For people looking to establish a new business in Massachusetts, it's important to understand how business operates in the state. Business law in Massachusetts is as complex as any other state, and knowing the legal issues that come with forming a business makes the process easier. Below are some of the basic steps required to form a business under Massachusetts business law.
Choosing a Business Entity Type
The first step that any business owner must take is choosing the type of business entity that will be formed. Sole proprietorships are simple options for single business owners. For two or more business owners, a general, limited or limited liability partnership is a good choice, as is a limited liability company. Finally, the most advanced type of business is a corporation, which offers stock to outside shareholders who elect people to run the business.
Understanding Trademarks and Name Reservations
Next, a business must have a name. Business law in Massachusetts has some rules that help protect a business' name so that others may not use it. Known as trademarks, these rules prevent a business from adopting a name that is the same as, or nearly indistinguishable from, the name of an existing business. People who are planning to start a business can, for a $30 fee, reserve a business name for sixty days. This process is performed through the Secretary of the Commonwealth's Corporations Division.
Permits and Regulations
In order to operate certain types of businesses, permits or licenses must be obtained, and certain regulations must be followed. Operating a business without a required permit or without adhering to regulations could result in fines or other penalties. Some examples of business licenses and regulations include:
- building, construction and machinery regulations
- rules for retails businesses, finanace
- insurance and real estate permits
- vehicle and transportation licenses
Final Steps
Most businesses are required to obtain a "doing business as," or D.B.A. name. These names are used to identify the business. Getting a "doing business as" name is generally a process that takes place on the local level, in the city or town in which the company is located.
Business law in Massachusetts states that if a business intends to hire employees, they must obtain a Employer Identification Number, or EIN. Employer Identification Numbers are obtained from the IRS, through a form that can be filed conveniently online.
