Prepared by U.S. Legal Forms, Inc.
Copyright - U.S. Legal Forms, Inc.
LIMITED LIABILITY COMPANY
FORMATION PACKAGE
STATE OF MASSACHUSETTS
Control Number: MA-00LLC
The contents of this package are as follows:
1. Statutory Reference
2. Introduction
3. Forms List
4. Notes on Downloading the Forms
5. Notes on Completing the Forms
6. Instructions and Steps
7. Accessories
8. Sample Ledger and Certificate
9. Disclaimer
LIMITED LIABILITY COMPANY
FORMATION PACKAGE – MASSACHUSETTS
Electronic Version
Statutory Reference
General Laws of Massachusetts – Chapter 156C – Limited Liability Company Act
http://www.mass.gov/legis/laws/mgl/gl-156c-toc.htm
Introduction
Created by state statutes to encourage business activity, a limited liability company (LLC) is a
“hybrid” type of business organization, with characteristics of both a partnership and a
corporation and many of the advantages of both. Like a corporation, the limited liability
company is a legal entity separate from its owners who are known as “members.” Barring some
other arrangement, members normally vote on any proposed action for the LLC, with the number
of votes per member typically corresponding to his or her percentage of ownership interest in the
business. Some of the advantageous benefits of an LLC include flexible ownership and
management, protection from liability for owners, and tax advantages.
FLEXIBILITY
A limited liability company generally has fewer legal formalities to observe than a corporation,
and is simpler to create and maintain. The ownership and management of an LLC is more
flexible than a corporation and very closely resembles that of a partnership. Keeping of corporate
minutes is not required. Management and control of an LLC is vested with its members unless
stated otherwise in the LLC’s Articles of Organization (called a Certificate of Formation in some
states). The owners of an LLC are called “members” and differ from the shareholders of a
corporation because members are allowed to participate in the management of an LLC without
being appointed to a managerial position such as a director or officer of a corporation.
IRS rules now allow an LLC to choose between being taxed as a partnership or as a corporation
(most choose partnership, but see below). If an LLC has more than one member, the relationship
between those members is governed by a written operating agreement. Although an LLC used to
be required to be comprised of at least two LLC members, today most states and the IRS
recognize the single-member LLC as a legitimate business structure.
LIMITED LIABILITY
In most cases, only the LLC is responsible for the company’s debts and the members are
protected from being individually liable. As a result, the member’s assets are typically not at risk
if the LLC is sued or cannot pay its debts. To maintain this limited liability protection for the
members the LLC must follow requirements such as holding member meetings and documenting
decisions through resolutions. However, there are some exceptions where individual members
may be held liable if he or she:
* Personally and directly injures someone
* Personally guarantees a bank loan or a business debt on which the LLC defaults
* Fails to deposit taxes withheld from employees’ wages
* Intentionally does something fraudulent, illegal, or clearly wrong that causes harm to the
company or to someone else, or
* Treats the LLC as an extension of her personal affairs, rather than as a separate legal entity.
TAXATION
Many tax benefits are available to LLCs and members including “pass through” tax treatment of
profits and losses, easy allocation of profits and losses to different members, and elimination of
payroll taxes for members’ cash withdrawals. The earnings of an LLC are not subject to
corporate taxes; instead, the profits flow through to the owners in proportion to their ownership.
However, LLC owners can instead elect to have their LLC taxed like a corporation. This may
reduce taxes for LLC owners who will regularly need to retain a significant amount of profits in
the company.
DISADVANTAGES
An LLC does not allow ownership to be transferred through sale of shares in the same way as
corporate stock ownership allows. In most jurisdictions, ownership interest may only be
transferred or created with the consent of a majority of the other members, unless the articles of
organization provide for a greater or lesser level of consent.
An LLC may abruptly cease to exist. Unless otherwise provided in the articles of organization or
a written operating agreement (which may for example allow a majority of members to vote to
continue the LLC), an LLC is dissolved at the death, withdrawal, resignation, expulsion, or
bankruptcy of any member. The LLC operating agreement can prevent this kind of abrupt ending
to your business by including certain provisions setting up guidelines for what will happen when
one member retires, dies, becomes disabled or leaves the LLC.
FORMATION
Not all businesses can operate as LLCs. Businesses in the banking, trust and insurance industry,
for example, are typically prohibited from forming LLCs. In addition, some states prohibit
professionals such as architects, accountants, doctors and other licensed healthcare workers from
forming LLCs, requiring a Professional Limited Liability Company (PLLC) or other entity.
State laws governing LLCs vary from state to state. However, if the LLC will have significant
business or member contacts (a.k.a. "presence") within a state, it should be formed in that state.
