|
|
|
STARTING AND OPERATING A BUSINESS IN MASSACHUSETTS Copyright © 2009, Michael D. Jenkins CHAPTER 18
CONTENTS OF THIS CHAPTER:
I. INTRODUCTION I. INTRODUCTION Massachusetts has a fairly typical tax and legal structure under which businesses must operate. However, doing business in the state will require you to deal with a considerable number of state business regulations, and taxes are generally somewhat high, for most types of businesses. In the past, the state saw a considerable exodus of businesses to lower-taxed jurisdictions like New Hampshire, but this has changed dramatically in recent years, as the state has:
As a result of these changes, a 2004 study by the Massachusetts Taxpayers Foundation showed that the "Taxachusetts" label no longer applies to the state -- in 2002, the state tax burden was only $96 per $1,000 of residents' income, which placed Massachusetts at 40th among the 50 states. (New York had the highest state taxes, at $131 per $1,000 of income.) On the other hand, all but very small employers are now burdened with heavy mandatory health insurance costs, by being forced to pay for health insurance for their employees, under new (2006) universal health care legislation. The Massachusetts General Court (legislature), in April, 2006, enacted an innovative but controversial new universal health care insurance law that, in effect, treats health care insurance much like auto insurance, requiring all Massachusetts residents 18 or older to obtain such coverage by July 1, 2007 (later extended to December 31, 2007), or face loss of their state personal exemption for the 2007 tax year, or a large fine in 2008 or later years. Residents may choose from a wide range of private insurance policies at varying rates, at prices ranging from large sums per month to free, for low-income individuals, whose insurance premium costs will be largely or entirely subsidized by the state (i.e., by taxpayers). Employers with 11 or more full-time employees or the equivalent must:
To calculate the number of equivalent full-time employees, an employer must compute the total number of payroll hours during a year and divide that number by 2,000. The Massachusetts Department of Revenue provides a Section 125 Employer Handbook and sample forms to help employers establish a Section 125 Plan, often referred to as a "flexible spending plan" or "flex plan" under federal Internal Revenue Code Section 125. For more on such "flex plans," see Chapter 12, Section 12.2 of this Massachusetts edition. Residents 18 or older must be able to show that they had health insurance by December 31, 2007 by filing Schedule HC, Health Care Information, with their Massachusetts income tax returns. Those who failed to do so are subject to a penalty of $219 per individual initially, which can increase substantially beyond that amount in the case of continued noncompliance. In 2009, the penalty for not having obtained insurance (for individuals whose income exceeds 150% of the federal poverty level) varies, based on age and income, from $17 per month to as much as $89 per month. Like most states, Massachusetts imposes an income tax on corporations, a sales and use tax, various excise taxes, with property taxes imposed at the local level. The state has also adopted a limited liability company (LLC) law, and a limited liability partnership (LLP) law, so that businesses operating in Massachusetts in LLC or LLP form may obtain the advantages of limited liability, without incorporating or becoming subject to corporate taxation, generally. Besides those usual forms, the state of Massachusetts also has long offered another form of business entity, the Massachusetts Business Trust, as yet another way to organize your business. Recent (2008) legislation has abolished the separate tax classification of corporate trusts as of 2009, and there will no longer be any separate corporate trust tax returns. Business trusts will now be treated either as corporations, partnerships, or disregarded entities, depending upon the federal tax treatment elected by the trust entity. UPDATE NOTE: Until recently, the state's economy was fairly robust, in terms of the level of unemployment, average per capita income levels, and other economic measures. However, while the state's unemployment rate was only 4.7% in March, 2008, it has risen to 7.8% in March, 2009, but was still well below the national unemployment rate of 8.5%. Thus, the economy of Massachusetts is still somewhat stronger than most other states. However, on the other hand, Massachusetts has a relatively high cost of living, compared to national averages, including some of the highest health insurance costs in the nation. To view the latest federal Bureau of Labor Statistics unemployment rate data for Massachusetts or any other state, visit the BLS website. The state offers many advantages for businesses, including having one of the most highly educated work forces in the nation. Massachusetts has the highest concentration of colleges and universities in the nation, which have produced half of all the Nobel Prize winners in the United States. II. LEGAL ENTITIES -- FILING FEES AND REPORTING REQUIREMENTS. (a) In General. A business that operates in Massachusetts can operate as a sole proprietorship, a general or limited partnership, a corporation, or a limited liability company. In addition, like the federal tax law, the state income tax law also recognizes S corporations, for income tax purposes, and generally allows the income or losses of an S corporation to "flow through" and be taxed or deducted at the shareholder level, rather than taxing the corporation itself as an entity (except for larger S corporations). Massachusetts also provides for limited liability partnerships, in which no partner is liable for debts of the partnership, in general, as in the case of a corporation or LLC, but with fewer legal formalities than are required for either a corporation or an LLC. Each of the above entities is discussed below, along with the basic requirements for forming such an entity and any general ongoing (non-tax) reporting requirements that are applicable to it. The tax treatment of each form of legal entity is discussed in Section IV below. Massachusetts has long provided for another kind of unusual business entity, the Massachusetts Business Trust. However, that entity is usually suitable only for certain types of large, specialized business entities, such as real estate investment trusts (REITs), and thus an analysis of the Massachusetts Business Trust requirements and uses is outside the scope of this small business publication. (b) Sole Proprietorships. In general, sole proprietorships in Massachusetts can be established without any formalities. However, as discussed in Section IV(b), it will generally be necessary to obtain one or more local business licenses from cities or counties in which you operate and, in some cases, state licenses, as well. No separate tax form filing is required, generally, for a sole proprietorship, under the Massachusetts income tax law. Instead, as with the Schedule C on your federal Form 1040, you simply report the net income or loss from your sole proprietorship on your state personal income tax return. See Section IV(c) for information on the Massachusetts income tax and filing requirements for individuals. Operating as a sole proprietor in Massachusetts is generally much simpler than as any other kind of business legal entity. As a sole proprietor, if you have no employees, you are not required to pay any unemployment taxes, withhold any federal or state income tax from wages, or obtain workers' compensation coverage for yourself. However, if you will be making sales that are subject to sales tax, you will need to register with the Massachusetts Department of Revenue and obtain a sales tax permit, as discussed in Section IV(d). Also, if you operate under a fictitious or assumed business name, you will need to register the assumed name with the city or town clerk's office, as discussed in Section IV(g). (c) Partnerships. The Massachusetts partnership laws allow creation of either a general partnership, in which all partners are liable for the debts of the business, or a limited partnership, in which only the general partners are liable for debts, while the liability of limited partners is limited to the amount they have invested, in general. State law also allows for the creation of a limited liability partnership, in which no partner has personal liability (subject to certain exceptions). Partnerships, as entities, are not subject to state income tax in Massachusetts. Instead, the income or losses of the partnership, as allocated among the partners, must be reported on the personal income tax returns of the individual partners (or on the corporate tax returns of any corporate partners). Partnerships are required to file an annual tax information return with the state. For details on Massachusetts partnership tax return filing requirements, see Section IV(c). A partnership agreement, for any type of partnership, should spell out in considerable detail such matters as the following:
