How to Start an LLC in Maine
Maine is known for its rugged individualism along with its jagged rock cliff coastline. This extreme northeastern state has both moose and lighthouses, along with excellent lobster. It is also the end of the Appalachian Trail. Yet, Maine can be the beginning of your trailblazing business. It has 147,240 small businesses that makeup almost all of the state’s economy, topping 99.2% of all Maine’s businesses. Small businesses in Maine employ 56.5% of the state’s workforce by giving jobs to 289,156 people. The state has large businesses, like J.D. Irving and Idexx Laboratories too. J.D. Irving employs 15,000 people and Idexx Laboratories employs 7,000 people. Some of the top industries in Maine are fisheries, shipbuilding, and manufacturing machine companies but other industries are also big ones for the state. These include forest products, and clean energy. Maine state officials said some industries trending upward include accommodation and food services, waste services, finance, and insurance.
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The natural place to start creating an LLC is to select a name. Maine entity names are governed by state law, specifically Title 13-B, §301-A. The law states the name must be distinguishable from all other businesses on state records.
Ready to start a new business in Maine? Use this step-by-step guide to help you pick an LLC name, register it with the state, and stay in good standing with the Maine government. Here’s a look at the process to follow to not only name your LLC but also register it.
Name your LLC
Think you have the perfect name? Click on Maine’s business directory search bar to see if it’s being used. A name that shows up is already taken but one that doesn’t is yours to claim.
State law also says your business name can’t be similar to another one that’s already in use.
Names can’t be similar
Maine defines what can make a business name confusing and lists things like only adding a suffix like LLC to a name already registered, adding articles like “the” or “an,” using conjunctions such as “and” as well as the symbol “&,” changing the words to singular, plural or possessive forms, and using abbreviations, symbols, punctuation, fonts or typefaces to make the name look different while being the same as another business.
According to Maine law, such practices create confusing names and those will not be approved by the state in a registration application.
Names must include LLC
All LLCs in Maine must have either LLC or Limited Liability Company in the name. Other general guidelines are that a name can’t be similar to a state or federal agency, can’t suggest a connection to a government agency, can’t imply an illegal purpose, and can’t use the word “Olympic.”
Name must be available
Those forming an LLC in Maine should check on name availability. For that, you’ll visit the state website, conduct a name search, and review the results provided.
This search tool will only generate up to 100 records at one time so you may need to narrow your terms or do several searches to determine if your name matches, or is similar, to another in the state.
If the name is already in use, you can’t use it. If the directory shows that no other business is using the name, you can use it.
Check other sources
You can also do a check through major search engines targeting the State of Maine, just to see if there’s anything else associated with your proposed name.
Before registering your name, check to see if a matching domain name and social handles are available too. While it may be that a domain with your chosen name is being used for a business outside of Maine, knowing you can’t use that domain for your LLC could cause you to rethink the name and choose something more unique.
You can file a name reservation to reserve a name for $20.
Select a registered agent
An LLC in Maine must have a registered agent listed on its formation paperwork to gain state approval. A registered agent is someone who can accept legal documents, like service of process, on behalf of the startup. This is an important function as your LLC may receive government documents or court-related papers.
The State of Maine isn’t as strict as some states about rules to be a registered agent. You can be your own registered agent or you can ask a family member or friend to do it. There are three primary conditions Maine has for all those wishing to serve as registered agents.
To be a registered agent in Maine, you must:
- Be at least 18 years old
- Have a Maine street mailing address (not a P.O. box)
- Be able to accept documents during normal business hours
Some business owners hire a registered agent service. This is a viable solution because it saves business owners stress and aggravation should a legal document come in the middle of a busy day or when they are serving a customer in their shop.
There are companies within the state and nationwide corporations that handle this function. The cost of hiring a registered agent in Maine ranges from $49 to $150 yearly. There is a list of commercial registered agents that can offer services in Maine on the Secretary of State’s website.
However, three national companies that are approved to do business as registered agents in Maine are Northwest Regional Agent, ZenBusiness, and IncFile.
File Certificate of Formation
Filing for a Certificate of Formation called a form MLLC-6 with the State of Maine is what makes your LLC an official business. In other states, you file Articles of Organization. It’s the same form, just a different name.
The form is a pretty basic one that shares some crucial information with the state including:
- The business name
- The filing date
- The effective date the LLC begins
- The name and mailing address of your registered agent
- The designation of a professional LLC
- Whether the company will be a low-profit LLC
The form also allows the LLC members to attach an exhibit to expound on other matters. This is not mandatory but is a place where you can clarify other parts of the business structure on state records.
You must provide complete contact information for the application, including your name, address, and email address for the form to get approved. Otherwise, it will be returned. Forms can be filed online or sent by mail, FedX, or UPS. There are different mailing addresses for the service you use.
Those using regular mail service should send the form to the Department of the Secretary of State, Corporations, UCC and Commissions, 101 State House Station, Augusta, ME 04333-0101.
Those using FedX or UPS should send it to the Department of the Secretary of State, Corporations, UCC and Commissions, 111 Sewall St., 4th Floor, Augusta, ME 04330
You can fill out and submit your LLC formation documents here.
The filing fee to apply for a Certificate of Formation in Maine is $175. There is an expedited service where you can get paperwork filed the same business day for an additional $100 filing fee per entity.
However, you will only need to pay the additional fee once if you’re filing several documents for the same LLC simultaneously.
The State of Maine accepts payments by credit card, check, or money order.
Maine processing time
Processing time for business entity filing is currently backlogged. The department is limiting telephone customer service hours from 10 a.m until 5 p.m. to address the backlog.
