Corporations offer liability protection and other advantages, but you cannot simply decide to be a corporation without following your state’s legal requirements. In Massachusetts, your corporation is officially formed when you register your articles of incorporation with the Massachusetts Secretary of the Commonwealth’s corporations division. You can obtain articles of incorporation forms from the secretary’s website, or you can use an online legal documentation service to prepare and file your forms.
Naming Your Corporation
Before you incorporate, you must decide on a name for your corporation. The name must include a reference to your corporate status, such as the word “corporation” or the abbreviation “inc.” Your corporation cannot have the same name as another existing corporation in Massachusetts or a name that is deceptively similar to an existing corporation. You can search currently used names at the Secretary’s website before you decide on a name for your corporation, and you can reserve a name by filing a form and fee with the Secretary if you are not quite ready to incorporate but want to make sure no one else registers under the name you want.
Articles of Incorporation
Your articles of incorporation provide your corporation’s foundation, so they must contain certain basic information about the business. The articles must include information such as the name of your corporation, the number of shares your corporation is authorized to issue along with descriptions of the value and class for those shares, restrictions on transfers of shares, the date your corporation is effective, the name and street address of your corporation’s agent and the names of the corporate officers. You must file the articles, along with a filing fee, with the Secretary of the Commonwealth, and articles can be filed online, by fax, in person or by mail.
Bylaws and Stock
Corporations typically develop bylaws in addition to the articles of incorporation to govern the corporation’s operations. Bylaws typically address issues such as the responsibilities of corporate officers, the size of the board of directors, the frequency and requirements of shareholder meetings, and how the directors and officers make decisions. While bylaws do not have to be filed with the state, they must be kept at your corporation’s principal place of business. Your corporation must also issue stock to provide ownership and operating capital. Since corporate stock is considered a security, you must comply with federal and state securities laws when distributing stock. While these laws generally require corporations to register stock sales, many small corporate transactions qualify for exemptions to these rules. For example, certain stock offers to fewer than 25 people do not have to be registered.
Taxes and Business Licenses
Your business must obtain an employer identification number from the IRS. An EIN acts like your corporation’s Social Security number, tracking your corporation’s tax filings. You can obtain an EIN by applying at the IRS website or completing a request form. You must also register with the Massachusetts Department of Revenue as a new business taxpayer. Depending on your business, you may also need certain licenses to operate. For example, different licensing requirements apply to retailers than to real estate agents. You can check with the state or local government to determine what licenses or permits apply to your industry.