As a rule, general partnerships in Massachusetts can be formed with no formalities, although it is highly advisable to have a written partnership agreement. However, as discussed in Section IV(b), it will generally be necessary to obtain one or more local business licenses from cities or counties in which you operate and, in some cases, state licenses, for any type of partnership, including general or limited partnerships, or limited liability partnerships. A limited partnership, in which there is at least one general partner (who is liable for partnership debts) and at least one limited partner (who is not liable for partnership debts), may also be formed under Massachusetts law. Unlike a general partnership, a limited partnership must generally have a written partnership agreement, and must file a certificate of limited partnership with the Secretary of the Commonwealth and pay a filing fee of $200, rather than the $150 fee specified by law in MGLA Sec. 109:61. A foreign limited partnership must register with the Secretary of the Commonwealth before it may conduct business in Massachusetts, and must pay a $200 registration fee. Limited partnerships are also required to file annual reports and pay a filing fee of $500 ($450 if filing electronically). For information on limited partnership filing requirements, see the contact information for the Massachusetts Secretary of the Commonwealth, listed in Section VI(a). LIMITED LIABILITY PARTNERSHIPS Limited liability partnerships (LLP's) are a relatively new form of partnership permitted under the laws of Massachusetts. Like an LLC, an LLP provides limited liability for its owners, while retaining the tax advantages of a partnership for federal and Massachusetts state income tax purposes. However, unlike an LLC, an LLP typically operates like a regular partnership and is not required to file articles of organization. Partners in a general partnership can obtain limited liability by simply registering the partnership with the state as an LLP. However, a partner in an LLP is not relieved of liability that arises from his or her own malpractice, negligence, wrongful acts, errors, or omissions. LLP's are generally adopted as a legal entity by professional partnerships. In Massachusetts, a professional LLP is generally required to carry a liability insurance policy in amounts specified for each profession by the appropriate state licensing board. To form an LLP in Massachusetts, you must register with the Secretary of the Commonwealth and pay a filing fee of $500. Foreign LLP's, those created under the laws of another state, must also register with the Secretary of the Commonwealth and pay a filing fee of $500. The Massachusetts LLP law protects a partner in an LLP from all types of liabilities of the partnership, such as contract obligations and trade debts, with the only exception being liability that arises out of the partner's own malpractice or other misconduct. However, the liability of a partner in a professional LLP is no less than that of a shareholder of a professional corporation. Every LLP doing business in Massachusetts, including both domestic and foreign LLP's, must file an annual report and pay an annual filing fee of $500. For more information on LLP registration and reporting requirements, see the contact information for the offices of the Secretary of the Commonwealth, listed in Section VI(a). Note that one potential drawback of LLP's, if you will do business in other states besides Massachusetts, is that some states, like California and New York, only recognize certain types of professional partnerships as LLP's. If yours is not a professional partnership, such other states may simply treat your LLP like an ordinary general partnership, with no limitation of liability. (d) Corporations. To form a corporation in Massachusetts, you must file articles of organization with the Secretary of the Commonwealth and pay a tax equal of $275 if no more than 275,000 shares of stock are authorized. If more than 275,000 shares, a fee of $100 applies, for each additional 100,000 shares that are authorized. A foreign corporation (one formed under the laws of another state or a foreign country), must obtain a certificate of authority before it may legally conduct business in Massachusetts, by filing an application for a certificate of authority and paying a filing fee of $400 (or $375 if filing by fax). For more information on filing articles of organization or applying for a certificate of authority to do business in Massachusetts, see the contact information for the offices of the Secretary of the Commonwealth, listed in Section VI(a). Once a corporation is formed or a foreign corporation has registered for a certificate of authority, it will be required to file annual reports and pay a filing fee of $125 ($100 if filing electronically) to the Secretary of the Commonwealth each year. Annual reports are due 2 1/2 months after the fiscal year-end. Failure to file this report on a timely basis will result in an additional fee and could result in suspension or revocation of your corporation's charter. In addition to paying federal income taxes on its income, a corporation that does business in Massachusetts must also file corporate excise (income and capital values) tax returns with the state. See Section IV(c) for a discussion of state corporate income tax rates and tax return filing requirements in Massachusetts. For tax forms and more information on corporate income taxes in Massachusetts, see the contact information for the offices of the Department of Revenue, listed in Section VI(a). (e) S Corporations. An S corporation is simply a regular corporation that has elected, for federal or state income tax purposes, or for both, to be taxed somewhat like a partnership, with its income, losses and tax credits flowing through to its owners, who report such income, losses, or credits on their individual tax returns. Massachusetts recognizes S corporations for income tax purposes, and generally treats them in a manner similar to the federal tax treatment. However, larger S corporations, with total receipts of $6 million or more, are subject to the state corporate excise tax, albeit at reduced tax rates. All corporations, including S corporations, are subject to the corporate excise tax on capital and must pay at least the annual $456 minimum corporate excise tax. (f) Limited Liability Companies. Massachusetts, like every other state in the U.S., has adopted a limited liability company (LLC) law. Thus, in addition to the traditional choices of sole proprietorship, partnership, or corporation, a business that operates in Massachusetts may also choose to operate in the form of an LLC. In most states, including Massachusetts, LLC's are very attractive entities for many small businesses, in that they offer the same protection as a corporation from creditors for debts of the business, while offering much of the flexibility plus the flow-through tax treatment of a partnership for federal and state income tax purposes. See Section IV(c) for a discussion of the income tax treatment of LLC's under Massachusetts tax laws. To form an LLC under the laws of Massachusetts, one or more persons must file a certificate of organization with the Secretary of the Commonwealth, which must be accompanied by a filing fee of $500. Until fairly recently Massachusetts law did not allow the formation of domestic 1-member LLC's, but this rule has finally been changed, to allow formation of 1-member LLC's on and after January 1, 2003. Massachusetts had previously announced that, for tax purposes, it would treat a foreign 1-member LLC the same as it is treated for federal tax purposes (as a sole proprietorship, in most cases, such as where the LLC is treated as a "disregarded entity" under the federal tax law). The same treatment now applies to 1-member domestic LLC's where the LLC is disregarded for federal tax purposes. CAUTION: Foreign LLC's, those formed under the laws of another state, must obtain a certificate of authority to do business in Massachusetts, by filing an application for a certificate of authority with the Secretary of the Commonwealth and paying a filing fee of $500. To obtain a certificate of authority, a foreign LLC must submit a certificate of good standing and a certificate of existence from the state in which it is domiciled. In addition to initial filing fees, an LLC formed in