520 if filed online. However, this cost does not include additional filing costs such as registered agent service fees and name registration.
How to Get Business Funding in Massachusetts
Finding funds for a Massachusetts business requires careful planning, research, and execution. A critical first step will be determining how much funding is needed. Next, business owners must choose their preferred option (or options) for funding the business.
Some of the common ways of obtaining financing for a business or company in Massachusetts include:
- Self-funding the business
Funding with Investors - Getting a loan to start a business
- Crowdfunding
- Using Massachusetts investment programs
How to Self-Fund a Business in Massachusetts
Self-funding a business offers several benefits. Owners get to retain control and ownership of their business while also having the freedom to make quick decisions. Self-funding also eliminates the pressure of delivering returns to investors. Instead, any profits generated will belong solely to the owner.
Massachusetts residents who wish to self-fund a business can achieve this by following several key steps.
1. Open a Business Account
Opening a business account is an essential first step to self-funding a business. Having a separate business account that does not include personal transactions makes it easier for business owners to track the expenses and income of their business.
2. Decide on Potential Sources of Income
Once the account is open, business owners can consider different fundraising options. Some of the avenues that an owner might choose include:
- Personal Savings: Depending on the type of business and the sum required, residents may be able to self-fund a business using cash in their checking or savings accounts.
- Loans: Loans are another way of self-funding a business. Homeowners may be able to obtain loans for a business or company with a home equity line of credit or a home loan. Business owners may also choose to self-fund using a small business loan.
- Credit Cards: Credit cards often serve as a source of funding for small businesses. There are different types of business credit cards, offering a variety of benefits and interest rates. Business owners should choose options that provide the best value.
3. Carefully Record Transactions
After the funds have been secured and transferred to the business account, keeping records of all expenses is considered a good business practice. Being able to track the costs will make it easier for owners to correctly assess the success and growth of the business.
How to Find Investors in Massachusetts
Finding investors in Massachusetts involves research, active outreach, and networking. However, there are several reasons to consider this option. Securing funding with the right investors will provide financial support, expertise, experience, validation, and credibility. It also reduces the risk (especially for startups) and makes it easier for businesses to scale and grow.
Some of the steps for finding investors in Massachusetts include:
- Consider working with friends and family: Instead of working with outside investors, business owners can seek funds from friends and family willing to take a stake in the business.
- Work with Private investors in the Community: Business owners sometimes partner with local business lenders in their cities to secure funding.
- Work with Angel Investors: Angel investors provide capital for small businesses and startups that require funding. This investment is usually in exchange for part of the business as royalties or equity. Compared to venture capitalists, angel investors are less likely to have a hands-on approach to company management.
- Get investment with Venture Capitalists: Venture capitalists typically invest in companies with a proven concept. However, venture capitalists may be willing to invest in startups or companies with good business ideas.
How to Get a Loan to Start a Business in Massachusetts
A business loan provides an effective solution for individuals who wish to secure funding for their businesses without sacrificing ownership. Although the exact details may vary, the general process of obtaining a loan in Massachusetts is similar for most businesses and companies.
1. Decide on the type of Loan.
The first step to securing a business loan is determining the type of loan that fits the business. For instance, term loans have a specified payment schedule and a fixed period, making them suitable for large projects. In comparison, credit facilities like a line of credit offer more flexibility for small businesses looking to cover emerging day-to-day expenses.
Some of the standard loan options include the following:
- Short-term loans: Suitable for quickly funding small- to medium-sized projects.
- Equipment financing: Loan funds that can be used for purchasing or upgrading business equipment.
- Long-term commercial loans: Low-interest loans suitable for large purchases
- SBA loans: Small business loans with capped interest rates and term limits of up to 25 years.
- Microloans: Smaller loans funded by the SBA.
2. Determine Eligibility
Most lenders have requirements for obtaining a loan. One of these is a good credit score. Compared to business owners with lower credit ratings, applicants with higher credit scores (above 680) will find it easier to secure loans. Banks typically prefer borrowers with a credit score that is good or excellent as they’re considered to offer less risk.
Business owners must also meet specific legal requirements to obtain an SBA loan. To qualify for an SBA loan:
- Applicants must be operating legally within the state and officially be registered as a for-profit business.
- The business must be physically located within the U.S.
- Business owners must not be on parole.
In addition, businesses must also meet certain financial requirements to be considered for an SBA loan. These include:
- Businesses must belong to SBA-eligible industries.
