How to Form an S Corp in Massachusetts: Filing, Form 2553, and Excise

To form an S Corporation in Massachusetts, you take two separate steps: incorporate a business corporation with the Secretary of the Commonwealth, then file IRS Form 2553 to elect S Corp tax treatment with the federal government. The state filing fee starts at $275, and the federal election itself costs nothing. One thing to know up front: Massachusetts imposes its own entity-level excise tax on S corporations, so the state tax picture is not the clean pass-through many owners expect from the federal side.

Pick a Name and a Registered Agent

Your corporate name has to be distinguishable from every other entity already on file with the Secretary of the Commonwealth, and it must include a corporate designator — Corporation, Incorporated, Company, Limited, or an abbreviation such as Corp., Inc., Co., or Ltd.1Cornell Law School. 950 CMR 113.16 Articles of Organization Check availability through the Secretary’s online business name database before you commit.

You also need a registered agent with a street address in Massachusetts. The agent is whoever receives legal documents and official correspondence for the corporation; a P.O. box does not count.1Cornell Law School. 950 CMR 113.16 Articles of Organization You can serve as your own agent or hire a commercial service, which typically runs $125 to $436 a year.

Prepare and File the Articles of Organization

The Articles of Organization is the document that creates your corporation under the Massachusetts Business Corporation Act, M.G.L. Chapter 156D.2General Court of Massachusetts. Massachusetts General Laws Chapter 156D Business Corporations The form is available on the Secretary of the Commonwealth’s website. Before you fill it out, decide how many shares to authorize. The authorized number is a ceiling, not a required issuance; most small S corporations stay with something modest like 1,000 or 10,000 shares to keep fees down.

The form asks for:

  • Total authorized shares and any par value.
  • Names and residential addresses of initial directors.
  • Names of the president, treasurer, and secretary. All three offices are required by statute, and one person can hold more than one.3General Court of Massachusetts. Massachusetts General Laws Chapter 156D Section 8.40 Required Officers
  • Registered agent name and Massachusetts street address.
  • Principal office where the corporation keeps its records.
  • Fiscal year end. Calendar year (December 31) is typical, because the IRS generally requires S corporations to use one.

If you want to restrict share transfers (common for closely held companies), put those restrictions in the articles or the bylaws at the outset.

File with the Corporations Division of the Secretary of the Commonwealth. Online filing is fastest; mail and fax are also accepted. The fee is $275 for up to 275,000 authorized shares, with another $100 for each additional 100,000 shares or portion of 100,000.4Massachusetts Secretary of the Commonwealth. Corporation Division Fee Schedule Online filings typically clear in one to two business days; mail takes longer depending on volume. Once approved, you receive a certificate of incorporation and a stamped copy of the articles. Keep the certificate; your bank will ask for it.

Get an EIN from the IRS

Once the corporation exists, apply for an Employer Identification Number. The EIN is the corporation’s federal tax ID and is needed to open a bank account, hire employees, and file returns. Apply online at IRS.gov; it is free and issued immediately.5Internal Revenue Service. Get an Employer Identification Number You will need the Social Security number or taxpayer ID of the responsible party, usually a principal officer or owner, and the application must be finished in one session.

Adopt Bylaws and Hold the First Meeting

Bylaws are the corporation’s internal rules — how meetings are called, how directors are elected, how shares are transferred. They are not filed with the state, but they belong in your corporate records. At the first organizational meeting, the directors adopt the bylaws, appoint officers, authorize issuance of shares to the initial shareholders, and approve opening a corporate bank account. Keep written minutes. Massachusetts courts look at whether a corporation followed its own governance procedures when deciding whether to respect its separate legal existence; mixing personal and corporate affairs or skipping documentation can put your liability shield at risk.

Confirm You Qualify for S Corp Status

S Corp is a federal tax election, not a different kind of entity. Under 26 U.S.C. § 1361, your corporation has to meet every one of these tests:6Office of the Law Revision Counsel. 26 USC 1361 S Corporation Defined

  • Domestic corporation, organized in the United States.
  • 100 shareholders or fewer. Family members can count as a single shareholder.
  • Shareholders are individuals, qualifying trusts, or estates. Partnerships, other corporations, and nonresident aliens cannot be shareholders.7Internal Revenue Service. S Corporations
  • One class of stock. Voting and nonvoting shares are allowed, but every share must carry the same rights to distributions and liquidation proceeds.
  • Not an ineligible corporation. Certain financial institutions, insurance companies, and domestic international sales corporations are barred.

Fail any of these on any single day and the S election can terminate. The usual accident is bringing in an ineligible shareholder.

File Form 2553 to Make the S Election

Form 2553, “Election by a Small Business Corporation,” is how you make the S Corp election with the IRS.8Internal Revenue Service. About Form 2553, Election by a Small Business Corporation There is no filing fee, and every shareholder has to sign to consent.

