How to Start an LLC in Maine (Step-by-Step Guide)

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.

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:

1. 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.
2. Most organizing documents must be filed by mail.

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.

1. Select a name for your Maine LLC

Follow naming requirements

There are two major guidelines to follow when naming your LLC in the state of Maine:

1. An LLC’s name must be distinguishable from the names of existing business entities on file with the Maine Secretary of State.
2. 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.”

Need help coming up with a business name? Check out our free business name generator.

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
• Date the Certificate should become effective, upon filing or a later date
• 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

4. Create 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:

1. Describe the LLC’s business structure
2. Establish the individual responsibilities and obligations of LLC members
3. 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 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

In Maine, while LLCs are not subject to a generalized business license requirement, the specifics of your business operations may require certain licenses and permits.

• Sales tax license: At the state level, almost all businesses will need to apply for a Sales Tax License. If you expect to exceed $3,000 in gross sales per year, you will need this license to collect and remit sales tax.
• Occupational licenses: Occupational licenses are also mandatory for industries regulated by various state agencies. These licenses encompass a wide array of sectors, including but not limited to food service, cosmetology, and construction. To identify the specific licensing requirements applicable to your business, consult the Maine Bureau of Professional and Occupational Licensing’s website.
• Local licenses: Additionally, the necessity for municipal licenses and permits arises based on your business’s location and the nature of its activities. Such local permits can range from signage and zoning permits to home occupation permits, among others. For detailed information tailored to your situation, reaching out to your local town office is recommended.

Find the contact information for your local city clerk to inquire about local license requirements. Check Maine.gov’s Business Licensing page for information on state license and permit requirements.

Understand state taxes

In Maine, LLCs typically don’t pay state income tax directly since they are considered pass-through entities, allowing profits and losses to be reported on the individual members’ personal tax returns.

However, LLC members must consider the state self-employment tax, which is 5.95% in Maine, to cover Social Security and Medicare as they are viewed as self-employed.

• Maine tax rates: Additionally, profits from the LLC are subject to Maine’s graduated personal income tax rates, which vary between 5.8% and 7.15% based on taxable income.
• Local taxes: Beyond these, LLCs may also face municipal taxes in certain localities and other specific taxes related to their business activities, including unemployment insurance taxes or franchise taxes, highlighting the importance of understanding the comprehensive tax responsibilities in Maine.
• 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.

Understand BOI reporting

The new Beneficial Ownership Information (BOI) reporting rule introduces a regulatory change aimed at enhancing transparency in business ownership to combat financial crimes like money laundering and tax evasion.

• Beneficial owners defined: Beneficial owners are defined as individuals who ultimately own or control a significant portion (usually 25% or more) of a legal entity, such as a corporation or limited liability company, or who exert significant control over the entity’s operations.
• Filing deadlines: Under this rule, LLCs and other entities are required to report the identities of their beneficial owners to the designated regulatory authority by specific deadlines. Businesses formed prior to 2024 have the whole calendar year to submit their information; any LLC formed in 2024 has 90 days from confirmation of business formation; businesses formed after January 1, 2025 will have 30 days. Additionally, you have 30 days from any changes to report them.

Learn more about BOI Reporting.

Post LLC tasks

Set up business bank accounts

While Maine and federal laws do not mandate LLCs to maintain separate business bank accounts, doing so is strongly advised for various reasons.

Benefits of separate accounts:

• Most critically, it helps preserve the limited liability protection that is a fundamental advantage of forming an LLC, safeguarding personal assets from business-related debts and liabilities.
• A distinct account ensures clear financial separation, which is crucial for maintaining the LLC’s legal protection.
• A  dedicated account also streamlines financial management and tax reporting, facilitating accurate tracking of business transactions, which simplifies compliance with tax obligations.

Banks to consider: Business bank accounts are available at many kinds of banks, including large national chains. However, new businesses and startups often prefer either local or online banks that may have more personal service and favorable rates. Some online options, like Found, Relay, or Mercury, work with new businesses and can be a great choice to start out.

Obtain a Certificate of Good Standing

Maine, while not issuing a document explicitly named “Certificate of Good Standing,” provides equivalent documents for entities such as LLCs. These are the Certificate of Existence, which attests to an LLC’s valid existence and standing within the state, and the Certificate of Compliance, which confirms the LLC’s adherence to state filing requirements and fee payments.

How to get it: These documents can be acquired through the Maine Secretary of State’s office via online, mail, or in-person requests. Opting for online processing ensures immediate service with a fee of $30, whereas the standard procedure could extend up to 7 days, not including mailing time, for the same fee.

Build a website

Choosing a domain name that aligns with your business name or the services and products you offer is a crucial step for most businesses to establish an online presence.

While every LLC owner knows a website is necessary, you might not know where to start. Follow these steps to get started:

1. Search for and purchase a domain name.
2. Sign up for web hosting.
3. Pick a web builder like Domain.com or GoDaddy to create a site with no coding experience necessary.
4. Tailor your site to your customers, adding appropriate pages, content, and images.
5. If you’re selling goods, add an e-commerce section to your site.
6. Review, test, and publish your site.

Costs to set up an LLC in Maine

To establish and maintain an LLC in Maine, there are several essential state fees and optional expenses to consider.

• Incorporation fees: The mandatory state filing fee for submitting the Maine Certificate of Formation to the Maine Secretary of State is $175, which is crucial for officially forming your LLC.
• Annual Report filing fee: For ongoing operations, an annual report fee of $85 is required to keep your LLC in good standing with the state. The report is filed once a year with the secretary of state and takes seconds to file online.
• Registered agent services fee: While optional, hiring a commercial registered agent is highly recommended, with fees varying from about $50 to $200 annually, to handle official documents and compliance deadlines on your behalf. This professional service is optional. You can serve as your own registered agent.

Foreign LLCs

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:

1. 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.
2. Appoint a Maine registered agent.
3. 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.