The current processing time for corporate filings is between 25 and 35 days. The state asks that anyone wishing to know if their business formation filing has been processed should do a corporate name search on the website search engine to see if their business name shows up. Additional filing information can be found on the Information Summary page.
Expedited filings will not show up for download until the next business day.
Create an LLC operating agreement
The State of Maine doesn’t require a new LLC to draft an operating agreement but it’s a smart business decision. An operating agreement states how you and other members plan to run the LLC and details what happens in the event of unforeseen circumstances, such as a member’s death.
Creating an operating agreement also clarifies rules so the LLC doesn’t fall under state law by default, which can create a lot of confusion and some legal issues.
An operating agreement should include:
- The activities of your LLC
- A list of decision makers and who has voting rights
- The process of transferring a member’s interest
- Initial contributions
- The process to manage profits, losses, and distributions
- Management methods and structure
- Compensation of LLC members
- Bookkeeping methods
- Dissolution procedures
Once you pick a name, select a registered agent, file the formation paperwork, and create an operating agreement, you can start doing business as an officially-recognized company. However, there are still a few more items entrepreneurs need to do.
Get your EIN
An employer identification number (EIN) is something you obtain from the Internal Revenue Service. It identifies your business much like a Social Security Number identifies a person. While all businesses aren’t required to get an EIN, all multi-member LLCs are required to have one.
Other businesses that are required to have an EIN include those:
- That have employees
- Files business taxes
- Are bought by you from someone else or you inherited it
- Offering a Keogh plan or solo 401(k) retirement plan
- Those that file for bankruptcy
These are federal regulations implemented by the IRS, not the State of Maine.
You can get your EIN by visiting the IRS website.
Open business bank accounts
One crucial element of running your LLC is opening business bank accounts. This should include both a checking and savings account. You want the LLC accounts to be separate from personal accounts to ease tax returns and accounting procedures.
It also makes it easier for you to keep track of expenses and revenues to share with other LLC members.
Where you do your banking in Maine should be a thoughtful decision because the bank or credit union you build a relationship with would be the best place to go for a business loan. Three banks in Maine cater to small businesses. They are Bar Harbor Bank & Trust, Bangor Savings Bank, and Partners Bank. There are also numerous credit unions.
Review LLC tax rules in Maine
An LLC is its own business entity. For tax purposes, regardless if the LLC is manager-managed or member-managed, profits and losses are reported on the owner’s personal tax returns.
The owner pays federal taxes and state taxes as an individual, not as a corporation.
The state imposes income taxes on all business entities with income originating in the state. It is a graduated tax with rates that range from 3.5% to 8.93%. Rates are based on the total amount of annual revenue.
Those on the lower end of the scale can have income up to $350,000 and maintain a lower tax rate. Those with a yearly income of more than $3.5 million will have the highest tax rate.
Maine also charges a 5.5% sales tax on all goods.
Tax incentives in Maine
However, the state has many tax incentives, exemptions, and credits available to specific industries. Some of those include:
- The federal tax incentive plan of reducing capital gains taxes for establishing underserved areas known as opportunity zones.
- Payments up to 3.6% of the income of new employees for up to 10 years in the Employment Tax Increment Financing (ETIF) program.
- As much as a 100% tax exemption from personal property taxes on eligible business equipment under the Business Equipment Tax Relief Program.
There are other tax credits and exemptions given to those in specific industries like chemicals and biofuels, manufacturing, custom computer programming, commercial agricultural businesses, and biotechnology.
File an annual report
Maine requires all businesses to file an annual report; sometimes referred to as a Statement of Information in other states. The annual report is a chance to change anything on the business information such as a change of registered agent.
The first report must be filed between January 1 and June 1 of the following calendar year after the formation of the LLC. If your LLC was formed in January, you would file it next year. Those filing for business entities in December would file between next January and June 1.
After that, all annual registrations have a June 1 deadline. They can be filed online or by paper mailing. The fee for filing a domestic business annual report is $85. The fee for a foreign business is $150 and all nonprofits have a $35 fee.
You can file a Maine annual report with the Maine Secretary of State’s office.
Get insurance for your LLC
In this type of business, personal liability protection is standard. All personal assets like your home, car, and bank accounts are protected, but it’s still important to have insurance. This includes liability, workers’ compensation, property, and health insurance.
The only insurance Maine requires is workers’ compensation insurance if a business has employees. Workers’ compensation pays for medical bills if there is an accident on the job that typical health insurance won’t cover.
It’s a good idea to get liability and property insurance even though the state doesn’t require that a business have them. It protects your LLC members should there be an incident with a customer, a theft, fire, or some other calamity.
There are also insurances likely required by landlords if you rent a shop or other businesses you take on as clients.
Additional resources to help you set up a business in Maine
The State of Maine has plenty of resources for those seeking to start a small business. Below are some of those who can help answer questions and guide you.
What’s the difference between a domestic corporation and a foreign LLC in Maine?
A domestic corporation is one that is registered and was formed in Maine. A foreign corporation is a company formed in another state or country but has been legally authorized to do business in Maine.
What happens if you don’t file an annual report in Maine?
Annual reports keep your business in good standing with the state. Those who don’t file on time will have to pay additional fees as well as lose their good standing. In some cases, the business may be administratively dissolved.
How does Maine handle assumed names?
Any entity must file with the state for permission to use an assumed name unless the name is always used with the corporate name. Any changes in a name must be filed with the Secretary of State.
What does the term company dissolution mean?
It means the company will go out of business. Any company in Maine wishing to dissolve must file dissolution papers with the state. Those are filed through the Secretary of State’s office.
Does Maine charge a franchise tax?
Only financial institutions are charged a franchise tax. Other LLC owners aren’t charged a franchise tax.
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