Massachusetts sits toward the pricier end of the spectrum for forming and maintaining a business, but the mechanics of doing it are fairly straightforward once you know the sequence. The rest of this guide walks through each step, from choosing a structure to keeping up with paperwork after you launch, for 2026.
1. Which business structure fits you?
Most people starting a business in Massachusetts pick from a handful of structures, and each one changes your taxes, your paperwork load, and how exposed you are personally if something goes wrong.
- Sole proprietorship. Legally, you and the business are one entity. There's nothing to file to get started, but you're also personally exposed to every debt and lawsuit the business generates. It's the default if you never file anything else.
- Partnership. Two or more people in business together without forming an LLC or corporation. It's easy to start but provides no liability shield, and each partner can be held liable for the business's obligations.
- LLC (limited liability company). The most popular pick for small businesses, since it separates your personal assets from what the business owes, with some flexibility in how it's taxed. Setup and upkeep cost more than a sole proprietorship.
- Corporation, S-corp or C-corp. More formality and paperwork, generally worthwhile once you're bringing in outside investment, adding shareholders, or your accountant has a tax reason for recommending it.
If you're still deciding, our business structure guide walks through the tradeoffs in more detail.
LLCs and corporations register with the Corporations Division of the Secretary of the Commonwealth. Sole proprietorships and partnerships skip this step, since there's no formation document for either one.
2. Register your business
Forming an LLC
Massachusetts LLCs are formed by filing a Certificate of Organization with the Corporations Division: $500 by mail, or $520 online, since online and fax submissions carry a mandatory $20 expedite charge. Name reservation isn't required before filing, but if you need to lock one down early, $30 holds it for 60 days.
Every Massachusetts LLC needs a registered agent, someone at a physical in-state street address who's available during business hours to receive legal paperwork for the company. Residents can serve as their own agent; otherwise, a commercial registered agent service runs about $100 to $250 a year.
Massachusetts law doesn't require an operating agreement, but skip it at your own risk. It's often what preserves your liability shield if a dispute ever goes to court, and most banks won't open a business account without seeing one.
Sole proprietorships and DBAs
Sole proprietors have no state filing to make just to get started. Operating under a name other than your own, though, usually triggers a local requirement: most Massachusetts cities and towns want a Business Certificate, commonly called a DBA, filed with the city or town clerk. Since it's a local filing rather than a state one, cost and process vary by location.
3. Get an EIN
The IRS issues EINs at no cost through a roughly 15-minute online application. You'll need one to open a business bank account, hire staff, or file most business tax forms, even as a single-member LLC with no employees.
4. Check licenses and permits
Massachusetts doesn't issue one blanket business license; what applies depends on your industry and municipality. Think professional licensing for fields like contracting, cosmetology, or healthcare, a local business certificate, health permits for anything food-related, and zoning approval if you're operating from home. Our guides on professional licensing by industry and zoning laws for home businesses cover both in more detail.
5. Understand Massachusetts taxes
Most income in Massachusetts is taxed at a flat 5% by the state, with an additional 4% surtax kicking in above roughly $1 million annually under the Fair Share Amendment, a threshold that moves with inflation each year. Sales tax sits at a flat 6.25% statewide, and cities and towns aren't permitted to add anything on top of it, unlike in most states.
Entity-level treatment follows federal defaults: a single-member LLC is disregarded and taxed like a sole proprietorship, with no separate business-level tax, while a multi-member LLC is taxed like a partnership. Electing corporate tax status instead exposes the business to the state's corporate excise tax, with a $456 minimum, an election worth running by a CPA before you make it. Our business structure guide lays out how each option is taxed at a high level.
6. Stay compliant: the annual report
Massachusetts LLCs owe the Corporations Division an Annual Report every single year for as long as the business exists, at $500 a filing. The due date tracks the anniversary of your original Certificate of Organization rather than a fixed calendar date, so tracking it falls on you. Between the formation fee and this annual cost, Massachusetts ranks among the more expensive states to maintain an LLC in, and letting the report lapse for two years gives the state grounds to dissolve it.
Massachusetts business costs at a glance
| Item | Cost |
|---|---|
| Certificate of Organization (LLC) | $500 mail / $520 online |
| Name reservation (optional) | $30 |
| Annual Report (every year) | $500 |
| Registered agent service (optional) | $100 to $250/year |
| EIN | Free (IRS) |
| State income tax | 5% flat (+4% over ~$1M) |
| State sales tax | 6.25% flat, no local add-on |
Frequently asked questions
How much does Massachusetts charge for LLC formation and the annual report?
$500 by mail ($520 online) to form, then $500 every single year after that for the Annual Report, among the highest combined costs of any state.
When is Massachusetts's Annual Report due?
On the anniversary of your original Certificate of Organization filing, not a fixed calendar date.
What's the personal income tax rate in Massachusetts?
A flat 5%, plus a 4% surtax on income above roughly $1 million a year.
Does sales tax vary by city in Massachusetts?
No, it's a flat 6.25% statewide with no local add-ons.
What's the minimum corporate excise tax in Massachusetts?
$456, for LLCs that elect to be taxed as a corporation.
The costs and rates above come from the Massachusetts Secretary of the Commonwealth and Department of Revenue as of 2026 and are subject to change, so confirm current figures before filing. None of this constitutes legal or tax advice; consult a Massachusetts-licensed attorney or CPA about your specific situation.