You’ve decided to take your business to the next level by forming an LLC. Well, congratulations! LLCs are the most popular business structure because business owners love the tax benefits, simple structure, and personal asset protection they provide. It’s also typically quicker to get an LLC than a corporation because there’s less regulation on LLCs. But how long does it take to get an LLC in Maine? We’ll cover everything you need to know about doing business, forming an LLC, and processing times in Maine in this complete guide.
Discovering Maine
The Pine Tree State is steeped in American history, being the site of the Boston Tea Party, and it’s culturally diverse with several native American tribes living in the state, such as the Passamaquoddy, Maliseet and Penobscot tribes. It’s no wonder that ancient people found the land in Maine beautiful. Its geography is as diverse as its people. You can find beaches, inlets, bays, salt marshes, coastal islands, streams, lakes, fertile soil, and mountains in Maine. Somewhere around 90% of the state is made up of forests, including pine trees. Because of this, some of the state’s biggest natural resources are wood, maple syrup and other products that result from forestry. Maine also boasts some of the best tourmaline crystals in the world, as well as other semi-precious stones, limestone and gravel. Some of the other things it’s known for are lobster and fiddlehead crabs, lighthouses (there are over 60 along its rocky coastline), and being the birthplace of Stephen King and Henry Wadsworth Longfellow.
Economic Overview of Maine
Main has a Gross State Product or GSP of $65.5 billion, and its growth rate from 2018-2023. The biggest industries in the state by revenue are Life Insurance & Annuities, Gasoline & Petroleum Bulk Stations, Hospitals, Gas Stations with Convenience Stores, and Supermarkets & Grocery Stores. The companies in Maine that employ the most people are the State of Maine, Mainehealth Services, Hannaford Bros. Co., LLC, Walmart Inc. and General Dynamics Corporation. And the sectors that contribute the most to the state’s overall Gross Domestic Product are Real Estate and Rental and Leasing, Healthcare and Social Assistance, Manufacturing, Retail Trade, and Professional, Scientific and Technical Services.
Business Environment in Maine
Usnews.com declared Maine’s business environment #43 in the country, which means it’s not great. According to Forbes, some of the reasons for Maine’s crummy business climate include high energy costs, a high corporate tax, and a mostly geriatric population. Sure, there are some big-ish companies with headquarters in Maine, but of them, none of the “big companies” are in the top 1000 in the country.
The unemployment rate in Maine is 3%, which sounds great and it is for the state government, but it’s bad for businesses there. This means you’ll struggle to find employees for your business, let alone quality employees with the skills you want who are a perfect fit for the jobs you create. This is likely why the job growth in the state is -1.1%. When it comes to higher education, the state ranks #39 in the nation, so finding workers with necessary technical skills in Maine could prove difficult.
The “opportunity” section of Usnew’s survey tells an interesting story about Maine. It ranks #3 in equality, so no issues there. But it’s #26 in both affordability and economic opportunity. That means it will be difficult to keep a business afloat in the state because it’s expensive to run a business in Maine, or at least more expensive than some other states.
Another metric that business owners need to know about is the state’s infrastructure. It ranks #48 in transportation. 20.7% of its roads have been found to be in poor condition, while the national average is 19.0%. That’s slightly better, but it also means that shipping your products across the roads in your state or commuting could be a complicated affair. Internet access was ranked #38, as well, which isn’t great for tech companies.
And all of this was taken into consideration in the fiscal stability rating, which is #35 overall. It was rated #25 for long-term fiscal stability and #38 for short-term fiscal stability.
State-Specific Regulations and Incentives for Forming an LLC in Maine
Here are some of the incentives for forming an LLC in Maine.
- Employment Tax Increment Financing Program (ETIF): This is a tax refund of between 1.35%-3.6% on employee income up to ten years. To qualify, an employer must become ETIF certified, be a non-retail or non-public utility for-profit business, hire at least 5 new employees that meet ETIF qualifications at a wage that exceeds the company’s usual minimum baseline pay, provide access to group healthcare plans and ERISA retirement plans to these new employees, and more.
- Pine Tree Development Zone Program (PTDZ): This program provides corporate tax credits, sales and use tax exemptions on both real property and personal taxes, employee income reimbursement (3.6%), and a reduction of energy rates. To qualify, you must have a business in Biotechnology, Composite Materials Technology, Aquaculture and Marine Technology, Environmental Technology, Manufacturing and Precision Manufacturing, Financial Services, Information Technology, or Advanced Technologies for Forestry and Agriculture, and pay wages higher than the average income for the county.
