If you’re looking to incorporate in a state other than your own, there are a lot of choices out there. Most states have their benefits and quirks that make them attractive or unattractive to business owners.
Thankfully, nowadays, businesses can pretty much incorporate anywhere in the world due to the internet.
Why would someone choose to incorporate Maine over any other state? The answer really comes down to personal preference because each state has its own advantages and disadvantages. But for some, incorporating in Maine is the best choice due to its ultra-low fees for filing Articles of Organization.
Filing Maine Articles of Incorporation
The application fee for filing an LLC Articles of Organization is only $90, whereas most states ask for at least twice as much. If you want to save some money and don’t mind doing the legwork yourself, you can try to file it online. However, the Secretary of State’s website requires that your file be fax or mail if you’re requesting expedited processing.
And since Maine doesn’t offer expedited processing, your request will be automatically rejected. At this point, just pay an extra $25 and have someone local do it for you. They’ll still get it filed in a timely manner, so there’s no need to bribe them with a tip jar.
Filing Articles of Incorporation for a Business Corporation
People sometimes think they have to incorporate as a C-Corp if they plan to raise money from VCs or angel investors. In fact, you can choose any type of entity that benefits your company the most -including a Limited Liability Company (LLC), which is still quite popular today for startups.
And it’s what you’ll want if your business requires multiple owners since LLC members are not required to be US citizens and pay lower taxes than other corporations.
Don’t forget: there is one additional fee for filing Articles of Organization in Maine: $300/$500 depending on whether you’re forming a foreign corporation or domestic corporation. But we’ll include this fee in our total section at the bottom, so you know our true cost.
Filing Articles of Incorporation for a Nonprofit Corporation
If you’re looking to incorporate your 501(c)(3) nonprofit organization, then look no further than Maine. Foreign nonprofits are required to follow the same process as foreign corporations, but domestic nonprofits can file for Articles of Incorporation at a flat fee of $300–which is well below average among other states.
Maine LLC Certificate of Formation Instructions
Now that you’ve paid for your LLC Articles of Organization, there are a few things to be aware of in order to maintain the validity and legality of the company.
The first thing is proper capitalization. When filing your initial paperwork with the Secretary of State, make sure you indicate whether or not your company will require “paid-in capital.” If so, then let them know how much and where it’s coming from (e.g., cash, assets, other considerations).
And just like any newly created business, no matter what type of entity you’re forming, Maine requires that you file a Certificate of Formation within thirty days of its formation date, which must include:
- Name of a corporation or limited liability company
- Principal place of business
- Names, addresses, and signatures of the people forming the corporation or limited liability company
- Nature of business or activity (for nonprofit corporations only)
- If the corporation is a corporation rather than a limited liability company, whether paid-in capital will be required
- The number of shares in the case of a stock corporation, together with any par value per share
- Any restrictions on transferability of issued shares
- Whether an existing foreign corporation is being continued into Maine or whether new Articles are being filed to organize one under Maine law
- The manner in which an incorporator is signing articles.
NOTE: a Certificate of Formation must be filed with the Articles.
Filing Trade Names: Doing Business As (DBA) and Assumed Names
Maine does not require registration or approval of a “doing business as” trade name prior to its use, but it’s still illegal to commence doing business under an assumed or fictitious name without filing a Certificate of Organization Designation for Domestic Limited Liability Company.
However, if you’d prefer to start using your DBA before incorporating in Maine, simply add it to your LLC’s Certificate of Organization by providing the following information:
- The name under which business is conducted
- Complete mailing address
- Fee ($50 for domestic LLC; $100 for foreign).
NOTE: This must be attached to your Articles of Organization.
Starting an LLC in Maine is easy
STEP 1: Name your Maine LLC:
Your LLC name must contain the words Limited Liability Company or the abbreviation “LLC.” You can use a descriptive name for your LLC so long as it doesn’t imply that it’s registered with the state. If you choose an available trade name and want to do business as (DBA) another name, include both names on your Articles of Organization.
FAQ: Naming a Maine LLC
Q. Can I use my own name for my LLC?
A. No. If you’re incorporating, your business must be represented by a fictitious (assumed) or trade name. You’ll need to file an “Articles of Organization Designation” for this purpose. For foreign corporations, the process is different.
Q. Can I use abbreviations like Corp., Inc., Co., etc.?
A. Yes, but only if they are not misleading to the general public. So long as the abbreviation isn’t used in conjunction with another word that might confuse customers into thinking that it’s something other than what it is, then you’re okay
STEP 2: Choose a Registered Agent in Maine
As part of your Articles of Organization, you’ll need to name a Registered Agent in Maine. A registered agent is an individual or business entity that receives legal documents on behalf of your LLC (and usually for no fee).
