Are you looking to form a limited liability company (LLC) in the state of Maine, but you’re not sure how the formation process works? There are several important steps when it comes to creating a Maine LLC that is compliant and able to do business in the state.
What is a Maine LLC?
The Maine LLC is one of the most popular business structures in state. It's a more casual and flexible type of business than a corporation, but includes the same personal asset protection you get with a corporation. That means you aren't personally liable for debts or lawsuits against your business. This is a critical protection that is lacking from sole proprietorships and general partnerships.
LLCs in Maine have simple formation and maintenance requirements, several options for how they can be taxed, and flexible management. From one-person businesses to multi-member LLCs with several owners, the LLC is a popular choice for a reason.
Forming an LLC in Maine (in 6 Steps)
Step One) Choose an LLC Name
Your LLC’s name is often the first impression you get to make on potential customers, and therefore it goes without saying that this is an important step. There are a few different aspects to take into consideration when selecting a name for your business:
Legalities: In the state of Maine, every limited liability company is required to have either the initials “LLC” or the phrase “limited liability company” in the name. In addition, you cannot include any words that refer to other business types (like “corporation” or “incorporated”), and you also can’t use words that are typically used to refer to specific kinds of businesses (like “bank” or “law office”).
Explanatory Naming: Another aspect to consider is including language that explains what your business does ― for example, if you’re a plumber, put the word “plumber” or “plumbing” in your LLC name. Additionally, if your business has strong values like being environmentally friendly, you can indicate that by including the word “green.”
Do You Like It?: At the end of the day, this is your business, and you should choose a name that makes you proud. You should also make sure your LLC name both sounds good when spoken out loud, and looks good when written down.
The most important consideration for naming an LLC is to not get too attached to any one business name until you have either reserved the name with the state of Maine, or you’ve officially formed your business. Maine makes it simple to determine if your desired name is still available: simply enter it into the Corporate Name Search. If no results pop up, then your desired name is still available. If you’re not yet ready to form your LLC, you can reserve your desired name with the Application for Reservation of Name form. Doing so ensures that no one else in Maine can take your desired name for 120 days. That window will give you plenty of time to get your LLC’s affairs in order.
Step Two) Designate a Registered Agent
Every LLC in Maine is required to designate a registered agent, which is the individual or registered agent service that receives government correspondence on behalf of your business, then forwards those documents to you.
According to the Maine Secretary of State, the duties of a registered agent are,
to forward to the represented entity at the address most recently supplied to the agent by the entity any process, notice or demand that is served on the agent…to provide the notices required by this chapter to the entity at the address most recently supplied to the agent by the entity…[and] to keep current the information listed for it.”
Without a registered agent, you could lose your good standing with the state of Maine, and the state also has the right to dissolve your LLC if they decide to. In a worst-case scenario, the state could fail to alert you regarding a lawsuit against your company, which could even lead to a judgment against your business because you didn’t defend yourself.
Our Recommendation: At the end of the day, we recommend designating a Registered Agent service to handle these requirements. Doing so will help eliminate junk mail and more importantly, keep your personal and/or business address off public record. Incfile and Northwest Registered Agent both offer a free Registered Agent service when you utilize their services to form an LLC. Both are fast and affordable. In fact, they’re the best available.
Step Three) File Formation Documents with State
Once you are ready to form your Maine limited liability company, you will fill out the certificate of formation.
This is THE document that will register your LLC with the state. You’ll want to ensure all of the following information is correct on the form:
- Your chosen business name
- Name and address of your registered agent
- Management style (member-managed or manager-managed)
- Name(s) and address(es) of the LLC’s manager
- Name and address of the LLC’s organizer
- Signature of organizer and registered agent
- Effective date
You can either fill out this form online with Adobe, or you can print off the pdf. Regardless of how you fill out the form, you must mail it in. Maine currently does not offer an online filing option.
Cost to Form an LLC: The state of Maine charges a $175 fee to form an LLC.
Processing Time: It takes 5-10 business days for the state to process your Maine LLC formation paperwork and get your finalized documents in the mail to you. However, for an additional $50 fee, you can have your filings expedited. Expedited filings are usually completed within 1-2 business days. Please note that the estimate of business days begins once ALL required paperwork is in order and filed correctly.
Step Four) Create an Operating Agreement
After you register an LLC in Maine, create a detailed outline that explains how you will run and manage your new business. Even though it doesn’t need to be filed with the state, put one together and keep it for your records.
When you open a bank account, you may be asked for this document in order to open an account. You’ll also want to keep in mind that any future business partners or managing members may also be interested in seeing your Operating Agreement before joining your company. After all, this document essentially serves as your overall plan for success.