Massachusetts must subsequently file annual reports and pay an annual report filing fee of $500 with each such annual report. A foreign LLC is also required to file an annual report and pay the applicable filing fee of $500. Massachusetts law permits the formation of professional LLC's, but requires any such LLC to obtain a certain minimum amount of professional liability (malpractice) insurance, as required by the applicable state governing board for the profession in which the members of the LLC are engaged. For more information on filing articles of organization for an LLC, see the contact information for the offices of the Secretary of the Commonwealth, listed in Section VI(a). (a) In General. When acquiring an existing business, there are a number of state legal and tax issues you or, preferably, your business attorney, should attend to before closing the purchase. These include matters such as doing a title search for any real property that is being acquired, checking for any recorded security interests on personal property items, and thoroughly researching county, state, and federal records for any judgment liens, tax liens, or other liens, before property is acquired. You will also benefit from consulting a tax advisor before the agreement of sale is negotiated, in order to seek a structuring of the agreement so that the purchase price is allocated among the assets in a way that favors you. You may be able to obtain considerable tax savings if the purchase price is allocated in a way that gives you the best possible tax results under federal and state income tax laws, and other state tax laws, such as sales/use tax or property tax laws. Depending upon the state (or states) in which the seller's assets are located, you may also have to comply with state bulk sale or bulk transfer laws. You should also obtain tax releases from various state taxing agencies, as discussed below. (b) Bulk Sale Laws. Typical bulk sale laws require either publication of legal notices to all creditors in advance of the sale and recording of such notices in some cases, or maintenance of detailed lists of the property to be transferred, for inspection by the public. Massachusetts is one of the many states that has repealed its bulk sale laws, so you no longer have to be concerned with this requirement when buying a business in Massachusetts. (c) Tax Releases. When you acquire an existing business, you will want to make sure that you do not unwittingly become liable for any unpaid taxes owed by the seller. Typically, to protect yourself, you will need to receive a tax release or releases from various state taxing agencies, for such taxes as sales and use tax, income tax withholding, and state unemployment taxes, in each state in which the seller does business. If you fail to obtain such a release or written statement from the tax agency that the seller is not delinquent on any tax payments, you will be held responsible for such tax if it is not withheld from the purchase price proceeds and paid to the state at the time the sale of the business transpires. Massachusetts law includes such a requirement and if a purchaser submits a written request to the Department of Revenue for a tax clearance, the Department is required to respond within 90 days, either specifying the amount of tax to be withheld from the purchase price or stating that no tax is due. You should also request a certificate of good standing from the Department of Revenue regarding the seller's liability for any unpaid state income, sales, or employee withholding taxes that might be owed. Since August 11, 2004, the state Department of Revenue has established a new certificate of good standing application on the Internet. Taxpayers can use this site to apply for and receive a certificate of good standing in only three days. Tax clearance certificates are no longer issued, as such. See the link to this website in Section VI(c) of this chapter. In Massachusetts, there is no specific procedure for an unemployment tax release, but you should insist that the seller demonstrate that all such taxes have been paid on a timely basis and have the seller make a request in writing to the Division of Unemployment Assistance for a statement of the seller's unemployment tax liability, if any. (d) Unemployment Tax Rating of Seller. In addition to obtaining tax releases, you may find it advantageous to succeed to the seller's unemployment tax experience rating, if the seller has a tax rate lower than you would otherwise obtain as a new business. To obtain the seller's favorable experience rating as a successor employer, you formerly needed to apply on a timely basis to the Division of Unemployment Assistance, part of the Executive Office of Labor and Workforce Development, within 120 days after the business purchase, requesting that you be treated as a successor employer. For transfers occurring in 2006 and thereafter, a buyer will automatically be treated as a successor employer in most cases if acquiring all or substantially all of the assets of the selling business, but both parties must give notice of the transfer to the Executive Office of Labor and Workforce Development within 120 days after the transaction. However, the buyer may be barred from taking over a seller's positive reserve account balance if the seller has not filed all required reports and paid all unemployment taxes it owes. Note that under recent "SUTA dumping" legislation, the state can now require a company that acquires the assets of another business (one with a high unemployment tax rate, usually) to succeed to the seller's experience rating, where there is significant common ownership of the two businesses. This prevents a company with a bad experience rating from shedding that rating by simply selling its business to a newly-formed company that would otherwise be able to obtain a "new employer" tax rate by doing such a sham transaction. PLANNING POINT: EXAMPLE: IV. MASSACHUSETTS TAXES AND OTHER GENERAL REQUIREMENTS. (a) In General.
Massachusetts has a very complex tax system for taxing both
individuals and corporations, and tax rates in the state are
generally very high, although the sales tax rate of 5% is
relatively low, and there are no local sales taxes, except
on a few items such as hotel/motel room rentals. The Department
of Revenue (DOR) web site contains a number of publications
that explain various state tax requirements and contains a
great deal of tax information, but due to frequent changes
in Massachusetts tax laws and regulations, plus the extreme
complexity of many of the state's tax laws, a significant
amount of the information is out of date and cannot safely
be relied upon.
For example, the DOR's online Guide To Massachusetts
Tax and Employer Obligations continued to state in
2006 (but corrected in the 2007 version) that the Massachusetts
LLC law required that an LLC "must have two or more members at
the time of formation and at all times thereafter," when in fact
the law was amended as of January 1, 2003 [Mass. General Laws,
Chapter 156C:2, paragraph (b)(5)] to allow single-member LLC's to
be formed. Accordingly, you may do better to check with your tax
advisor or by calling someone at the DOR if you have a state tax
question, rather than attempting to sort through the often confusing
or partly outdated mass of information provided on the DOR web site.
And relying on private tax publications may not be much help,
either. We also have noted earlier in this chapter that the current
editions of both of the two major (private) all-states tax guide
services STILL state, incorrectly, that Massachusetts doesn't allow
single-member LLC's and that it treats LLC's as corporations for tax
purposes.
All but very small businesses are now required to file and pay
most Massachusetts state business taxes electronically, using
the Department of Revenue's WebFile site for filing returns.
This requirement applies to all businesses with combined annual
withholding tax, sales and use tax, sales tax on meals, sales
tax on telecommunications services, and room occupancy tax
liabilities of $10,000 or more.
For state tax forms and tax information, see the contact
information for the Massachusetts Department of Revenue
in Section VI(a).
(b) State and Local Licensing.
Nearly any business, operated anywhere in the United States, will
have to have at least one government license of some kind. In
most cases, this will be a local license, issued by your city or
county. Before you open your business, contact your local city
or county hall and find out if your particular business needs
one or more local licenses. Most kinds of local business
licenses are granted upon payment of a fee, with no further
requirements, except possibly for annual or other periodic
renewal fees.
