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When starting a new company, choosing a business entity is the most important decision that the founders must make. For most businesses with more than one founding member, forming as an LLC is often the best option for a number of reasons.
An LLC is an uncomplicated business structure that affords business owners legal protection by separating personal assets from business debts. Moreover, LLCs often enjoy a lower tax rate than corporations. Nevertheless, creating an LLC can get complicated depending on where you are based, with the formation process, filing fees, and continuing legal obligations differing from state to state.
Starting an LLC in Maine is a bit more difficult than in most states due to high filing fees and two aspects of the filing process that deviate from the U.S. norm:
- The state refers to an LLC’s organizing document as a “Certificate of Formation” instead of the term “Articles of Organization” which is used in most U.S. states.
- Most organizing documents must be filed by mail.
To avoid a misstep in the filing process, follow these steps to start an LLC in Maine, and refer to the checklist at the bottom of the post to familiarize yourself with the legal and financial requirements for LLCs in the state.
Starting an LLC in Maine step-by-step
1. Select a name for your Maine LLC
Follow naming requirements
There are 2 major guidelines to follow when naming your LLC in the state of Maine:
- An LLC’s name must be distinguishable from the names of existing business entities on file with the Maine Secretary of State.
- An LLC’s name must contain one of the following phrases or abbreviations: “Limited Liability Company”, “Limited Company”, “L.L.C.”, “LLC”, “L.C.”, or “LC.”
Reserve your LLC name with the Maine Secretary of State
After selecting a name for your LLC, you may reserve it with the Maine Secretary of State to ensure that it cannot be used by another Maine business entity before your Certificate of Formation is filed.
First, use the Maine Secretary of State’s Corporate Name Search to confirm that the name you’ve selected is available for use in the state. If the name is available, file an Application for Reservation of Name by mail with the Secretary of State to reserve it for up to 120 days. The filing fee is $20.
2. Designate a registered agent
As in every U.S. state, forming an LLC in Maine requires the appointment of a registered agent service to handle state and federal legal documents and service of process on the business’s behalf.
The registered agent must either be a state resident or business entity with a street address in Maine OR if the individual or business is based out-of-state, they must have a business office in Maine.
3. File a Certificate of Formation
When you are ready, file a Certificate of Formation with the Maine Secretary of State to legally form your LLC in the state. The certificate is required to be filed through the mail, and cannot be filed online as in most other states. The filing fee is $175, however, you can pay an additional $50 for 24-hour expedited service, or $100 for immediate service.
Your Maine LLC’s Certificate of Formation must include the following:
- LLC name
- Registered agent’s name and address
- The date that the certificate will become effective
- A statement declaring whether the LLC is a low-profit LLC
- A statement declaring whether the LLC is a professional LLC
- The signature of an authorized individual
An LLC formed in a state other than Maine that intends to do business in the state must register with the Maine Secretary of State.
Follow these steps to legally do business in Maine as a foreign LLC:
- Comply with Maine LLC naming guidelines and confirm that your LLC’s name is available for use in the state using Maine’s Corporate Name Search.
- Appoint a Maine registered agent.
- File a Statement of Foreign Qualification to Conduct Activities with the Maine Secretary of State by postal mail (there is no online filing option). The filing fee is $250.
- The statement must be accompanied by either a Certificate of Good Standing or a Certificate of Existence from the LLC’s home state. The certificate must be dated no more than 90 days before it is filed with the Secretary of State.
4. Draft an operating agreement
Although not a legally mandated step for forming an LLC in Maine, drafting a comprehensive LLC operating agreement is strongly recommended for all nascent limited liability companies.
The operating agreement should do the following:
- Describe the LLC’s business structure
- Establish the individual responsibilities and obligations of LLC members
- Detail how the LLC will be run
Without an operating agreement clarifying the specific duties of its members, an LLC may face significant legal and operational difficulties.
5. Obtain an IRS Employer Identification Number (EIN)
All newly formed LLCs in the United States must acquire an Employer Identification Number (EIN) from the Internal Revenue Service (with the exception of single-member LLCs).
The nine-digit EIN is like a social security number for a business and is necessary to pay income tax, file tax returns, open business bank accounts, and perform many other important functions.
You can apply for an EIN online on the IRS website without paying a filing fee.
6. Fulfill your Maine LLC’s additional legal obligations
Once an LLC is legally formed in Maine, its members must devote attention to fulfilling legal requirements that apply for the duration of the company’s existence.
File Annual Reports
All LLCs active in Maine are required to file an Annual Report with the Secretary of State every year. Reports are due each year by June 1.
You can file your annual reports online or by mail. The annual report filing fee is $85 for LLCs formed in Maine and $150 for foreign LLCs doing business in the state.
Obtain business licenses and permits
A Maine LLC may be required to obtain one or more state or locally-issued business licenses, permits, or certifications depending on the nature of its business and its location.
Check Maine.gov’s Business Licensing page for information on state license and permit requirements, and visit the Maine.gov Local Government portal to learn about local business license requirements and find local city clerk contact information.
Register with Maine Revenue Services
Certain LLCs active in Maine are required to register with the Maine Revenue Services in order to fulfill certain state tax obligations. This includes LLCs that collect sales tax on retail goods as well as LLCs with employees.
You can register with Maine Revenue Services online on the department’s website.
Maine LLC checklist
A Maine LLC’s name must obey the following rules:
- Must be distinguishable from the names of existing business entities on file with the Maine Secretary of State.
- Must contain one of the following phrases or abbreviations: “Limited Liability Company”, “Limited Company”, “L.L.C.”, “LLC”, “L.C.”, or “LC.”
Formational documents and filing fees:
- Application for Reservation of Name – $20 filing fee
- Certificate of Formation – $175 filing fee
- Statement of Foreign Qualification to Conduct Activities – $250 filing fee (foreign LLCs only)
- An LLC is formed in Maine through the filing of a Certificate of Formation with the Maine Secretary of State.
Additional legal obligations:
- File Annual Reports – Required of all LLCs doing business in Maine
- Obtain State and local business licenses/permits – Necessary for certain types of LLCs
- Register with Maine Revenue Services – Necessary for certain types of LLCs