Otherwise, it may be subject to fees and/or taxes for doing business in an outside state. If an LLC
is required to qualify to do business in an outside state, it may have to pay filing fees and
franchise taxes as a foreign LLC to the outside state.
ARTICLES OF ORGANIZATION
The existence of an LLC begins when a document typically known as the “Articles of
Organization” are filed with the Secretary of State’s Business/Corporate Division. The Articles
of Organization is the primary document constituting the legal identity of the LLC. If there are
any conflicting provisions in other LLC forms or documents (the operating agreement, member
agreements, or resolutions), the articles of organization override such provisions.
Requirements vary by state, but most states require the following minimum information:
* The name of the LLC. The name you select must not be the same as or deceptively similar to
an existing business name in your state. Most states require that the limited liability company
name be followed by the words “Limited Liability Company” or by the abbreviation “LLC.”
* The mailing address of the proposed entity.
* The name and address of a registered agent in the state of filing.
* The name and address of the LLC’s organizer.
* The LLC’s stated period of duration or date of termination (indefinite/perpetual duration is
normally allowed.
* Some states may require that your articles of organization list the name and address of each
LLC member.
* The signature of the Organizer (person filing the Articles of Organization).
* Whether the LLC will be managed by one manager, more than one manager, or the members.
REGISTERED AGENT
Most states require that an LLC have a Registered Agent at a Registered Office within the state
of formation. This Registered Office may be at an address that is different from the LLC’s
business address, but may not normally be a post office box.
The main purpose of the Registered Office/Agent requirement is to provide a public record of a
person who will accept service of process on behalf of the LLC if claims are brought against it.
Because the Articles of Organization are a public record, potential claimants can usually contact
the Secretary of State’s office to obtain LLC’s registered agent information in order to serve your
LLC with a subpoena or summons. The agent may also be used to accept official documents,
such as tax notices.
OPERATING AGREEMENT
LLC members should enter into an Operating Agreement of some type (a detailed sample is
provided in this package). This Operating Agreement may be established either before or after
the filing of the Articles of Organization and may be either oral or in writing in many states.
Regardless of state requirements, it is preferred practice to have a written Operating Agreement.
If you don’t create a written Operating Agreement, the LLC laws of your state will govern your
LLC. The Operating Agreement is kept by the members (each should have an updated copy), and
is not filed with the government.
The LLC operating agreement may vary in complexity, but normally contains the following
information:
* Company name and address information
* Name and address information for each LLC member
* LLC management structure and operation
* Items/Funds contributed by each Member
* Fair market value of each item contributed
* Date/triggers of company dissolution, if any
* Accounting methods
* Tax treatment decisions for your LLC
* Appointment of LLC officers, if any
* Designation of a final capital pay-in date, if any
OPEN A BANK ACCOUNT
Most banks require only a copy of your Articles of Organization and your federal Employer ID
Number to open a bank account. Some, however, may also require a resolution authorizing the
opening of the account passed by the LLC’s members and a copy of the LLC Operating
Agreement. Because bank requirements vary by bank, you should contact the branch manager
and ask about their requirements for new LLC accounts.
MEMBER MEETINGS
Although a corporation’s owners’ failure to hold shareholder or director meetings may subject
the owners to liability, this is not the case for LLCs in many states. If the LLC’s Articles of
Organization or Operating Agreement do not expressly require such meetings, such liability will
normally not attach for failure to have member meetings. While many states do not require that
your limited liability company hold meetings on a regularly scheduled basis, it is advisable to
conduct member meetings to protect the integrity of the LLC’s operations and minimize
disagreements.
* * *
Forms List
The following forms are available for download with this package.
MA-NAMERESV: Application for Reservation of Entity Name
MA-00LLCT: Certificate of Organization
MA-LLC-TL: Sample Transmittal Letter
MA-00LLC-1: Sample Operating Agreement (Multi-Member LLC)
MA-00LLC-2: Sample Operating Arrangement (Single-Member LLC)
US-IRS-SS-4 : Application for Federal Tax Identification Number & Instructions
MA-2222LLC: Sample LLC Notices & Resolutions
Instructions on using the forms are either included with the forms and/or found in the Steps to
form LLC section, below.
* * *
Notes on Downloading the Forms
In order that we can provide you with the most up to date forms at all times, all forms are located
on our servers for you to down load, complete and print. Downloading instructions are provided
and we will assist if you have any problems.
From the the download page, the easiest procedure to download the forms is to right click on the
form links and select “save target as” to save each form to your hard drive.
You will have six days during which you can return to the forms download page to download the
forms again if needed. You are advised to save the forms to your computer as soon as possible to
avoid any problem with the six day limit.
