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Massachusetts Business Law

Formation of a Business Organization

It is important to take the time to think through the nature of a business before choosing a form of organization. Not everyone needs to incorporate immediately when a business is commenced. Many businesses start as sole proprietorships or partnerships before taking the next step of creating a more formal entity. Of primary concern is to obtain a good liability insurance policy, if possible, before beginning operations or providing services.

Factors to consider are the type of business, the risks involved, the number of owners, the amount of capital invested or to be invested, licenses or permits that may be required, and tax implications. One of the primary reasons for incorporating a business, creating an LLC or limited partnership is to limit the liability of each owner to the assets of the corporation. Naturally, a business owner does not want to lose his or her home and personal investments if something goes wrong with the business. The authorities that govern some occupations do not permit incorporation as a means of avoiding liability to customers, patients or clients, such as a physician's or an attorney's liability for professional malpractice. For small business owners who seek financing from a bank, it is customary for the bank to require each owner to personally guarantee the loan. A limited liability entity in that instance would not protect an owner's personal assets from the bank if the business defaults on the repayment of the loan. 

Information relating to Corporations and other Business Entities

Massachusetts Secretary of State Corporations Division

United States Patent and Trademark Office

Massachusetts Trademark Search and Forms

Massachusetts Corporations

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