Massachusetts is one of the best states to start a business in, so it is no wonder many new companies are popping up in the state. While diving into entrepreneurship may sound complicated, once you read this guide, you will be well on your way to successfully starting your own business.
In this guide, you will find everything you need to know about starting a business in Massachusetts, from choosing an idea to registering your business and even how to market it once it’s up and running!
Step 1: Choose Your Idea
Every business is based on a good idea. While anyone can think of a business idea, the trick is to find one that works. Although finding and choosing a good business idea can be overwhelming, the process is more simple than you may think. Your business idea does not have to be overly complicated or thought out at this stage.
Here are a couple of questions to ask yourself to get those ideas flowing:
- What are my passions, hobbies, and skills?
- Can I turn any of these hobbies into a paying business?
- Will I enjoy running the business for a living?
- Is there a need for my business?
- What consumer problem does my business solve?
- Are there any businesses like mine already out there?
- How do I plan on being different from those businesses?
These thought-provoking questions should give you a clue about whether or not you are on the right track. If not, you can continue brainstorming and even ask your friends and family for help.
Step 2: Pick a Name
Once you have chosen an idea for the business, you must pick a name. When choosing a name for your business, you need to keep a few things in mind.
First, Massachusetts does not allow businesses to use the same name as others already registered with the state. However, you can quickly search on the Massachusetts Secretary of State’s business entity search to check whether or not your chosen name is available.
Second, your chosen business name should be memorable and easy enough for customers to read and pronounce. You don’t want people confusing your business with another.
Finally, when picking a name, try to keep it relevant to the industry your business is based in.
If you’re still struggling to come up with a good business name, try out these helpful and easy tricks:
- Use an online name generator. These are free and usually come up with unique names.
- Hold a brainstorming session with your friends and family.
- Create a survey on your social media accounts.
Step 3: Write Your Business Plan
Once you have decided on your business idea and what you’ll call your business, you will need to write your business plan. The business plan will have everything you need to know about your business, including your research and planning, financial details, marketing techniques, and how you plan on running the business on a day-to-day basis.
While there are no set rules in Massachusetts as to what needs to be included in your business plan, try to ensure that your business plan answers the following questions:
- How does your business solve consumer problems?
- Are there any businesses already open like yours, and how do you plan on being different from them?
- Who is your target market?
- How do you plan on turning them into paying customers?
- What skills will you need in the business?
- How many people will you need to hire?
- How much will you need to make before you break even in the business?
- How do you plan on making a profit?
Your business should be as informative as possible because it can also be an excellent tool for marketing your business to potential investors.
Step 4: Get Funding
Starting a business requires money. You’ll need funding to cover start-up costs; if you cannot afford to fund that yourself, you will need to get funding another way. This can be done through grants, loans, and investors.
Grants
Massachusetts Executive Office of Housing and Economic Development (EOHED) has several grant programs available for small businesses in the state. You can check out their website to see if your business qualifies for one of these grants.
Loans
If your business does not qualify for any business grants, try applying for a loan instead. Loans differ from grants because you will have to pay the money back with interest. The EOHED also offers several loans geared toward businesses. Alternatively, you can seek loans from private sources like your local bank or friends and family. Just be sure to get any loans in writing – even if you borrow from a close family member.
Investors
If you’re happy parting with some shares in your business, you can also have an investor help out with funding some of the start-up costs. There is also the option to have friends and family invest in your business. As with loans, just be sure to have your agreement in writing.
Step 5: Choose a Business Structure
Choosing the proper structure for your company is crucial for the success of your business, as each structure has different benefits. Here are the different business structures to choose from:
Sole Proprietorship
This is the simplest business structure and is perfect for those who want to get a business up and running without all the paperwork. In a sole proprietorship, there is only one sole owner of the business, and there is no separation of business and personal assets.
Partnership
A partnership is another informal business structure with no separation of business and personal assets. The only difference between this structure and a sole proprietorship is that a partnership has more than one owner, each with equal shares of the business.
Limited Liability Company
A limited liability company, or LLC, is one of the most popular choices of business structures for small businesses. Many small businesses choose this structure because it is a hybrid: it combines the simplicity and flexibility of a sole proprietorship or partnership and the liability protection of a corporation.