* * *
Notes on Completing the Forms
The forms in this package may be available in Adobe Acrobat (“.pdf”) and/or Microsoft Word
(“.doc”) format.
If available in .pdf format, the forms will contain “fillable” blanks which you can type directly
into, and print. However, you can still print the form and fill in with a typewriter or by hand if
you desire.
If available in .doc format, the forms may contain “form fields” created using Microsoft Word.
“Form fields” facilitate completion of the forms using your computer. They do not limit you
ability to print the form “in blank” and complete with a typewriter or by hand. To complete the
forms click on the gray shaded areas and type the information. For the separation agreement
complete the gray shaded areas and also make any other changes or additions to resolve all
issues.
If you do not see the gray shaded form fields, go the View menu, click on Toolbars, and then
select Forms. This will open the forms toolbar. Look for the button on the forms toolbar that
resembles a shaded letter “a”. Click in this button and the form fields, if present, will become
visible. If there are no form fields, just type into the document, underlining if necessary, to
complete the form.
Some forms may be “locked” which means that the content of the forms cannot be changed
unless the form is unlocked. You can only fill in the information in the fields. If you need to
make any changes in the body of the form, it is necessary for you “unlock” or “unprotect” the
form. IF YOU INTEND TO MAKE CHANGES TO THE CONTENT, DO SO BEFORE YOU
BEGIN TO FILL IN THE FIELDS. IF YOU UNLOCK THE DOCUMENT AFTER YOU
HAVE BEGUN TO COMPLETE THE FIELDS, WHEN YOU RELOCK, ALL
INFORMATION YOU ENTERED WILL BE LOST. To unlock click on “Tools” in the Menu
bar and then selecting “unprotect document”. You may then be prompted to enter a password. If
so, the password is “uslf”. That is uslf in lower case letters without the quotation marks. After
you make the changes relock the document before you begin to complete the fields. After any
required changes relock the form, then click on the first form field and enter the required
information. You will be able to navigate through the document from form field to form field
using your tab key. Tab to a form field and insert your data.
If you experience problems, please let us know.
* * *
Steps to form LLC
Step 1: See FORM: MA-NAMERESV
APPLICATION FOR RESERVATION OF NAME
It is recommended that you reserve a LLC name in order to assure that your
Certificate of Organization is not rejected because the name you have selected is
not available.
You may skip this step and go to Step 2, but if the name you have selected is
not available, the Certificate of Organization will be rejected and returned to
you.
This form should be typed or printed in BLACK ink.
Print or type the LLC name you wish to reserve.
A LLC name MUST contain the words "limited liability company", "limited
company", or the abbreviation "LLC", "LC", "L.L.C." or "L.C."
A LLC name MAY contain the name of a member or manager.
A LLC name obviously may NOT be the same as, or deceptively similar any
business name currently on file.
Have the Applicant sign the Application.
Provide the name and address of the Applicant.
The reservation reserves the name for the exclusive use of the applicant for a
period of thirty days. The name may be re-reserved by the applicant for an
additional thirty day period upon payment of an additional fifteen dollar ($15.00)
fee. Before the name may be reserved for a third thirty day period the name must
be made available to the public for one business day.
File the original and one copy of the Application.
The filing fee is $15.00.
A preliminary check for name availability can be made by telephoning the
Corporations Division at 727-2850 or 727-9640. This is only a preliminary
inquiry and does not guarantee that the name will be available at the time of
filing.
Mail the original and one copy of the APPLICATION FOR RESERVATION
OF NAME along with the $15.00 filing fee (Make check payable to
Commonwealth of Massachusetts) to:
Secretary of the Commonwealth
Corporations Division
One Ashburton Place, 17 th
Floor
Boston, MA 02108
Telephone: (617) 727-2859
Step 2: See FORM: MA-00LLCT
CERTIFICATE OF ORGANIZATION
Once you have reserved the limited liability company name, or if you have chosen
to proceed without reserving a name, you are ready to complete the Certificate of
Organization.
The Certificate of Organization should be typed or printed legibly in black ink.
Enter the appropriate information into the form, print, and sign.
File the original and one copy of the Certificate of Organization.
The filing fee is $500.00.
Step 3: Mail the original and one copy of the CERTIFICATE OF ORGANIZATION
together with the $500.00 filing fee (Make check payable to Commonwealth of
Massachusetts) to:
Secretary of the Commonwealth
Corporations Division
One Ashburton Place, 17 th
Floor
Boston, MA 02108
Telephone: (617) 727-2859
A sample cover letter to send with the Certificate of Organization is included in
this packet.
See FORM: MA-LLC-TL
SAMPLE TRANSMITTAL LETTER
Step 4: Complete an Operating Agreement.
