Sales and Employer Tax Registration for Massachusetts Small Businesses

by | Oct 26, 2022 | Business, Taxes

As a small business owner in Massachusetts, you must pay state taxes. What may be less clear is what exactly you should be paying and how to do it. 

We’ve put together this article to help you understand sales and employer tax registration for Massachusetts small businesses.


Sales Tax

Sales tax is collected from customers by businesses for each sale of qualifying goods or services, who are entrusted to pay the tax to the state of Massachusetts. The Massachusetts sales tax is 6.25%. 

Business owners are responsible for all sales taxes collected and must pass them along to the Massachusetts Department of Revenue (DOR) in order to comply with state laws. If a business fails to do this, the business can be subject to hefty fines. 


Registering Your Business

When you conduct business in Massachusetts, you must register your business with their Department of Revenue and obtain a Massachusetts Sales and Use Tax Registration Certificate.


Where to Register

You can register online at MassTaxConnect. It’s a pretty user-friendly site that will walk you through submitting your registrations.


What You Need

  • Social Security Number for sole proprietors or Employer Identification Number for everyone else
  • Your legal name
  • Business mailing address
  • Starting date of your business
  • Specific to Corporations: contact information for business officer(s), including title(s) and social security number(s)
  • Specific to Nonprofits: IRS Determination Letter recognizing an organization as a 501(C)(3)


Cost to Register



Permit Renewals

Never – no renewal necessary!


Collecting Sales Tax

If you are a service-based business that provides personal or professional services, this is going to be some great news: your services are tax-exempt! You do not need to collect Massachusetts state sales tax on these kinds of services. 

However, if you also sell goods, you will need to collect some taxes. For example, say you run your own hair styling business. Your services would be tax-exempt, but you will need to charge the 6.25% tax on any hair products you may sell. 

Almost all sales of goods will be subject to the state sales tax with a few exemptions. Check out’s list of tax-exempt items & sales for a complete list of exemptions. 


Hot Tip: 

Try using a point-of-sale system like Squarespace or Shopify to conduct your sales transactions. They can keep detailed records of your sales and automatically add the tax to transactions. This info will come in handy when it’s time to file your returns.


Filing and Paying the Taxes

When you register your business online, Massachusetts DOR will assign you a filing frequency. This is how often you will be required to file a sales tax return with the state and is usually based on your volume of sales. Typically this is monthly, quarterly, or annually.

Once you get your filing frequency and have filed your return, the sales taxes are due to the state on the 30th of the following reporting period. 


Employer Tax

If you are a business owner that has employees, you’ll need to pay state employer taxes when conducting business in Massachusetts. Massachusetts income tax rate is 5%. 

Massachusetts employment taxes are different from the federal income taxes – Social Security and Medicare (FICA) – you may already know. FICA is 7.65% of an employee’s pay. This amount is paid by you to the IRS. Additionally, the same amount is taken out of the employee’s paycheck and also given to the IRS.

These next steps will show you how to collect and file employer taxes in Massachusetts. 

Setting Up Payroll

You’ll need to establish a payroll system to keep track of your employees, their wages, their work hours, and your employer tax obligations. You can go old school with a simple Excel spreadsheet, but we highly recommend hiring a payroll service to take care of all your payroll needs! We have a few preferred vendors we work with and can recommend!

Hot Tip: 

Payroll records must be kept on file for at least three years in Massachusetts, so be sure to save all related documents. 


Working with Employees

Once you are all set up, you can start working with your team. When they onboard, make sure to grab new hire paperwork from them for your taxes:

  • Federal Form W-4
  • Federal Form I-9
  • Direct deposit banking information
  • Massachusetts form M-4

All new hires must be reported to the state. You can report them via MassTaxConnect.

Collect and approve employee timesheets from all hourly and salaried nonexempt employees. 


Paying Employees

When the pay period ends, tally up your employees’ hours, calculate the applicable taxes, and withhold them from their paychecks. You can pay your employees via cash, check, or direct deposit. 

Filing Employer Taxes

Federal taxes should be filed with and sent via the Electronic Federal Tax Payment System

Massachusetts employer tax returns are filed quarterly with DOR via MassTaxConnect. At year-end, you must issue your employees Form W-2s with their payroll and tax data for that year by January 31st of the following year. 

Reach out to us today if your small business needs a little extra help preparing your sales and employer tax registrations for Massachusetts by clicking here.