Massachusetts LLC and Asset Protection
An Massachusetts LLC
offers business entrepreneurs the form of corporate organization that provides perhaps the most flexibility to you. An LLC formation, like the alternative corporate forms of organization like a limited partnership
or a Subchapter S Corporation,
are generally prime candidates for a business juststarting. The state of Massachusetts gives public support to an Massachusetts LLC.
Should I form a Massachusetts LLC?
An Massachusetts LLC satisfies a necessary condition of your business planning developement in that it meets the requirement that you establish a legal form of organization in order to gain the statutory benefits and protection available in Massachusetts to your LLC. Your Massachusetts LLC establishes a legal presence within the state, which you can use either as a platform for in-state operations or by registering your Massachusetts LLC via your agent's physical address in order to meet the purely statutory requirement for tax and filing purposes absent an in state operation.
Advantages and Disadvantages:
Advantages of Limited Liability Company
- Limited Liability: Owners of a LLC have the limited liability protection of a corporation.
- Flexible Profit Distribution: Limited liability companies can select varying forms of distribution of profits. Unlike a common partnership where the split is 50-50, LLC have much more flexibility.
- No Minutes: Corporations are required to keep formal minutes, have meetings, and record resolutions. The LLC business structure requires no corporate minutes or resolutions and is easier to operate.
- Flow Through Taxation: All your business losses, profits, and expenses flow through the company to the individual members. You avoid the double taxation of paying corporate tax and individual tax. Usually, this will be a tax advantage, but circumstances can favor a corporate tax structure.
Disadvantages of Limited Liability Company
- Limited Life: Corporations can live forever, whereas a LLC is dissolved when a member dies or undergoes bankruptcy.
- Going Public: Business owners with plans to take their company public, or issuing employee shares in the future, may be best served by choosing a corporate business structure.
- Added Complexity: Running a sole-proprietorship or partnership will have less paperwork and complexity. A LLC may federally be classified as a sole-proprietorship, partnership, or corporation for tax purposes. Classification can be selected or a default may apply.
By Massachusetts and other state law in order to proceed with forming a llc, you need to prepare a written abstract detailing your llc purpose, the names of your initial Massachusetts LLC members, the name and address of your Massachusetts registered agent, the details of which will be introduced into the body of your LLC operating agreement and related Massachusetts LLC formation documents assembled for application to the state of Massachusetts.
Massachusetts' 2011 Business Tax Climate Ranks 32nd
Massachusetts ranks 32nd in the Tax State Business Tax Climate Index. The Index compares the states in five areas of taxation that impact business: corporate taxes; individual income taxes; sales taxes; unemployment insurance taxes; and taxes on property, including residential and commercial property. Neighboring states ranked as follows: Rhode Island (42nd), Connecticut (47th), New York (50th), New Hampshire (7th) and Vermont (38th).
Massachusetts' Individual Income Tax System
Massachusetts' personal income tax system consists of a flat rate of 5.3% on most personal income. This rate ranks 31st highest among states that levy an income tax. Massachusetts' 2008 state-level individual income tax collections were $1,916 per person, which was the 2nd highest in the nation.
Massachusetts' Corporate Income Tax System
Massachusetts' corporate tax structure consists of a flat rate of 8.8% on all corporate income. Among states levying corporate income taxes, Massachusetts' rate ranks 9th highest nationally. In 2008, state-level corporate tax collections (excluding local taxes) were $334 per capita, which ranked 4th highest nationally.
Massachusetts Property Taxes among Nation's Highest
Massachusetts is one of the 37 states that collect property taxes at both the state and local levels. As in most states, local governments collect far more. Massachusetts' localities collected $1,683.66 per capita in property taxes in fiscal year 2006, which is the latest year that the Census Bureau published state-by-state data. Despite a well-known property tax limitation measure passed in the early 1980s, Proposition 2 1/2, Massachusetts' combined state/local property taxes are the 8th highest in the nation per capita. High levels of collections have been possible because the limitations in law are relatively easy to override locally. At the state level, Massachusetts collected a mere $0.01 per capita during FY 2006, making its combined state/local property taxes $1,683.67 per capita.
| Massachusetts LLC Advantages and Disadvantages