Massachusetts LLC Operating Agreement

Massachusetts law (MGL c.156C § 3) does not require an operating agreement but allows members to adopt one. Without a written agreement, Massachusetts default rules govern. The default rules may not match member intentions on critical issues like distributions, voting, and member dissociation.

The Massachusetts Secretary of State charges $500 to file a Certificate of Organization. The annual report costs $500. Massachusetts is one of the more expensive states to form and maintain an LLC. Members pay Massachusetts personal income tax on their pass-through share of profits at the applicable rate.

Massachusetts generally follows federal treatment — LLCs are pass-through entities taxed at the member level. However, Massachusetts imposes a corporate excise tax on LLCs with revenues over $6 million, treating them similarly to corporations for that portion. The state income tax rate is 5% (5.4% for short-term capital gains).

All Massachusetts LLCs must file an Annual Report with the Secretary of State and pay the $500 fee by the anniversary date of the Certificate of Organization. Late reports incur additional fees. Failure to file results in administrative dissolution of the LLC.