Start a Business in Maine
Want to know how to start a business in Maine? Technically, all you’ve got to do is sell something, and you’re a bonafide sole proprietor. But what if you want to do more than that? In Maine, you wouldn’t be alone—the state has the second-highest self-employment rate in the US. Find out how to register your business, protect your personal and business assets, and meet Maine legal requirements with our comprehensive guide to starting a business in Maine.
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1. Pick a Business Structure
Establishing a business as a sole proprietor or as a member of a general partnership is easy because you don’t have to file any paperwork with the state of Maine. You’re in business as soon as you sell a basket of blueberries or a lighthouse tour. The drawback to these two business structures is that neither offers liability protection. So, if your business gets sued or owes debts, you are personally responsible for meeting all legal and financial obligations. This means that your personal assets (house, car, and money in your bank accounts) could be seized to satisfy these obligations.
To shield your personal assets from business damages, you’ll need to form a separate business entity, such as a limited liability company (LLC) or a corporation, and register your business with the state.
Maine Limited Liability Company (LLC)
While LLCs are especially popular among small business owners, businesses of all sizes can benefit from the flexibility and powerful liability protection LLCs offer. LLCs provide versatility in terms of both management structure and tax classification, so you have more options for how to run your business. To establish your Maine LLC, file a Certificate of Formation with the Maine Bureau of Corporations, Elections & Commissions.
Maine Corporation
Corporations offer less leeway than LLCs when it comes to management—shareholders must appoint a board of directors, which in turn must elect officers to run the company. Additionally, corporations must adhere to all the rules laid out in their bylaws. On the plus side, these rules tend to make corporations seem more accountable and reliable in the minds of investors and donors. To form your Maine corporation, submit Articles of Incorporation to the Maine Bureau of Corporations, Elections & Commissions.
Can an LLC be just one person?
Yes! A one-person LLC is called a single-member LLC. Single-member LLCs are one of the most common kinds of businesses in the country. For the most part, single-member LLCs are just like multi-member LLCs, but there are some slight differences in how they file taxes and protect personal assets.
Read all about Single-Member LLCs.
What about a Maine Nonprofit?
If your corporation won’t be distributing any of its income to members, directors, or officers, you can start a Maine nonprofit. Nonprofits can be organized for various purposes in Maine, including to achieve charitable, political, and even land development objectives. To form your nonprofit in Maine, you’ll need to file Domestic Nonprofit Corporation Articles of Incorporation with the Bureau of Corporations, Elections & Commissions. The filing fee is $40.
Want to learn more? Check out our Nonprofit Guide.
2. Name Your Business
This is where the fun begins. But choosing a name for your business in Maine shouldn’t be taken lightly. If you don’t form a separate business entity, like an LLC or corporation, you’ll need to use your own name or a DBA. Using DBA allows you to do business under a more descriptive title— for example, you can call your food truck business Lobster Rolls on the Roll instead of Will Johnson.
When naming an LLC or corporation, you’ll need to adhere to the naming conventions laid out in Maine state statutes. Your name must:
- Be unique among registered business names in Maine.
- Contain an entity identifier, such as “corp.” for a corporation or “LLC” for an LLC.
- Not contain any language that implies a false business purpose—for example, calling your business a charity when it is not.
- Not contain obscene language or promote unlawful activity.
If you’re hoping to distinguish the name of your business from the name of another business, it’s important to note that using different entity identifiers and adding words like “and” or “the” won’t make your name unique. You can find a complete list of naming rules for LLCs in Title 31 ME Rev Stat § 1508 and for corporations in Title 13-C ME Rev Stat § 401.
Find out if your desired name is available in Maine by searching the Maine’s Corporate Name Search database.
Can I reserve a business name?
Yes. If you know what name you’d like to use but aren’t ready to register your business, you can reserve that name for 120 days. To do so, you’ll need to file an Application for Reservation of Name with the Secretary of State and pay a $20 fee. You cannot renew your reservation.
What is a Maine DBA?