- Businesses must employ fewer than 500 workers.
- Businesses must have a net income of under $5 million (after taxes).
- Business owners must show evidence of invested equity in the business.
Other eligible requirements include providing a sound business and proof that the applicant tried and failed to obtain loans from other financial sources.
3. Meet Collateral Requirements
Most business loans are backed by collateral, which must be provided before the loan is released. Depending on the lender, accepted forms of collateral can be anything from stocks and bonds to real estate and constructed property.
A key metric in determining the amount of collateral a lender requires is the Loan-to-Value ratio (LTV). For instance, a lender offering a 70% LTV ratio for a business loan will lend a customer $70,0000 if the collateral is valued at $100,000.
When deciding how much needs to be provided for collateral, lenders focus on the financial health of each applicant. Some of the things that are considered include:
- Borrower’s ability to repay
- Borrower’s credit history
- Collateral value
- Amount of Capital
- Loan conditions (amount, interest rate, duration).
4. Provide Documentation
As part of the loan application process, lenders require that businesses provide a variety of documentation. For instance, some lenders may request a business plan outlining how the loan will be used. Lenders may also request financial statements (for businesses already in operation) and documents backing up the offered collateral. Most lenders will request information about any additional company stakeholders and a signed personal guarantee(s).
Some of the documentation that a business will need to provide include:
- A government-issued photo identification
- Business insurance policy
- Company’s employer identification number
- A business plan
- Proof of business Massachusetts license
- Proof of source of income
- Tax returns from previous years
- Recent bank statements
How to Find Massachusetts Business Grants
Businesses in Massachusetts have access to multiple grants operated by the government and other organizations. To qualify for a grant, the business must meet the eligibility criteria and application requirements. Some of the available grants in the Bay State include.
- Massachusetts Economic Development Incentive Program (EDIP)
- Empower Digital Grant Program (administered by MGCC)
- CDFI & CDC Capital Match Program (administered by MGCC)
- Massachusetts Growth Capital Lending Products
- MassDevelopment Lending Product
In Massachusetts, the Office of Grants and Research oversees state-funded grants. It manages over $150 million in grants, which are distributed to state, municipal, and non-profit agencies across the state. The Massachusetts Executive Office of Economic Development (EOHED) also provides a constantly updated resource for grants, loans, and capital programs available for small businesses.
Office of Grants and Research,
35 Braintree Hill Office Park, Suite 302,
Braintree, MA 02184
Executive Office of Economic Development (EOHED,
1 Ashburton Place, Room 2101,
Boston, MA 02108
Can I Start a Business with No Money in Massachusetts?
It’s impossible to start a business with no money. Although Massachusetts charges no fee for online business registrations, most businesses require a license or permit, which costs money. However, business owners can take active steps towards starting a business while engaged in activities that require little to no money.
Some of these include:
- Create a business plan
- Work from home
- Apply for micro-loans or grants
- Provide free samples to build a portfolio
- Attend local networking events
- Work part-time while engaged in another job
- Choose a low-cost service-based business idea.
Step 5. Choosing a Business Structure in Massachusetts
Understanding the different business structures is crucial when starting a business in Massachusetts. Business structures affect the business formation process as well as ownership and control. It also affects how profits are shared and the liability the owner bears.
There are four main types of business structures:
- Sole proprietorships
- Partnerships
- Corporations
- Limited liability companies (LLC).
Each option offers unique benefits.
Partnerships
A partnership is a business structure that includes two or more owners. There are three general types of partnerships: general partnerships (GP), limited liability partnerships (LLP), and limited partnerships (LP).
Under a general partnership, all the partners share in the responsibilities and profits. General partners are also equally liable for debts. In contrast, a limited partnership consists of general partners with expansive roles and limited partners who have limited control and no liability. With a limited liability partnership, all the partners have limited liability.
Some of the key features of the partnership structure include:
- Business is owned by multiple people (partners).
- Ownership of the company’s assets is split across partners.
- Profits are shared among partners in line accordance with the agreement.
- Taxes according to each partner’s income.
How to Start a Sole Proprietorship in Massachusetts
A sole proprietorship is a business structure where one person runs the company. With this structure, the business and owner are legally the same.
A sole proprietorship is suitable for small businesses with low risk and profits. Some of the key features of the sole proprietorship business structure include:
- The owner of the business has complete control
- The assets of the business or company belong to the owner
- Profits of the business are paid to the owner
- The owner bears all the debts of the business
- Owner is taxed as an individual
Starting a Sole Proprietorship in Massachusetts
Unlike some US states, Massachusetts general laws do not have specific regulations for establishing a sole proprietorship. Sole proprietors can start businesses by following several quick steps.