The problem with using the company’s organizer as its registered agent is that if they can’t be there at all times to sign for legal documents, then it creates doubt about whether the LLC has been properly formed and/or represented when necessary.
In order to avoid lawsuits from being brought against your LLC when one of these instances occurs, it’s best to hire a third party to serve as its registered agent. Even though you don’t have to incorporate in Maine in order to do business here, most people choose a qualified RegisteredAgent from the state to avoid this potential hassle.
FAQ: Nominating a Maine Registered Agent
Q. Can I use my own address for the registered agent service?
A. Realize that by serving as your LLC’s registered agent, it is representing your company in legal proceedings. If they fail to do their job properly (or are negligent), then this could affect you and/or all other members in a negative way. Make sure that whomever you choose has an established reputation for service
Q. Can I hire another business to act as my LLC’s Registered Agent?
A. Yes, so long as you retain control over who it hires to fill this role. The best option would be to nominate yourself or another individual who works for your LLC to act in this capacity when filing articles of organization
STEP 3: File the Maine LLC Certificate of Formation
For a Maine LLC filing with the SOS, you must file your Articles of Organization and pay the state’s filing fee in order to create an official record of your business. Your Articles of Organization (required) and Certificate of Formation (optional) should be sent to:
Maine Secretary of State Corporations Division
29 State House Station
Augusta, ME 04333-0029
You can also file online for $50, but keep in mind that priority filings may take up to 3 weeks for processing (First class mail is not recommended). The paper form will only cost $150 once all fees have been paid. For more information about this process, please refer to our “How to Start a Business in Maine” page.
FAQ: Filing Maine LLC Documents
Q. Is the Maine LLC certificate of formation optional?
A. It’s not required, but an available option if you’d like to do so for additional convenience. By doing so, your LLC will be recognized as a legal entity once it has been approved by the state
Q. Can I file my Articles of Organization electronically?
A. Yes, there is an electronic filing option that can save on processing time (1-2 weeks) and expedite access to your company records/status updates through SOSDirect.
STEP 4: Create a Maine LLC Operating Agreement
Your Maine LLC operating agreement is a contract that must be written by all members of your LLC. It provides an extraordinary amount of protection for both you and other members against disputes, claims, legal liabilities, etc.
By having this document in place before your company conducts business outside the state, you are showing that you have done what’s needed to protect yourself legally should an issue arise down the road.
An operating agreement can be created at any time, but it’s recommended that you do so before your company opens its doors for business, whether it’s just you or several LLC owners. An operating agreement should include:
- The name and address of the LLC
- How much each member invested into the Maine LLC
- A list detailing exactly how much each member owns within the corporation; and
- Details about ownership shares and voting rights
Operating Agreements can be created by members of your LLC (contrary to popular belief, the document doesn’t need to be drafted by an attorney).
If you’re forming a single-member LLC, then it’s best that one member create the agreement without help from another individual. Keep in mind that an Operating Agreement is not required; instead, it’s something that’s always recommended for all business owners.
FAQ: Creating a Maine LLC Operating Agreement
Q. Is it necessary to have a written operating agreement?
A. Yes, otherwise, your company is held to the standards of the Maine Revised Statutes to which it is registered. It’s important that you have an agreement in place to protect both the individual members and the LLC itself.
Q. Is a written LLC Operating Agreement required as part of the formation process?
A. No, as long as you have an operating agreement in place after your company has been created. In fact, without one, you will not be able to keep track of any member changes that occur during operation.
STEP 5: Get a Maine LLC EIN(Employer Identification Number)
A federal tax identification number (EIN), similar to your social security number, is the first step in making sure that you are maintaining accurate records for yourself and your LLC. It’s what the IRS will use to identify you during any future interactions.
FAQ: Getting a Federal Tax ID (EIN) for Your Maine LLC
Q. What do I need to apply for an EIN?
A. In order to get a federal tax identification number, you must have a Social Security Number or an Employer Identification Number from the Maine Revenue Services.
Q. Can my new business accept credit cards?
A. No, it does not have enough volume yet. You will need at least 3 employees and $5,000 in yearly sales to qualify.
Separate Your Personal and Business Assets
One of the most important things you can do in order to protect yourself personally is to make sure you are able to separate your personal and business assets.
1. Opening a business bank account:
It is recommended that you do not use your personal bank account for conducting business with the LLC. You must establish a business account to separate personal and corporate assets.
