Start a Business in Massachusetts Today

Step 1: Create a business plan for your Massachusetts company

The first step to starting any business is crafting a solid business plan. For Massachusetts, you’ll want to look into zoning laws and permits before you get started. Places like Boston and the surrounding suburbs have a high population, so there may be rather strict zoning laws in some areas.

You don’t want to launch your business in a location in which it can’t legally operate.

What to Include in a Business Plan

Beyond that, a business plan usually takes a look at:

• Your overall business idea: Successful businesses have a market need, meaning they solve a problem that needs to be fixed. What type of business will you start?
• Your overall objectives: What is your mission statement, and what do you plan to do? Company culture is just as influential as the product itself. 
• A market analysis: Who is your target market, and what do they need?
• A competitive analysis: How can you be better than the competition?
• A pricing scheme: You’ll need to make enough revenue to operate at a profit, but higher price points turn away consumers.
• Finances: How much money do you need for startup costs and ongoing operations? Check for tax breaks and local grants. Make a plan for outside funding if necessary. 

Need help creating a business plan for your Massachusetts startup? We put together a comprehensive library of articles and guides on business planning.

Step 2: Choose a business structure

To pay taxes to Massachusetts and the IRS, small business owners need to form a legal business entity. To avoid the double taxation of a corporation and take advantage of the state’s flat personal income tax rate, small business owners may wish to form an LLC in Massachusetts or sole proprietorship. 

Sole Proprietorship in Massachusetts

Sole proprietors generally have the lowest cost and least amount of paperwork. They don’t necessarily need to register for a federal employer identification number (EIN) and can use their social security number as their tax id, but that does leave them open to identity theft. 

Massachusetts Limited Liability Company (LLC)

On the other hand, LLCs require annual reports, and business owners must file articles of organization (also known as a certificate of an organization) with the Secretary of the Commonwealth.

It may also be wise to have an operating agreement, and you do have to pay a filing fee. Still, it’s a small price when you consider that this business structure affords you liability protection in the event of a lawsuit or bankruptcy. This type of personal asset protection gives new business owners tremendous peace of mind.

Massachusetts LLCs also require a registered agent with a business address. However, the process is still speedier than forming a corporation, and you can do it all online.

Step 3: Determine startup costs for your Massachusetts business

Business costs are overwhelmingly dependent on your industry.

A freelance graphic designer can get started for little more than a computer and tablet price, but a retail store needs to cover rent, inventory, and wages for new hires.

Tips for Calculating Business Costs

To get a clear picture, add up your fixed expenses (like insurance premiums, wages, and rent) with variable costs (like business taxes, utilities, and inventory costs). Also, make sure to include one-time fees such as equipment purchases and keep a six-month cushion of operating expenses in case of an emergency.

Once you understand how much your business will cost, you can explore your funding options through the Small Business Administration (SBA). Their website has information on loans, grants, and investment capital. The Attorney General’s Office also has grant opportunities.

Curious about “how much it costs to start a business in Massachusetts?” Look no further. This helpful guide will walk you through business cost calculation and more.

Step 4: Name your Massachusetts business

A business doesn’t have to reflect the name of your legal business entity. Sometimes sole proprietors and single-member LLCs use a trading name rather than their own.

In Massachusetts, any person, corporation, or general partnership doing business under a name that isn’t their own must file for doing business as (DBA) certificate with the county or city clerk. 

Business Naming Considerations

Beyond that, a name is significant because it’s how your customers will know you. It should be simple and catchy enough to work with social media and word of mouth.

It also has to be unique enough that you won’t have any problems with domain registration. You can search online to make sure your name isn’t already taken. The last thing you want is a lawsuit over naming rights.

Step 5: Register your business in Massachusetts

When you’re ready to register your business, it’s time to get the rest of the paperwork in order.

This includes obtaining an EIN, opening a business bank account (to keep your personal and business expenses separate), obtaining the proper insurance, and getting the required permits and licensing. 