Step 1. Choose a Name
Sole proprietors are either allowed to choose a trade name for their business or use their own legal names. It’s considered good practice to avoid names already in use by another company or competition. New businesses can confirm the availability of their name using resources by searching through businesses incorporated in the Commonwealth.
Step 2. File For a DBA
DBA is an acronym that stands for “Doing Business As.” Filing a DBA is the process that allows businesses to operate under a specific name. Although DBAs are typically filed within the town or city where the company provides services, the process is generally the same. Applicants must provide:
- The name of the company
- The company’s business address
- Contact details
Businesses are also required to pay a filing fee.
Step 3. Obtain a License or Permit
Depending on the type of service being offered by the business, sole proprietors may need to obtain a license or permit that allows them to operate within the Commonwealth. The cost of obtaining a license or permit varies, depending on the type. Sole proprietorships that also include employees will also require an EIN.
How to Start a Corporation in Massachusetts
Corporation
A corporation is a legal entity that’s separate from its owners. Ownership rights to the company can be bought or sold as stocks. Corporations can also be held legally liable. Different types of corporation structures exist, including S, C, and B corporations. Some of the features of a corporation include:
Directors and shareholders decide the ownership and control of a corporation.
- Corporations exist as separate legal entities.
- The profits of a corporation may be shared with shareholders in the form of dividends.
- Corporate taxes are paid independently of taxes paid by directors and shareholders.
Details of the legal rules and regulations for naming, incorporating, and registering a corporation are provided under the Commonwealth Business Corporation statute (Chapter 156)
Step 1. Choose a Corporation Name
The first step to forming a corporation is picking a name. Per the general laws of the Commonwealth, the name of a corporation must include the word “corporation” or “incorporated.” Abbreviations such as “inc,” “corp,” or “P.C” are also permitted.
Other naming rules outlined under Section 4 of the commonwealth laws include the following:
- Corporate names may not be similar (or the same) as an existing corporation or an already reserved name.
- The corporate name must not have an implication that differs from what it is organized for
- Corporations that wish to use names that contradict the commonwealth rules may be able to obtain an exception by applying to the Secretary of State for approval.
Step 2. Registered Office and Registered Agent
As part of the requirements for setting up a corporation, Section 5 of Massachusetts General Laws mandates that every corporation must maintain a registered office as well as appoint a registered agent. Some of the specifications in the statute include:
- The registered office must be in a physical location (not a PO box)
- The registered office does not have to be the same as the corporation’s main business location
- The registered agent may either be an individual, domestic corporation or corporation registered in another state but authorized to do business in the Commonwealth.
Step 3. File the Articles of Organization
To form a corporation in Massachusetts, businesses must file articles of organization with the Secretary of the Commonwealth. The following information must be provided:
- Name of the corporation
- Details of the incorporators
- The corporate office’s street address
- Stock structure
- Purpose of the corporation (types of service provided)
- Registered agent and the registered office
The cost of folding the Articles of Organization is $275 for the first 275,000 authorized shares ($100 for any additional 100,000) Filing can either be done online or sending it by mail to:
Secretary of the Commonwealth
Corporations Division,
McCormack Building,
One Ashburton Place, 17th floor,
Boston, MA 02108.
How to Start an LLC in Massachusetts
An LLC operates with a hybrid business structure that merges the benefits of partnerships and corporations. With an LLC, owners have limited liability for the debts and actions of the company. It also offers flexibility in management and taxation. LLCs are popular with many small businesses and startups in Massachusetts because they allow for easier separation of personal and business liabilities.
The Massachusetts Limited Liability Company Act (Chapter 156C) provides the rules for naming, setting up, and incorporating an LLC in the Commonwealth. Some of the requirements for setting up a limited company include:
Step 1. Name the LLC
Per Section 3 of the act, the name of the limited liability company must include the words “limited liability company,” “limited company,” “L.L.C,” L.C, LLC, or LC. While the name of the company may include that of a member or manager, it must not be the same as any other LLC or corporation licensed in the Commonwealth. Individuals who wish to form an LLC may reserve the rights of a specific name by filing it with the state secretary.