2. Getting a business credit card:
You need to have a business credit card, not a personal one.
A lot of financial institutions allow you to get a separate account for a sole proprietorship or LLC without any repercussions.
3. Hiring a business accountant:
You need to hire an accountant that specializes in small businesses. An experienced certified public accountant will be able to guide you through your financial options, and they can also assist you with filing the necessary business tax documents if required.
Why go through all of this trouble? Simply put, by separating your personal from your business affairs, you are able to protect your personal assets from being used as a means to pay off any legal claims or damages that may result from a lawsuit involving your LLC.
Get Business Insurance for Your Maine LLC
If you are launching a Maine LLC, the next thing you will want to do is get up to date on your business insurance.
1. Worker’s Compensation Insurance:
Although it’s not required by the state of Maine, worker’s compensation insurance is something that you should consider getting for all new hires in order to protect yourself against any claims made by employees resulting from workplace-related accidents or injuries.
You can apply online at http://www2.maine.gov/cgi-bin/online/commerce/workerscomp/.
2. Commercial Auto Insurance
You need commercial auto insurance if you have more than one vehicle, regardless of whether it is owned by the company or an employee of your company while they are on the clock. This can be a complicated process, so you should have your agent walk you through the process.
3. General Liability Insurance
General liability insurance will protect your company in case you are sued for accidents or injuries that happen during a business endeavor.
The best way to find out if you need this type of insurance is by speaking to an experienced general liability insurance agent who specializes in businesses similar to yours.
Create Your Business Website
A website is one of the best ways to get your business in front of potential customers. It is important that you create a user-friendly website with detailed information on who you are and what your business offers.
A poor website can hurt your business, as people will think you lack professionalism. A good way to get an attractive, professional site is to hire a web designer who specializes in designing sites for small businesses.
Maine Business Permits and Licenses
One of the first things you need to do as a Maine business is applying for any necessary permits or licenses.
You can visit this website which has all of the information on required licensing and applications: http://www2.maine.gov/online/business/index.html.
Types of licenses:
- Professional License: The state of Maine requires that your business be licensed for any specific licenses related to the types of work you do in order to practice in Maine. For example, if you are a doctor or an attorney, you will need to get professional licensing in order to operate in the state. You can go here for more information on what types of licenses may be necessary: http://www2.maine.gov/online/business/profmanu.html.
- Your company must register with the Department of Labor in order to pay unemployment insurance tax (Chapter 511). You can find out all about this process by speaking with someone at one of these offices: Augusta 622-7900, Bangor 622-6200, Portland 622-4270.
- Sales License: Businesses that make more than $20,000 in taxable sales will need to file and pay the appropriate Maine state taxes, which include a 5% sales tax (Chapter 35). You can apply for this license online at https://secure.maine.gov/revenue/.
- Excise Tax: If you’re interested in selling products like tobacco and alcohol, then you’ll need to get an excise license from the Department of Administrative and Financial Services (Chapter 138). You can find information about getting one here: http://www2.maine.gov/online/atf/businesses/index.html#tobacco_liquor
- S-Corp Certification: If you form an s-corporation, then you must apply for certification as such with Maine’s Secretary of State office (Chapter 4). You can find out how online at http://www.maine.gov/sos/.
- Sell on Amazon: Selling on Amazon FBA is a great way to increase your revenue and grow your business quickly and easily, but first, you must register as a professional seller and obtain a sales license from the state of Maine (https://sellercentral.amazon.com/gp/help/202302870?ie=UTF8&itemID=200261540&language=en_US.
- Firearms Dealer License: If your business sells firearms, then you must be licensed by the state of Maine (Chapter 202). You can find out how to get this type of license here: http://www2.maine.gov/online/atf/businesses/firearms_dealers.html
- Real Estate License: If you work in real estate, whether buying and selling homes or renting them, then you will need a real estate broker’s license from the Bureau of Financial Institutions in order to practice in Maine (Chapter 701). You can find information on getting one here: http://www.bfinla.state.me.us/profre/documents/brokerslicenseappguide09-02-08web1.pdf.
- Loan Company License: If your business collects or gives out loans, then you will need a license from the Bureau of Financial Institutions (Chapter 651). You can find information on getting one here: http://www.bfinla.state.me.us/profre/documents/lclguide09-02-08web1.pdf.