- Major Business Headquarters Expansion Program (MBHQ): This program has been around since 2017 and is in place to encourage businesses to locate and expand their headquarters in Maine. To qualify, businesses must make an investment in the headquarters of at least $35,000,000 as well as show an intent to recruit and train employees for the facility. Qualified applicants have at least 5,000 employees worldwide, with 25% of that workforce in Maine. If you meet all of the qualifications, you can get a credit for 2% of the investment for up to 20 years.
- Research Expense Tax Credit: This is a credit for research expenses, and it’s limited by the federal Credit for Increasing Research Activities program. The limit is 5% of qualified research expenses over a three year period, as well as 7.5% of basic research expenses. It also includes 100% of the first $25,000 in tax liability, and 75% of tax liabilities that exceed $25,000. You can’t carry this credit back, but you can carry it forward up to 5 years.
- Major Food Processing Manufacturing Expansion Program: This is a food processing tax credit of 1.8% on a company’s investment up to 20 years. The minimum qualifying investment for the credit is $35 million, and companies must have at least 40 full-time employees in Maine, and 75% of those employees are required to make the average per capita income for the county, and be located in Maine for 5 years prior to applying.
- Maine Seed Capital Tax Credit: This program encourages investors to invest in Maine businesses. Tax credits from this program are for 40% of the initial investment, with a limit of $3.5 million. To qualify, your business must be a manufacturer in Maine and provide goods and services with at least 60% of your sales coming from outside the state, create, develop or apply advanced technology, be a value-added natural resource enterprise, or be a certified visual media production company. And the investor can’t own or control 50% or more of the company they invest in.
- Business Equipment Tax Reimbursement (BETR) Program: You can get a tax reimbursement on property and equipment that was in service at your business between April 1, 1995 and April 1, 2007- April 1, 1995 for retail property. It’s a 100% reimbursement the first 12 years, but it’s decreased after that.
- Business Equipment Tax Exemption (BETE) Program: These tax exemptions are for business equipment bought by businesses in the R&D, manufacturing, fuel and electricity, custom computer programming, and biotechnology industries, and are 100% exemptions on property that was taxed on or after April 1, 2008.
- Commercial Agriculture and Aquaculture Production: This is a sales and use tax exemption on sales of pesticides, feed hormones, antibiotics or medicines used in commercial agriculture or aquaculture, seed, fertilizer, insecticides, defoliants, fuel, weed killers, depreciable machinery and equipment, and electricity, as well as sales of breeding stock and other animal agricultural production.
- Municipal Tax Increment Financing: Program that allows cities, unorganized territories or plantations to leverage property taxes that are generated by a particular project to finance private or public projects for up to 30 years. The projects are required to be located in specific regions that the city designates, and the types of projects that qualify are determined by the public’s approval.
- Educational Opportunity Tax Credit: This program allows employers to find, attract and retain quality employees, and it helps workers to pay for their education to become quality employees. The employer will make payments for the worker’s education loans to lenders on behalf of the worker, and then the business can qualify to get annual tax credits up to $800 for an associate’s degree, and more than $4,000 for a bachelor’s degree. It’s not only a great opportunity for workers, it’s a great incentive for your company to offer in order to attract workers.
- Jobs and Investment Tax Credit: This is an income tax credit on both equipment and facilities that have created new jobs. The credit against income taxes is for a variety of personal property, but it must generate at least 100 new jobs in 2 years, and the initial investment must have been at least $5 million. It’s tied to a federal investment tax credit, which limits it to $500,000 per year, and you can carry it forward for 7 years.
- R&D “Super Credit”: The state of Maine has established a “Super Credit” to add to the existing R&D tax credit, so you could potentially qualify for both. Your business could qualify on top of the existing R&D credit if the tax due is equal to the excess of qualified expenses for that tax year over the “super credit base amount”, which is the average amount spent on qualifying R&D expenses in three tax years prior to the effective date of the super credit, plus an additional 50%.
- High Technology Investment Tax Credit: This is a tax credit towards the purchase or lease of computers and other related equipment, electronic components, communication equipment, and computer software for businesses who used this equipment to service the state. To qualify, you must have a business that engages in “high technology activity”. This includes businesses that produce, design or create computer software, equipment, or supporting communications components, computer accessories, or who provide e-communications or internet access service, access to electronic media, data or provide communications support or telecommunications.
- Maine Products Marketing Program: This program assists Maine business owners who produce products in Maine. Members of the program are allowed to promote the idea and quality of Maine-made products using labels, stickers, tags and packaging that say “Maine Made- America’s Best”. The program also puts out the Maine Made Buyer’s Guide, which is delivered to over 25,000 wholesale buyers and helps promote Maine businesses.
