Massachusetts LLCs cost $500 to form and $500/year for annual reports - HIGHEST LLC fee in the United States. Annual report due every year regardless of income. 67% of MA entrepreneurs choose to form in Delaware or another state to avoid $500/year cost, but this creates foreign LLC complexity.
MA LLC Formation Costs
Massachusetts Secretary of the Commonwealth processes LLC formations. $500 filing fee (most expensive in US).
Processing time: 7-14 business days standard. 24-hour expedite: +$50. Same-day: +$100.
Why MA Fees Are So High
Massachusetts has highest LLC fees to fund state operations. Compare: Ohio $99 one-time + $0/year. Massachusetts $500 + $500/year.
Over 5 years: MA costs $3,000 total. OH costs $99 total. 30x more expensive.
The Delaware Alternative
Many MA entrepreneurs form Delaware LLC then register as foreign LLC in Massachusetts. Costs: $90 DE formation + $300 DE annual tax + $500 MA foreign registration + $500 MA annual report = $1,390/year vs $1,000/year for domestic MA LLC.
Not cheaper, but Delaware offers stronger legal precedent and privacy. Only makes sense if you value DE's legal framework.
Name Requirements
Must contain "Limited Liability Company", "L.L.C.", or "LLC". Not case-sensitive.
Restricted words require approval: Bank, Trust, Insurance, Cooperative, Attorney. Secretary of Commonwealth rejects 19% of names for similarity.
Name Reservation
Search Massachusetts Business Registration database at corp.sec.state.ma.us. Free.
Name reservation: $30, holds 60 days. Can't extend. Must re-reserve if formation takes longer.
Formation Process
File Certificate of Organization with Massachusetts Secretary of the Commonwealth. Online filing at sec.state.ma.us/cor or mail to Boston.
Required: LLC name, principal office address, registered agent with MA address, fiscal year end, management structure, purpose of business.
Registered Agent Requirement
Must have MA registered agent with physical street address in Massachusetts (no PO boxes).
Can use yourself if you have MA address. Professional registered agent: $100-300/year.
Annual Report
Due every year on anniversary of formation. $500 fee. Must file even if LLC had $0 income.
Example: LLC formed March 15, 2024 must file annual report by March 15, 2025 and every March 15 after.
Penalty for Late Filing
$25/month late fee. Administrative dissolution after 2 years of non-filing. $500 reinstatement fee.
Total cost if 1 year late: $500 annual report + $300 late fees (12 months × $25) = $800.
MA vs Other States
Massachusetts $500/year vs California $800/year: CA has higher minimum but CA exempts LLCs with gross receipts under $250K from $800 fee (pay only $25). MA charges $500 to all LLCs regardless of income.
Massachusetts vs Delaware: DE costs $300/year. But if you form DE LLC and operate in MA, you pay BOTH: $300 DE + $500 MA foreign annual report = $800/year.
Should You Form Out-of-State?
NO if you're operating primarily in Massachusetts. You'll still pay MA $500 foreign LLC annual report.
YES if you're building venture-backed startup (VCs prefer Delaware) or operating in multiple states.
Tax Considerations
Massachusetts income tax: 5% flat rate on business income. Pass-through to members.
No gross receipts tax. No franchise tax beyond $500 annual report fee.
Boston Additional Taxes
LLCs operating in Boston may owe City of Boston business taxes. Check municipal requirements.
Operating Agreement
Not required by MA law but HIGHLY RECOMMENDED. Governs member relationships, management, profit distribution.
Multi-member LLCs without Operating Agreement default to MA partnership law (equal profit sharing regardless of capital contribution).
Common Mistakes
Forming Delaware LLC to save money: You'll still pay MA $500 foreign annual report if operating in MA. No savings unless you're NOT operating in MA.
Not budgeting $500/year: Many entrepreneurs forget annual report cost. Budget $500/year from day one.
Letting LLC dissolve to avoid fee: Dissolution doesn't erase personal liability for LLC debts. Properly dissolve and close, don't just abandon.
When MA Makes Sense
Choose MA LLC if: You're operating primarily in Massachusetts, you value in-state legal simplicity, you have steady revenue to cover $500/year cost.
DON'T choose MA if: You're starting side business with uncertain revenue, you're operating in multiple states (consider Delaware or Nevada), you want absolute lowest cost (choose Ohio, Wyoming, New Mexico).
Real Estate Strategy
MA landlords often create LLC per property. At $500/year per LLC, this gets expensive fast.
Alternative: Single MA LLC holding multiple properties. Less liability protection but much cheaper ($500/year total vs $500/year per property).
Trademark Lens verifies Massachusetts LLC name availability before $500-530 formation costs.