Any name your business uses other than its legal name is a DBA. In Maine, a DBA for domestic business entities is referred to as an assumed name. Assumed names are often used by LLCs and corporations for branding purposes or by sole proprietors who don’t want to use their first and last name as their business name.
To register a Maine DBA you’ll need to file a Statement of Intention to Transact Business Under an Assumed or Fictitious Name with the Secretary of State. Fictitious names are used by out-of-state businesses. The filing fee is $125. State rules for naming LLCs and corporations also apply to assumed names.
What about trademarked names?
It’s a good idea to check with the US Patent and Trademark Office (USPTO) to make sure your business name hasn’t been trademarked by someone else. If it has, and you use it anyway, there’s a chance that the business could come after you for infringement.
3. File Formation Paperwork
Starting a sole proprietorship or general partnership won’t require you to file any paperwork with the Maine Secretary of State because you won’t be establishing a separate business entity. (You may still need to get a Maine business license, though.)
However, you do need to submit formation paperwork to the state if you’re starting a Maine LLC or corporation. Once your documents have been filed and accepted, your company is officially registered with the state as a separate business entity.
- To form a Maine LLC, file a Maine Certificate of Formation.
- To form a Maine corporation, file Maine Articles of Incorporation.
Both of these forms will require you to list a Maine Registered Agent to accept legal mail on behalf of your business. After filling out your formation paperwork, you can complete your registration by submitting it to the Maine Secretary of State’s Bureau of Corporations, Elections & Commissions online, by mail, or in person.
Note: This information you supply in your formation paperwork will become public record. The names and addresses you provide will be freely available through Maine’s Corporate Name Search business database.
What is a registered agent?
A registered agent—sometimes referred to as a commercial clerk in Maine—is the individual or company you appoint as responsible for receiving legal correspondence for your business. According to Maine law, your registered agent must have a physical address in Maine where they can accept service of process during regular business hours. You can be your own registered agent, but staying put at one location all day isn’t for everyone. That’s why some folks hire a registered agent service.
How can I keep my private information off Maine’s public record?
The best way to keep your private information off the public record is to keep it off public documents. While this may not be entirely possible, you can limit the amount of personal information you make available on your business registration paperwork by getting a registered agent so that you can list their address on these documents instead of your own. (Hint: that’s what we do!)
4. Draft Internal Records
So far in this guide, we’ve dealt with public forms that you’ve had to file with the Maine Secretary of State’s Division of Corporations, Elections & Commissions. Now, it’s time to organize your internal records. These are the documents your business will keep on record within your company.
Though these documents are internal, you’ll likely need to show them to third parties like the bank or—if you start a nonprofit—the IRS.
Here are the major internal documents you need to organize for LLCs and corporations:
Maine LLC Operating Agreement
This is your LLC’s rule book. It defines how your LLC will do things like make decisions, distribute money, manage operations, and appoint officers. Your operating agreement plans for every big picture scenario your LLC is likely (or unlikely) to face, including dissolution.
Drafting an operating agreement is hard, and the internet is full of shabby templates that have been copy and pasted from who knows where. So we had our attorneys draft a Maine LLC Operating Agreement template that you can use as a solid foundation.
Maine Corporate Bylaws
Bylaws are the rules your corporation will adopt and follow internally. Bylaws detail how your corporation will appoint directors and officers, hold shareholder and board meetings, and handle emergencies, among other things. Unlike operating agreements, corporate bylaws are required by law in Maine (see Title 13-C ME Rev Stat § 206).
As with operating agreements, you can find plenty of bylaws templates online. But bylaws are pretty serious, so you don’t want to just use the first template you come across. Our attorneys drafted an Maine Corporate Bylaws template you can use to get started.
Starting a nonprofit? Learn about Maine nonprofit bylaws.
5. Get Maine Business Licenses
Maine doesn’t issue a general, state-wise business license. However, you may still be required to obtain certain licenses and permits based on your location or industry.
