## Corporate formation in Massachusetts
Forming a corporation creates a separate legal entity owned by shareholders. Provides liability protection but more administrative burden than LLCs.
## C-corp vs S-corp vs LLC
**C-corporation:**
- Default corporate tax treatment
- Separate tax entity (Form 1120)
- Double taxation (entity + dividends)
- Unlimited shareholders, multiple classes of stock
- Required for venture capital + IPO
- Best for high-growth tech / biotech
**S-corporation:**
- Tax election (Form 2553)
- Pass-through taxation (Form 1120-S + K-1s)
- Limited to 100 US-resident-individual shareholders
- One class of stock
- Saves self-employment tax
- Best for small businesses with profits to distribute
**LLC (limited liability company):**
- Hybrid — limited liability of corp + tax flexibility
- Default pass-through; can elect C-corp / S-corp
- Most flexible structure
- Best for most small businesses
**Benefit corporation:**
- Profit + social mission
- B-Corp certification separate from legal status
- Available in most states
## Corporate formation steps
**1. Choose state of incorporation:**
- **Home state** — usually simplest for local business
- **Delaware** — sophisticated business law + Court of Chancery; preferred for VC-backed startups
- **Nevada** — strong asset protection + no state corporate tax
- **Wyoming** — privacy + low fees + favorable laws
- Most businesses incorporate in home state UNLESS raising VC
**2. Choose name:**
- Must be unique in state
- Must include corporate designator (Inc, Corp, Co, Ltd)
- Reserve name if not ready to file
**3. Choose registered agent:**
- Person / company at physical state address
- Receives legal documents
- DIY (yourself) or service ($100-$300/year)
**4. File articles of incorporation:**
- File with Secretary of State
- Required information: name, registered agent, share authorization, incorporator
- Filing fees: $50-$500 typical
**5. Adopt bylaws:**
- Internal governance document
- NOT filed publicly
- Defines: board structure, officer duties, meetings, voting, amendments
**6. Hold organizational meeting:**
- Initial board meeting (or written consent)
- Adopt bylaws
- Elect officers
- Authorize stock issuance
- Adopt fiscal year
- Adopt banking resolutions
**7. Issue stock:**
- Stock certificates (or book entry)
- Track in stock ledger
- File appropriate state / federal exemptions
- 83(b) election for founders (within 30 days)
**8. Obtain EIN:**
- IRS Employer Identification Number
- Free at irs.gov
- Required for banking + taxes
**9. Open business bank account:**
- In corporate name
- Critical for liability protection (avoid commingling)
**10. State / local registrations:**
- State sales tax (if applicable)
- State employer registration (if hiring)
- Business license / permits
- Zoning / occupational licenses
**11. Federal tax election (if S-corp desired):**
- Form 2553 within 75 days of formation OR 75 days of tax-year start
- Or by March 15 for tax year
## Ongoing compliance requirements
**Annual / periodic:**
- Annual report / franchise tax filing (state-specific)
- Annual meetings of shareholders + directors (or written consents)
- Maintain corporate book + minutes
- Update beneficial-ownership info (FinCEN under Corporate Transparency Act)
- File federal tax returns (1120 / 1120-S)
- Issue K-1s (S-corp) or W-2s (employees)
**As needed:**
- Special meetings / consents for major decisions
- Stock issuances / transfers
- Officer / director changes
- Articles amendments
- Updated bylaws
## Beneficial Ownership Information (BOI) — Corporate Transparency Act
**Federal law (effective 2024):**
- Most corporations must report beneficial owners to FinCEN
- Existing entities had until Jan 1, 2025 to file
- New entities: 30 days from formation
- Updates within 30 days of changes
- Significant penalties for non-compliance
- Status under litigation (subject to change)
## Common formation mistakes
- **Wrong entity choice** — LLC vs S-corp vs C-corp matters for taxes / structure
- **Wrong state** — incorporating in DE for local business adds cost without benefit
- **Missed S-corp election deadline** — costs entire first year
- **No bylaws** — defaults to state law (often suboptimal)
- **No stock ledger** — issues with cap table later
- **Comingling funds** — pierces corporate veil
- **Inadequate annual meetings** — same problem
- **Missing 83(b) election** — costs founders tax
- **DIY VC-track companies** — angels / VCs require professional setup
## Maintaining corporate veil
Liability protection requires actually treating corporation as separate entity:
- Separate bank account
- Adequate capitalization
- Annual meetings
- Documented decisions
- Don't pay personal bills with corporate funds
- Sign contracts in corporate name
- Maintain corporate formalities
- File required reports / taxes
## What you should do
For Massachusetts corporations with VC / IPO ambitions: hire a startup-experienced attorney from the start. Most Massachusetts business attorneys offer flat-fee formation packages ($1,500-$5,000+ for full corporate setup). Online services (LegalZoom, Stripe Atlas, Clerky) work for simple cases but generally inadequate for fundraising or complex situations.
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*This guide is general information about Massachusetts law as of early 2026 and is not legal or tax advice. Corporate law is highly specific. Talk to a licensed Massachusetts business attorney about your specific situation.*
This guide is for general information only and does not constitute legal advice. Laws change and outcomes depend on your specific situation — talk to a licensed attorney before acting on anything you read here.