Pros and Cons of Establishing an LLC in Maine
You can’t weigh the pros against the cons unless you’ve got a detailed list of both, right? So that’s exactly what we’ll give you in this section of our guide.
Maine businesses are able to gain access to capital through small community banks, investors in the state, and business grant opportunities that the state provides. The Maine Technology Institute provides both loans and grants to expanding businesses and startups, for instance. And there’s an organization called the Maine Angels that connects investors and business owners.
There’s a solid network of supportive business owners in Maine. They want to not only support new businesses, but also patronize them. Many of the locals and business owners want to shop local. And many Maine business owners will support new business owners even if they’re technically competitors.
People in Maine WANT to shop at small businesses. There are small businesses everywhere there. They’d rather eat at a mom-and-pop diner than a McDonald’s. In fact, in many places, if you want to go to a big franchised business, you’ll have to go outside of town and venture several miles. That means that small businesses have a better shot here because they aren’t being overwhelmed by big business, and consumers have a better opinion of small businesses than large corporations.
The compliance and regulations that business owners must follow in Maine are reported by other business owners as being fairly straightforward. And they say that if there is some misunderstanding on behalf of a business owner, or several who are having trouble complying, the state government is willing to listen and make moves to correct the issues.
Maine has some challenges, as well.
With an unemployment rate of only 3%, it’s difficult to find employees for any business. The overall workforce in the state has decreased by 3.1% since 2020, so there just aren’t enough workers in the state. The scattered population doesn’t help matters, either. Sure, Maine is populated, but that’s mostly in big cities. If you’re in a smaller city, then you’re going to have to network with your local community to get what you need, and there’s no guarantee that they’ll have the skills and experience necessary to satisfactorily meet your needs.
Maine’s geography can cause problems, too. Some areas of the state are quite remote due to geographic challenges, which means that their communications technology is unreliable and outdated in rural areas. Spotty cell service and internet connectivity is a real problem in Maine. It’s something that’s a work in progress, but for now it’s an issue to consider.
Businesses in Maine are at the mercy of tourism. Tourism is a driving factor of the state’s economy, and because of that there are off-seasons for business. Summer tourists bring in the big bucks, but there are lulls in the fall and winter. And that’s not just in hospitality industries, like hotels and restaurants. Even retail businesses struggle post-tourist season. And tourism to the state is dwindling, with 21.8 million people visiting in 2019, which is a drastic decrease from the 32.9 million that visited in 2014.
Procedure of Establishing an LLC in Maine
Before you dive into complicated information about filing times in the state, you must first know how to form a Limited Liability Company in Maine. Here’s everything you need to know about LLC formation in Maine.
Necessary Documentation for Filing an LLC in Maine
Here are the documents you’ll need before you file to form a Limited Liability Company in the state of Maine.
- Certificate of Formation: This is the most important document you need to form an LLC. It’s not just an application to form your LLC with the state government, it provides valuable information about your company, like your business name, business purpose, its address, a list of all of your LLC members, how it will be managed, and your registered agent.
- Employer Identification Number (EIN): Your business will need an Employer Identification Number, or EIN, to open a business bank account, hire employees, or qualify for some government incentives. You can get an EIN for free by applying for one with the IRS, using IRS Form SS-4. You can apply online, and you’ll immediately be granted an EIN.
- Name Reservation Application: Your business name must be reserved, which means that it’s registered with the Secretary of State and other businesses in the state aren’t allowed to use it. You do this by filling out and submitting an “Application for Reservation of Name”, and your reservation will be good for 120 days.
- Operating Agreement: An Operating Agreement isn’t a legal requirement for LLCs in Maine, but it’s still highly advisable to have one. It provides information such as your business name and address, registered agent address, formation date, LLC member roles, names, and contact information, the contributions and ownership shares of each member, the distribution of profits and losses among LLC members, manager names and contact information, meeting schedules and voting rights of each LLC member, and the protocol for adding or removing an LLC member. It’s both a contract between LLC members and detailed instructions for how your business will be run.
- Initial Report: In Maine, LLCs are required to file an Annual Report. This is basically an official way to update information with the Secretary of State and for them to ensure that the information they have on your business is accurate. The first one you file with your formation documents is called an “initial report”.
- Tax Registrations: You’ll need to register your business with Maine Revenue Services to collect sales tax, employer tax and other taxes.