C or S Corporation
A corporation is a formal business structure most commonly used by large companies with multiple shareholders. A corporation is an entirely separate entity from the owners and shareholders, and businesses have the option to be taxed as an S-type corporation which offers additional tax benefits.
Step 6: Register Your Business
After choosing your business structure, you may need to register with the state of Massachusetts before you can begin trading legally.
Sole Proprietorship
There is no legal requirement for this business structure to be registered with the state. However, if you wish to operate under a different name other than your legal name, known as an assumed name, you will need to file this with your local county.
Partnership
This business structure does not need to be registered with the state either, but if you wish to operate under a different name, you must file an assumed name with your local clerk. This assumed name must be re-filed every four years. It is also recommended that all business owners sign a partnership agreement. However, the partnership agreement is an internal company document this doesn’t need to be submitted to the state.
Limited Liability Company
To register your LLC in Massachusetts, you must complete and submit the Certificate of Organization with the Secretary of the Commonwealth. This certificate contains all the information about your business. The fee to do this is $500.
Corporation
Registering a corporation is very similar to an LLC. You must complete and submit the Articles of Organization with the Secretary of the Commonwealth. The fee for filing for your corporation online is $275.
Step 7: Set Up Your Finances and Accounting
To set up your finances, you will need to open a business bank account, apply for a credit card, and set up some payment methods for your customers to use. If your business has employees, you will want to use payroll software to keep track of salaries.
If you’re unsure how to keep track of expenses and look after the business’s books, it is a good idea to hire an accountant to do this for you. You will be especially thankful for the help when tax season rolls around!
Step 8: Get Business Insurance
Not investing in a good business insurance policy is a very risky idea. While Massachusetts does not require businesses to have insurance, you should at least have a general liability insurance policy. This is a broad insurance policy covering everything a business needs for the daily running of the business.
There are other insurance policies you can choose from, like:
- Commercial auto insurance
- Commercial property insurance
- Business owners insurance
Consult a business attorney or broker if you’re feeling overwhelmed by the choices and unsure what to get. They will be able to help you find the insurance that best fits you and your business’s needs.
Step 9: Obtain Any Permits or Licenses Needed
The state of Massachusetts does not issue statewide general business licenses. However, if you wish to collect sales tax, you are legally required to apply for a sales tax permit online through the web filing application MassTaxConnect. You will need to create an account to log in first.
Although Massachusetts does not require a general business license, you may need specialized permits or licenses depending on your business. Check out the Business Licenses and Permits page to see what you may need. You should also contact your local county clerk to see if you may need additional local permits or licenses to remain compliant.
Step 10: Build a Website
Every business needs a good website, and there are two ways of going about this: you can build your website using free or subscription-based online web-builders, or you go pay to have someone else design the website for you.
If you decide to build your website yourself, there are a couple of things you need to keep in mind:
- Make sure that your domain name is still available. You can do this with a quick google search.
- Make sure your business name is clear and visible on the front page.
- Do not clutter the webpage with unnecessary images, videos, and GIFs, as this slows loading times.
- Be sure to include your contact details.
- Add links to your other social media accounts.
Step 11: Hire Employees (If Any)
If you need to hire more people to assist you with your business, you must legally report all new hires on the MassTaxConnect portal. This needs to be done within 14 days of the hire date.
When hiring employees, thoroughly read through all applications to interview candidates that match your requirements. And when interviewing candidates, ask a mix of both professional and behavioral questions.
Step 12: Market Your Business
The final step in starting a business in Massachusetts is to market your business. This is easy to do and can be done on any budget. The one thing to remember when marketing your business is to be consistent, as this is the best way to build brand recognition.
Here are some different ways to market your business:
- Advertise on your business website.
- Engage with customers online through social media.
- Create a Google Business Profile and advertise on Google.
- Attend local expos and business conventions.
- Hold competitions.
- Advertise for free on social media like Facebook, Instagram, and even TikTok.
You can also always hire a marketing expert to take care of this side of the business for you.