However, if you are engaging in any kind of food business,
you will usually need to also obtain a health department
permit and show that you are in compliance with health
department food-handling requirements. In addition, be
sure to check with an attorney or local government zoning
or planning department officials to determine if your
business will be in compliance with all local zoning and
planning restrictions. If you own or rent any type of
facility, you will generally need fire department permits,
showing that you meet fire safety codes and any construction
or improvements to an existing structure will usually
require a building permit. If you intend to simply operate
your business from your home, you may be in violation of
local zoning requirements, but this is less likely to be
a concern if you don't have clients, customers, suppliers,
or employees coming to your house on business, on a regular
basis.
State governments have traditionally required
special licenses for many kinds of professionals, such
as for physicians, dentists, lawyers, and accountants. To
further protect consumers, Massachusetts has expanded the
list of occupations that must be licensed by the state to
include many other occupations. Most state licenses not
only require payment of fees, but are only issued for a
given profession or occupation upon showing that you have
completed certain educational or experience requirements,
or passed certain tests, or some combination of the
foregoing.
For information on state licensing and business registration
requirements in Massachusetts, see the contact information
for the offices of Division of Professional Licensure, listed
in Section VI(a). The Division of
Professional Licensure is an "umbrella" agency within the Office
of Consumer Affairs and Business Regulation, and is responsible
for ensuring the integrity of the licensing process for more
than 45 trades and professions regulated by some 32 separate
boards of registration.
For assistance with working your way through the maze
of licensing and permitting requirements in Massachusetts,
contact the Massachusetts Office of Business Development
(MOBD) at the address listed for that agency in
Section VI(a).
Most business registrations for various state
taxes (sales and use tax, unemployment tax, employer
withholding, etc.) must be done online, either through
the MOBD web site or the Department of Revenue web site,
both listed in Section VI(c).
The Application for Original Registration
form can only be completed online, as you are no longer
permitted to download it and print it out on paper.
(c) Income and Franchise Taxes.
Massachusetts has both an individual income tax and a
corporate excise tax, the latter of which is both a corporate
income tax and a capital values tax on a corporation's assets
or net worth. The application of these taxes to the main types
of business legal entities is summarized in the following
paragraphs.
Note that under 2008 budget legislation, S corporations
and entities that are treated as partnerships are required
to withhold Massachusetts state income taxes from the
distributive shares of income of such persons attributable to
their shareholders or members.
TAXATION OF SOLE PROPRIETORS AND PARTNERSHIPS
The Massachusetts individual income tax is a remarkably
complex tax, imposed at different rates on different categories
of income, although it has been simplified somewhat in recent
years. Short-term capital gains and certain other gains are
taxed at 12%, while most other categories of income are now
generally taxed at 5.3%. Rates were higher, until passage
of Ballot Measure 4, approved by voters in November, 2000,
which reduced the tax on most classes of income to 5.6%
in 2001, 5.3% in 2002, and to 5% in 2003 and later years.
However, the state legislature in 2002 froze the tax rate
at 5.3% for 2003 and subsequent years, notwithstanding the
voters' passage of Ballot Measure 4 and a veto by Governor
Romney, both of which were overridden by the legislature.
Individual taxpayers will also pay state income tax on
their share of the earnings of a pass-through entity, such
as a partnership, S corporation, or LLC. The Massachusetts
personal income tax return is Form 1,
which must be filed with the Department of Revenue. Sole
proprietorships are not treated as separate taxable entities
by the Commonwealth of Massachusetts. As with the federal
income tax return, on which the income of a sole proprietorship
is reported on Schedule C of the return, a
sole proprietor also reports business income on Schedule
C of his or her Massachusetts personal income tax
return.
Massachusetts has legalized same-sex marriages, and partners
in such marriages are allowed to file joint Massachusetts income
tax returns, although they may not file joint federal returns,
which introduces some considerable complexity. Preparation of
a hypothetical federal return will often be necessary for such
couples, since various items on the joint state return are based
on federal return numbers.
Partnerships, or entities taxable as partnerships, such as
LLC's, are not subject to state income taxation in Massachusetts,
but must file an information return with the Department of
Revenue each year, showing each partner's share of taxable
income, losses, and credits, on Form 3.
The partnership information return is due by April 15th of the
following year, in the case of a calendar year partnership.
Partnerships with nonresident partners may file a composite
return on behalf of such nonresidents and withhold the tax
on their behalf.
Individual taxpayers doing business as sole proprietors
(or who are partners in partnerships, members of LLC's, or
shareholders in S corporations), who have taxable income
from the business, will generally be required to make
advance payments of estimated Massachusetts individual
income taxes, on Form 1-ES, if their net
tax liability (not covered by withholding) exceeds $400.
Estimated tax payments are due in four installments,
on the 15th day of the 4th, 6th, and 9th months of the
taxable year, and the 15th day of the first month of
the following year.
To avoid penalties for underpayment of estimated tax, you
must either pay in 80% of the current year's tax, or 100%
of the previous year's tax.
The Massachusetts corporate income tax, on corporations
other than S corporations, is also computed in a complex
manner. This tax, called the corporate excise tax, consists
of two parts: a 9.5% tax on net taxable income, and a capital
values tax of $2.60 per $1,000 of tangible property in the state
or $2.60 per $1,000 of net worth, whichever is applicable,
depending upon whether the corporation is considered a "tangible
property corporation" (where over 10% of the value of its
property, other than locally taxed property, is tangible
property) or is an "intangible property corporation," under
complex definitions.
(Note that while the law states that the capital values tax is
$7.00 per $1,000, the actual rate imposed is only $2.60 per
$1,000, and while the statute sets the tax rate on income at
8.33% and the minimum tax at $400, each of those amounts is
increased by a 14% surcharge, to 9.5% and $456, respectively.)
Unlike a number of states (New York, for example) that impose
the higher of an income tax or a tax on capital of a corporation,
the Massachusetts corporate excise tax is the sum of BOTH of the
two above calculations, and cannot be less than an annual minimum
tax of $456. The state corporation income tax return is
Form 355, which must be filed with the Department
of Revenue by the 15th day of the third month following the end
of the taxable year, or by March 15th in the case of a
corporation whose taxable year is the calendar year.
Corporations are required to make estimated tax payments
of their state corporate income tax in advance, if their
tax liability for the year exceeds $1,000. Estimated tax
payments are due in advance, in four installments, on the
15th day of the 4th, 6th, 9th, and 12th months of the
taxable year. Rather than paying in 4 equal installments,
Massachusetts requires 40% of the estimated corporate
excise tax to be paid with the first installment, 25% each
with the second and third, and the remaining 10% of tax
with the fourth installment. A new corporation with fewer
than 10 employees in its first taxable year only needs to
pay 30% of the tax liability for the first installment,
but must pay 20% of the total estimated tax for the fourth
installment.
Estimated tax payments can be made electronically or
with Form 355-ES.
