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Editorial 10 MIN READ

Massachusetts fees at mid-2021: $500 in, $500 a year, unmoved

A Certificate of Organization still at the top of the table, an annual report still matching it dollar for dollar, and a biotech cluster that pays without flinching

The Editors
Staff, Incorporator.org
10 min read Updated
Contents 7 sections
  1. What the 2021 fee schedule actually says
  2. The statutory anchor: ch. 156C, § 12
  3. What happens when the anniversary slips
  4. The cluster economy that pays the fee
  5. Taxes and adjacencies, briefly
  6. Who the Massachusetts fee schedule fits in mid-2021
  7. Sources

he Massachusetts LLC fee schedule did not move through the pandemic year, and it is not moving in 2021. A Certificate of Organization still costs $500 to file with the Corporations Division, the annual report still costs $500, and both numbers remain the highest pair of flat LLC fees of any U.S. state. The Secretary of the Commonwealth's office processed its 2020 volume without touching the table, and the table that sat on the site in January 2020 is the one that sits there today.

This is a mid-2021 review of what the Commonwealth actually charges an LLC in June 2021, what the statute says about why, and what the number looks like against the cluster economy that keeps paying it.

What the 2021 fee schedule actually says

The Corporations Division publishes its fee schedule at sec.state.ma.us/divisions/corporations. The document that serves today is the same document that served in mid-2019 and mid-2020. The two LLC numbers every founder needs to know are the ones set by Mass. Gen. Laws ch. 156C, § 12: $500 to file the Certificate of Organization, and $500 for the annual report due on the anniversary of formation. Both fees are statutory rather than regulatory, which means a change would require the Legislature rather than the Secretary, and neither the 191st General Court in its 2019-2020 session nor the 192nd General Court in its current session has filed a bill to revise the LLC fee schedule in ch. 156C.

Beyond the two headline numbers, the schedule for adjacent LLC work reads as follows in June 2021. An amendment to the Certificate of Organization runs $100. A restated certificate runs $100. Reservation of a proposed name is $30 for 60 days. A Certificate of Good Standing from the Division runs $25 on paper and $12 if ordered through the online portal. A certified copy of a filed document runs $12 plus a per-page charge for documents longer than a few pages. A Certificate of Cancellation (the LLC equivalent of a dissolution filing) runs $100. Administrative reinstatement after a lapse runs $100 on top of any missed annual report fees that must accompany it.

Foreign qualification for an out-of-state LLC to do business in Massachusetts costs $500 for the Application for Registration and $500 every year thereafter for the foreign LLC's annual report. The symmetry is deliberate. The Commonwealth charges a foreign LLC the same $500 on both sides of the filing calendar that it charges a domestic one. That is the structural reason a Wyoming or Delaware LLC doing business in Massachusetts saves nothing on the ongoing maintenance line by forming out of state first.

The online portal at corpfiling.sec.state.ma.us adds a small electronic-filing surcharge on top of the statutory fee. The portal surcharge is a processing charge rather than a revenue item; it reflects the cost the Secretary's office pays the portal vendor per transaction. For a $500 domestic filing, the portal cost lands in the range typical of state filing portals and is small next to the fee itself. Paper filings remain available by mail to the Corporations Division in Boston, and fax filings remain available for filers with an account.

There is no tiered expedite menu of the kind Delaware runs. The Commonwealth does not sell $100-per-tier shortcuts. Online filings submitted during business hours are usually reviewed the same day or the following business day, and fax filings move at a similar pace. Paper filings run a week or more from receipt, which is unchanged from 2019. Filers who need a certificate issued on a specific day for a closing can call the Corporations Division and ask; the office will usually accommodate a reasonable request without a separate fee.

The statutory anchor: ch. 156C, § 12

The fee schedule is not a Secretary's invention. It is the product of Mass. Gen. Laws ch. 156C, the Massachusetts Limited Liability Company Act enacted in 1995 and amended periodically since. Section 12 is the operative provision for both formation and annual reporting. The Certificate of Organization must state the LLC's name, the address of its Massachusetts office, the general character of its business, the latest date on which the LLC is to dissolve if any, the name and Massachusetts street address of its resident agent, the names and business addresses of any managers, and the name and business address of any person authorized to execute documents on the LLC's behalf. The statute then sets the filing fee for that certificate at $500 and requires an annual report carrying the same $500 fee.

Section 5 of the same chapter is what makes the resident-agent requirement load-bearing. Every Massachusetts LLC must continuously maintain a Massachusetts office and a resident agent in the Commonwealth. The office does not need to be where the business is actually run; it needs to be a Massachusetts address. The resident agent must be either a Massachusetts resident individual or a corporation authorized to do business in the Commonwealth, and the agent's address must be a physical street address. A P.O. box does not satisfy the statute.

The 1995 enactment of ch. 156C set the $500 fees at a level that was, at the time, the highest in the country. Twenty-six years later, that is still true on the flat-fee comparison. California's $800 annual minimum franchise tax under R&TC § 17941 is a larger number, but it is a tax on the entity rather than a filing fee, and it has different collection and planning consequences. On the pure Secretary-of-State fee line, Massachusetts holds the top spot in 2021.

