Benefits of a Corporation
A corporation offers its owners limited liability, which means that only the corporation’s assets can be used to pay the corporation’s financial obligations. In other words, the shareholders’ personal assets are not at risk. There may be other benefits to choosing a corporation for the structure of your business.
Requirements for Incorporating in Massachusetts
Preparing Your Articles of Organization
To form a corporation in Massachusetts, you must file articles of organization with the Secretary of State. You are required to use a form provided by the state or prepare articles with the same format as the state form. The corporation will legally exist when the articles are filed.
The articles of organization must include:
- Name of the corporation
- Corporate purpose
- Names and addresses of incorporators
- Street address of the initial corporate office
- Initial board of directors and officers, including president, secretary and treasurer
- Registered agent and registered office
- Stock structure
- Fiscal year-end of the corporation
- The purpose of the corporation
- Street address where corporate records will be kept
A corporation can have different types of stock, called classes or series. These types of stocks can have different advantages, for example one can offer voting rights while another may not.
Regarding the stock structure of your corporation, your articles of organization must also include the following information:
- The total number of shares of stock the corporation is authorized to issue
- Any restrictions on transfer of shares
- If there is more than one class of stock, the articles must provide a distinguishing designation for each class of stock. Before shares are issued, the articles must state the preferences, limitations and relative rights applicable to that class or series of shares.
Ready to form a corporation? GET STARTED NOW
Naming Your Corporation
Before filing articles of organization, you should make sure the corporate name you have chosen is available. You can check its availability online at the Secretary of State’s website, by calling the Secretary of State’s office.
You can reserve a name for 60 days by submitting a form to the Secretary of State. A 60-day extension is available.
The name of your company must meet the following requirements:
- It must include the words “corporation,” “incorporated,” “company” or “limited,” or an abbreviation for one of those words.
- Your corporation’s name cannot be the same as a reserved name, the name of any other entity lawfully conducting business in Massachusetts or a trademark or service mark registered in Massachusetts. The name also cannot be so similar to another entity’s name that the two might be mistaken for one another. You may use the same or a similar name if the other entity consents in writing.
An incorporator’s primary duty is to sign the articles of organization and file them with the Secretary of State. When specifying incorporators for your company, you must adhere to the following guidelines:
- There may be one or more incorporators.
- An incorporator may be a person or a business entity.
- Either before or after incorporation, the incorporators may meet to adopt bylaws and elect directors, a president, a treasurer and a secretary. Until corporate shares are issued, the incorporators can take any action that shareholders are allowed to take.
Specifying Directors and Officers
Corporate directors are responsible for managing the business and affairs of the corporation. Frequently, they delegate many of the day-to-day responsibilities to the corporation’s officers. The articles of organization or bylaws may state qualifications for directors.
When specifying your corporation’s directors and officers, you must adhere to the following requirements:
- The minimum number of directors is determined by the number of shareholders. For example, if there are three or more shareholders, there must be at least three directors, unless the articles of organization provide otherwise.
- Although state law requires a minimum number of directors, it does not set a maximum number of directors. The articles of organization or bylaws should specify the number of directors.
Specifying a Registered Agent and Registered Office
Every Massachusetts corporation must maintain a registered agent and a registered office. A registered agent is responsible for receiving legal documents addressed to the corporation.
The following requirements apply when specifying a registered agent:
- The articles of organization must list a registered office and a registered agent who is at that office. The registered office must be an actual street address in Massachusetts.
- A registered agent may be an individual or a corporation formed or qualified to do business in Massachusetts.
- The registered agent must consent in writing to act as agent.
Stating a Corporate Purpose
The purpose of every Massachusetts corporation is to engage in any lawful business. The articles of organization should state this, but they do not have to state any additional purpose.
Determining Incorporation Bylaws
Bylaws set forth the rules and procedures that will govern a corporation and may also include any provision for managing the corporation’s business and regulating its affairs.
Your corporation’s bylaws must meet the following requirements:
- Massachusetts corporations must have bylaws, but they are not filed with the Secretary of State.
- Bylaws must be consistent with the law and the articles of organization.
Costs of Incorporating in Massachusetts
The Massachusetts Secretary of State requires a fee when filing articles of organization or reserving a corporation name. Corporations are also required to pay state and federal income taxes.