Incorporating in Massachusetts: Everything You Need to Know

Incorporating in Massachusetts is a process allowed in the state that provides professionals, such as doctors and lawyers, the option to form a corporation.3 min read

Incorporating in Massachusetts is a process allowed in the state that provides professionals, such as doctors, lawyers, and accountants, the option to form a corporation.

Information for Incorporating in Massachusetts

If you are considering forming a corporation in Massachusetts, it is recommended that you review the laws and regulations of the state that apply to your business structure. This helps ensure that before you begin filing the paperwork, you'll know from the start what is expected to form a legal corporation in Massachusetts. This will save you time and money. It is also a good idea to discuss your plans to form a corporation with a qualified attorney familiar with corporations.

Benefits of Incorporating in Massachusetts

Businesses incorporated in Massachusetts enjoy several benefits, such as:

  • Limited liability protection provided by a corporation.
  • A Massachusetts corporation protects your personal assets since they cannot be used to satisfy a corporation's debts and liabilities.
  • The limited liability protection also protects its shareholders from claims that arise from a lawsuit.
  • The board of directors and its officers who are part of a Massachusetts corporation are also covered by limited liability protection.
  • With a corporation structure, it can make things easier to get funding and additional capital when needed versus other types of business structures.
  • It is also possible to sell stock or other financial instruments.
  • Massachusetts corporations are easily transferred by transferring or issuing stock.
  • A Massachusetts corporation can attract top talent and retain that talent with offers of bonus plans and stock options.
  • As a career platform, a corporation is an attractive business structure for employees who are eligible for benefits such as profit sharing, insurance, and retirement plans.
  • As a separate perpetual legal entity, a Massachusetts corporation does not cease to exist upon the death of a shareholder. This occurs with other business types.

Corporation Taxes

A Massachusetts corporation allows owners to retain and protect more of its income since the tax rate for its income tax is generally lower than that of an individual. The individual shareholders report and pay their personal income taxes only on the monies the corporation pays them.

Shareholders must pay taxes on any dividend income paid by the corporation, even with income tax already paid by the corporation. This is referred to as "double taxation." The owners of a Massachusetts corporation can elect to have what is known as "pass-through" tax status by filing Form 2553 with the IRS.