How to form an LLC in Maine in 6 easy steps
The only thing sweeter than a can of Moxie is launching a new business in the Pine Tree State. If you're thinking about establishing a new business in Maine, you've undoubtedly got many questions, from where to open up shop to how to attract your first customers. You should also think about whether it's wise to start an LLC.
A Maine Limited Liability Company (LLC) is a corporate structure that minimizes a business owner's personal liability. Personal assets, such as cars or houses, cannot be seized for bankruptcy, litigation, or other outstanding obligations. In contrast, if you run a sole proprietorship, your personal assets are jeopardized if the company runs into financial issues.
But, unlike S corporations, LLCs are not treated as distinct business entities for tax purposes, allowing you to report your business profits and losses with your personal income tax returns.
If you've determined that an LLC is an appropriate structure for your company, your next inquiry is likely to be, "So how do I start an LLC?" Fortunately, the procedure is straightforward.
Check out this step-by-step guide so that you can make your Maine LLC formation process quick and painless.
1) Check if your business name is available
A unique name is one of the first pillars of building a brand. In addition, your company name should help you portray yourself to your customers and the rest of the community, so choose something original, eye-catching, and compliant with the state's naming regulations.
The phrase "limited liability company" or its permitted abbreviations (LC, L.C., LLC, L.L.C., LTD) must appear in your business name.
There must be nothing in your name that might be mistaken for a government entity. As a result, "IRS Tax Experts" for an accounting service won't work.
Also, LLC names that contain a restricted title (names or titles that need a license, such as "attorney," "dentist," or "psychologist"). You may need to provide proof (such as occupational or business licenses) that a licensed expert in the industry manages your LLC.
Let's say you want to use a company name or trade name that differs from the one you formally incorporated under. You may wish to register for a DBA (Doing Business As). A DBA helps customers and the government know who is behind a company, regardless of assumed identities or name changes, and may shield you against fraud or confusion in the marketplace.
Once you've decided on a name for your LLC, check its availability using the Maine Corporate Name Search.
2) Find a registered agent
A Maine registered agent is an individual or licensed business that serves as the state's primary point of contact for your company. Any government or legal documents that your business gets will be sent to your registered agent. By state law, registered agents must live in the state and have a street address (P.O. Boxes not allowed).
You might guess that you could save time and money to act as your own registered agent. However, while one can lawfully fulfill the role, doing so may come with unintended consequences.
For one thing, the registered agent must be present at the office during business hours. So, for example, if you're a landscaper who works from site to site, this may be impossible.
In addition, one of the primary reasons for registered agents is to accept service of process. For instance, if your company receives a legal notification of an impending lawsuit or court action, you probably don't want that happening where you serve customers. The interruption could not only be embarrassing, but it may also damage your reputation.
Many companies use a registered agent service, also called a commercial registered agent, to receive legal or governmental paperwork on their behalf. Moreover, some providers can offer digital documentation, allowing you to determine the situation's urgency without waiting for the paperwork to be sent by snail mail.
3) Write your LLC operating agreement
An operating agreement is like a blueprint for your business structure, laying out the conditions of ownership and operation. This agreement keeps details in black and white regarding the company and may help you avoid future internal squabbles or legal issues.
In addition, state law requires operating agreements, even if you're running a single-member LLC.
Furthermore, single-member LLCs benefit from operating agreements because they help define precisely how your company differs from a sole proprietorship. For this reason, you don't run into any problems with the Maine Revenue Services when filing your state tax return.
And the good news is that the agreements are pretty uncomplicated to write. Here's an example operating agreement template to give you an idea.
4) File your Certificate of Formation
Once you've decided on a name, picked a registered agent, and crafted an operating agreement, you're ready to submit your LLC paperwork.
With the Maine Secretary of State, you file your Certificate of Formation, called Articles of Organization, in most other states. The Certificate of Formation is a relatively simple application. Here's everything you'll need to ensure it's completed properly:
- The LLC's name
- Effective date (upon filing or on a later date)
- Low-profit LLC status (Low-profit LLCs are established for charitable or educational purposes.)
