This content doesn’t contain and isn’t meant to provide legal, tax, or business advice.*
In addition to Massachusetts being a nexus of international trade and a major East Coast hub for the US tech industry, one of its main draws for entrepreneurs is its people.
The state consistently ranks as the most educated state in the country. It is home to more than 100 universities and colleges, including some of the top-rated schools in the world, such as Harvard, Tufts, MIT, Northeastern, Boston College, Amherst, Williams, and Wellesley—to name a few.
“Massachusetts is a strong state for any small business to establish itself, including women-owned businesses,” says Pamela Prince-Eason, president and CEO of the Women’s Business Enterprise National Council (WBENC).
According to The 2024 Wells Fargo Impact of Women-Owned Businesses report, the state is in the top 10 for supportive environments for women-owned businesses, offering mentorship and training programs, financial resources like grants and business tax credits, and networking opportunities.
In Massachusetts, your new business has the opportunity to grow alongside—and maybe even employ—some of the best minds in the country.
It’s an exciting and dynamic place to start a business, but the startup process can be complex. This step-by-step guide will take you through the key elements of starting a business in Massachusetts.
Start a business in Massachusetts
- Choose a business idea
- Create a business plan
- Name your business
- Choose a business structure
- Get an employer identification number
- Obtain business licenses and permits
- Examine business insurance options in Massachusetts
- Understand financial considerations
- Market your business
1. Choose a business idea
When it comes to starting a business, you must first have a great business idea. Are you going to sell something new that fills a gap in the market? Or, perhaps you’re going to improve on an existing product or service?
There are two key questions you should ask yourself:
Who is your customer?
Determine whether your business is business-to-consumer (B2C) or business-to-business (B2B). Identify your target customer, assessing who they are and what their needs are.
Decide if you will sell products online, through a brick-and-mortar storefront, or both. You should survey prospective customers, conduct market research, and research industry trends.
What is your projected profitability?
There are several variables that influence profit strategies, including price, distribution, and overhead costs. Figure out how much you need to sell in order to break even and then generate a healthy profit margin.
2. Create a business plan
Your next step is to draft a business plan, which acts as the master document you use to map how your business will run, how it will make money, and how you plan to grow. The process of writing a business plan is crucial to help you put pen to paper to craft your vision, and is vital if you’re planning on pitching your business to investors to raise capital.
To get a headstart on your business plan, you could use a template to organize your thoughts or review example business plans for inspiration.
Your plan should include:
- An executive summary
- A company description and mission statement
- A portfolio of products or services
- A summary of the company’s organizational and managerial structure
- Financial plans, including forecasted business income and business expenses
- A customer segmentation report
- Market research and target market analysis
- A comprehensive marketing plan
- An operations and logistics plan
Gabrielle “Gaby” King Morse, president and CEO of the Center for Women & Enterprise (CWE), a nonprofit organization devoted to helping women entrepreneurs grow their businesses in Massachusetts, offers this advice about business plans: Plan, adapt, and plan again.
“No business plan is perfect, and it’s true that reality will foil even the best of plans,” King Morse says. “Skimp on the planning, though, and you’re guaranteed to make mistakes that are more numerous and expensive.”
She adds that the plan helps make sure that you’re running your business, not the other way around: “Use reality to build resilience into your business.”
3. Name your business
An effective business name is creative and easy to remember. And most importantly, the name can grow with you and your business. When naming a new Massachusetts business, you must:
Check name availability
Your business name cannot be used by any other business in the state of Massachusetts. Search through Massachusetts’ business entities to see if any of your top choices for names are available for registration.
Include required terms
If you form an LLC or corporation (more on this in the next section), its status must be reflected in its name. That typically includes identifiers like “limited liability company,” “limited company,” “corporation,” “Co.,” “LLC,” “LC,” “L.L.C.,” or “L.C.”
Be separate from government entities
Your name cannot be a term that could be reasonably confused with a government entity. For example, you can’t name your company “Massachusetts Police Department LLC” or “CIA LLC.” Additionally, you cannot name your business something that could reasonably be confused with another existing, registered business within the state or that would wrongly indicate you operate in a regulated industry, such as health care, law, financial services, or higher education.
Consider a DBA
A DBA, or “doing business as” name allows you to operate under a different name than that of your legal entity. In Massachusetts, this process is known as getting a business certificate. City or town governments are the entities that approve business certificates, not the state itself. In Boston, business certificates cost $65, but fees vary by city.
Acquire a website domain and social media handles
Check if your top picks for a website name are available—register and buy one or more available domains, as necessary. Repeat this process for social media handles.
4. Choose a business structure
Among the most popular business structures for up-and-coming entrepreneurs are sole proprietorships, limited liability companies, and corporations. More than one option may fit your business, but the distinctions can help you identify the best fit.
Here’s a breakdown of each business structure:
Sole proprietorships
A sole proprietorship is a structure in which there is no legal distinction between you and your business. You receive all of the money from your business and pay taxes through your own personal tax return. For 2023, Massachusetts had an individual tax rate of 5% on all earned or unearned income, though certain capital gains can be taxed at 8.5%.
A sole proprietorship is a flexible, simple way to start a business, especially if you have little risk, low overhead, and no employees. Plus, it’s easy to transition into an LLC or corporation in the future.
Limited liability company (LLC)
Limited liability companies, or LLCs, are an excellent option for small business owners because they’re straightforward to apply for and, unlike sole proprietorships, include liability protection.
Your personal assets are insulated in the event that your business is sued or takes on debt it cannot repay. LLCs are owned by members and are considered pass-through entities, meaning your business income will flow to the members to then be taxed at the Massachusetts personal rate of 5%.
