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Step-by-Step Guide to Starting an LLC in Maine [2022]

Maine LLC Quick Facts

Maine LLC Costs

Initial Cost:
– State LLC Filing Fee: $175

 

Recurring Cost:
– Annual Report Filing Fee: $85

Maine LLC Processing Time

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

 

Expedited processing is available for an additional fee.

Not sure about filing an LLC yourself?

Want an LLC, but not sure about filing the paperwork yourself? Let Zenbusiness, IncFile, or IncAuthority help guide you through the LLC formation process, so you know everything was done right.

IncFile and IncAuthority are both currently running a special where you only pay state fees for your LLC formation!

Overview

Guide to Starting an LLC in Maine

If you’re looking to start a business in Maine, one of the steps will require setting up a business entity. There are four main types of entities: sole proprietorship, general partnership, corporation, and Limited Liability Company (LLC).

Here, we’ll cover the basics of forming an LLC in Maine, including what steps you need to take and what fees you can expect to pay.

The Limited Liability Company (LLC) is a popular type of entity due to the personal liability protection and has the potential to save money on taxes.

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.

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: Guide to starting a business in Maine

Steps to Form a Maine LLC

Maine LLC Certificate of Formation PDF

Let’s go over how to fill out the LLC Certificate of Formation in Maine. Maine currently only offers filing by mail. To get started, visit the Maine Secretary of State’s website and download the Maine Certificate of Formation Form MLLC-6.

Total Time: 10 minutes

Step 1: Choose a Name for the LLC

Maine LLC Name

The first step in forming a Maine Limited Liability Company is to make sure the name you want is available.  

It’s critical to do a name search before registering an LLC name, as the name of each LLC must be distinguishable from other entity names registered in the state of Maine. Fortunately, the Maine Secretary of State makes it easy to search and verify if your LLC name is available.  Here is more information on how to do a Maine LLC name search.

In addition to the name being unique, the entity designator (identifier used at the end of the business name) must be either:
– 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 find 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.

Step 2: Select the Filing Date

Maine LLC Filing Date

While you cannot back-date the formation date of your LLC, you can specify when you want the business entity to become effective at a time in the future.

Some will delay the effective date (starting date) of the LLC if they aren’t ready to start the business, but want to get the filing out of the way or if they are close to the end of a calendar year.

To choose today’s date for the start date of the LLC, select “Date of this filing”, otherwise choose “Later effective date” and the date you want the LLC to start. The start date of the LLC can be delayed for up to 90 days.

Step 3: Election of Low-Profit LLC

Maine LLC L3C Designation

If this LLC will be classified as a low-profit Limited Liability Company (L3C), indicate by checking the box.

An L3C is a for-profit business that has the goal of supporting some type of public benefit. See more information about the Maine L3C Act.

An L3C (low-profit limited liability company) is a for-profit LLC that is required to satisfy three requirements:
1. The company must at all times significantly further the accomplishment of one or more of the charitable or educational purposes within the meaning of Section 170(c)(2)(B) of the Internal Revenue Code of 1986, as it may be amended, revised or succeeded, and must list the specific charitable or educational purposes.
2. No significant purpose of the company is the production of income or the appreciation of property. The fact that a person produces significant income or capital appreciation is not, in the absence of other factors, conclusive evidence of a significant purpose involving the production of income or the appreciation of property.
3. No purpose of the company is to accomplish one or more political or legislative purpose within the meaning of Section 170(c)(2)(D) of the Internal Revenue Code of 1986, or its successor.

Step 4: Election of a Professional LLC

Maine LLC Professional License Designation

If the activities of the business require a professional license from the state, such as accountants, attorneys, and veterinarians, this box will need to be checked. If professional licensing is required, you will also enter a brief explanation of the type of professional services.

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

Related: What is a Professional LLC?

Step 5: Appoint a Maine Registered Agent

Maine LLC Registered Agent

Maine law requires that every LLC in the state have a Registered Agent. A Registered Agent will act as a central point of contact to receive legal documents, tax notices, summons, subpoenas, etc., on behalf of the LLC.

The basic requirements to be a Registered Agent in Maine include:
– The agent must be a Maine resident at least 18 years of age or a commercial Registered Agent service
– The agent must have a physical address in the state (PO Boxes aren’t allowed)
– The agent must generally be available during normal business hours at the address provided to receive service of process

Learn more about the requirements for a Registered Agent in Maine

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 commercial Registered Agent service like Northwest Registered Agent will help keep the owner’s names from being publicly listed.

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

If a Commercial Registered Agent is used, be sure to get their CRA public number and the name of their company, as this must be entered on the LLC paperwork.   Visit the Bureau of Corporations, Elections & Commissions to do a Commercial Registered Agent search.

Estimated Cost: 175 USD

Consider using an LLC formation service like Zenbusiness, IncAuthority, Northwest, or IncFile to guide you through the LLC formation process, so you know everything was done right.

IncAuthority and IncFile are currently running a special where you only pay state fees for your LLC formation and they do the rest!

You have a Maine LLC! Now what???

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: 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 is that 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 Licenses – The state of Maine doesn’t have a general business license; however, many cities require a business license to operate. The Maine Department of Economic and Community Development has a One-Stop Licensing Center and Business Answers service for all the information needed to obtain appropriate licenses for your business and can be reached at 800-872-3838.
  • Business Tax Registration – Businesses selling products and certain services will need to Register with Maine Revenue Services to register for a Sales Tax License, Service Provider Tax, and/or Withholding Taxes.
  • Professional Licensing – Some services such as electricians, door-to-door home repair sellers, and landscape architects require licensing in Maine.  While this isn’t a license on the business, licensing is required in order to operate.

Related: What business licenses and permits 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. 

Related: How to File a Maine LLC Annual Report

Common Questions To Starting An LLC In Maine

How much does it cost to start an LLC in Maine?

There is a filing fee of $175 to start an LLC in Maine.

Is there a yearly fee for an LLC in Maine?

Each year, an annual report and an $85 state filing fee will be due for Maine LLCs.

How long does it take to start an LLC in Maine?

It normally takes 5-10 business days for the state to process the LLC paperwork in Maine. For an additional fee, one business day processing is available.

Can you be your own Registered Agent in Maine?

Anyone can act as a Registered Agent in Maine, provided they are at least 18 years old, reside in the state, and are generally available to receive documents during normal business hours.

Related: What are the requirements for Registered Agents in Maine?

Does an LLC need a business license in Maine?

It’s sometimes thought that the LLC and business license are the same in Maine, but they aren’t. An LLC is referred to as the business entity, which is how the business is organized to conduct business. A business license is an approval from a government entity to legally operate.

Related: What business licenses are needed in Maine?

What is a Foreign Limited Liability Company?

A Maine foreign LLC is an LLC that was formed in another state but wants to physically operate in Maine. Physically operating means having a presence, such as having an office or hiring an employee.

Related: What is a foreign LLC?

Can you use a PO Box for your LLC in Maine?

No – A PO Box can only be used as a mailing address for the LLC. A physical street address in Maine must be used for the Registered Agent.

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