How to Form an LLC in Maine

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Maine LLC Quick Facts

Maine LLC Costs

Initial LLC Filing Fee – $175

 

Recurring Fee: Annual Report – $85

LLC Processing Time

It normally takes 5-10 business days for the LLC paperwork to be approved in Maine.

 

Expedited processing is also available for an additional fee.

Don’t want to form an LLC by yourself?

Let IncFile or IncAuthority guide you through the LLC formation process, so you know everything was done right. Only pay state fees!

Quick Reference

The Limited Liability Company (LLC) is a popular entity structure for businesses starting in Maine.  The LLC provides personal liability protection and has the potential to save money on taxes. With a little research, you can learn how to form an LLC yourself.

Unlike a sole proprietorship or partnership where the small business owner can be held personally liable for lawsuits against the business, the LLC is a separate legal structure, protecting the business owner’s personal assets.

Related: How Does an LLC Protect You?

Besides the liability protection, the Limited Liability Company provides several other benefits over the sole proprietorship, partnership, and corporation because of the multiple tax options, ease of administration, and management flexibility.

Related: Should you use a Formation Service, Hire an Attorney or Do it Yourself?

Cost to Form an LLC in Maine

The LLC filing fee for standard processing is $175, which typically takes 5-10 business days.  Expedited processing is available which shortens the approval process to 24 hours for an additional $50 or an additional $100 for 1-hour processing.

Guide to Forming an LLC in Maine

Forming an LLC can be both affordable and is something most people can do themselves. Entity formation companies like IncFile or IncAuthority help guide you through the process and make sure there are no mistakes.

Related: Should you use a Formation Service, Hire an Attorney or Do it Yourself?

To get started forming a domestic LLC, download the Certificate of Formation (Form MLLC-6). Foreign LLC’s (only for an LLC that was formed in another state and wants to be located in Maine) will need to file a Statement of Foreign Qualification to Conduct Activities (Form MLLC-12) with the Secretary of State.

Step 1: Name the LLC

When selecting a name for your LLC, it’s important to do a Maine LLC name search before filing to ensure the name you want is available. In Maine, each entity registered with the Secretary of State must have a unique name.

In addition, the name of the LLC must include one of the following words or abbreviations at the end of the business name:

  • Limited Liability Company
  • Liability Company
  • L.L.C.
  • LLC
  • L.C.
  • LC

A comma may be used after the business name and before the designator.  “Cowboy Cleaners LLC” and “Cowboy Cleaners, LLC” are both acceptable.

If there is a name you want to use, but aren’t ready to form the LLC, the Application for Reservation of Name (Form MLLC-1) can be filed to hold the name for up to 120 days. The state filing fee for a name reservation is $20, paid to the Secretary of State.

Once you found a name that is available, enter that name in the form. You may also want to see if a domain name is also available to have a matching website address.

Maine LLC Name Registration

Step 2: Filing Date

You may list an effective date if you would like the Limited Liability Company´s existence to become effective on a date other than the date of filing.

If an LLC is being created late in the calendar year and doesn´t expect to begin business until after the following year, delaying the start will save money and reporting.

Maine LLC Filing Date

Step 3: Designation as a low-profit LLC

The Secretary of State provides a designation as a low-profit LLC or L3C.  The low-profit LLC is a business with a charitable or educational focus but doesn’t want or qualify for not-for-profit status.  See more information about the Maine L3C Act.

Maine LLC L3C Designation

Step 4: Professional LLC Designation

If any of the business activities require a professional license from the state, this box will need to be checked, and the type of professional service entered.  Common licenses professionals need in Maine include accountants, attorneys, veterinarians and many more.

If your business does not need professional licensing, leave this box unchecked.

Maine LLC Professional License Designation

Step 5: Registered Agent

A Maine Registered Agent must be identified before forming the LLC.  The Registered Agent can either be a Commercial or Noncommercial Registered Agent.  If a Commercial Registered Agent was hired or you plan to hire one, their CRA public number and the name of their company must be entered.   Visit the Bureau of Corporations, Elections & Commissions to do a Commercial Registered Agent search.

A Noncommercial Registered Agent can be a member (owner), friend, family member, attorney, etc.  The Registered Agent must have a physical address (PO Boxes are not allowed) in the state to act as a point of contact to receive legal documents, tax notices, summons, subpoenas, etc. on behalf of the LLC during business hours.  There is an option for a mailing address in addition to the physical address, should you want mail going to a different address.

You are not required to pay for a registered agent. Any individual meeting the requirements can be the agent; however, the agent’s name and address become public record, and with that comes a loss of privacy. This is more important for some entrepreneurs, especially when doing business from home or still employed.  Hiring a registered agent service like Northwest Registered Agent to be the Registered Agent will reduce unwanted phone calls and mailings.

Maine LLC Registered Agent

Step 6: Registered Agent Consent

Before a Registered Agent can be selected, they have to consent to serve as the Registered Agent.  Nothing is required to fill out in this step.

How to Form an LLC in Maine

Step 7: Other Matters

If there are other rules and regulations the members want to LLC to be bound by, those can be attached as additional exhibits.  Most LLCs skip this section.

Step 8: Signature

Have an individual authorized to sign contracts to sign and date the Certificate of Formation.  This is typically a member.