When to File

For the election to take effect in the current tax year, Form 2553 must be filed no later than two months and 15 days after the start of that tax year.9Office of the Law Revision Counsel. 26 USC 1362 Election Revocation Termination For calendar-year filers, that is March 15. You can also file any time during the prior tax year. For a brand-new corporation, the clock starts on the first day it had shareholders, acquired assets, or began doing business.10Internal Revenue Service. Instructions for Form 2553 Miss the deadline, and the election normally takes effect the following tax year, with the corporation taxed as a C Corp for the year you were late.

Where to Send It

Massachusetts-based corporations mail Form 2553 to the Department of the Treasury, Internal Revenue Service, Kansas City, MO 64999, or fax it to 855-887-7734.11Internal Revenue Service. Where to File Your Taxes for Form 2553 The IRS generally sends a determination letter within 60 days confirming the election was accepted.10Internal Revenue Service. Instructions for Form 2553 Keep that letter with your permanent records; banks, lenders, and buyers will ask for it.

If You Missed the Deadline

Late filers can often still get the election treated as timely under IRS Revenue Procedure 2013-30. The corporation has to meet all of these:12Internal Revenue Service. Revenue Procedure 2013-30

  • It intended to be an S corporation as of the desired effective date.
  • The relief request is made within three years and 75 days of that date.
  • The only defect was the late filing.
  • There is reasonable cause for the delay, and the corporation acted to fix it once discovered.

To request relief, file a completed Form 2553 with “FILED PURSUANT TO REV. PROC. 2013-30” written at the top. Every shareholder during the period between the intended effective date and the filing must sign and include a statement confirming they reported income consistently with S Corp status. Attach a short explanation of the reasonable cause.

Plan for the Massachusetts Corporate Excise

Pass-through taxation is a federal rule. Massachusetts imposes its own corporate excise on S corporations, and it is worth understanding before you elect.

Every Massachusetts S corporation owes a minimum excise of $456 per year, no matter what the business earns. On top of that minimum, the state charges $2.60 per $1,000 of taxable Massachusetts tangible personal property or taxable net worth.13Mass.gov. S Corporations Larger S corporations pay an additional income-based tax:

  • Gross receipts of $6 million to $9 million: 2% on net income subject to tax.
  • Gross receipts of $9 million or more: 3% on net income subject to tax.13Mass.gov. S Corporations

S corporations below the $6 million threshold with modest tangible property generally owe only the $456 minimum. That minimum is due every year, including loss years.

Massachusetts S corporations file Form 355S with the Department of Revenue. There is no separate state election; Massachusetts automatically recognizes your federal S status. Pass-through income is reported on shareholders’ individual Massachusetts returns at the applicable state rate. The state does not conform to every federal rule — bonus depreciation is disallowed, net operating loss carryovers and carrybacks are not permitted, and state and local tax deductions are treated differently.14Mass.gov. Instructions for Massachusetts S Corporation Return Form 355S Working with a tax professional familiar with both systems is a practical step.

Pay Yourself Reasonable Compensation

If you are both a shareholder and an employee, the IRS requires you to receive reasonable compensation as W-2 wages before taking non-wage distributions. Wages carry Social Security and Medicare tax; distributions do not. The IRS pays close attention to S corporations that pay unusually low salaries alongside large distributions.15Internal Revenue Service. S Corporation Compensation and Medical Insurance Issues

If the IRS decides your compensation was unreasonably low, it can reclassify distributions as wages and assess back employment taxes, interest, and penalties. “Reasonable” depends on what you do, the hours you put in, pay for comparable positions in your industry, and the corporation’s revenue. There is no fixed dollar line; the standard is what a similar business would pay someone to do the same work.

As an employer, the corporation withholds federal income tax, Social Security, and Medicare from employee wages and pays the employer’s share. It also owes federal unemployment tax (FUTA) on the first $7,000 of wages paid to each employee per year.16Internal Revenue Service. Publication 15 (2026) Employers Tax Guide

Keep the Corporation in Good Standing

Formation is not the finish line. A few recurring obligations keep the corporation — and the S election — alive.

Annual Report

Every Massachusetts domestic corporation files an annual report with the Secretary of the Commonwealth. The fee is $125 by mail or $100 electronically, rising to $150 if you miss the deadline.17Massachusetts Secretary of the Commonwealth. Filing Fees Repeated failures can lead to administrative dissolution, which also terminates the S Corp election.

Federal Return

S corporations file an informational return on Form 1120-S each year. For calendar-year corporations the deadline is March 15, with a six-month extension available on Form 7004.18Internal Revenue Service. Publication 509 (2026) Tax Calendars Each shareholder receives a Schedule K-1 reporting their share of the corporation’s income, deductions, and credits for their personal return.

Corporate Formalities

Hold at least one annual meeting of shareholders and one of directors each year, and keep written minutes. Document the major moves: officer appointments, significant purchases, loans, benefit plans, stock issuances. Those records are what preserve the legal line between you and the corporation if that line is ever challenged.