The total estimated tax that must be paid in is usually
equal to 90% of the actual tax liability for the year, but
if the preceding year was a full year of 12 months, the
current year payments need only be equal to 100% of the
prior year's tax liability, if less. However, as under
federal tax law, a large corporation (with taxable income
of $1 million or more in any of the three preceding years)
can only base the first quarter estimate on the prior year
tax, and to the extent that reduces the first installment,
must make up that amount by adding it to the second quarter
installment.
Penalties will be imposed for failure to make the
required estimated tax payments on a timely basis.
S corporations are generally taxed in the same manner
as under federal law.
That is, the income or losses are taxed to the shareholders,
not the corporation, at least for small S corporations
whose gross receipts are under $6 million. An S corporation
with between $6 million and $9 million of gross receipts
must pay tax on its net income in 2008 at a 3% tax rate, and
S corporations with $9 million or more in gross receipts
pay tax at a rate of 4.5% (which is still much less than
the 9.5% tax rate on income of a regular corporation). (The
tax on S corporations is reduced for 2009 to 2.8% for those
with between $6 million and $9 million of gross receipts and
to 4.2% for those with over $9 million of gross receipts.)
While the tax rate on an S corporation is lower than on a C
corporation, its income is also taxable to its shareholders,
however. In addition, an S corporation is not exempted from
the $2.60 per $1,000 tax on tangible property or net worth.
S corporations file their annual tax returns on
Form 355S and all S corporations, regardless
of size or profitability, must pay the $456 annual minimum tax.
TAXATION OF LIMITED LIABILITY COMPANIES
In Massachusetts, a limited liability company (LLC)
will be taxed in the same manner as a partnership, thus
avoiding the possible double taxation of income that
can occur with a corporation. Note that under the IRS
"check-the-box" regulations, effective since 1997, an LLC
is able to elect to be treated as a partnership if it has
more than one owner, or as a sole proprietorship if it
does not, for federal tax purposes. Massachusetts law until
recently did not permit formation of a one-owner LLC.
However, effective as of January 1, 2003, Massachusetts
became the last state to permit formation of one-owner LLC's.
The state's Revenue Department has announced that it will
treat all LLC's the same as they are treated for federal tax
purposes and state law now reflects that position.
Most LLC's will choose to be treated as partnerships
-- or as sole proprietorships ("disregarded entities"), in
the case of single-owner LLC's -- rather than as corporations.
(Information you may have seen in older Department of Revenue
publications or in current privately published tax guides from
major tax publishers, stating that Massachusetts does not allow
the formation of single-owner LLC's, or taxes all LLC's as
corporations, is out of date and incorrect.) Massachusetts
tax legislation in 2008 made it clear that the state will
follow the federal tax classification of legal entities,
including "disregarded entities."
Note that it is not always entirely clear whether an LLC is
a "single-member LLC" or not, where the "single owner" is a
married couple who hold the entire ownership of the LLC in some
form of co-tenancy, such as joint tenants with right of survivorship,
tenants by the entirety, or as tenants in common. The federal Internal
Revenue Service (IRS) has taken a very lenient position in Rev.
Proc. 2002-69, where a couple hold the LLC interest as community
property, ruling that the IRS will accept whatever choice the couple
make, either to disregard the LLC as an entity (treating it as a
"single-member LLC") or to treat it as a partnership between the
husband and wife.
However, Massachusetts is not a community property state, so
where the LLC is owned by a husband and wife in some form of
co-tenancy, it is unclear whether the IRS treatment would be as
lenient as for community property owners, since the IRS has not
issued any published rulings on whether an LLC can be a disregarded
entity if held in one of the various forms of co-tenancy by a
married couple, rather than being held as community property.
Thus, it is also unclear, where an LLC is owned by a husband and
wife as co-tenants, whether Massachusetts would treat the LLC
as a single-member LLC or as a partnership. Note, however, that
the Massachusetts Department of Revenue treats a business that
is not a corporation or LLC, but is owned jointly by a husband
and wife, as a partnership, rather than as a sole proprietorship,
so it seems fairly likely that an LLC owned jointly by a married
couple would also be considered a partnership, rather than a
disregarded entity.
(d) Sales and Use Tax.
Massachusetts imposes a general sales tax on retail sales of
tangible personal property and certain types of services at
the statewide rate of 5%. Unlike most other states, Massachusetts
does not allow local governments to impose general sales taxes,
although local governments are authorized to impose hotel/motel
room occupancy taxes. Sellers are required to obtain a seller's
permit and to collect and pay over the sales and use taxes to
the Department of Revenue.
Sales of computer software were formerly exempt from
sales tax. However, effective April 1, 2006, prewritten
computer software sold to a customer in Massachusetts or
purchased for use in Massachusetts is considered to be a
transfer of tangible personal property subject to sales
or use tax regardless of the method of delivery. The
transfers may be made by electronic means such as the
Internet or "load and leave," but are taxable in any
event. Transfers of custom software continue to be
treated as nontaxable personal service transactions.
Database or similar electronic information services
remain as nontaxable services.
There are numerous other exemptions from the sales tax,
the most important of which is the resale exemption. If you
are a wholesaler or retailer who purchases goods that you will
resell, your purchase of such goods may qualify as an exempt
sale for resale. Similarly, if you sell goods to wholesalers
or retailers for resale by them, your sale may also qualify
as an exempt sale for resale. In any such transaction, the
exemption is ordinarily available only if the purchaser gives
the seller a valid resale certificate, certifying that the
items are being purchased for resale, and not for use or
consumption by the buyer.
A shadow tax, the use tax, is also imposed at the same
rate as the sales tax. It is primarily intended to tax
property that is acquired from sources outside of the state,
in transactions not subject to sales tax, when such property
is used or consumed within Massachusetts. Use tax may also
apply to items purchased on an exempt basis, such as for
resale, if such items end up being used or consumed,
instead of being resold.
Before making any taxable sales, you will need to register
with the Department of Revenue on Form ST-1, Sales and
Use Tax Registration. This form is restricted, in
that you are not permitted to simply download it from the
Department of Revenue website and submit it, unless your
business is already registered with the state. Since
September 1, 2003, all new businesses that register for
sales tax must do so online, at the Department of Revenue
website (see Web link in Section VI(c)).
To register your business, you should first go online to
the Department of Revenue web site and complete the online
Application for Original Registration.
Note that the Massachusetts Department of Revenue has
announced a moratorium on sales taxation of Internet
services, as its tax on such services was felt to be
putting the state at a disadvantage compared to other
high-tech states like California, Florida and the state
of Washington, which have exempted such services, including
Internet service providers (ISP's), from sales taxes.
For more information on Massachusetts sales and use tax
registration and compliance, see contact information for
the offices of the Department of Revenue in
Section VI(a).
(e) Real and Personal Property Taxes.
In Massachusetts, as in every other state, any business
real estate you own will be subject to real property taxes.