Maine State Business License
You won’t need a general business license from the state to operate in Maine, but you may need an industry-specific one. Liquor, eating and lodging, gaming, and agricultural licenses are all issued through state agencies. So, if you run a restaurant that serves alcohol, you’ll need a liquor license from the Maine Bureau of Alcoholic Beverages & Lottery Operations and an Eating & Lodging License from the State of Maine Health Inspection Program. You can determine which state licenses your business needs using the Maine Department of Economic & Community Development’s online Business Answers service.
Professional Business Licenses
Professional business licenses are required for fields where practitioners must undergo specialized training or education to perform their jobs. Professional services encompass a wide range of professions, from medicine to cosmetology. To find out which professional licenses you need, visit the business section of Maine’s state website for licensing resources by profession.
Local Business Licenses
Depending on the city or country where your business is located, you may also need local licenses or permits. In Portland, for example, certain types of businesses need to get city business licenses, including taxi companies, mobile food service companies, and street artists. You’ll need to contact your local jurisdiction to find out what local licenses your business may need.
Learn more about How to Get a Business License.
How do I get a Maine business license?
To get an industry-specific Maine business license, you’ll need to go through the agency in charge of regulating your industry in Maine. Every agency has its own licensing procedures and fee schedule. For example, to get an Eating & Lodging License from the Division of Environmental and Community Health, State of Maine Health Inspection Program, your business must submit an application, pass an inspection, and pay a fee.
How much does it cost to get a Maine state business license?
State-level license and permit costs in Maine vary by type. If you’re a beekeeper, for instance, you’ll pay $10-550 for your Apiary License from the Department of Agriculture, Conservation, and Forestry, depending on how many colonies you have. You’ll have to contact the state regulating agency for your industry to find out the exact cost of the license(s) you’ll need.
How do I get a professional license in Maine?
You can get a professional license from the agency responsible for providing regulatory oversight for your field in Maine. The qualifications and costs of acquiring your professional license will depend on your field and regulating agency. For example, if you’re a counselor, you’ll need to meet education, training, exam, and criminal background requirements in addition to submitting a license application and fees totaling $446 to the Board of Counseling Professionals Licensure.
How do I get a local business license?
Local license application procedures and requirements vary by jurisdiction. If you plan on running a mobile home park in Bangor, for example, you’ll need to file an application with the Bangor City Clerk’s office and pay a fee of $252-576, depending on the number of lots you have. You’ll need to check with your local city or county government for specific details regarding licenses for your business.
6. Organize Your Money
The liability protection you get from forming an LLC or corporation is only as strong as the separation between you and your business. At a minimum, you’ll need to open a bank account for your business. And if you’re going to hire employees, you’ll need to tackle payroll, too.
Open a Business Bank Account
To keep your business spending separate from your personal spending, you’ll need to open a business bank account. If you don’t, a court could find that your business is not actually separate from you, the owner, under the Alter Ego Doctrine. Also known as piercing the corporate veil, this is the outcome when a judge finds that a company is not a separate entity but rather an alter ego of the owner. If this ever happens, you could lose your limited liability status.
Opening a business bank account as a sole proprietor is important, too. Though sole proprietors and general partnerships have no limited liability status to protect, both will benefit from organizing their business finances come tax season.
How do you set up a business bank account?
LLCs and corporations will need to provide the bank with their formation documents, operating agreement or corporate bylaws, EIN, and in some cases, a Corporate Resolution to Open a Bank Account or LLC Resolution to Open a Bank Account.
Do I need a business bank account to accept credit card payments?
Probably. Payment processors require you to provide them with a bank account. This is where they’ll deposit funds from transactions. Most of the time, this needs to be a business bank account.
Some payment processors may let you get away with listing a personal bank account, but it’s not a great idea. Mixing your business finances with your personal finances erodes the separation between you and your business, weakening your liability protection. It also turns tax season into a nightmare.
Learn more about Payment Processing.