Getting these factors in order will go a long way when it comes to accounting and tax filing.

Insurance

Most businesses need general liability insurance. Other Massachusetts business insurance, like commercial auto policies, depends on the industry, so consult with a qualified insurance agent.

If you plan to hire employees, the government mandates disability and workers’ compensations, among others. 

Business Licenses and Permits

As stated, Massachusetts doesn’t have a general business license requirement. Instead, it depends on the industry. For example, those collecting sales tax will need a special permit.

Need more information about licenses and permits in Massachusetts? Read all about licenses for different industries and how to apply for them in our Massachusetts business licenses guide.

Step 6: Market your business

Marketing is the key to bringing new customers into your business. As of late, marketing has gone increasingly digital.

Get on social media

You may want to create a cross-platform social media strategy, including major platforms like Twitter, Facebook, Instagram, and LinkedIn.

Go local

You may also want to go local, registering for Google My Business, Yelp, local business directories, bulletins, and groups on LinkedIn and Facebook.

Try partnering with a like-minded local business owner for a significant marketing boost, and make sure your website is optimized for search engines.

Consider hiring an agency

If you’re looking for assistance with your business’s marketing, consider hiring an outside agency. Searching for a list of top local agencies may help.

Benefits of opening a business in Massachusetts

Rate of Massachusetts State Taxes

One of the significant benefits of opening a business in Massachusetts is the rate of state taxes. Though all companies have to pay federal tax on their income, Massachusetts has a relatively low personal income tax rate for the sheer population density.

This matters for business owners that launch a limited liability company (LLC) or sole proprietorship, where business income is passed on to your return.

The state has a flat 5.05% personal income tax, whereas California has a 13.3% top rate, and New York has an 8.82% top rate.

Massachusetts is a leader in the marine trade

Massachusetts also rests right on the Atlantic Ocean, making it a leader in the marine trade.

With its numerous universities, some parts of the state also boast a unique opportunity for businesses targeting an 18 to 25-year-old demographic. 

Examples of good businesses to start in Massachusetts

Massachusetts’s large population makes it a great place to start companies that service drivers, diners, and other businesses.

Profitable businesses began in Massachusetts include food trucks, marketing agencies, vending machine companies, consulting firms, coffee shops, bed & breakfasts, and car repair shops.

Looking for more ideas? Check out our list of the best businesses to start in Massachusetts.

Bottom Line

Massachusetts population density helps businesses thrive, even if they’re in niche industries.

This makes it one of the best places to start a business in the U.S., especially if it’s a high-earning business that can benefit from the flat personal tax rates.

The state can also guide you through the process, and almost all the information you need can be found on Mass.gov or MassTaxConnect.

Ready to turn your business idea into a reality? Reach out to us today. From formation to compliance, we’re here to help you start, run, and grow your business in Massachusetts.

Top Massachusetts Cities to Form Businesses

Boston: State capital with a strong presence in biotech, IT, and financial services. Home to world-renowned institutions like Harvard University and MIT. Vibrant startup ecosystem supported by a robust venture capital network.

Cambridge: Globally recognized hub for biotechnology and information technology. Dense concentration of startups and innovation, especially in Kendall Square. Benefits from proximity to MIT and Harvard.

Worcester: Emerging biotech hub with more affordable real estate compared to Boston and Cambridge. Ongoing revitalization efforts enhancing its business appeal. Growing presence in manufacturing and distribution sectors.

Springfield: Strategic location for logistics and manufacturing due to major interstate highways. Growing sectors include healthcare, education, and financial services. Increasingly attractive for business due to economic development efforts.

Waltham: Known for its strong technology focus, especially in software and analytics. Part of the Route 128 technology corridor, benefiting from proximity to Boston. Historical association with the watch industry, now a modern tech hub.

Each city offers unique advantages based on their industrial strengths, educational resources, and geographic locations, making them suitable for various types of business ventures in Massachusetts.