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Doing business in

Massachusetts

Navigate Massachusetts’s business landscape with ease—whether you’re incorporating, expanding, or managing tax compliance. Commenda helps you stay ahead with automated solutions for incorporation, compliance, and tax filings.
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massachusetts

Business Overview

Massachusetts features a knowledge-based economy with world-class strengths in biotechnology, education, healthcare, and finance. The state’s innovation ecosystem includes renowned universities, venture capital networks, and research centers that drive economic development and technological advancement.

Key Facts & Figures

Category Details
Capital Boston
Major Cities Boston, Worcester, Springfield, Lowell, Cambridge
State Sales Tax Rate 6.25%
Local Sales Tax Rate No local sales tax
Corporate Income Tax 8.25% flat rate
Physical Nexus Threshold Physical presence through employees, property, or inventory
Economic Nexus Threshold $100,000 in annual sales

Did you know?

Massachusetts leads the world in life sciences research and development, with over 1,000 biotechnology and pharmaceutical companies.

Setup & Compliance

Massachusetts business formation involves several state agencies with specific registration requirements.

Starting a Business in Massachusetts:

  1. Select Your Business Structure: Consider Massachusetts tax implications for different entity types.
  2. Register Your Business: File formation documents with the Secretary of the Commonwealth.
  3. Register for Tax Accounts: Register with the Department of Revenue for sales tax and withholding.
  4. Obtain Required Licenses: Research and secure necessary state and local business licenses.
  5. Register as an Employer: Register with the Department of Unemployment Assistance if hiring employees.

Key Compliance Considerations:

  • Annual Reports: Massachusetts entities must file annual reports with the Secretary of the Commonwealth.
  • Sales Tax Collection: Collect and remit 6.25% state sales tax on taxable transactions.
  • Corporate Income Tax: C-corporations pay 8% corporate excise tax.
  • Paid Family and Medical Leave: Massachusetts employers must participate in the state’s PFML program.
  • Industry-Specific Regulations: Various professions and industries require specialized licensing through state boards.

Hiring & Payroll

Massachusetts has some of the strongest worker protections in the nation.

Massachusetts Payroll Requirements:

  • Unemployment Insurance: Rates from 0.94% to 14.37% on first $15,000 of wages.
  • State Income Tax Withholding: Flat 5% of taxable wages.
  • Paid Family and Medical Leave (PFML): Contribution rate of 0.68% of eligible wages split between employer and employee.

Massachusetts Employment Laws:

  • Minimum Wage: $15.00 per hour ($6.75 for tipped employees).
  • Sick Leave: Employers with 11+ employees must provide up to 40 hours of paid sick leave annually.
  • Pay Equity Law: Prohibits salary history questions and requires equal pay for comparable work.
  • Non-Compete Restrictions: Limited to 12 months and requires garden leave payments.
  • Massachusetts is not a right-to-work state.

State Incentives

Massachusetts offers extensive economic incentives to attract and retain innovative businesses.

Key Business Incentives:

  • Economic Development Incentive Program: Comprehensive tax incentives.
  • Research and Development Tax Credit: Supports innovative company development.
  • Life Sciences Tax Incentive Program.

Small Business & Startup Support:

  • Massachusetts Small Business Development Center: Comprehensive business resources.
  • Innovation Vouchers: Support for technology transfer and commercialization.
  • Emerging Technology Fund: Support for cutting-edge technology businesses.

Regulatory Considerations

Massachusetts provides a comprehensive regulatory environment supporting innovation.

Key Business Regulations:

  • Data Privacy: Advanced laws protecting consumer and business information.
  • Environmental Compliance: Stringent regulations supporting sustainable practices.
  • Professional Licensing: Mandatory for various high-tech and professional services.

Additional Regulatory Areas:

  • Technology and Innovation Sector Compliance.
  • Higher Education and Research Industry Regulations.

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