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Some of the hottest new tech startups, SEO/PPC agencies and business incubators are based in Massachusetts, such as Care.com, Run Keeper and Word Stream. Several older, very well-established companies are located there as well, such as Houghton Mifflin Harcourt, Hanover Insurance Group, Liberty Mutual Insurance, Staples and Wayfair.
However, just because a company is based in Massachusetts doesn’t mean it can’t be incorporated in Delaware. Many corporations that are headquartered elsewhere incorporate in Delaware in order to take advantage of Delaware’s corporate law structure, which is known for providing the best corporate liability protection.
Incorporating in Delaware is not a difficult process, no matter where your company is based. When filing a Delaware corporation, your business is domestic to the state of Delaware and foreign to every other state. This is called Foreign Qualification.
In order to get the authority from your company’s home state to operate a Delaware corporation there, business owners typically register in their home state as a foreign entity. This is an important step that is sometimes overlooked.
By failing to comply with local compliance regulations, you may be putting your company at risk.
Massachusetts, like most other states, has an application process and requires a state fee as well as additional documents from Delaware. Every corporation registered in the state must also complete an Annual Report at the end of each fiscal year, no matter if the corporation is foreign or domestic to Massachusetts.
Your corporation will also have to present a Foreign Corporation Certificate of Registration, on which you will have to list the names and titles of the corporation’s directors and officers. One of these directors or officers will need to act as the Authorized Individual and sign the Certificate of Registration.
Massachusetts will also require your business address and make you obtain a Registered Agent in Massachusetts. Any legal documents from the Secretary of State as well as any service of process will go to the Registered Agent, whose job it will be to forward the documents to the responsible party.
Massachusetts also requires a Certificate of Good Standing from the state of Delaware. The Certificate of Good Standing must be current within 60 days.
Once approved, Massachusetts will send your company a Certificate of Authority. This is the way in which Massachusetts gives your Delaware corporation permission to operate in Massachusetts. The turnaround time to receive your Certificate of Authority is about 2-3 business days.
Once your Delaware corporation is registered as a foreign entity to do business in Massachusetts, keep in mind that you will be responsible for the Massachusetts annual compliance matters as well as Delaware’s. The Massachusetts annual report is often due before March 15. Delaware’s annual report, which includes yearly Franchise Tax, is due before March 1.
A Delaware Registered Agent like Harvard Business Services, Inc. can help you complete the Massachusetts Foreign Qualification process. If you would like assistance in registering your Delaware corporation in Massachusetts, or just have questions about Foreign Qualification, please call 1-800-345-2677, Ext. 6130 or email us.
*Disclaimer*: Harvard Business Services, Inc. is neither a law firm nor an accounting firm and, even in cases where the author is an attorney, or a tax professional, nothing in this article constitutes legal or tax advice. This article provides general commentary on, and analysis of, the subject addressed. We strongly advise that you consult an attorney or tax professional to receive legal or tax guidance tailored to your specific circumstances. Any action taken or not taken based on this article is at your own risk. If an article cites or provides a link to third-party sources or websites, Harvard Business Services, Inc. is not responsible for and makes no representations regarding such source’s content or accuracy. Opinions expressed in this article do not necessarily reflect those of Harvard Business Services, Inc.