How to Start a Business in Massachusetts

Life Sciences and Biotech employs over 100,000 workers in Massachusetts, concentrated in Cambridge's Kendall Square. The state leads the nation in NIH funding per capita.

Technology and Software drives the Route 128 corridor and Boston's Seaport District. Massachusetts tech companies raised billions in venture funding in 2024 alone.

Healthcare and Hospitals anchor the state economy, with Mass General Brigham, Beth Israel, and Tufts Medical Center among the largest employers. Healthcare accounts for roughly 18% of state GDP.

Higher Education includes over 120 colleges and universities, creating a steady pipeline of talent and research commercialization opportunities.

Financial Services is centered in Boston, home to Fidelity Investments, State Street, and a growing fintech sector. The industry employs over 150,000 people statewide.

Clean Energy is growing rapidly under state mandates, with offshore wind projects and solar installations creating new business opportunities across the supply chain.

Massachusetts imposes a flat 5% income tax on wages, salaries, and business income. This rate applies to sole proprietors, LLC members, and S-Corp shareholders on their pass-through income.

The 4% millionaire's surtax took effect in 2023, adding an extra 4% on annual income exceeding $1,000,000. This brings the top marginal rate to 9% for high earners.

The state sales tax is 6.25%. Businesses selling taxable goods must register for a Certificate of Registration through MassTaxConnect and collect sales tax at the point of sale.

Massachusetts does not have a franchise tax, gross receipts tax, or separate business privilege tax. LLCs taxed as partnerships or sole proprietorships pass all income through to the owner's personal return.

Corporate excise tax applies to C-Corporations at a rate of 8% of net income, plus a property measure component. S-Corps and LLCs electing pass-through treatment avoid this.

Quarterly estimated tax payments are due April 15, June 15, September 15, and January 15 through the Massachusetts Department of Revenue. Underpayment penalties apply if you owe more than $400 at year-end.

Massachusetts has a cost of living index of roughly 135 (national average is 100), making it one of the more expensive states for business operations. Housing and commercial rent are the biggest cost drivers, especially in Greater Boston.

The state minimum wage is $15.00 per hour as of 2024, significantly above the federal minimum of $7.25. Tipped employees must receive at least $6.75 per hour before tips.

Average commercial office rent in Boston ranges from $40 to $75+ per square foot annually, depending on neighborhood. Suburban locations like Worcester, Springfield, and Lowell offer rents 40-60% lower than downtown Boston.

Energy costs in Massachusetts are among the highest in the nation, averaging roughly 25 cents per kWh for commercial electricity. Factor utility costs into your budget, especially for manufacturing or data-intensive businesses.

The Massachusetts Small Business Development Center (MSBDC) provides free consulting, financial planning assistance, and help with SBA loan applications. MSBDC has regional offices across the state.

The SBA Massachusetts District Office in Boston connects founders with SBA-guaranteed lenders and microloan providers. SBA 7(a) loans are available up to $5 million for qualifying businesses.

MassVentures offers direct equity investments and grants to early-stage technology and life sciences companies in Massachusetts. Their START program provides grants up to $200,000 for companies with federal SBIR/STTR awards.

The Massachusetts Growth Capital Corporation (MGCC) provides loans and technical assistance to small businesses in underserved communities. Their small business lending programs offer terms more favorable than conventional banks.

Boston and Cambridge both offer local grant programs for startups and small businesses. Check your city's economic development office for neighborhood-specific funding opportunities.

In the first 30 days after formation, open your business bank account, register for state taxes on MassTaxConnect, and file your local business certificate (DBA) at your city or town clerk. These three steps are prerequisites for accepting payments legally.

Between days 30 and 60, secure business insurance (workers' comp if hiring) and set up your accounting system. Get your Google Business Profile live and start building your website.

By day 90, confirm that all license applications are approved, your first quarterly estimated tax payment is scheduled, and your operating agreement is signed. Mark your annual report due date (formation anniversary) in your calendar to avoid the $500 renewal fee catching you off guard.