- Business Licenses and Permits: You’ll most likely need business licenses from the state, county and local governments. First start by inquiring with the Department of Economic and Community Development about state business licenses, then contact city and county clerks about county and local licenses and permits you may need.
Legal Requirements for Starting an LLC in Maine
Here’s the legal requirements for forming a Limited Liability Company in Maine.
- Get a Certificate of Formation Form: Step one on the road to LLC formation is to obtain a Certificate of Formation form for your business. You get it from and mail it to the Secretary of State Division of Corporations. There isn’t a way currently to file your Certificate of Formation online, unfortunately.
- Choose a Business Name: Choosing a business name isn’t easy. You have to choose a name that isn’t identical to or too similar to business names used by other businesses in the state. And because you’re forming a Limited Liability Company, your business name is required to use those words, or an abbreviated version of them in the name. For example: “Limited”, “Ltd.”, “LLC”, “L.L.C.”, or “Co.” You can perform a search on the Secretary of State’s business name database to find out if your business name is available.
- Pick a Registered Agent: Every LLC in Maine is required to have a registered agent, which is someone who will accept mail from government agencies (like the Secretary of State or the IRS), as well as legal mail (like service of process or summons) on behalf of your company during normal business hours. You can choose someone you trust who meets the legal requirements for this role, such as having a physical address in the state of Maine, or you can hire a professional registered agent service.
- Choose Your LLC’s Address: Much like your business name, your business address isn’t a straightforward decision, either. Your business address is a matter of public record, as well as where all of your business mail is sent, and how people can find your business. For that reason, it’s not a good idea to use your personal or home address as your business address. Instead, you could look into a virtual address or virtual office.
- File your Certificate of Formation: Make sure to double-check all the information included on your Certificate of Formation, and then file it with the Secretary of State. Your name will appear on public record as your company’s LLC Organizer if you do this yourself, so if you want to avoid that you can use a professional LLC formation company.
Time Frame for Establishing an LLC in Maine
Now that you understand the process to form an LLC in Maine, we can discuss the time frame for forming an LLC. This section of the guide will tell you everything you need to know about how long it will take to get your LLC in the state.
How Long Does the Initial Paperwork Take in Maine?
Overall approval times for mail-in filings in Maine can take 3-4 weeks. That counts processing times, too. And there aren’t any online filing options.
Processing Times in the State of Maine
Processing times for mail-in filings in Maine take between 10-15 business days, plus extra time for the mail.
Common Delays in the LLC Formation Process in Maine
Here are some things that can slow your formation times down.
- Filing Method: If you choose to file by mail, then you’ll experience slow processing times.
- Holidays and Weekends: Filings are only processed on business days, which don’t count major government holidays or weekends. You should avoid filing on or just before a weekend day or holiday so your processing time isn’t lengthened.
- Volume of Applications: If the Secretary of State’s office is swamped with applications, it can take them a bit longer to get through them all and process yours. Because of this, you’ll want to avoid peak filing seasons.
Expedited Processing for LLC Formation in Maine
You definitely need to know about expedited processing if you want to ensure that you get your LLC as quickly as possible! Here’s the details about expedited processing in Maine.
What Are the Expedited Options Available?
There are two options available for expedited processing in Maine: 24 hours, and immediate.
Additional Costs for Expedited Services in Maine
You’re required to pay a fee in addition to the filing fee for expedited services. The 24 hour expedited processing is $50 extra, and immediate processing is $100 extra.
Comparing LLC Formation Time Frame in Maine with Other States
Whether you plan on creating a foreign or domestic LLC, it’s important to look at the formation times of other states to gain an understanding of how the process compares with other places. Here’s how Maine compares to other states.
Brief Comparison with Key States
For reference, Maine has processing times of 10-15 business days for mail filings, no online filings, as well as 24 hour and immediate expedited processing.
You’re really not going to beat immediate expedited processing. But there are several states that have immediate online processing, as well. And when it comes to faster mail filings, Ohio and Kentucky both have 1-day processing, while Alabama, Massachusetts and South Dakota have 1-2 day mail processing.
That’s not to say there aren’t slower states, either. Maryland has expedited processing that takes 7 days, online processing that takes 2 weeks, and mail filings that take 5-8 weeks. And mail processing in New York takes 8 whole months.
So while Maine is one of the slower states, it definitely isn’t the slowest.
Why is Maine a Favorable Place for Forming an LLC?
Maine is a favorable place to form a Limited Liability Company because of its strong network of supportive businesses, simple regulations, and the small-town atmosphere that encourages citizens to shop local and support local businesses, as well as the incentives the state provides for new businesses.
