Massachusetts legal and accounting and tax considerations in 2024

• Tax rates

  

  1. The corporate tax in Massachusetts is 8% of the corporation’s taxable net income, with the minimum payable amount of US$456;
  2. Withholding tax on Massachusetts sourced income including dividends, interest payments and wages will be 5.1%. Additionally, capital gains tax is also imposed at rate of 5.1%;
  3. Besides state tax, companies will also be required to pay federal taxes including corporate income tax of up to 35%, withholding tax of 30% and capital gains tax of 35%;
  4. Branch offices are also subject to state corporate tax of 8% and federal corporate income tax of up to 35%;
  5. Sales tax is also levied in Massachusetts up to a rate of 6.25%. There is no federal sales tax.

• Tax filings

  1. Massachusetts companies must file annual tax return by the 15^th day of the forth month after close of the taxable year;
  2. Sales tax and withholding tax filings may be required on a monthly, quarterly or annual basis, depending on the amount of annual liability.

• Miscellaneous

  1. A business owner i) who is neither a US citizen, permanent resident or tax-resident) ii) who lives outside the USA iii) who only has a company number in the USA iv) whose staff and directors are based outside the US and v) whose company provides services or manufactures goods outside the USA, is legally exempt from USA corporate and personal income tax;
  2. While the above applies for the majority of cases, it should be confirmed on case-by-case basis;
  3. Foreign corporate shareholders need to register for Employer Identification Number (EIN) tax at all times. IRS will not share tax information with the Client’s home country;
  4. Net operating losses may be carried forward for twenty years and may be carried back for two years to offset taxable income for those years;
  5. US has signed income tax treaties on withholding tax rates with over 60 countries including France, Russian Federation, South Africa, Sweden, Barbados, India, and the United Kingdom.

Legal and compliance

• Incorporation regulations

  1. A Massachusetts company can be incorporated with 1 director and 1 shareholder. There are no residency or nationality requirements;
  2. All Massachusetts companies must have a local registered office and a resident agent. Healy Consultants will provide this service to our Clients;
  3. To incorporate the company, Healy Consultants will assist our Clients file the articles of organization/ certificate of organization for their entity with the Secretary of the Commonwealth;
  4. To open the corporate bank account, Healy Consultants will assist our Clients apply for Federal Employer Identification Number (FEIN) for their company.

• Labour regulations

  1. The minimum wage in Massachusetts is $11 per hour, which is higher than the federal minimum wage of US$7.25 per hour;
  2. The average work week in Massachusetts is 40 hours. An employee working higher than 40 hours is entitled to overtime pay of 1.5 times the regular hourly wage;
  3. Employers are required to maintain complete payroll records with the following information: i) employee’s name ii) occupation iii) amount paid and iv) hours worked. These records will be maintained for at least 3 years;
  4. Employees are allowed up to 40 hours of sick leave in 1 year. Employees who miss 3 days of work in a row must provide a doctor’s note;
  5. Employers may not discriminate against an employee/potential employee on grounds of gender, race, religion, nationality etc.