Massachusetts also imposes personal property taxes on
tangible personal property. ("Personal property" is any kind
of property that is not real estate.) However, certain business
personal property, such as business inventories and machinery
of corporations that are subject to the corporate excise
tax, are exempt from personal property tax in Massachusetts.
While Massachusetts localities generally tax tangible
personal property, there is no local property tax on intangible
personal property, such as stocks, bonds, promissory notes,
and other such paper assets. (However, the capital values
portion of the corporation excise tax may be imposed on
intangible assets, as well as on tangible assets or net worth.)
All businesses with taxable property are required to file
Form 2 with the town assessor's office by
March 1 of each year, listing all taxable property owned on
January 1 in that particular city or town.
(f) Other Business Taxes.
Massachusetts imposes a number of excise and other taxes
on businesses, including:
(g) Trade Names. A trade name, also known as a fictitious or assumed name, is any name used in the course of business that does not include the actual legal names of all the owners of the business. Thus, if your business goes by any name other than your own real name, it is operating under a trade name. The same is true of a corporation, if it operates under a name other than its true legal name. A trade name might also be one that suggests the existence of additional owners, by using such words as "company," "associates," or "group." In most states where you do business, it will be necessary to register a trade, fictitious, or assumed name, so that people who do business with you can find out who the actual owners of your business are. You may also want to register any such trade name, as a means of protecting against other companies usurping that particular trade name. In Massachusetts, any unincorporated business operating under an assumed name must register the assumed name with the city or town clerk's office. There is a nominal filing fee of one dollar. However, a corporation, LLC, or LLP operating under its true name is exempted from this requirement, as is any partnership whose title contains the surname of at least one partner, or any limited partnership using its true name if the name includes, without abbreviation, the words "limited partnership." V. EMPLOYER REQUIREMENTS IF YOU HAVE EMPLOYEES (a) Employer Registration and Withholding. If you have any employees, you will already be withholding federal income tax and FICA taxes from their wages. Since Massachusetts imposes a state income tax on the income of individuals, you will need to also withhold Massachusetts income tax from the wages of your employees. Before you begin to pay wages, you must register as an employer with the Department of Revenue. For all new registrations on or after September 1, 2003, businesses are required to register online at the Department of Revenue's web site. See the link to their site in Section VI(c). For more information on Massachusetts income tax withholding and registration requirements for employers, see the contact information for the offices of the Department of Revenue, listed in Section VI(a). (b) Unemployment and Other State Payroll Taxes. If your business employs one or more individuals in each of 13 weeks during any calendar year or if your payroll amounts to $1,500 in any calendar quarter, you, as an employer, will be required to pay state unemployment tax based on the amount of such wages paid. Employers subject to the Massachusetts unemployment tax are required to register with the Executive Office of Labor and Workforce Development, Division of Unemployment Assistance, on Form 1110A, Employer Status Report, which is also used to obtain an employer identification number for unemployment tax purposes. New employers are required to pay tax at a rate of 2.83% in 2008 on the first $14,000 of wages paid to each employee, in general, or 6.99% for new construction industry employers. There is also a Workforce Training Contribution, equal to 0.06% of covered wages and a solvency assessment of 1.10% in 2009. After you have had employees for a while, you will develop an unemployment tax experience rating. This rating is based on the number of employees you terminate who then claim unemployment benefits and the amount of such benefits paid to those former employees, under complex formulas. The state will inform you when they have assigned you an individual tax rate based on your firm's experience rating. That rate may be higher or, if you have had relatively few benefit claims charged to your account, lower than the standard new employer tax rate you initially were paying. All state unemployment taxes are imposed upon you as the employer, and, under Massachusetts law, cannot be charged to your employees or withheld from their wages. Employers with 6 or more employees are during a calendar quarter are also required to make contributions to a state health insurance fund for unemployed workers. This tax rate is generally 0.12% of covered wages, except that it is 0.04% in the first year an employer is subject to the unemployment tax law, and 0.08% in the second year. For more information on your Massachusetts unemployment tax obligations as an employer, see the contact information for the offices of Division of Unemployment Assistance, listed in Section VI(a). (c) Workers' Compensation. Workers' compensation insurance is a state-mandated insurance requirement for most employers, in almost every state. In Massachusetts, virtually all businesses with one or more employees are required by law to have workers' compensation insurance, except those able to self-insure. Note, however, that a sole proprietor is generally not considered an employee. Until recently, the state took the position, unlike most other states, that a partner in a partnership doing business in Massachusetts had to be covered, although there was nothing in the Workers' Compensation Act that specifically said a partner in a partnership was considered to be an employee. However, the law has been changed to make it clear that partners in a partnership and members of an LLC no longer are required to be covered, but they, as well as sole proprietors, can now voluntarily elect coverage. Similarly, unlike most states, Massachusetts until recently required that an employee of a corporation who was the sole stockholder of the corporation must be covered for workers' compensation purposes. This law also has changed, under legislation in 2002, so that now an officer or director of a corporation who owns at least 25% of its stock may elect, on Form 153, Affidavit of Exemption for Certain Corporate Officers, to be exempt from workers' compensation coverage. Also exempt from coverage are real estate salespersons paid strictly on a commission and salespersons who are direct sellers of consumer products (other than in a retail establishment). Workers' compensation provides wage loss and medical benefits to employees injured on the job and it protects you, as an employer, from legal action for damages for injuries or job related illnesses suffered by your employees. In effect, it is a "no-fault" insurance system for work-related injuries or illnesses. CAUTION: As an employer, you must notify injured employees of their benefits and post a notice in the workplace informing your employees of their workers' compensation coverage. In the event an employee is killed or is injured and unable to work for five or more calendar days, you must file Form 101, reporting the accident to the Department of Industrial Accidents within seven days. For more detailed information regarding your obligations as an employer under the Massachusetts workers' compensation laws, contact your insurance carrier or see the contact information for the offices of the Department of Industrial Accidents, listed in Section VI(a). (d) State Wage and Hour Laws. Some employees of certain small firms not engaged in interstate commerce are not covered by the federal minimum wage and overtime laws. However, even if few or none of your employees are covered by the federal wage-hour laws, if, for example, because your firm does less than $500,000 a year in gross sales and the employees in question are not deemed to "...engage in (interstate) commerce...," they will still generally be subject to the Massachusetts wage-hour laws, which recently increased to $7.50 an hour on January 1, 2007 and increased again to $8.00 in 2008, where it remains in 2009. In the event the federal minimum wage is increased to a level equal to or greater than the state minimum wage, the Massachusetts minimum wage will automatically increase to 10 cents an hour higher than the new federal minimum wage. The Massachusetts minimum wage laws do not apply to employees providing professional services, or to outside salespersons. Massachusetts law also requires payment at time-and-a-half for overtime hours worked, in excess of 40 hours in a week. Note that, as under federal wage-hour laws, certain classes of executive, administrative, and professional employees are exempted from the Massachusetts overtime rules. State law also exempts a number of other classifications of workers from the overtime pay rules, including outside salespersons and workers in:
Employers are required to post the state minimum wage poster in the workplace. Employees who work a period of more than 6 hours are entitled to a meal break of at least 30 minutes, generally, with a few limited exceptions. Compensation for the meal break need not be paid. In addition to wage-hour laws, most businesses are subject to federal child labor laws, which put numerous restrictions on the working hours and kinds of work in which minors under the age of 18 may engage. Your business must also be cognizant of similar state child labor laws, in the Commonwealth of Massachusetts. Work permits are generally required for any minor under the age of 16 who is to be employed, and minors under the age of 18 may not work in many types of occupations that are considered hazardous. A minor must be 14 to work, generally, but there are certain exceptions. Children as young as 9 may deliver newspapers with a special badge and written consent of a parent or guardian. Minors 12 or older may sell certain articles for sale in public places, although selling door-to-door is prohibited until the age of 16. Minors aged 12 and 13 may work on farms with their parents or at other farms if they have the written consent of their parents, and minors aged 10 and 11 may engage in limited seasonal work with special permission from the federal Secretary of Labor. Children may work at any age on a farm owned or operated by their parents. Minors of the ages 14 or 15 are subject to various restrictions on the hours they may work. They may not work:
The Massachusetts child labor laws are enforced by the Attorney General of Massachusetts, Fair Labor and Business Practices Division. For more information on state minimum wage, overtime, and child labor laws in Massachusetts, contact the Office of the Attorney General, at the address listed in Section VI(a). (e) State Occupational Safety and Health Laws. Employers in Massachusetts must comply with state and federal job safety laws designed to prevent injuries resulting from unsafe or unhealthy conditions in the workplace. The Division of Occupational Safety of the Massachusetts Department of Labor enforces health and safety standards issued under the laws of Massachusetts. Unlike about half the states, Massachusetts does not have an OSHA-approved state plan, however, so most job safety enforcement in the state is the responsibility of the federal OSHA agency. Note that while you may obtain a free safety consultation from federal OSHA experts, they must and will cite you for any violations they discover at your workplace. This is not the case with state safety inspections. If you request a safety consultation from the Division of Occupational Safety and they detect violations, they will not cite you if you promptly correct the unsafe conditions. For information on your job safety and health obligations as an employer, required posters, and possible on-site safety consultations, see the contact information for the Boston offices of the Division of Occupational Safety of the Massachusetts Department of Labor, listed in Section VI(a). (f) Other Miscellaneous State Labor Laws. Other Massachusetts labor laws you need to be aware of, as an employer, include the following: (1) Wage payments to terminated employees. Wages must be paid weekly or biweekly, except in the case of bona fide executive or administrative employees, or in certain other limited instances. State law prescribes that an employee who voluntarily quits your employment must be paid final wages no later than the next regularly scheduled payday, or if there is no regular payday, by the following Saturday. However, in the case of an employee who is discharged, any wages owed to him or her must be paid on the day of discharge, generally. (2) Right-to-work laws. About half the states have enacted "right-to-work" laws, which guarantee that no person may be denied employment for refusing to join a union or for not paying union dues, thus banning either "union shop" or "agency shop" agreements, or both. In a union shop, an employee not belonging to a union may be hired but then must join the union, usually within 30 days. In an agency shop, an employee need not join the union but, to remain employed, must pay union dues. Massachusetts does not have such a right-to-work law and allows union shop or agency shop contracts between an employer and a union. (3) State anti-discrimination laws. In addition to complying with federal anti-discrimination laws, employers must also be aware of and comply with state civil rights laws in Massachusetts, and must display a poster informing employees of their rights. You can obtain this poster from the Massachusetts Commission Against Discrimination, at the address listed in Section VI(a). Massachusetts law not only bars the usual types of job discrimination based on race, sex, religion or national origin, but also specifically prohibits sexual harassment, discrimination on the basis of handicap or genetics, or on account of a person's sexual orientation, other than persons "whose sexual orientation involves minor children as the sex object." The state anti-discrimination laws apply to all employers with six or more employees. All employers except those with fewer than 25 employees are also subject to recordkeeping requirements under the Massachusetts employment discrimination law. In addition, state law now requires (since January 1, 1997) that every employer with six or more employees adopt a written policy on sexual harassment. State law also makes it illegal, in most cases, to ask questions about a job applicant's or employee's criminal record, or to base employment decisions on it, generally, such as asking about arrests or prosecutions that did not lead to a conviction. However, employers may ask the following questions:
Employers are required to post notices in the workplace containing excerpts from the Massachusetts employment discrimination laws, and can be fined up to $1,000 for failure to do so. For more information on state civil rights laws, contact the Massachusetts Commission Against Discrimination, at the address listed in Section VI(a). (4) Reporting new hires. Under federal welfare reform laws, employers in all states are now required to report newly-hired (or rehired) employees to a designated state agency within 20 days after the date of hire. However, since Massachusetts already had a similar law since 1993, requiring reporting of new hires within 14 days to the Department of Revenue, the more stringent state law, rather than the federal, continues to apply. The Massachusetts new hire reporting requirement applies not only to employees, but also to independent contractors your business hires, if you anticipate paying the independent contractor $600 or more over the course of the year. Thus, you must report:
If you receive an income withholding order from Department of Revenue, state law requires you to withhold child support from the employee's paycheck and send payments to the Department of Revenue within 3 business days of the date the employee is paid. Massachusetts requires any employer of 25 or more employees and independent contractors to file new hire reports electronically. If you have Internet access, you may file new hire reports electronically over the Internet. See the address information for new hire reporting in Section VI(a) and the link to the new hire reporting web site at Section VI(c). (5) Family leave laws. Massachusetts has both a family leave law and a maternity leave law, each of which is summarized below. MASSACHUSETTS FAMILY LEAVE ACT The Massachusetts family leave law, like the federal, applies only to certain employers with 50 or more employees, as it incorporates by reference the entire federal Family and Medical Leave Act. However, for employers covered by the federal act (and the Massachusetts act), Massachusetts law requires covered employers to grant an additional 24 hours leave in each 12-month period, which is in addition to the 12 weeks of family leave required to be granted under the federal Family and Medical Leave Act, for the following additional types of family obligations of an employee:
MASSACHUSETTS MATERNITY LEAVE ACT In addition to the above family leave provisions, the Massachusetts Maternity Leave Act allows a female employee to take up to 8 weeks of unpaid leave at:
To be eligible, the employee must have worked for the employer in a full-time position for at least 3 months or finished a probationary period (which cannot exceed 6 months), and the employer must employ at least 6 employees. The employee must give the employer 2 weeks notice of her departure date and notice that she intends to return to her job. Under most circumstances, the employer must restore the employee to her job or to a reasonably similar position with the same status, pay, length of service credit and seniority when she returns from pregnancy leave. Because state and federal law prohibit sex discrimination in employment, male employees may have a right to take the same 8 weeks of leave a female employee is entitled to take at the adoption of a baby, and to take a certain amount of leave at the birth of a child. (6) Lie Detector Tests Prohibited. Under Massachusetts law, an employer may not require or demand, as a condition of employment, prospective employment, or continued employment, that an individual submit to or take a lie detector or similar test. Unlike the federal law, which exempts certain kinds of private businesses from the prohibition against polygraph testing , the Massachusetts law makes no such exceptions. All applications for employment within Massachusetts must contain the following notice, which must be in clearly legible print: "It is unlawful in Massachusetts to require or administer a lie detector test as a condition of employment or continued employment. An employer who violates this law shall be subject to criminal penalties and civil liability." Note, also, while not related to lie detector testing, Massachusetts law states that any employment application which requires the applicant to set forth his or her work experience history must contain a statement that the applicant may include in such history any verified work performed on a volunteer basis. VI. STATE SOURCES OF HELP AND INFORMATION (a) Key State Agencies Contact Information. Massachusetts, as many states have done in recent years, has set up "one-stop shopping" centers to help new or existing businesses to obtain all necessary state licenses and permits and comply with other state tax and regulatory requirements. These are the Business Assistance Resource Centers, which offers a wide variety of information and forms for the small business person concerning the legal requirements for doing business in the Commonwealth. Their information is gathered from a number of agencies including but not limited to the Department of Unemployment Assistance, Division of Industrial Accidents, Department of Revenue, the Internal Revenue Service, the Massachusetts Office of Business Development, and the state Attorney General's Office. The Massachusetts Office of Business Development (MOBD), which is a part of the Department of Economic Development, offers hands-on assistance to new or relocating businesses in the Commonwealth. If you call, they will assign a specialist to assist you with getting started and finding your way through the maze of state taxes and regulations. MOBD has a number of "one-stop" offices around the state. For more information, contact the main Boston office at: Mass. Office of Business Development Addresses and other contact information for other key state and federal government agencies in Massachusetts, mentioned in preceding sections of this book, are listed below for your convenience. SECRETARY OF THE COMMONWEALTH. Contact the office of the secretary of state (which is called the Secretary of the Commonwealth in the Commonwealth of Massachusetts) for information on:
Secretary of the Commonwealth TAXES. Obtain state income, sales and use tax, and other miscellaneous business tax forms, instructions and information from the Massachusetts Department of Revenue, which is the main tax collection agency in Massachusetts. Also register with this agency as an employer, for sales and use tax and state income tax withholding purposes. All new business registrations are now required to be made online, at the Department of Revenue web site. Mass. Department of Revenue STATE LABOR LAWS. Contact the Massachusetts Attorney General's office about your obligations as an employer under various state labor laws, including:
Division of Fair Labor and Business Practices STATE LICENSES. The following agency is the main Massachusetts licensing agency, and is part of the Department of Consumer Affairs and Business Regulation. Register with this state agency for various professions and occupations that require special state licenses. Division of Professional Licensure STATE SALES TAX. Obtain your sales and use tax license or permit and information on the Massachusetts sales and use tax law from the Department of Revenue, at the address listed above for that agency. STATE UNEMPLOYMENT TAX. Contact the following state agency to determine whether you are an employer subject to payment of state unemployment taxes, and for registration as an employer if you are subject. Also contact this agency about required health insurance contributions you must make on behalf of unemployed workers in each calendar quarter in which you employ an average of 6 or more employees. Executive Office of Labor and Workforce Development NEW HIRE REPORTING. Report newly hired employees, or independent contractors to whom you expect to pay $600 or more in the course of the year, to the Department of Revenue at the following address, by mail or fax, within 14 days of hiring. You may mail or fax reports to the Department of Revenue at the following address, or you may file reports online, at the web address listed in Section VI(c). You may also download the reporting form from their website, Form NHR, for mailing or faxing in. Massachusetts Department of Revenue WORKERS' COMPENSATION INSURANCE. If you employ workers for whom you must supply workers' compensation coverage, contact the following agency for posters, forms, and further information: Commonwealth of Massachusetts STATE OSHA PROGRAM. For information on state occupational safety and health laws that may affect you as an employer in Massachusetts, and for workplace safety consultations, contact: The Commonwealth of Massachusetts There is no approved state OSHA program in Massachusetts. The federal government provides federal OSHA enforcement instead. For required posters and information on federal occupational safety and health laws that affect you as an employer in Massachusetts, contact: U.S. Department of Labor/OSHA STATE ANTI-DISCRIMINATION LAWS. Contact the following state agency for more detailed information on Massachusetts civil rights laws that may apply to your business, and to obtain anti-discrimination notices you are required to post in the workplace: Mass. Commission Against Discrimination (b) Small Business Development Centers. A number of Small Business Development Centers (SBDCs) are located throughout Massachusetts to assist you. These centers, usually located on college campuses, provide a wealth of start-up information and sponsor frequent business-oriented seminars. Contact the lead office below for information and help, or for the location of other SBDCs nearer to you. Mass. Small Business Development Center (c) Internet Sites. For anyone with access to the Internet, there is a wealth of state and even local business information provided by state and local governments. All states now have a state government Web page, and most major Massachusetts state agencies also have sites on the Internet where you can obtain useful small business information on matters such as state taxes, financing sources, or the addresses and phone numbers (or e-mail addresses) of various state and federal agencies' offices in Massachusetts. Since new sites are appearing frequently, you might also want to search for other Massachusetts government Web sites by using one of the popular Internet search engines, such as Google or Yahoo. To start your Internet search for Massachusetts government information, you may want to begin with the following Internet sites: Commonwealth (state) of Massachusetts home page: Massachusetts Department of Revenue (taxpayer assistance, downloading of state tax forms): Certificate of Good Standing Website (apply for a Department of Revenue Certificate of Good Standing online): Massachusetts Office of Business Development (operates several "one-stop" centers that assist new and startup businesses): Division of Unemployment Assistance (unemployment tax, state anti-discrimination law posters): Secretary of the Commonwealth (corporate, LLC, LLP, and limited partnership filings; also offers Citizen Information Services for new and small businesses): Massachusetts Commission against Discrimination (information on employer requirements under state anti-discrimination laws): Massachusetts New Hire Reporting (Department of Revenue web page): (d) Financing Sources. For information and help on locating financing for your small business, contact the nearest U.S. Small Business Administration office in Massachusetts. The address of the SBA District Office in Massachusetts is: U.S. Small Business Administration Also, the state offers a number of loan programs and
financial assistance programs for business. Contact the
state's Office of Business Development (see address
listed in Section VI(a)) for
information on state financial assistance programs.
|
Copyright © 2009 Michael D. Jenkins
|