Different Massachusetts business entities

Our Clients may choose a business structure from below to start their business in Massachusetts. The most commonly incorporated entities are the limited liability company (LLC) and C-Corporation (C-Corp). We enlist different types of business organizations, so you can choose the right entity for your business.

The Limited Liability Company (LLC)

Setup LLC in Massachusetts

  • An LLC can be setup with 1 director and 1 shareholder, who may need not be US nationals or residents. Furthermore, for a simple LLC, there is no requirement to deposit a minimum capital amount;
  • In US, LLCs may choose to be taxed either as a partnership (or disregarded entity); or a corporation. By default, an LLC will be taxed as a partnership i.e. corporate tax will not be payable and the income will flow through to the shareholders who will pay personal tax;
  • Best uses: Massachusetts limited liability companies are ideal for starting a small business in the US.

The C-Corporation (C-Corp)

  • A C-Corp is also incorporated with 1 director and 1 shareholder of any nationality/residency, with no minimum share capital requirement;
  • In US, income earnt by a C-Corp is taxed twice i.e. at the corporate level and thereafter, in the hands of the shareholders. A C-Corp cannot choose to be taxed as a partnership;
  • However, US Citizens and residents may choose to setup a S-Corp (a variant of C-Corp). This entity, while being a corporation can choose to be taxed as a partnership, after opting for Subchapter S status;
  • Best uses: Given the Massachusetts Corporation requirements, a C-Corp is generally recommended, when our Clients wish to list their company on the stock exchange to raise public capital.

Branch Office

  • Instead of registration of foreign Massachusetts LLC, foreign companies may choose to register branch offices. Like an LLC and C-Corp, a branch office must have a registered agent and an address in Massachusetts;
  • All business activities of a branch office must be approved by the parent company. However, a branch office may hire its staff, lease its own office and open its own bank account;
  • Lastly, the branch office is also required to pay annual franchise taxes;
  • Best uses: A branch office is recommended, only when our Clients wish to book their global income under 1 company’s name, rather than choosing a new company in Massachusetts.

Representative Office

  • Representative Offices are not legally recognized under Massachusetts business law. However, our Clients may choose to setup a branch office, which i) engages in only promotional activities, but ii) does not offer any income generating services/products;
  • Since there is no income generating activity, such a business entity will be legally tax exempt in Massachusetts and US;
  • Best uses: This structure is only recommended, when our Clients wish to perform promote their parent company in the US.

Business Trust

  • A business trust is useful for asset management and tax mitigation purposes;
  • The Massachusetts Business Trust (MBT) is set up for business purposes, and it can have its operations outside Massachusetts too;
  • An MBT is an arrangement whereby real estate and/or a business is handed to trustees in accordance with the trust deed. The trustees hold and manage the business on behalf of the beneficiaries;
  • According to the Massachusetts Corporate Tax Law, trading trusts are treated as a corporation, partnership, or a sole proprietorship;
  • Best uses: MBTs are the ideal business vehicles for investment, asset management, and tax planning.

Table of comparison between Massachusetts entities

 LLCC-CorpS-CorpBranch OfficeRep Office
How long to set the company up?1 week2 weeks2 weeks2 weeks2 weeks
How long to open company bank account?4 weeks4 weeks4 weeks5 weeks5 weeks
Minimum paid-up share capital?NoNoNoNoNo
Allowed to sign sales contracts with local Clients?YesYesYesYesNo
Allowed to invoice local Clients?YesYesYesYesNo
Massachusetts corporate tax payable?0%8%0%8%No
Massachusetts withholding tax payable?5%5%0%0%No
Federal corporate tax payable?0%35%0%0%No
Withholding tax rate payable?35%0%35%35%No
Corporate bank account?BNY MellonWells FargoBank of AmericaU.S. BankWells Fargo
Can rent office premises in Massachusetts?YesYesYesYesYes
Allowed to import raw materials?YesYesYesYesNo
Allows to export goods?YesYesYesYesNo
Can the entity hire expatriate staff in Massachusetts?YesYesYesYesYes
Do you visit Massachusetts for company incorporation?NoNoNoNoNo
Individual shareholders allowed?YesYesYesNoNo
Corporate shareholders allowed?YesYesNoYesYes
Corporate director(s) allowed?NoNoNoNoNo
Resident director required?NoNoYesNoNo
Resident agent required?YesYesYesYesYes
Resident shareholder required?NoNoYesNoNo
Minimum number of directors11111
Minimum number of shareholders111Parent CompanyParent Company
Public register of shareholders and directors?YesYesYesYesYes
Statutory audit required?NoNoNoNoNo
Annual tax return to be submitted?YesYesYesYesNo
Access to US double taxation treaties?YesYesYesYesNo
Estimate of engagement costsUS $US $US $US $US $
Total Massachusetts business setup costs in Yr. 18,7328,9328,9328,8438,843
Subsequent annual costs (incl. accounting and tax fee)4,5004,6004,6004,5004,500
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Contact us

For additional information on our business setup services in Massachusetts, please email us at email@healyconsultants.com. Alternatively please contact our in-house country expert, Ms. Grace Odhiambo, directly: