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hey my name is eric in today's video we're talking about starting an llc in massachusetts so in this video i'm not only going to show you three different ways you can do this but also three things that you should be aware of that may create potential cracks in your llc now if you're not familiar with the terms such as piercing the corporate veil registered agents or in your case in massachusetts it's called the resident agent or the term co-mingling funds you're definitely going to want to watch this video because i'm not only going to show you how you can set up an llc but make sure that it's actually protected and doing what it's supposed to do for you and your business now the first screen that we're on here comes from nolo.com this is just a very reputable website written by attorneys and you can see that it's talking about the current filing fee of a certificate of organization so setting up for an llc in massachusetts is 500 by mail and 520 for an online filing so it is an extra 20 to file online which is ridiculous because it should cost less you would think but i just wanted you to know that that fee no matter what route you go to set up your llc in massachusetts you're going to pay that fee so if you do it yourself through their state website through an online legal tool or even if you go through an attorney they may bake that fee into their cost structure but you're going to pay that 500 now if you want to do it yourself going through the state website this is the url that you would do that through uh know that all resources that i'm mentioning in this video are in the description below so you can go to the description and click through to get any of these resources if any of them are paid links i will let you know that in advance but my goal with this video is not to steer you necessarily in one direction or the other but to give you all the information so that you can make the best decision for yourself now if you're looking at this the two methods you can go here is file online which in my opinion is one of the most difficult states to do this within i've never come across this before but you can see here it says if you don't have a cid and pin please contact our office with their email address so basically you have to email their office then get a customer id number and pin number and then be able to go through the process and it is going to cost you an extra 20 bucks if you go online so some people may be deterred by that especially because it's talking about like you need a browser capable of 128-bit encryption blah blah there's a lot of hoops to jump through so some people may want to go the route of the pdf here now the interesting thing though about this pdf is it's very vague with the amount of information and guidance it gives you so if we scroll down and we look at section 5 here it says the name and street address of the resident agent in the commonwealth so i don't like the fact that they just kind of just gloss over this and say like who is your resident agent and the reason for that is if you don't have a proper resident agent set up for your business and i'll explain what all that is in a minute i can create what i was talking about earlier is cracks in your llc so this might be a good time to explain what an llc is and what it is not you probably understand but sometimes people get a little bit confused some people think they're going to set up an llc for tax purposes there's no tax advantage for setting up an llc the advantage of setting up an llc is limiting your liability so when you have your business you have your business assets and then you also have your personal assets so in the business you know it could be the office space the income that you're generating etc but then on your personal side it could be your personal home personal bank account cars all those things so when you set up an llc what you're doing is you're drawing a division between your personal and business assets now if you were to be sued for some reason the attorney who is suing you is going to try to find cracks in your llc and you might remember earlier i talked about a term called piercing the corporate veil so that's like the technical legal jargon but basically what they're trying to do is find a crack in your llc and one of the ways they may be able to do that is if you don't have a proper resident agent set up for your llc and one of the things i don't like by going through the state website is they just kind of really gloss over things they just say you know what's the name street address of the resident agent in the commonwealth to me that's kind of doing a disservice to the person getting set up because it's not explaining what the resident agent is so why don't we take a look at what a registered agent is so if we go to this uh this blog post here from inkfile which is an online legal tool that you can set up within llc and we scroll down a little bit this is really helpful here so down here it says are there other names for a registered agent so it's known by different names in different states in massachusetts as we saw it is called a resident agent that you can see right here so if we go back here you can see that that is mentioned as well here some states call it a statutory agent agent of for services of processor commercial regis registered agent so what does that registered agent actually do in your case resident agent official letters and correspondence from your secretary of state so any kind of information that's coming through they kind of act as a third-party go-between between you and the state service of process notices so if your corporation or llc is sued or needs to appear in court for example so if an attorney is suing your company because their client slipped and fell at your business or fill in the blank the million ways you can get sued uh they are going to make sure that you're showing up and getting that documentation uh the third uh section here official federal government correspondents information notifications fourth bullet point tax forms and requests for payment and fifth bullet point request to complete permits company filings or reports so what that registered agent is doing is they're just making sure that you're compliant and you know crossing your t's dotting your eyes for your llc so the reason that's important too is you want a registered agent that is within the state lines so in your case you want to make sure that that resident agent i should be saying is in your state and i really just don't like the fact that they just kind of leave this very vague right so a lot of people they may end up like filling out section five here and saying you know it's my cousin sarah she's my resident agent because i'm gonna save a few dollars and i'm gonna put her information in here but she actually doesn't know what she's doing as resident agent maybe she's not forwarding you the correspondence or making sure that you're you know keeping up on your annual reports and when that happens what can happen is you have a crack in your llc so then when that attorney comes after your business what they're gonna do is they're gonna try to pierce the corporate veil and then if they're able to do that they're not only going to be able to come after your business assets but your personal assets as well so that is why understanding what piercing the corporate veil means and what a proper registered agent or in your case resident agent is is so important so what we're going to be talking about further in this video is commingling funds because that's another way that you can have a crack in your llc but we're going to get to that in a little bit so going through the state website in my opinion it's fine but i don't like the fact that they don't give you more guidance and information on sections such