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

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: 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:

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:


Businesses in Massachusetts conduct market research using various methods, some of which include:

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. 

  1. 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.

  1. 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.

  1. 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. 

  1. 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:

  1. 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:

  1. Financial Plans

The financial planning section contains fiscal planning and projections for a company. It includes information such as the following: 

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: 

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:

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:

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:

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:

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:

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:

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:

In addition, businesses must also meet certain financial requirements to be considered for an SBA loan. These include:

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:

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:

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. 

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:

  1. Create a business plan
  2. Work from home 
  3. Apply for micro-loans or grants
  4. Provide free samples to build a portfolio
  5. Attend local networking events
  6. Work part-time while engaged in another job
  7. 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: 

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:

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:

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:

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.

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:

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:

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:

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.

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: 

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:

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:

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:

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:

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:

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:

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:

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:

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:

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:

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:

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:

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.