Set up Payroll
If you’re hiring employees or independent contractors, you’ll need to set up payroll in Maine. Here’s an overview of the steps:
- get an EIN
- determine whether you’re hiring employees or independent contractors
- prepare the forms your employees will fill out
- choose a payroll service or software
- decide on a payroll schedule
- notify the state of your new hires to the Department of Health and Human Services, Division of Support Enforcement and Recovery, New Hire Reporting Program
- register to remit tax withholding in Maine through the Sales & Use, Withholding and Service Provider Tax Registration Service
- register with the Maine Department of Labor Bureau of Unemployment Compensation to get your Maine Employer Account Number
- find your Employer UI Contribution Rate through the ReEmployMe insurance portal
Setting up payroll is complicated. To streamline the process, use a solid payroll service or software that will automatically withhold payroll taxes, file state and federal returns on your behalf, and pay your employees by check or direct deposit.
What forms will my employees need to fill out?
Your new employees will need to fill out a W-4 to determine how much you’ll withhold and an I-9 to verify that the employee is eligible to work in the US. Maine employees will also need to fill out a W-4ME for state-level income tax withholding.
What’s the difference between an independent contractor and an employee?
It’s important to understand the difference between an independent contractor and an employee. That’s because for employees, you’ll need to withhold and pay income, social security, and Medicare taxes. Independent contractors pay these taxes on their own.
An independent contractor is self-employed—how they complete their work is not directly controlled by an employer. An independent contractor may perform the same kind of work for other businesses, and can do the work when and how they choose.
An employee, on the other hand, performs their work how and when their employer chooses.
If you’re unsure, you can file Form SS-8 with the IRS and let them decide.
Learn everything you need to know about hiring independent contractors.
How do I get a Maine Employer Account Number?
To get your Maine Employer Account Number, you can register online through the Maine Department of Labor Bureau of Unemployment Compensation’s ReEmployMe Portal. After registering, you’ll also be able to calculate your unemployment insurance (UI) contribution rate, which you’ll need when setting up payroll.
7. Get Business Insurance
Forming an LLC or corporation protects your personal assets. But if anything disastrous befalls your business—like a lawsuit, burglary, flood, or fire—your business is on the hook to pay. Business insurance can help cover the costs.
In Maine, you may be legally required to get workers’ compensation insurance, and, of course, you’ll need auto insurance for any business vehicles. However, beyond that, how much and what types of additional coverage you purchase is entirely up to you. Supplemental insurance can help protect the time and money you’ve invested in your business by helping you recoup losses due to property and equipment damages or liability claims.
Here’s an overview of the most frequently purchased kinds of business insurance:
Workers’ Compensation Insurance
Workers’ compensation insurance is a way to protect your employees from undue financial loss by covering medical costs and lost wages if they are injured while working. All employers in Maine are required by law to have workers’ compensation insurance. There are a few exceptions for those employing agricultural and aquacultural laborers and domestic workers. You are also not required to cover any independent contractors or subcontractors. However, as an employer, you can always voluntarily cover workers even if it’s not legally required.
Unlike many other states, Maine doesn’t have a state-funded workers’ compensation insurance program. You’ll need to purchase coverage through a licensed insurer who sells property and casualty insurance or specializes in business insurance. With the right qualifications, your business can also self-insure or join with other businesses to provide group self-insurance. The cost of workers’ compensation insurance depends on the level of hazard associated with your business classification.
Liability Insurance
This covers the costs of claims against your business for injuries or damages to the property of others, like clients or customers. This includes medical expenses, legal fees, settlements, and judgments. Whether or not you need it depends on whether your business is likely to be sued and how many assets your business needs to protect. If it’s just you and your computer in your basement, you might feel comfortable skipping liability insurance. Or maybe you won’t. Beyond general liability insurance, you can purchase or add on more specific types, like professional, cyber, commercial, home-based business, or product liability insurance.
Do business owners need workers’ compensation insurance in Maine?
