Starting a Business in Massachusetts
The Bay State boasts many reasons for running a business, especially a technology driven business. It largest city, Boston, is commonly known as the East coast Silicon Valley. Everybody is familiar with Harvard, but Massachusetts has many other institutions that are producing a great workforce. Massachusetts has a variety of opportunity programs for those starting a business and companies that want to expand their operations from within the state. Some common incentives come in the form of tax credits, grant/loan programs and exemptions. Researching the correct information and procedures is very important, especially if you are trying to get the correct business licenses or verifying an FEIN number. Some other important tasks that can be completed are checking on the status of form ST-4, trying to pay Massachusetts sales tax, searching for a Massachusetts sales tax rate, or performing a corporation search.
STEPS TO STARTING A BUSINESS IN MASSACHUSETTSThe Massachusetts Secretary of State lets you incorporate a business once you have selected a business name. The Massachusetts Department of Revenue collects taxes and sets the standard for filing procedures. In order to meet core compliance from the state level an application for an online Massachusetts Seller’s Permit should be submitted. The sales tax permit will ensure that you will be able to collect and remit sales tax correctly. The last major task you will need to do in order to remain compliant is to look up the correct licenses and permits you will need by conducting proper Business License research. After you are done with your compliance requirements, you can look into the different incentives offered in Massachusetts. Companies in Massachusetts can benefit from these outstanding programs. Here is a brief list of the incentive programs provided:
- One major loan program available in Massachusetts is the Emerging Technology Fund. This program provides loans up to $2.5 million to technology companies who have a proven track record. Funds can be used for the purchase of technology related equipment such as computers, software or other technological materials. Additionally, money can be used for other growth and expansion related activities. Businesses that qualify for the credit would be in the technology arena such as computer manufacturers, software developers, internet providers and other electronic media companies.
- Massachusetts has an entertainment program for filmmakers that split incentives into three parts. The program offers a Production Credit, a Sales Tax exemption, and a 25% Payroll Credit. To qualify for the production credit a company must spend at least $50,000 on a film project towards eligible production expenditures. To qualify for the payroll credit or tax exemption at least 50% of the project must be filmed in Massachusetts. Credits can be carried forward for up to five years.
- Massachusetts has Sales Tax exemptions for businesses that purchase Research & Development or manufacturing equipment. Sales tax on equipment and machinery used in R & D as well as in the manufacturing process of tangible personal property that is for resale qualify for exempt status from Sales Tax. The Sales Tax exemption is equal to the standard 5% rate on Massachusetts sales tax and the standard 5% out of state use tax.
- Massachusetts offers an employment incentive called the Economic Development Incentive Program. It was created to help companies expand their workforce with job creation to facilitate growth. The program includes a credit of up to 40% of the corporate excise tax liabilities owed by the business.
- In an effort to facilitate growth in research and development, Massachusetts offers two tax credits to a business that qualifies. The first is the basic R & D tax credit which is based off of qualified R & D expenses that would also qualify for a federal level tax credit and is given as a 10% credit. The second is the Research Payments R & D tax credit which is 15% of qualified contributions. Credits are taken against corporate income tax obligations and can bring a company’s tax owed to the minimum. There are no deductions that can be taken against sales tax in which a specific license would be needed.