- Professional LLC status (for professional services providers such as accountants, architects, attorneys, chiropractors, dentists, doctors, engineers, registered nurses, and veterinarians.)
- Registered agent's name and address
- Authorized person's signature (usually an owner)
The Certificate of Formation state filing fee is $175. It takes about 9-15 business days for approval, but you can pay for expedited processing. It's an additional fee of $100 for the same business day or $50 for next business day processing.
In addition, businesses headquartered outside the state but want to conduct business in Maine must form a foreign LLC by filing a Statement of Foreign Qualification to Conduct Activities with the Division of Corporations, UCC, and Commissions, a branch of the Maine Secretary of State.
You can find the forms and fee schedule here.
5) Get your Employer Identification Number
Your Employer Identification Number (EIN) functions similar to your personal Social Security number. It sets your organization up as a distinct legal entity with the Internal Revenue Service (IRS) and enables you to include your LLC's finances on your personal state income tax return. Your EIN isolates your personal assets from those of your business, which is why you probably founded an LLC.
EINs are essential for Maine business owners, particularly if you operate an LLC. Because you've completed your Certificate of Formation and your LLC is in working order, you can also get a Certificate of Good Standing for your LLC.
With your EIN and Certificate of Good Standing in hand, you may establish a business bank account, which keeps your company and personal expenditures separate and makes it clearer to prevent errors when submitting your tax returns. Moreover, your LLC won't be charged federal income taxes. Instead, you and the other LLC owners will pay taxes on your personal income.
Also, your EIN and the separate legal status your LLC provides means you can now hire employees. Just remember, the state requires all employers to pay for worker's comp insurance to protect their employees.
6) Wrap up other regulation and sales tax requirements
To start a new company in Maine, you must understand business licenses and permits, insurance statutes, sales tax requirements, and other local, state, and federal regulations. It almost sounds like law school, but it's not too much trouble.
Licenses and permits
General business licenses are overseen at the town and city levels in Maine. You may also need building or zoning permits. Reach out to your local municipal office or county clerk for more information.
Depending on the nature of your business and whether it's a professional LLC, you may need specific licenses and permits. Types of business and professions that require licensing or permits include:
- Accountants, attorneys, financial services, insurance agents, and real estate agents
- Architects, contracting, engineers, general construction, and land surveyors
- Auto repair shops
- Barbers and cosmetologists
- Bars, restaurants, and grocery stores
- Doctor's offices (dentists, chiropractors, physicians, surgeons, psychologists, and social workers)
Insurance to protect your business
Small business insurance for Maine LLCs may be required to safeguard your company and its workers. For example, the state requires workers' compensation insurance, which helps pay employee medical costs if an employee gets sick or injured from a job-related incident. Fortunately, workers' compensation policies are easily accessible online.
In addition, if you hire employees in Maine, you must register with the Maine Department of Labor for Unemployment Insurance Tax. Employers must also register for Employee Withholding Tax on behalf of their workers with the Maine Revenue Services.
State tax department regulations
If you sell goods, you'll likely need to collect sales tax. You can find the Business Tax Forms here.
Other local, state, and federal regulations
Maine law requires your LLC to file an annual report by June 1st of every year with the Maine Secretary of State. It's an initial filing fee of $85, with a $50 late fee for filing within 60 days of the due date. Go beyond the allotted time, and the state may choose to dissolve your LLC for not meeting filing requirements. You can file online here.
Although it's impossible to list all applicable laws for every type of business, this article is a good start. Contact an attorney if you have questions or if your particular industry is riddled with red tape.
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Forming an LLC takes plenty of moxie, and Maine's entrepreneurs have it both figuratively and literally. With the excitement that comes with running a company and winning customers, there’s always a bit of uncertainty. Even the slightest blunder may have far-reaching repercussions for your fledgling venture.
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