Step 2. Provide an Official Address
As part of the rules of starting an LLC in the Commonwealth, Massachusetts laws mandate that the company must have and maintain an office. However, Section 5 of Massachusetts general laws provides that the address of the office does not necessarily need to be the place of business. It could be a separate location.
Step 3. Appoint a Registered Agent
In addition to a registered address, every LLC must have a registered agent. Per the rules outlined by Commonwealth laws, the appointed agent must meet the following qualifications.
- The agent must be a resident of the Commonwealth.
- The agent may be a domestic corporation (a corporation already formed under the laws of the Commonwealth)
- The agent may be a corporation formed in another state but authorized to provide services in the Commonwealth.
Step 4. File the Certificate
The final step to forming an LLC is filing a Certificate of Organization with the Secretary of the Commonwealth. Some of the information that must be included in the Certificate of Organization includes:
- The name of the LLC
- Employer Identification number (if any)
- The street address of the LLC where records will be maintained
- The general character of the business (type of services that the LLC offers)
- The name and business address of the registered agent
Filing can either be done online or by sending the Certificate via mail to the:
Secretary of the Commonwealth
One Ashburton Place,
Room 1717, Boston,
Massachusetts 02108-1512
Filing online costs $500, while filing vial main costs $520. Submitted certificates must also include a signature as well as the name of managers (if any), authorized signers, and the details of the filer. Upon approval of the filed documents, the SOC issues a certificate confirming the formation of the LLC.
Starting a Business Partnership in Massachusetts
A partnership is a business structure that includes two or more owners. There are three general types of partnerships: general partnerships (GP), limited liability partnerships (LLP), and limited partnerships (LP).
Under a general partnership, all the partners share in the responsibilities and profits. General partners are also equally liable for debts. In contrast, a limited partnership consists of general partners with expansive roles and limited partners who have limited control and no liability. With a limited liability partnership, all the partners have limited liability.
Some of the key features of the partnership structure include:
- Business is owned by multiple people (partners).
- Ownership of the company’s assets is split across partners.
- Profits are shared among partners in line accordance with the agreement.
- Taxes according to each partner’s income.
How to Start a Non-Profit in Massachusetts
Massachusetts’s laws define non-profit organizations as any organization formed “not for personal pecuniary gain.” Instead, non-profit organizations are formed for charitable, civic, or other public purposes. Oversight of thousands of public charities in the commonwealth falls under the Non-Profit Organizations/Public Charities division.
To start a non-profit corporation in Massachusetts, applicants will need to meet the legal requirements of the Commonwealth. Some of the general steps that organizations need to take include:
- Name the organization
- Appoint Incorporators and directors.
- Appoint a registered agent.
- Complete the Files Articles of Incorporation
- File an initial report
- Apply for an Employer Identification Number
- Apply for 501(c)
To legally incorporate a nonprofit organization, owners must file non-profit articles of organization with the Secretary of the Commonwealth. Details that must be contained within the article include:
- The non-profit’s statement of purpose
- The non-profit’s name and street address
- Bylaws adopted by the non-profit
- Names of elected officers and directors
- Name and address of the registered agent
Step 6. Choosing a Business Location in Massachusetts
One of the most important decisions made when launching a business (especially outward facing businesses) is deciding on a business location. The location of a business can significantly affect its long-term success.
Depending on the services offered by the business, business locations may be located in a retail space (such as storefronts) or run from home. Larger corporations may require industrial space, while commercial businesses will fare better in spaces that account for a lot of foot traffic.
Some of the factors to consider when choosing a business location in Massachusetts include:
- Demand around the location
- Available parking
- Amount of local competition
- Proximity and ease of access for vendors and suppliers
- Brand visibility
- Budget
Some locations in Massachusetts may have specific regulations and licenses that are mandated for business operations. Businesses may also be required to meet safety standards set by the Office of Public Safety and Inspection.
What Kind of Business Can I Run From Home in Massachusetts?
While a wide variety of businesses can be run from a home office, most of these are typically sole proprietorships or partnerships. Massachusett general laws permit businesses to operate from home as long as it’s done in compliance with the commonwealth regulations. Residents who wish to run a business from home are advised to check for local ordinances or zoning restrictions.
For instance, some cities and towns require that home businesses first obtain a permit if the business will be having clients (usually not more than three at a time) visit the premises. A permit may also be required to account for the additional parking and hours of operation. Businesses in the food and beverage sector may also need to obtain permits or meet certain health regulations.