To register as an LLC in Massachusetts, you have to file an LLC Certificate of Organization through the Secretary of the Commonwealth of Massachusetts. This costs $500.
Corporations
A C corporation is a formal business structure that is completely independent from its founding members. Corporations provide the most liability protection for founders when compared to LLCs or sole proprietorships, and owners are allowed to sell shares in exchange for outside investment. This makes them a great option for companies that need to raise significant cash to get off the ground and grow.
A corporation pays taxes on its profits as a business. In Massachusetts, this is called the corporate excise tax. Though rates can differ across industries, as a general business, plan to pay 8% of your taxable net income. From there, your pay as a shareholder would also be taxed personally—however, you can file Form 2553 with the IRS to form an S corporation, which would eliminate double taxation.
To incorporate in Massachusetts, you must file Articles of Organization with the Secretary of the Commonwealth of Massachusetts. This costs $275 for access of up to 275,000 shares; an additional $100 per 100,000 extra shares.
5. Get an employer identification number
For most business options, you have to apply for a federal employer identification number (EIN). An EIN allows your business to file permits and licenses, hire employees, open a business bank account, and pay federal and state taxes.
You can apply for an EIN number for free with the IRS online. If you’re a sole proprietor and would prefer to use your own Social Security number to report your tax payments, however, an EIN is not required for your business.
6. Obtain business licenses and permits
Massachusetts does not have a general business license but, depending on your industry, you may have to obtain specific business licenses and permits. Industries that require licenses include retail, transportation, health care, and real estate. Massachusetts maintains a database of the various permits and licenses that may be necessary for your business.
7. Examine business insurance options in Massachusetts
The state of Massachusetts requires LLCs and corporations to have two types of insurance:
Companies with employees are federally mandated to have unemployment insurance. This is a fund used to pay employees who have lost their job through no fault of their own; you can register through the Department of Unemployment Assistance (DUA).
You may also want to prepare accordingly for disasters or emergencies by purchasing a business insurance policy that aligns with your needs.
Other common business insurance policies include:
- Professional liability insurance. Professional liability insurance protects your business in the case that a customer or client is harmed due to a professional error you’ve made in your business.
- General liability insurance. General liability insurance, sometimes called “slip-and-fall insurance,” protects you in the case that a customer or client is injured in your place of business.
- Commercial property insurance. Commercial property insurance protects you in the case that a natural disaster, such as a flood or a hurricane, damages your place of business.
8. Understand financial considerations
Your business plan is the go-to document to assess how much money you’re going to need to get your company up and running. Here are some different ways to raise money for your new Massachusetts business:
- Bootstrapping. Bootstrapping is when you save up your own money to fund your business.
- Funding from friends and family. Consider raising money for your startup through loans or investments from friends and family. Be mindful of developing a plan of how to repay this money to help preserve your personal relationships.
- Angel investors and venture capital. An angel investor is an individual who invests a sum of money into your business, while a venture capital firm is a group of professional investors. Massachusetts is home to a number of angel investors and venture capitalists.
9. Market your business
Marketing is the process of reaching out to, engaging with, and converting customers. Start by building a brand—creating logos, slogans, color schemes, fonts, and marketing language—and eventually developing a detailed marketing strategy to connect to your target audience. Key steps to conquer marketing include:
Conducting market research
Marketing research is when you determine who your ideal customer is, based on demographics like age, location, or gender. Once you decide your target customer, you can explore avenues to reach them.
Determine a content strategy
Create a roadmap of how you’re going to approach your social media and website campaigns for your business. One size doesn’t fit every business, so think through the ways you can connect your communication strengths as a business owner with your target market.
Analyze conversion
Set aside time each month to analyze which of your marketing strategies are converting casual browsers into customers. Those strategies may include videos, guides, or email campaigns. Knowing how many people are converting from different sources can provide insight to help you invest more into sales channels that impact your bottom line.
When navigating the many elements of starting a business in Massachusetts, tapping into nonprofit organizations and their available resources can help. For example, the Center for Women & Enterprise provides women entrepreneurs with one-on-one business consulting with experts that give advice on marketing, business plan development, and business-related legal and tax issues.
“We support women-owned businesses across Massachusetts and New England to launch, grow, connect to procurement opportunities, and develop a strong and supportive community,” says King Morse.
Additional advice King Morse shares with entrepreneurs to set them up for success:
- Lean into your community for feedback and support. “This is not just your customer/client base, but also your fellow business owners, local technical assistance providers, city/town officials and community organizations,” she says.
- Eat your peas. “Just like we tell our kids: You have to eat your veggies to get your dessert. You may hate certain elements of owning your business, such as your financial statements, but your business won’t thrive if you ignore what you don’t like,” she explains.
*This post is for information only. You are responsible for reviewing and using this information appropriately. This content doesn’t contain and isn’t meant to provide legal, tax, or business advice. Requirements are updated frequently and you should make sure to do your own research and reach out to professional legal, tax, and business advisers, as needed. Businesses outside of Massachusetts will have different steps and requirements. To sell products using the Shopify platform, you must comply with the laws of the jurisdiction of your business and your customers, the Shopify Terms of Service, the Shopify Acceptable Use Policy, and any other applicable policies.
Starting a business in Massachusetts FAQ
How much is a business license in Massachusetts?
Massachusetts does not require a general business license.
Does the state of Massachusetts require a business license?
Business licenses and permits are only required in Massachusetts for specific industries such as health care, the building trades, and commercial transportation.
Do I need a business license to sell online in Massachusetts?
No, but depending on what you sell online, you may need to get a seller’s permit and charge sales tax. Massachusetts taxes business transactions of physical goods at a sales tax rate of 6.25%, with exceptions for clothing, certain snacks and foods, some prescription and non-prescription medicines, and select digital goods.