What happens when the anniversary slips

A Massachusetts LLC owes its annual report on or before the anniversary of its original Certificate of Organization. An LLC organized on June 15, 2021 owes its first annual report by June 15, 2022, and every June 15 thereafter. Missing the anniversary does not trigger an immediate penalty the way Delaware's June 1 annual tax triggers a $200 flat penalty plus 1.5% monthly interest. The Commonwealth's enforcement track is slower and reputational rather than direct.

What happens on a lapse is that the LLC falls out of good standing on the Division's records. A pull of a Certificate of Good Standing after the lapse returns a document that notes the delinquency. Banks, lenders, title companies, and counterparties in routine commercial work request those certificates as a matter of course; the lapse surfaces at the moment it is most costly to surface. The practical consequence is not a fine but a deal that pauses while the LLC catches up its filings.

The Division does eventually administratively dissolve LLCs that remain delinquent across multiple reporting cycles, though the Commonwealth moves less aggressively on this than several peer states. Reinstatement requires the $100 reinstatement fee plus the missed annual reports at $500 each. An LLC that has ignored three anniversaries is looking at $1,600 to return to good standing before any registered agent or lawyer sends an invoice. The math favors paying the $500 on time.

The cluster economy that pays the fee

The fee survives politically because Massachusetts does not compete on price and has no institutional reason to start. The Commonwealth's economic base around Kendall Square, the Longwood Medical Area, and the Route 128 corridor produces entity formations for reasons that are largely indifferent to the cost of filing. A faculty-inventor forming a holding LLC for a Broad Institute spinout, a biotech incubator forming a special-purpose entity for a clinical collaboration, a hospital-affiliated research group forming a vehicle for an NIH grant, an MIT-adjacent founder forming an operating LLC around a piece of licensed technology: none of these profiles are shopping filing fees. They are forming in Massachusetts because the principals, the labs, the hospitals, the anchor institutions, and the surrounding capital are in Massachusetts. The $500 is a cost of being in the cluster.

The biotech and life-sciences formation volume through 2020 was consistent with that read. The Massachusetts Biotechnology Council's industry reports through 2020 showed continued growth in company counts across the state despite the broader pandemic retrenchment in other sectors, and venture funding into Boston-area therapeutics firms set records in the back half of 2020 and the first quarter of 2021. That formation pipeline ran through ch. 156C and paid the $500 on both sides.

Professional services firms are the second durable constituency. Law, accounting, architecture, and medicine practices that operate as Professional Limited Liability Companies file under the same § 12 track with the same $500 formation fee and the additional sign-off of the relevant Board of Registration. There is no cheaper state to form a PLLC that will practice in the Commonwealth, because the foreign-PLLC registration costs the same $500 and the licensing authority still has to approve the practice.

Real estate holding entities are the third. Massachusetts property held through an out-of-state LLC still requires that LLC to register as a foreign entity in the Commonwealth and pay the annual $500 fee, which erases the supposed savings of forming in Wyoming or Delaware for a Brookline two-family or a Back Bay condominium held as a rental. Forming the LLC in Massachusetts from the start avoids a dual-state filing apparatus with no corresponding benefit.

The profile that does not fit the fee schedule is the remote founder whose connection to Massachusetts is coincidence rather than necessity. A consultant who happens to live in Somerville and who could conduct the business from any state has a real case for forming in a lower-cost jurisdiction. The 2017 Massachusetts formation guide covered this question directly, and the math has not changed. Over a ten-year hold, the Commonwealth costs $5,500 in filing fees alone. Delaware over the same period costs $3,090. Wyoming runs under $700. If the business has no genuine Massachusetts nexus, those differences compound.

Taxes and adjacencies, briefly

The Secretary of the Commonwealth's fees are one agency's bill. The Department of Revenue is the other. A Massachusetts LLC with default tax classification pays no entity-level state tax; partnership-taxed LLCs file Form 3 informationally and single-member LLCs pass through to the owner's personal return. An LLC that elects corporate treatment on Form 8832 or 2553 files Form 355 and pays the Massachusetts corporate excise, which through 2021 remains an 8.0% net-income measure and a $2.60 per $1,000 non-income measure on tangible property or net worth, with a $456 minimum. Sales tax registration through MassTaxConnect is free, separate from any Secretary filing, and at a 6.25% rate on tangible personal property and a narrow band of services. None of this changes the $500 on either side of the Secretary's line, but every founder reading this should know that the Commonwealth's full cost of carrying an operating entity is the sum of both agencies' bills.

Who the Massachusetts fee schedule fits in mid-2021

The schedule fits three profiles and poorly serves a fourth.

It fits any LLC anchored to the biotech, life-sciences, or academic medicine cluster, where the principals and the work cannot credibly relocate and where the $500 is rounding next to the capital flowing through the formation. It fits professional practices that must operate in the Commonwealth and that have no cheaper path into a PLLC. It fits real estate holding entities for property actually located in Massachusetts, where dual-state filing would cost more than the single Commonwealth line.

It does not fit the remote operator whose residence in Massachusetts is incidental and whose business could be run from any state. For that profile the fee schedule is a $500 annual decision to subsidize an address.

The schedule will probably not move before the end of the 192nd General Court's current session, because no bill is pending to move it and no constituency is organized to ask. What will move is the composition of the formations paying it. The 2020 surge in single-member LLCs that every Secretary of State reported showed up in Massachusetts as well, though in smaller proportion than in cheaper-filing states. The biotech and professional pipelines that have always paid the $500 are continuing to pay it. The schedule, like the cluster it serves, is stable for reasons external to the table itself.

Sources

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