- Travel Agent’s License: If your business is in the travel industry, then you must have a licensed agent with the Maine Office of Consumer Credit Protection (Chapter 402). A guide for those applying for such licenses is available at http://www2.maine.gov/online/ccp/
Maine LLC Tax Filing Requirements
So, what are the requirements for filing your LLC taxes in Maine? Here is a quick list of what you need to do according to the state of Maine:
- File an Annual Report on or before April 15th.
- Pay Franchise Tax at 6.5% of your total income with your 1040 form each year by April 15th, but you have until June 15th to pay it without being penalized.
- Prepare and file a 1041 form if there were any major changes in your business, like adding new members or dissolving in the previous year (due on or before the 15th of the fourth month following the close of your fiscal year).
Remember, these are just some general guidelines. Be sure to speak with a tax expert if you have any questions about what you will need to file for your LLC in Maine.
If you are considering opening a business in Maine, then there is one more thing you should be aware of. According to the state of Maine, anyone who sells over $500 worth of goods by conducting transactions that involve 3 or more people (i.e., parties) at any given time must apply for a sales tax license.
This includes online retailers like Amazon and eBay sellers. So if your new company will be doing any amount of direct retail sales, then make sure you get this type of license before beginning operations.
There are some exceptions to this rule, though. If all the following apply to your situation, then you are exempt from having to pay sales tax:
- You sell products but not services
- Your total revenue does not exceed $10,000
- You sell all products within Maine (no sales outside the state)
- All transactions take place in one location (i.e., you aren’t running a retail store)
If these don’t fit your situation, but you still want to avoid sales taxes, then there is another option. You can apply for a resale license by filling out and submitting form G-325A along with two copies of Form BOE-101.
More information on how to apply and who qualifies for this license can be found here: http://www2.maine.gov/tax/individuals/Pages/ResellersLicensingApplicationProcessGuide.aspx#beginning.
According to the state of Maine, any individual or business employing at least one person must register with the Unemployment Insurance Commission.
You should not wait until your employees are already working for you before doing this. Registering early will give you more time to get all of your paperwork in order before the beginning operation, which means that applying for unemployment insurance will be much easier once it is time.
File Your Maine LLC Annual Report
If you intend to run a business in the state of Maine and want to form an LLC, then there is one last thing you need to do. You must file your initial report with the Department of Secretary of State (DOS). Here are some guidelines on how and where exactly this should be done:
- What’s Due: The Annual Report is due by April 15th every year.
- Where To File: This has to be submitted through the Online Business Filing Center managed by the DOS.
- There is a $60 fee for submitting this report. This amount will go up each year, so make sure you take that into consideration when deciding on when to file it.
- Signatures Required: A statement left under penalty of perjury needs to be signed in front of a notary.
- How To File: You must establish an account with the DOS to file online, which you can do so through their website. Once your account is set up, you can log in and submit the report electronically, which will result in immediate processing by the state.
You should also remember that if you are doing business under the assumed or fictitious name (i.e., trade name), then you must register these separately with Maine’s Secretary of State as well. Be sure to check out our article on how to Register an Assumed Name if this applies to your situation.
As far as penalties for late filing go, there are none other than what the state imposes on any other business-related fees due to late payment.
Hiring Employees in Maine
As we briefly mentioned earlier, you will need to work with the state of Maine when it comes to paying your employees. This means that in addition to federal and state unemployment insurance taxes, you will also need to pay into their employment security fund (ESF).
The rate for this is calculated by taking 3% of each employees’ gross wages, which in turn will be divided between the ESF and the worker’s individual Unemployment Tax Account. Here are some other points you should take note of:
- Any household employers located within the state must also contribute
- Exempt from this tax are employers who only hire independent contractors
- You can find more information on rates and exemptions here: http://www2.maine.gov/labor/labor-forms-and-publications/employers.shtml.
FAQ. Hiring Employees
Q. What is the unemployment tax rate for household employers in Maine?
A. In Maine, household employers pay a tax rate of 4.95% when they have one or more employees in their homes.
Q. If I have an employee that is from a “waiver state,” do I still need to pay unemployment insurance?
A. Yes, you will need to file for unemployment if you reside in a waiver state and have at least one employee who does not live there as well. You can find a list of these states here: http://www2.maine.gov/labor/labor-forms-and-publications/workers-compensation/unemployment-insurance/employee-eligibility/#waiverstates
As a business owner, it is important that you always stay up to date with any changes or updates made in regard to your industry. This isn’t limited to only knowing the basic requirements and laws but also keeping track of how these might be interpreted and applied by different states.
Although this might seem like an overwhelming task, we hope that our article on Maine LLCs will help shed some light on what exactly needs to be done in order for you to get started with running your new LLC in the state of Maine.