Step 9: Filer Contact Cover Letter

The filer contact cover letter (3rd page of the pdf) needs to be filled out and sent along with the Certificate of Formation.  Enter:

  • Name of the Entity – Make sure to match the name entered on page 1.
  • Type of Filing – Enter “Certificate of Formation”
  • Special Handling Request and Fee – If you want faster processing, indicate the option by checking the appropriate box.
  • Contact Information – This can be any person, member, or non-member, that can answer questions should the Secretary of State need answers during processing.
  • Address – This does not have to be any of the addresses listed earlier.  This address is where the filing will be returned.

Step 10: Pay and Submit

Submit payment and  mail the Certificate of Formation to:
Secretary of State
Division of Corporations, UCC and Commissions
101 State House Station
Augusta, ME 04333-0101

If you have questions, contact the Maine Secretary of State by phone at
207-624-7752 or email cec.corporations@maine.gov.

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Tasks After Forming Your LLC

Once the LLC has been formed, there are a few additional steps to take care of. Below is a list of the most common tasks.

Prepare a Maine LLC Operating Agreement

The operating agreement is a document that governs the framework of an LLC.  This document covers items like ownership rights, member responsibilities, how profits and losses are distributed, and more.

Most states do not require an LLC to have an operating agreement, but it is still worth considering. Without an operating agreement:

  • The LLC could be subject to generic state rules that may be detrimental in the event of a lawsuit.
  • Member’s personal liability protection may be diminished.
  • Members may not fully understand their roles and responsibilities, which could lead to costly disputes in the future.

Related: Maine operating agreement template

Obtain an EIN

The EIN or Employer Identification Number (also called a Federal Employer Identification Number or FEIN) is a unique 9-digit tax identification number assigned to a business by the Internal Revenue Service (IRS). Similar to a social security number for an individual, the EIN identifies business entities for tax purposes. The EIN will be needed to hire employees, open a bank account, register for business licenses and permits, file tax returns, and more.

There is no cost for the EIN when registering through the IRS. The number is available immediately when applying through the IRS website; however, you can also register by phone, fax, or mailing IRS Form SS-4.

Related: How to Apply for an EIN

Get Business Insurance

Even with the liability protection of the LLC, business insurance is important to protect the business. The most common types of insurance include:

General Liability Insurance – covers damages owed and medical expenses for accidents that happen at your place of business.
Business Property Insurance – replaces damaged, stolen, or lost business property. This includes your physical business location, equipment, supplies, and anything else you used to run your business.
Business Vehicle Insurance – covers company vehicles and may also include coverage for personal vehicles used for business-related activities. Many personal policies won’t cover your vehicle if there is an accident while being used for business purposes.
Workers Compensation Insurance – covers medical expenses that occur because of an accident or injury that happens to one of your employees while they’re at work.

Related: 7 Types of Insurance Your Business May Need

Elect the LLC’s Form of Federal Income Taxation

One of the significant benefits of the Limited Liability Company is the tax flexibility it provides.  When applying for the Employer Identification Number, you will choose how the entity will be taxed for federal income tax purposes. While there are some limitations, an LLC may be classified for federal income tax purposes as a:

  • Sole proprietorship
  • Partnership
  • C-corporation
  • S-corporation

While this may sound confusing, this refers to how the LLC is taxed, not the legal structure.

Related: How can an LLC be taxed?

By default, the taxation of an LLC is called pass-through taxation, which means the profits or losses of the LLC flow through to the members.

Single-member LLCs will, by default, be taxed as a sole proprietorship. The members can also elect to change the taxation to a C-corporation or an S-corporation.

Multi-member LLCs will, by default, be taxed as a partnership. The members can also elect to change the taxation to a C-corporation or an S-corporation.

In general, the difference between being taxed as a corporation and being taxed as a sole proprietorship or partnership the profits and losses are passed to the member’s federal income tax returns based on their percentage of ownership.  As a result, the owner will pay self-employment taxes on all business profits.  As an alternative, electing to be taxed as a corporation allows the members to take a reasonable salary and then pay payroll taxes.  Any remaining profits are distributed and aren’t subject to payroll taxes, resulting in potential tax savings.

Before electing how your LLC will be taxed, consider talking with an accountant to assess which one will be best for you. Some tax elections, such as the C corporation, may be detrimental for some people due to double taxation.

Open an LLC Bank Account

Opening a bank account for your LLC is important for liability protection as the account separates the business’s income and expenses from the member’s personal funds.

Several documents will be needed to open a business bank account such as:

  • A banking resolution is a document that authorizes the members to open a business bank account on behalf of the LLC.
  • Copies of the original formation paperwork from the state showing the creation of the LLC.
  • Driver’s licenses of the members.
  • In some circumstances, a Maine Certificate of Good Standing may be needed to prove the LLC is active and in good standing with the state.

Related: How to Open a Business Bank Account for your LLC 

Apply for Business Licenses and Permits

Depending on what your business does and where it is located, there will likely be various business licenses and permits needed before starting your business. Some common registrations include:

  • Business License – Some cities require businesses to obtain licensing before they can start. Check with your county clerk about local licenses and permits.
  • Professional License – Certain services such as electricians, landscape architects, salons, and others must be licensed.
  • Sales Tax License – To sell products and certain services, registration with the Maine Department of Administrative and Financial Services will be necessary.
  • Hiring Employees – Before hiring employees, registration with the Maine Department of Labor will be needed for Unemployment Insurance Tax and  Maine Revenue Services for Employee Withholding Tax.

Related: What Business Licenses are Needed in Maine?

File Annual Reports

LLCs are required to file an annual report by June 1st each year with the Maine Secretary of State.  The annual report filing fee is $85.

Related: How to File a Maine LLC Annual Report