Massachusetts is one of the pricier states to form and maintain a business in, but the process itself is pretty simple once you know the steps. Here's what it actually takes to start a business in Massachusetts in 2026, from picking a structure to keeping up with the paperwork after you launch.
1. Which business structure fits you?
Most people starting a business in Massachusetts choose from a handful of basic structures. Each one changes how you're taxed, how much paperwork you're signing up for, and how much personal liability you're carrying.
- Sole proprietorship. You and the business are legally the same thing. There's no state filing required to create one, you just start operating, but you're personally on the hook for any business debts or lawsuits. It's the default if you don't file anything else.
- Partnership. Two or more people running a business together without forming an LLC or corporation. Simple to start, but it offers no liability protection, and each partner can be held responsible for the business's debts.
- LLC, or limited liability company. The most common choice for small businesses. It separates your personal assets from the business's debts and lawsuits, and it gives you some flexibility in how you're taxed. It costs more to set up and maintain than a sole proprietorship.
- Corporation, either an S-corp or C-corp. More structure and more paperwork, and it usually makes sense once you're raising outside investment, bringing on multiple shareholders, or your accountant recommends it for tax reasons.
If you're still weighing your options, our guide on choosing a business structure goes into the tradeoffs in more depth.
Whichever structure you land on, LLCs and corporations are registered with the Massachusetts Secretary of the Commonwealth's Corporations Division, the state agency that handles business filings. Sole proprietorships and partnerships don't register there, since there's no formation document to file.
2. Register your business
Forming an LLC
To form an LLC in Massachusetts, you file a Certificate of Organization with the Corporations Division. It costs $500 by mail or $520 online (the extra $20 is a mandatory expedite fee that kicks in whenever you file online or by fax). You don't need to reserve your business name separately, but if you're not ready to file yet, you can hold a name for 60 days for $30.
Every LLC needs a registered agent, someone with a physical Massachusetts street address who's available during business hours to accept legal documents on the company's behalf. You can act as your own agent if you live in the state, or pay a commercial registered agent service, usually $100 to $250 a year.
Massachusetts doesn't legally require an operating agreement, but write one anyway. It's what protects your liability shield if things ever get contentious, and most banks will ask for it before they'll open a business account.
Sole proprietorships and DBAs
If you're running a sole proprietorship, there's nothing to file with the state to get started. But if you're operating under a name other than your own legal name, most Massachusetts cities and towns require you to file a Business Certificate, often called a DBA, with your local city or town clerk. That's a local filing, not a state one, so the fee and process depend on where you're located.
3. Get an EIN
An Employer Identification Number is free straight from the IRS and takes about 15 minutes online. You'll need one to open a business bank account, hire anyone, or file most business tax forms, even if you're a single-member LLC with no employees.
4. Check licenses and permits
There's no single statewide business license in Massachusetts. What you actually need depends on your industry and where you're located: professional licensing for fields like contracting, cosmetology, or healthcare, a local business certificate, health permits if you're handling food, and zoning approval if you're running things out of your home. Our guides on professional licensing by industry and zoning laws for home businesses cover both in more detail.
5. Understand Massachusetts taxes
Massachusetts charges a flat 5% state income tax on most income, plus a 4% surtax on anything over roughly $1 million a year (the Fair Share Amendment, with a threshold that adjusts for inflation each year). Sales tax is a flat 6.25% statewide, and unlike most states, Massachusetts doesn't let cities or towns add anything on top of that.
How your business itself gets taxed depends on its structure. A single-member LLC is taxed like a sole proprietorship by default, meaning there's no separate business-level tax, and a multi-member LLC is taxed like a partnership. If you elect to be taxed as a corporation, the business may owe the state's corporate excise tax, which has a $456 minimum. That election is worth running by a CPA before you make it. Our guide on choosing a business structure covers the basics of how each option gets taxed.
6. Stay compliant: the annual report
Every LLC in Massachusetts has to file an Annual Report with the Corporations Division and pay $500, every single year, for as long as the business exists. It's due on the anniversary of your original Certificate of Organization filing, not a fixed calendar date, so you're responsible for tracking it yourself. Massachusetts has one of the highest combined formation and annual costs of any state, and if you let the report lapse for two years, the state can dissolve your LLC.
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, and then $500 every single year 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 over 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, if you elect to have your LLC taxed as a corporation.
Fees and rates above come from the Massachusetts Secretary of the Commonwealth and Department of Revenue as of 2026, and they do change over time, so double check before you file. None of this is legal or tax advice. Talk to a Massachusetts-licensed attorney or CPA about your specific situation.