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

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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 our guide, you can learn how to form an LLC in Maine without an attorney.

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

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?

Steps to Form a Maine LLC

Let’s break down the steps to complete the Maine LLC formation process.

Total Time: 10 minutes

Step 1: Choose a Name for the LLC

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: Appoint a Maine Registered Agent

Every LLC in Maine is required to 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 registered agent service like Northwest Registered Agent to be the Registered Agent will reduce unwanted phone calls and mailings.

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.

Step 3: File the Maine Certificate of Formation

The paperwork to officially create an LLC in Maine is called the Certificate of Formation (called the Articles of Organization in many states.

The only way to submit is by downloading and filling out the Certificate of Formation (Form MLLC-6).

In addition to the form, a Filer Contact Cover Letter will have to be submitted. The filer contact cover letter (3rd page of the pdf) needs to be filled out and sent along with the Certificate of Formation. Here you would 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.

Estimated Cost: 175 USD

Turnaround Time: It normally takes 5-10 business days for the state to process the LLC paperwork.

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.

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.  This isn’t a common designation, and if you are considering it, please see more information about the Maine L3C Act.

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.

You don't have to form your LLC by yourself or pay an attorney!

Forming an LLC is a little intimidating, especially when it’s your first time. Professional entity formation services help guide you to make sure it’s done right. Check out our reviews of popular LLC formation services to learn more.

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.

When filling out the Articles of Organization, there are a few sections that may be unfamiliar, especially when seeing them for the first time. Let’s go over a few of those sections to help you get your LLC started right.

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.  The annual report filing fee is $85.

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 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. For an additional fee, one business day processing is available.

Do I have to pay to hire a registered agent?

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

If I have an LLC, is a business license required?

It’s sometimes thought that the LLC and business license are the same, 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.

What is a Foreign Limited Liability Company?

A foreign LLC refers to an LLC that is physically operating in states outside of the state where it was formed. Physically operating means having a presence, such as having an office or employee. The LLC will need to register as a foreign LLC in each state that it plans to operate.

Learn more about the foreign LLC.

What is a Professional Limited Liability Company?

Businesses that require state licensing, such as accountants, attorneys, podiatrists, physical therapists, acupuncturists, etc., often must file as a Professional Limited Liability Company (sometimes referred to as a Professional LLC or PLLC) instead of an LLC. Filing for a PLLC is very similar to that of the LLC.

Learn more about a professional LLC.

Is an LLC the same as a corporation?

The LLC is one of four main types of business entities. You can learn more about each here:
What is a sole proprietorship?
What is a general partnership?
How to form a Maine corporation

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