If you’ve made it to this page, then it’s obvious that you’re interested in learning how to start a Limited Liability Company (LLC) in Maine. Congratulations! Forming an LLC is a big decision both for you and your business in Maine.
I’ll give you everything you need to know about how to start an LLC in Maine, but first I’ll cover some of the basics with you, like what a Limited Liability Company (LLC) is and why many small business owners say they chose to form an LLC rather than a different business structure (like a sole proprietorship or a corporation).
(If you want to skip to the “How to Form an LLC” section, click here)
Table of Contents
What Is a Maine LLC?
A Maine LLC is a Limited Liability Company formed in the state of Maine that is governed by the laws, regulations, and statutes of the state of Maine.
Why Choose an LLC?
There are many advantages to forming an LLC and you’re sure to notice many more that aren’t listed here. These are the most common reasons that small business owners say they made the decision to form an LLC in Maine:
1. Limited Liability and Asset Protection
One of the biggest reasons that business owners choose to form an LLC is limited liability and personal asset protection. As part of this protection, a Maine LLC owner can’t be held personally responsible for the debts and liabilities of their LLC.
This means that if your Maine LLC encounters financial or legal problems, the creditors of your LLC in Maine can’t list things like your house, car, boat, personal finances, or any other personal assets you’ve accumulated as a way to compensate them for the debt your LLC owes. The only items they can list are those associated with your Maine LLC.
Americans are well versed in economic tragedy. We’ve learned that even the biggest, most successful and well-prepared businesses can be crippled overnight by one unexpected event. Even if it weren’t for natural disasters, business owners live in fear of consumer trends and an unpredictable economy.
But when you form an LLC in Maine, you get the peace of mind that comes with a Limited Liability Company. Even if you were to go out of business, you wouldn’t become homeless and destitute because a Limited Liability Company differentiates between your personal assets and the assets of your business entity. This peace of mind is priceless for nearly any business owner who works hard to create and establish their business in Maine.
The next reason for forming an LLC in Maine is the privacy and protection of personal information that you can achieve when you form an LLC.
Unfortunately for business owners and everyone on the internet, cybercriminals and scammers have become quite skilled at what they do over the past decade. They can steal your identity with seemingly insignificant bits of information (like your name and address). It’s quite alarming that they can amass thousands of dollars in debt in your name without you even noticing until it’s too late.
If you choose a business model such as a sole proprietorship for your business, then you’ll be forced to register your personal information with the Maine Secretary of State Division of Corporations. This means that they’ll list your information on their website, where it will become part of the public record and anyone can access it, regardless of why they want the information.
One advantage of starting an LLC in Maine is that you have the option to protect your personal information.
To do this, all you need to do is hire an LLC formation service. An LLC formation service will not only help you create and file all of the necessary formation documents (like the Certificate of Formation for your Main LLC) to establish your LLC with the Maine Secretary of State and Division of Corporations but also will add their information to these formation documents so that yours isn’t listed on the public record.
Enlisting the help of an LLC formation service is a win-win situation for LLC owners because they maintain ownership of their LLCs even though their personal information isn't registered with the Secretary of State, but instead is kept private, which allows them some protection against cybercrime and identity theft.
Another reason for starting an LLC is the state and federal tax benefits that LLCs enjoy. These tax benefits are most obvious when you compare the way that a Maine LLC is taxed with that of a Maine corporation.
Corporations are subject to what is known as “double taxation.” Here’s a quick look at how corporations are taxed:
A corporation’s profits are taxed at corporate rates. Then the profits, which have already been taxed, are given to corporate shareholders in the form of dividends, which are also immediately taxed. This means that the funds are taxed twice before corporate shareholders have access to them, thus the term “double taxation.”
But when you form an LLC in Maine, you avoid double taxation. Here’s how taxation of a Maine LLC works:
The profits of a Maine LLC are taxed at company rates, which are often less steep than corporate rates. They’re then disbursed to LLC members as personal income. Of course, there is a personal income tax, but that isn’t immediately charged, so it’s obvious that the profits of an LLC in Maine are taxed differently than a corporation in Maine.
But there are even more tax benefits for a Maine LLC.
The 2017 Tax Cuts and Jobs Act brought the Qualified Business Income Deduction (QBID) with it. QBID is a 20 percent tax benefit that is exclusive to LLCs. This is another excellent reason to choose to form an LLC in Maine.
How to Start an LLC in Maine
Now that you know a bit more about what a Limited Liability Company is and some of the reasons that business owners choose to form an LLC, you’re better able to make an informed decision about whether forming an LLC is the right decision for your business. Here are the steps to form an LLC in Maine:
*IMPORTANT* If you’ve never formed an LLC before or you’re generally inexperienced with LLCs, there’s good news. There’s a type of professional service designed to help you.
It’s called an LLC formation service and, just as its name suggests, a formation service helps to file all of the necessary documents (like the Certificate of Formation for your LLC) and legally establish your LLC with the Maine Secretary of State.
Formation services can charge as little as $0 plus any state filing fee you incur during the formation process. My favorite LLC formation service is ZenBusiness, and they charge $49 plus any subsequent filing fee you’re charged.