as this now if you do want to go through a service like inc file there's a lot of online legal tools there's legal zoom zen business inc file so the reason that i like ink file though is that it's zero dollars plus your state fee now if you're anything like me you might be wondering like okay like what's the catch kind of thing so i'm gonna get into that and how they actually make their money uh before we get to that you can see that they have over 250 000 businesses launched since 2004 and then they also were honored as one of the 360 best entrepreneurial companies in america by entrepreneur so what you would do if you use this service and again this link will be in the description below um this is an affiliate link that i'll be providing for them the way that works is if you use it i do get some income but i always recommend this service because it's reputable but on top of that it's free for you so here i'm going to show you how that works you would select llc state formation and then we're going to go to massachusetts so now you can see that there are three packages that pop up here there's silver gold and platinum now for the silver package this is where you can see the 520 so that's for filing online through the state but then zero dollar package fee and one of the things i want to highlight here is the free registered agent service for a year now i mentioned earlier like how are they actually making their money people are just doing the silver package obviously if people upgraded gold and platinum then they're kind of making some money on the package fee so why don't we go back to this article here on ink file as you remember we're looking at this if you scroll down further on this post here and you see this line right here it's even free for the first year when you incorporate with ink file and then it's just 119 annually after that so the way that ink file works is that first year your registered agent service is free but then ongoing it's 119 so when you do go with the silver package understand that the year two year three you're gonna have 119 fee for that registered agent service even if you don't go with their service because you don't have to continue using their registered agent service in the future i'd recommend it the first year because it's free it's definitely something that you want to go through a professional service just to make sure you're again dotting your eyes and crossing your t's now one of the reasons some people like to go with the gold and platinum for the gold it's the ein business tax number that is something that you'll have to set up on your own if you do the silver package very easy to find here you can just put in ein irs right and you can click apply here i will include this link in the description below this is going to walk you through what you need to do also a good link here is this one right here uh if you actually need an ein most people setting up with an llc by the way 80 of all new entities set up our llc so you're in good company but this will walk you through if you actually need an ein and how to apply for it i had to do this for my own business so all the information i'm giving you right now is all stuff that i had to research i'm not an attorney or a cpa but i have done a lot of research on this as you can see and i do know that it was a pain in the butt applying for the ein by myself but if you are trying to save money you can do that yourself also another thing to be aware of is the business banking account that i've highlighted down here now this is really important so sometimes people again don't cross their t's without their eyes not to overuse that cliche but when you have an llc set up and you don't have a business banking account you're running everything through your personal bank account what that is called is co-mingling funds and again this is another crack in your llc because if you're to be sued that attorney may try to pierce the corporate veil by proving that you are commingling funds and you have a personal bank account that you're using to buy groceries and you know fill up your gas tank but then also using to pay invoices and collect money in your business so when you're co-mingling funds again that's another crack in your llc that is why it's very important to get set up with a business bank account as of right now inkfile is doing that through bank of america obviously if you go and get set up with a business bank account yourself that is free to do as well but that's something that they add on here as a free add-on if you're to go with the gold package so the thing that i like about inkfile is that they can really run you through these packages pretty easily so if i was go get the silver package you just put in your information here your mailing address and you can see that we're about 25 done here uh one thing worth highlighting is the tax saving benefit this is a fully deductible business expense uh so just know that when it comes to tax time that you are deducting uh that yearly uh fee 520 the first year 500 after that uh and then it's just a really simple process going through and getting set up with ink file as opposed to you know going through this pdf with very little information or additional resources now the third route that you might want to consider is going through with an attorney now why would you want to go through with an attorney uh if you're just nervous about setting it up yourself through inc file or the online tool on from the state website if you have a more complex business model perhaps you're doing sales out of state in state you've already been generating income you may want to go through an attorney another thing to consider too is if you have a business that's already netting 40 50 000 a year in income then there might be a different way to set up your business structure that might make sense for you if you're just getting started and you don't even have any income coming in they might be overkill but one of the services that i like is avo it's a lawyer directory service i'm not affiliated with them in any way as of right now but i just like them because i've used them in the past for some of their services they have a pretty neat feature too that you can actually submit questions and lawyers will answer them for free on their forums but what we're looking at right here are massachusetts limited liability company llc lawyers but you can see there's 64 results here which is quite a bit so what you can do is go down here and then filter your results and i want to give you um only four stars and up so now we're at 24 results and then if we go down again if you click this box right here for free consultation now what you're looking at are eight attorneys that are massachusetts and they all offer a free 15 minute phone call consultation with you so that you can kind of get initial questions and things answered so if you do have a complex business model you may want to go this route again i will include this link in the description below i do not get any income from it i just find it to be a really helpful resource now if you remember earlier i did mention the fact that you can also potentially save on taxes if you're set up in a different structure so on the screen right here you can see an ink file review that gets a little bit more into the weeds for ink file but around the 2 30 mark of that video is where i talk about the difference between an llc and an s corp so if you're already generating 40 60 000 of net income in your business you may want to watch that video just to see what that's all about so again guys links in the description below if you do sign up with ink file i will receive a commission but i truly appreciate it because it helps support my youtube channel and my family and what i'm trying to do here on youtube all right guys i'll catch you in that next video