Sole proprietors with no employees, LLC owners, and anyone who owns at least 20% of a corporation aren’t required to cover themselves under workers’ compensation insurance. However, depending on your line of work, covering yourself can be a wise decision. Not all health insurance companies cover on-the-job injuries, so workers’ compensation insurance can provide you with additional financial protections.
Do I need insurance for my home-based business?
Probably. That’s because you can’t count on your homeowners’ or renters’ insurance policy to cover damages related to your business. Most insurance companies offer a home-based business insurance plan.
8. Understand Your Tax Burden
Owning and operating a business in Maine means that you’ll need to pay federal, state, and possibly local taxes. Income taxes in Maine run a little higher than average, while property taxes run a little lower. Here’s an overview of where your tax dollars are headed.
Federal Taxes
- LLCs. Single-member LLC? By default, you’re taxed similar to a sole proprietor. More than one LLC owner? You’re taxed as a general partnership. Either way, your default tax status is “pass-through,” which means you don’t pay corporate taxes. Instead, your LLC’s owners report profits and losses on their personal tax returns. For federal income taxes, you’ll need to pay the 15.3% federal self-employment tax rate on all earnings up to $147,000. An LLC can file paperwork with the IRS to be taxed as an S-Corp or C-Corp instead.
- Corporations. Corporations are taxed as C-Corps by default. This means that corporations pay the 21% federal corporate tax rate on federal taxes.
To pay your federal taxes (and take a good deal of other steps required to start a business), you’ll need to get an Employer Identification Number (EIN). You can apply for one with the IRS or hire us to get one for you.
Do I need an EIN if I’m self-employed?
If you’re operating a sole proprietorship or single-member LLC that doesn’t employ anyone else and you don’t need to file excise or pension plan returns, you don’t legally need an EIN.
However, you can still get one—and you probably should. Otherwise, you’ll have to use your own social security number to do business. Plus, you’ll likely need an EIN to open a business bank account.
How do I get an EIN?
To get an EIN, you can either apply online or file form SS-4 by mail with the IRS. Getting an EIN is free.
Check out our guide to applying for an EIN.
What is an S-Corp?
An S-Corporation is a federal tax election. Registered business entities like LLCs and corporations start out with a default tax status, but can file paperwork with the IRS to be taxed as an S-Corp. Like LLCs, S-Corps are taxed as pass-through entities. Like corporations, S-Corps can make distributions that aren’t subject to the 15.3% self-employment tax.
Learn more about the S-Corp tax election.
What is a C-Corp?
A C-Corporation is the default federal tax election assigned to corporations. Most corporations are taxed as C-Corps, but LLCs can also apply for C-Corp tax designation by filing paperwork with the IRS. C-Corps file federal corporate income taxes and state corporate income taxes (in Maine, the corporate tax rate is graduated, ranging from 3.5% to 8.93% based on income). C-Corps can pay their shareholders in distributions, and the shareholders report those profits on their personal tax returns.
Learn more about the C-Corp tax election.
Maine State Business Taxes
Maine Revenue Services collects income, sales, and some miscellaneous taxes from Maine businesses.
If you own an LLC, you’ll be responsible for paying Maine individual income tax. Individual income tax rates in Maine are based on income level, spanning from 5.8% to 7.15%. Final tax calculations also vary according to filing status.
Likewise, corporations must pay Maine corporate income tax based on their adjusted federal taxable income. Maine’s graduated corporate income tax rates start at 3.5% for corporations making $350,000 or less and top off at 8.93% for corporations making $3,500,000 or more.
Maine also imposes a Sales, Use & Service Provider Tax. You’ll need to collect this tax from your customers on qualifying sales throughout the year. Then, you’ll have to file a Maine Revenue Services Sales and Use Tax Return and pass on the taxes you’ve collected to the state. You can register using the state’s online Sales & Use, Withholding and Service Provider Tax Registration Service. Sales, Use & Service Provider tax rates vary by category—for example, the general sales tax rate is 5.5% while the auto rental tax rate is 10%.
