How to Form a C Corporation in Massachusetts

Introduction

If you’re an entrepreneur with an idea for a business, your first instinct might be to start operating without incorporating. But while this will shield you from liability, it doesn’t offer the same protection that a corporation can provide. In this article, we’ll show you how to form a c corporation in Massachusetts and why it’s important to do so.

Choose a name for your corporation.

With your new business name in hand, it’s time to file a Certificate of Incorporation. To do so, you’ll need the following information:

• The full legal name of your corporation (not your nickname)
• Your agent’s name and address
• The number of shares authorized

You can download a one-page document from the Massachusetts Secretary of State website that will help guide you through this process.

Apply for an employer identification number.

An employer identification number (EIN) is a unique nine-digit identifier assigned to businesses by the Internal Revenue Service. It’s used for tax purposes, and you’ll need it if you plan to set up and operate your business as a corporation in Massachusetts.

Your EIN can be obtained online through the IRS website, or by calling 877-829-5500. You’ll need your Social Security Number (SSN), along with other details about your business such as its name, address, and type of organization. Once obtained, this number should be used on all relevant tax forms throughout the life of your C corporation—it will not change unless there are major changes to who owns or runs the company.

If you fail to obtain an EIN before filing corporate taxes in Massachusetts with either an S-Corporation form or Form 1120S (if using Schedule M), then none may be issued—meaning that you won’t be able to file these required documents until all issues are resolved!

Prepare and file articles of incorporation.

You will need to prepare and file articles of incorporation. The process varies from state to state, but in Massachusetts, you must first determine the name of your corporation. You can use a limited liability company (LLC) or another business name if it’s available for your type of entity.

The state requires that you sign your articles with a notary public so that they’re official documents filed with the government. You’ll also have to pay a filing fee when you file them at 749 Summer Street in Boston, MA 02127; there’s no filing fee if you file online through their website (www.massbizportal-cmcsa).

Draft bylaws.

The bylaws are the rules that govern how your organization operates. They should clearly define:

• The structure of your corporation and its management
• How meetings will be conducted
• Which officers need to be present before decisions can be made
• How often meetings will be held and what notice is required for them (one day in advance?)
• What happens if a director or officer cannot attend a meeting (they may vote by proxy)

Issue stock to founders.

For your C corporation to be a real entity, you must issue stock and make it available for others to purchase. This can be done by creating the shares yourself and then transferring them to yourself, or by asking an attorney who specializes in this sort of thing to do it for you.

The benefits of issuing stock are that:

• It creates a formal relationship between investors and the company;
• It establishes a capitalization structure for raising investments;
• It offers protection from personal liability as well as limited liability for shareholders;

The drawbacks are that:

• You must pay taxes on any dividends paid out (or earnings if there aren’t any). The IRS requires that all owners report their ownership of public companies on their tax returns every year. This can get complicated if there are multiple classes of stock with different voting rights or dividends paid out at different rates depending on which class was purchased;

Hold organizational meetings.

It is important to hold organizational meetings as soon as possible. You must hold these meetings within 180 days of filing articles of incorporation, and you must issue stock within 90 days of filing articles. The meetings can be held in person or over the phone, but you should make sure that each shareholder is present at least once per year.

Create corporate records book.

• Create a corporate records book. The corporate records book is where you record the following:
• Minutes of all shareholder and board meetings
• Stock ledger, which includes information about the corporation’s stockholders, such as names and addresses; number of shares owned by each stockholder; purchase dates; sales prices for each sale or transfer of shares; and dividend distribution dates.

Comply with other tax and regulatory requirements.

• File an annual report.
• File an annual tax return with the Massachusetts Department of Revenue (DOR). You will file this return by the same due date as your federal income tax return, which is generally April 15.
• Pay the minimum franchise tax of $100 or $500 per year depending on your type of corporation and its net worth (assets minus liabilities).
• Pay any other taxes related to your activities as a C corporation that are applicable in Massachusetts.

Follow these steps to incorporate in Massachusetts as a c corporation

To form a c corporation in Massachusetts, you must:

• Prepare and file articles of incorporation with the Secretary of State.
• Draft bylaws.
• Issue stock to founders.
• Hold organizational meetings with your attorney present (unless this is not required by your state).
• Create corporate records book.

It’s also important to stay compliant with other tax and regulatory requirements, such as those governing elections made by shareholders or directors, federal income taxes owed on profits earned at the corporate level, state sales taxes owed on purchases made by the company itself (not its individual owners), corporate income taxes due on profits earned at the entity level for each year that it operates (even if those earnings are reinvested in growth), payroll withholdings from employee paychecks that go toward paying federal Social Security and Medicare tax obligations (and any other mandated coverage programs), etc..

Conclusion

Incorporating your business is a big step, but it’s not the only one. After you have formed your c corporation, be sure to maintain ongoing compliance with the tax and regulatory requirements of Massachusetts.