See FORM: MA-00LLC-1
SAMPLE OPERATING AGREEMENT (MULTI-MEMBER LLC)
For a single-member LLC,
See FORM: MA-00LLC-2
SAMPLE OPERATING ARRANGEMENT (SINGLE-MEMBER LLC)
Step 5: Apply for a Federal Tax Identification Number. This is done with form US-IRS-
SS-4. Mail to your regional IRS office.
See Supplemental Form: US-IRS-SS-4
FEDERAL TAX ID APPLICATION AND INSTRUCIONS
Step 6: Open a bank account and conduct business.
Step 7: Maintain Records
Each limited liability company shall keep the registered office the following:
(1) A current list of the full name and last known address of each member and
manager;
(2) A copy of the certificate of organization and all certificates of amendment
thereto, together with executed copies of any powers of attorney pursuant to
which any certificate has been executed;
(3) Copies of the limited liability company's federal, state, and local income tax
returns and reports, if any, for the three most recent years;
(4) Copies of any then effective written operating agreements and of any financial
statements of the limited liability company for the three most recent years; and
(5) Unless contained in a written operating agreement, a writing setting out:
(i) The amount of cash and a description and statement of the agreed
value of the other property or services contributed by each member
and which each member has agreed to contribute;
(ii) The times at which or events on the happening of which any
additional contributions agreed to be made by each member are to be
made;
(iii) Any right of a member to receive, or of a manager to make,
distributions to a member; and
(iv) Any events upon the happening of which the limited liability
company is to be dissolved and its affairs wound up.
These records are subject to inspection and copying at the reasonable request and
at the expense of any member or manager during ordinary business hours.
The current list of names and addresses of the members must be made available to
the state secretary within five business days of receipt of a written request by said
state secretary or by the director of the securities division of the state secretary's
office stating that such information is required in connection with an investigative
or enforcement proceeding.
Ongoing: Sample Notices and Resolutions are provided for your convenience.
See FORM: MA-2222LLC
Sample LLC Notices & Resolutions
* * *
Accessories
U. S. Legal Forms, Inc. offers the following LLC accessories:
LLC Seal:
If you would like to order a LLC seal call U.S. Legal Forms, Inc. at (601)
825-0382. Engraved with your company name: $24.95 plus shipping, or see
http://www.uslegalbookstore.com/officeproducts/
Imprinted (or blank) Lithographed LLC Membership Certificates:
Preview
Order for your state
* * *
SAMPLE OWNERSHIP LEDGER
and
SIMPLE MEMBERSHIP CERTIFICATE
Ownership Ledger
Name and Residence
Address of LLC
Member Date of
Transfer %
Ownership Amount Paid Subsequen
t Transfer
Membership Certifcate
No. _____ LIMITED LIABILITY COMPANY- STATE OF MASSACHUSETTS
Percentage: ___
This Certifcate certifes that ____________________________, is a true
and lawful owner of ____ percent ownership of
______________________________, a Massachusetts Limited Liability
Company. Such ownership interest is only transferable in
accordance with the Operating Agreement between the Members.
This certifcate is issued by the Company by its duly
authorized ofcers on this the ____ day of _________,
20___.
__________________ ___________________
Disclaimer
THESE MATERIALS ARE PROVIDED "AS IS" WITHOUT ANY EXPRESS OR IMPLIED
WARRANTY OF ANY KIND INCLUDING WARRANTIES OF MERCHANTABILITY,
NONINFRINGEMENT OF INTELLECTUAL PROPERTY, OR FITNESS FOR ANY PARTICULAR
PURPOSE. IN NO EVENT SHALL U. S. LEGAL FORMS, INC. OR ITS AGENTS OR OFFICERS
BE LIABLE FOR ANY DAMAGES WHATSOEVER (INCLUDING, WITHOUT LIMITATION
DAMAGES FOR LOSS OF PROFITS, BUSINESS INTERRUPTION, LOSS OF INFORMATION)
ARISING OUT OF THE USE OF OR INABILITY TO USE THE MATERIALS, EVEN IF U.S.
LEGAL FORMS, INC. HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
If you are not an attorney, you are advised to seek the advice of an attorney for all serious legal matters.
The information and forms contained herein are not legal advice and are not to be construed as such.
Although the information contained herein is believed to be correct, no warranty of fitness or any other
warranty shall apply. All use is subject to the U.S. Legal Forms, Inc. Disclaimer and License located
here: http://www.uslegalforms.com/disclaimer.htm . To view, click on the link, or copy it into the
address window of your web browser.
If you cannot view the information contained at the link above, or do not agree to the terms
therein, you may not use the package materials. Return the package for a full refund.
* * *
~ Thank you for using USLF ~
