A Massachusetts LLC operating agreement helps establish credibility as a legal entity and protects your business’s operations. The document configures the LLC members’ ownership percentages, how to add or release members, allocation of profits and losses, responsibilities and rights, and other essential company details.
Is an LLC Operating Agreement Required in Massachusetts?
NO, an LLC operating agreement isn’t legally required in Massachusetts. However, it helps to set clear rules and expectations for your company.
By Type
Single-Member LLC Operating Agreement
Establish guidelines for managing a limited liability company owned and run by a single proprietor.
Multi-Member LLC Operating Agreement
Define the responsibilities and obligations of LLC members.
Laws
All operating laws are outlined in Chapter 156C – Limited Liability Company Act. Some of the specific LLC operating agreement regulations in the state of Massachusetts include:
- Section 9: Records and documents.
- Section 21: Rights, powers, and duties of classes or groups of members
- Section 35: Liability for distribution in excess of terms of the operating agreement.
Costs and Fees
There are several costs involved in the formation of an LLC in Massachusetts:
- Certificate of organization filing fee – $500 ($520 for online applications).
- Name reservation fee – $30.
- Annual report fee – $500.
How to Form an LLC in Massachusetts
Once you’ve decided to start your new enterprise in Massachusetts, you can easily follow the steps below:
Step 1 – Name Your LLC
Use the Secretary of the Commonwealth website in Massachusetts to check if the name you have in mind is already under a different business. This site has a searchable database for all the business entities in Massachusetts. Also, do a screening search on the internet to confirm if any company has a similar name.
You should also ensure no other company has a similar federal trademark on the US Patent and Trademark Office. This helps you to avoid trademark infringement.
Step 2 – Designate a Massachusetts Registered Agent
The next step in the LLC formation is to appoint a registered agent. This could be you, a registered agent service, or a local resident with a legal right to do business in the state. The agent receives official paperwork and legal correspondence on behalf of your LLC.
Step 3 – Submit a Certificate of Organization
Now that you have your LLC name and a registered agent to guard your information, you now need to file a Massachusetts certificate of organization.
Ensure you include all members and managers in the certificate of organization. You can file this document by mail or via the online portal at the Secretary of the Commonwealth.
Step 4 – Write an LLC Operating Agreement
The next step is to write an operating agreement for your LLC. Although this agreement isn’t required in Massachusetts, it forms a contract on various issues among your LLC’s members. Without an LLC operating agreement, your company may be more susceptible to losing liability protection.
Step 5 – Apply for an EIN
Next, apply for an Employee Identification Number with the IRS through mail, online, fax, or phone. The IRS uses EIN or the Tax ID Number to track and identify your LLC.
Step 6 – Open a Bank Account
Now that you have an EIN, you should open a bank account for your LLC. This makes it easier to sort out finances while filing taxes and prove that your business is separate.
Step 7 – File Annual Reports and Taxes
Under Massachusetts law, you must file annual reports and taxes with the Secretary of the Commonwealth. This report gives an update on your LLC’s ownership and contact details. Failure to submit this report for more than two years can lead to the dissolution of your LLC.
Sample
You can create your Massachusetts LLC operating agreement by downloading our free template below.
