Forming an LLC in Maine
Many business owners favor a limited liability company (LLC) business entity for their small business. The LLC business structure provides personal liability protection similar to a corporation but offers options for taxation as a sole proprietor or partnership, avoiding corporate double taxation. And Maine has a unique low-profit LLC (L3C) business entity for charitable or educational purposes. Learn how to start an LLC in Maine.
Steps to Form an LLC in Maine
Name Your LLC
- Choose a Name for Your LLC. First, come up with a name for your business. The business name must be unique and different from any other company's name. The name cannot use the word "corporation," use obscene language or claim a profession or business affiliation that does not exist.
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- The name you decide on must contain limited liability or limited company or one of the legal suffixes:
- In addition, a low-profit limited liability company must have the suffix L3C or l3c.
- Check If Your Business Name is Available. The next task will be to ensure that an existing business isn't using your chosen name.
- Search the business name search page at the Secretary of State Business Services to see if the name is available. The name is only approved when filed with the state.
- Conduct an internet search to ensure your no one else has registered your name as a domain name. Type your LLC name into a search engine and see if there are any matches.
- Finally, to avoid trademark infringement, it's a good idea to check that no one else has trademarked your name. Start with the United States Patent and Trademark Office (USPTO) trademark database.
- Reserve Your Business Name. Maine allows you to reserve a business name for 120 days while you go through the formation process. Complete the Application for Reservation of Name (Form MLLC-1) and pay a $20 fee. This reservation is no guarantee that the Secretary of State will approve your name, but it keeps anyone else from using it for that time.
- Protect Your Business Name. Once you know your name is unique and not encumbered by a trademark or domain name registration, you may want to protect it so others can't use it.
- Register a trademark. To protect your brand, you may register your business name in Maine or with the USPTO as a trademark. To file a Maine trademark, complete the Application for Registration of Mark (Form Mark-1) and pay a $60 registration fee.
- Register a domain name. You can also register the business name as a domain name. Then you have rights to that domain. Find a domain name registrar from an approved ICANN registrar list.
Get a Registered Agent
Under Maine law, LLCs must have a registered agent. A registered agent is a business entity or an individual that accepts legal documents for your LLC. When someone sues your LLC, the service of process goes to your registered agent.
Your registered agent must be a Maine resident or a business entity with a physical street address in Maine. They should be available at that address during standard business hours.
You can be your own registered agent or choose one member to act as the company's registered agent. However, if none of your LLC members are willing and able to take on this responsibility, consider using a professional registered agent service. With a registered agent service, you pay a fee for the registered agent to accept legal papers for the LLC.
File Your Certificate of Formation
You are now ready to register your Maine LLC as your business registration with the Maine Secretary of State. Complete the Certificate of Formation (Form MLLC-6) and pay a $175 filing fee. Expedited service is available for an additional cost.
Your LLC certificate of formation must contain the following:
- Name of the LLC (with limited liability company or abbreviation of it in the name)
- Filing date (date of this filing or a later date)
- If applicable, the LLC's designation as a low-profit LLC or professional LLC
- Name of registered agent
- Registered office (the physical location, not a P.O. Box)
- Any attachments the LLC owners or members decide to include, particularly the LLC Company Agreement
- Signature(s) of at least one authorized person
A cover letter must accompany the certificate of formation, including the following information:
- LLC name
- List of the filings you are enclosing (certificate of formation)
- Any special handling requests (for example, 24-hour or immediate service)
- Contact information for whoever can answer questions
- Address where the Secretary of State should send the return documents
Mail the certificate of formation, along with the filing fee, to:
If by mail, to Department of the Secretary of State Division of Corporations, UCC and Commissions, 101 State House Station Augusta, ME 04333-0101.
If by Fed Ex or UPS, to Department of the Secretary of State Division of Corporations, UCC and Commissions, 111 Sewall Street, 4th Floor, Augusta, ME 04330.
A professional LLC formation company can assist you with your new business. They are particularly helpful if you live outside the state or want to create a unique LLC, such as a professional LLC or low-profit LLC.
Draft an Operating Agreement
Maine law requires that an LLC operating agreement govern a Maine LLC called a "Limited Liability Company Agreement." An operating agreement is similar to but different from "bylaws," "charters," or other forms of corporate organization.
The Maine Limited Liability Company Agreement should contain the following points
- Percentage of members' ownership
- Voting rights and responsibilities
- Powers and duties of members and managers
- Distribution of profits and loses
- Holding meetings
- Buyout and buy-sell rules (procedures for transferring interest)
- Dissolution procedures
The members may manage an LLC or hire an outside manager.
Get an EIN
If you hire employees or the LLC has more than one member, you will need an Employer Identification Number (EIN). An EIN is a unique federal tax number that the Internal Revenue Service (IRS) issues. The IRS uses your EIN as an identification number for your business. Think of an EIN as a Social Security number for businesses. When you apply for a business bank account, apply for a company credit card, or pay employees, you need an EIN. You can easily get the EIN at the IRS website. Or you can file by fax, mail, or online. There is no fee for an EIN.
Set Up Business and Tax Accounts
Once you create your LLC, you have federal and state tax and reporting obligations. Register online with Maine Revenue Services for all of your LLC's Maine business taxes, including withholding taxes, sales and use taxes, and service provider taxes.
If you have employees, you are subject to federal withholding tax. And depending on your LLC tax structure, there is state and federal business income taxation.
When you start a new business, you must set up business accounts, tax accounts, and employer accounts with the state. Register with Maine Revenue Services and the Maine Department of Labor to determine your tax obligations.
State Business Tax
There are different ways to tax an LLC. If you set up your LLC for pass-through taxation on the members' individual income tax returns, there is no state tax. However, if your LLC elects for taxation as a corporation, your LLC pays a corporate state tax rate on the LLC's net income.
State Employer Tax
Your LLC will be subject to state rules if it has employees—even if they are also members. As an employer, you create an account with Maine Revenue Services to set up employment withholding accounts. Additionally, employers should:
- Report new hires with the Maine Department of Labor
- Register for workers' compensation insurance
- Set up an unemployment insurance account
Sales and Use Taxes
When you set up an account with Maine Revenue Services, you can register for a sales and use tax or seller's permit. You need this permit if you sell physical products in Maine. The sales tax in Maine is 5.5%. You, as the seller, collect the sales tax from the purchaser and remit the sales tax to the state.
Business Licenses and Permits
Certain kinds of businesses (professionals, construction, liquor businesses, etc.) must hold licenses with the state of Maine. In addition, there may be local business licensing rules, so check with your local city or county government for their permit or licensing requirements.
Registration in Other States
If you want your Maine LLC to operate in another state, contact the secretary of state office in that state to register as a foreign LLC. You may need to show proof of your LLC's good standing in Maine. To do this, order a certificate of good standing, which Maine calls a "certificate of existence," online with the Secretary of State. The state fee for the certificate of existence is $30.
You must file an annual report to keep your Maine LLC in good standing. You can create a preprinted annual report or file your annual report online with the Secretary of State's office. This report is due by June 1st of each year.
Along with the annual report, LLCs pay an $85 fee. Submit this fee when filing the LLC yearly report.