An attorney can help you outline your Operating Agreement or create one from a free template online. You can read more about Operating Agreements here, but some of the basic information you’ll want to have includes:
- Individual members' ownership percentages
- Rights and responsibilities
- Voting powers and meeting guidelines
- Allocation of profits and losses
- Management rules for the LLC
- Provisions for buying a member owner out, or transferring their shares in the case of illness or death
Step Five) Handle Taxation Requirements
The vast majority of LLCs require a federal tax ID number, or EIN. An EIN is basically the business version of a social security number, and it’s used for a variety of important LLC functions.
For instance, you’ll need an EIN if you want to hire any employees, and many banks require them to open business bank accounts as well. You’ll also need one for tax purposes, hence the name federal tax ID number. Get an EIN for your LLC for free through the IRS.
When it comes to state-level LLC taxes, Maine levies these taxes based on the nature of your business. The most important of these is income taxes. If your LLC is considered a pass-through entity—usually a sole proprietorship or partnership—you’ll pay income taxes on your individual tax returns. However, LLCs which choose to be taxed as corporations will be subject to the state’s corporate income taxes. The current corporate income tax rates range from 3.5% to 8.93%, depending on your income. You can learn more about Maine’s corporate income taxes here.
Businesses involved in retail sales are also subject to the state sales tax. The general sales tax rate is 5.5%, but some other categories pay higher taxes. You can see a breakdown of the state sales taxes here, and you can file online for the tax at this link.
LLCs with employees are also subject to a few other taxes and fees. Withholding taxes are portions of wages that you as the employer hold back from the paycheck and send to the state. You can read more about withholding taxes with these FAQs. Maine also funds their unemployment program through employer taxes; you can learn more about the fund and your payment responsibilities here.
Maine also requires a wide variety of industry-specific taxes. These taxes cover a huge range of industries, from potato shippers, milk handling, blueberries, and more. You can learn more about industry-specific taxes here.
Depending on where in Maine your business is located, you could also need to pay some local taxes. Property taxes are the most common local taxes, applicable to both businesses and individuals. You can check this link for more information on property taxes. You can also check out details about your local government here, which can serve as a good starting point for learning what laws and requirements exist for your region.
Unlike some states, Maine does not allow local counties and cities to charge additional sales taxes. However, that may change in the future, as the state legislature is scheduled to discuss that possibility in 2019. You can learn more here.
Step Six) Obtain Business Licenses and Permits
The state of Maine does not have a state-wide general business license that each LLC needs to acquire in order to do business. The general licenses are managed on the local level instead. You can visit this link to get in contact with your local government office and start applying for your general licensing needs.
Maine also upholds the licensure required by the federal government for certain occupations, including agriculture, aviation, and more. Please consult the Small Business Association’s listings for federally-regulated industries requiring licensure.
And much like the state has industry-specific tax requirements, it also has licenses and permits that are required for businesses in certain industries. These licenses range from teachers to funeral service providers to real estate agents and everything in between. You can consult a listing of licenses by profession to determine which ones you’ll need to run your LLC in compliance with state laws.
Would you prefer to have a professional form your LLC?
If you would prefer to have a professional handle the paperwork for you, consider hiring an online incorporation service like LegalZoom and Incfile. To see which is the better option for you, check out our side by side comparison.
Next Steps: What to do After Creating a Maine LLC
Open a business bank account: We highly recommend that you establish a separate business banking account so that your business and personal finances are maintained completely separate. This is important because it helps protect your personal assets and also makes filing taxes much easier. Once you receive your EIN from the IRS, you’ll be able to use it to establish an account at the bank or credit union of your choice.
Get Business Insurance. Every Maine business with employees is strictly required to acquire workers’ compensation insurance. For more information on this policy, check out the Workers' Compensation Board. After you obtain these legally required policies, it’s probably also a good idea to pursue general liability insurance, as well as some industry-specific policies.
Understand income reporting. Income reporting is just what it sounds like – reporting the income you made from your business. It’s important to note that you must file this form whether you made or lost money over the course of the year. The state of Maine has several forms based on how your business is set up that you can access here.
Understand annual reporting. Maine requires that all LLCs file an annual report. You can file it online here; be sure to meet the June 1st deadline to maintain your good legal standing. Your annual report will essentially serve to update the state on any pertinent information regarding your business that has changed over the course of the year.
Find an accountant. We don’t recommend that you attempt to manage your business finances without the help of a professional. There is too much room for error, and a professional can ultimately save you time and money by guiding you on how best to manage your business finances. At a minimum, enlist professional help to set you up with software and the steps for keeping up with your finances on a regular basis. Then, consult back with your accountant at least a couple of times per year – and especially at tax time – to ensure you’re keeping track of everything correctly.