Some of the businesses that can be run from a home include:
- Dropshipping business
- Marketing service
- Mobile app development
- Online tutoring
- Home daycare
- Photography
- Affiliate marketing
- Web Design
- Freelance writing
How Do I Start A Small Business From Home in Massachusetts
The process of starting a small business from home will depend on the type of business structure. For instance, while small businesses organized as LLCs will need to file a Certificate of Organization, this requirement is not mandated for sole proprietorships.
Some of the general steps that small business need to take include:
- Choosing a name
- Filing for a DBA
- Registering the company address
- Appointing a resident agent
- Obtaining a license or permit
- Getting an EIN Number
Step 7. Legal Requirements for Starting a Business in Massachusetts
The Commonwealth of Massachusetts provides specific legal requirements for different business structures. For instance, while a limited liability company is mandated to include LLC in its name, sole proprietorships have more flexibility with naming options. However, there are some general rules that apply to most businesses.
Laws in the commonwealth require that all businesses maintain a registered address and registered agent, who will be tasked with receiving and forwarding any legal or government communication. Businesses must also obtain an Employer Identification Number for tax purposes. Depending on the structure, businesses may need to file a Certificate of Organization or a DBA.
How to Get an EIN Number in Massachusetts
Applications for an EIN number can be processed online using the IRS EIN Assistant. Business owners can also apply for an employer identification number by mailing a completed application form (SS-4).
However, businesses will need to meet the requirements in order to be eligible for one. An EIN number can be obtained for the following:
- Forming a new business or corporation
- Opening a bank account that requires an EIN
- Hiring employees (including household employees)
- Purchasing a business
- Creating a pension plan or trust
- Forming a corporation or partnership
- Changing the structure of a business (e.g., sole proprietorship to partnership)
During the application process, requesters will need to specify the legal structure of their business (e.g., partnership, corporation, trust, etc). Applicants will also need to provide a reason for the request. Other required details include:
- The legal name of the entity (DBA name)
- Registered business address
- Main business activity
- Types of products or services
- Contact details of the filer
A valid Taxpayer Identification Number is required for any application. If the validation is approved, an EIN number will be provided for the business.
How to Get a Massachusetts Registered Agent
Massachusetts general laws of registration provide some flexibility in the choice of a registered agent. Per the state’s statutes, registered agents may either be individuals (such as the owner or a secretary), a domestic corporation, or a foreign corporation authorized to operate in the Commonwealth.
Massachusetts registered agents provide multiple functions for businesses, LLCs, and corporations, some of which may include:
- Receiving service of process and other legal documentation on behalf of the represented business.
- Maintaining a physical address (not a PO box) within the Commonwealth.
- Notifying the represented business or company of any incoming communication from the state.
- Ensuring compliance with Massachusett general law requirements for businesses.
A large percentage of businesses prefer the convenience of hiring a third-party registered agent service. The cost of hiring a Massachusetts agent ranges from $100 to $350 per year. Businesses on a budget may consider the option of appointing close family members as long as the individual meets the general requirements for the role, namely:
- The individual must be a resident of the state with a physical address
- The individual must be able to guarantee availability during regular business hours (Monday through Friday) all through the year
Massachusetts Business Tax
The Massachusetts Department of Revenue oversees taxes for all businesses in the commonwealth, from sole proprietorships to corporations. Businesses can register with the department via the MassTaxConnect online platform. As part of the registration processes, businesses must provide the following information:
- The business’s legal and mailing address
- The date the business began
- The contact information for the business
- A Federal Employer ID Number (FEIN) (required for all businesses, including sole proprietorships with employees)
Are Business Records Public in Massachusetts.
Access to business records in Massachusetts will depend on the custodian. Although the Freedom of Information mandates the disclosure of records maintained by the government, it does not apply to all records in the custody of private organizations or businesses.
This means residents can access business records maintained by government organizations, such as the information provided in the Massachusetts Business Register or bankruptcy filings. However, businesses in Massachusetts are not required to release internal business information such as memos, emails, trade strategies, or confidential information.
Government officials are also permitted to restrict access to any business records that may contain the following:
- Any material that contains financial information voluntarily provided for use in developing government policies
- Plans, schematic drawings, or blueprints
- Trade secrets or any other proprietary information
Note: Some private businesses may voluntarily provide information to the public via brochures, newsletters, pamphlets, and trade journals. However, this information is not mandated.
Massachusetts businesses may also provide business records pertinent to the company’s activities, such as market data, economic trends, and updates on business policies.