Depending on your industry, you may also need to pay miscellaneous state taxes. These include the state’s Blueberry, Cannabis, and Healthcare Provider Taxes. You can find out which taxes apply to your business and your exact tax rates through Maine Revenue Services.
Local Maine Business Taxes
If your business owns property, you’ll owe property taxes at the local level. To figure out your property tax rate, contact the department in charge of property taxes in your local jurisdiction.
9. Build a Business Website
If you want Mainers to find your business, they have to be able to find you online. This means you’ll need a website, a business email account, and social media accounts. Don’t worry if you’re not especially tech-savvy—you don’t have to be a web developer or an influencer to establish a robust online presence. You’ll just need the following:
- Domain name. Your domain is the address where your website will live. You’ll want a domain name that is short, unique, local, and—most importantly—available. If your domain is trademarked, you could face legal trouble.
- Domain registrar. Once you’ve decided on a domain name, you’ll want to register it with a domain registrar. Some domains are more expensive than others. Some domain registrars also offer hosting and most will provide you with a business email that includes your domain name (“[email protected]”).
- SSL certificate. An SSL certificate signals to your users that your website is secure. If your website will use forms—like a sign-up form or a “contact us” form—an SSL certificate is critical. But even if you don’t you use forms, you’ll still probably want one—it allows an encrypted connection, which means your users’ data is transported securely. There are several types of SSL certificates, and you can often get one through your domain registrar.
- Site design. The easiest option is to use a free website creation tool—there are a number of free options available. Most are easy even for a newcomer to use, with styles and built in templates. For a more custom design, you can hire a web designer to work on your website, but this will be much more expensive.
10. File Maine Annual Report
All LLCs and corporations registered in Maine must submit an Annual Report to the Maine Secretary of State, Bureau of Corporations, Elections & Commissions every year. Filing an annual report ensures that allows you update basic information about your business, such as your principle address. This ensures that all of your information remains current on state records.
Annual Reports are due on June 1st each year and can be filed online through the Maine Secretary of State’s Annual Report Filing portal. The fee is $150 for LLCs and $85 for corporations.
Read more about How to File a Maine Annual Report.
What if I forget or don’t file my Maine Annual Report?
If you fail to file your annual report on time, you’ll be charged a late filing fee of $50. If you don’t file and don’t pay the late fee, the state will dissolve your business.
11. Apply for Trademarks
A trademark is a design, symbol, word, phrase—or any combination thereof—that represents a brand’s goods or services exclusively. Only some businesses register trademarks.
You can apply to register your trademark with the Commonwealth of Maine or federally with the U.S. Patent and Trademark Office (USPTO). Registering your trademark in Maine is cheaper and easier than registering with the USPTO, but doing so only protects your trademark in Maine.
You can only register a trademark once you’ve started using it (so slap it on that website you just made), and not all applications are approved. Trademark law is complex, and the strength of a trademark application (and the trademark itself) depends on many factors.
Our attorneys can review your application, offer advice, and prepare and submit the application for you—Check out our Trademark Service.
How do I register a trademark in Maine?
You can register for a trademark in Maine by filing an Application for Registration of a mark with the Secretary of State’s office. You’ll need to include the date you first started using it, three samples of your mark in use, and a cover letter containing your business’ contact information. In addition, Maine requires you to renew your trademark registration every ten years with an Application for Renewal of a mark.
The fee for registering a trademark in Maine varies. Maine classifies marks by industry. You’ll pay $60 for your first classification and $10 for each additional class. For example, if your mark is used in “communication” and “education,” your fee will be $70. The renewal fee is the same as your initial registration fee. Keep in mind that registering your trademark in Maine only protects your trademark in Maine.
Can I register a trademark before I use it?
No. But you can file an application with the USPTO under Intent-to-Use status. This gets your application in line before you’ve actually used the mark, which could be helpful if you’re worried someone else might register your mark before you’ve had a chance to use it.
For your trademark to become official, you’ll eventually need to show proof that you’re using it. An Intent-to-Use application buys you some time to do that.
Learn more about filing an Intent-to-Use Trademark.
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