If you’d like to learn more about LLC formation services, check out my guide on the best LLC service here.
1. Obtain Certificate of Formation Form
The first step to forming your Maine Limited Liability Company (LLC) is to obtain the Certificate of Formation form from the Maine Department of the Secretary of State. This is the primary document you’ll be filing with the Secretary of State, and the following steps will refer back to it.
You can obtain a copy of the form here, and the Certificate of Formation must be filed by mail. The filing fee is $175.
2. Choose Your Business Name
The next step to forming your LLC in Maine is to choose your LLC name.
All LLCs operating in the state of Maine are required to have unique names, so this part isn’t as simple as going with the first name that comes to mind. Maine law also requires all Limited Liability Companies to include the words “Limited Liability Company”, “Limited Company”, or the abbreviations “L.L.C.”, “LLC”, or “LC” in their name. If you are establishing a low-profit LLC, then you must include “L3c” or “l3c”.
Once you name your Maine LLC, you can check to see if the name is available via the Maine Secretary of State’s business name database located here.
Once you’ve decided on a name, you can file an Application for Reservation of Name with the Secretary of State to reserve your chosen business name for up to 120 days. You can obtain a copy of the form here and you must file the reservation by mail. The filing fee is $20.
If you’ve had to register a name for your LLC that isn’t to your liking or doesn’t match your marketing material, then you do have the option to register a trade name or a DBA. A DBA, or “Doing Business As” name is the one your LLC will use for marketing and promotional purposes, similar to how some individuals have nicknames. You can register the trade name or DBA for your Maine LLC by filing a Statement of Intention to Transact Business Under an Assumed or Fictitious Name. You can obtain a copy of this form here and you must file the form by mail along with a $125 filing fee. Be sure to include a complete version of the filer contact cover letter form, along with an additional $50-$100 if you selected 24-hour or immediate processing.
3. Choose A Maine Registered Agent
The next step to forming your Maine Limited Liability Company is appointing a registered agent.
All LLCs in Maine must appoint a registered agent to receive service of process and act as the legal point of contact for your business. This registered agent must be either a legal resident of Maine or a business entity that is licensed to provide registered agent services in Maine. Your LLC’s registered agent must also have a physical address within Maine.
Luckily, finding registered agents in Maine is relatively simple. A list of commercial registered agent services can be found on the Maine Secretary of State’s website here. If you’re unsure of the difference between a commercial registered agent and a noncommercial registered agent, there isn’t one when it comes to the type of service. A commercial registered agent is an individual or business entity that has listed itself with the Maine Secretary of State. A noncommercial registered agent has chosen not to list themselves in this way but are still authorized to provide registered agent services.
You can choose to act as your own registered agent, but there are some risks associated with doing so. If you act as your own registered agent, you accept the responsibility of being available during regular business hours to accept legal documents on behalf of your LLC, which can make your daily operations difficult.
You also risk the ability of your business to operate, as missing a service of process or other important legal documents from the Secretary of State may cause you to lose your ability to legally operate your business in Maine. Acting as your own registered agent will also require you to list your name and address on your Certificate of Formation, which will then cause your name and address to be listed on the public record.
Fortunately, there are professional services in Maine that are available to help. You can choose to enlist a professional Maine registered agent service to act as your legal point of contact and accept service of process on behalf of your LLC. Using a registered agent service will also allow you to keep your information off the public record. When you hire a registered agent service for your Maine LLC, they will register their name and address on your Certificate of Formation. This will allow you to keep your information off the public record and secure from online criminals.
The only real downside to using professional registered agent service is that they can cost between $99-$299 per year. Considering the risks of acting as your own registered agent though, it’s worth the investment for new LLC owners to use a professional Maine registered agent service.
For more information on registered agent services in Maine, check out my guide to the Best Registered Agent Service in Maine here.
4. Sign And File Your Certificate of Formation
After appointing your registered agent and choosing your LLC name, it’s time to sign and file your Certificate of Formation with the Secretary of State.
You’ll need to ensure that your Certificate of Formation has all of the following information before filing, so double-check everything before submitting it to the Secretary of State:
- Your LLC’s name,
- The effective date of your LLC (if different than your filing date),
- Whether the LLC is a low-profit LLC,
- Whether the LLC is a professional LLC,
- The name and address of your LLC’s registered agent, and
- The signature of your LLC’s Authorized Person.
After verifying the accuracy of your Maine Certificate of Formation, you can file the document by mail by sending it and the $175 filing fee to the following address:
Department of the Secretary of State
Corporations, UCC and Commissions
101 State House Station
Augusta, ME 04333-0101
Approval of your documents by the Secretary of State usually takes 5-10 business days, or for an additional $50-$100 you can have expedited processing. The $50 expedited processing fee will ensure your documents are processed within 24 hours, while the $100 expedited processing fee will flag your documents for immediate processing. Be sure to include the completed filer contact cover letter included with the form to ensure the appropriate filing.
Other LLC Activities
Filing your Certificate of Formation with the Maine Secretary of State isn’t the only activity you’ll need to accomplish to get your LLC up and running. You may also need to acquire a business license or file some additional paperwork. Here are some other activities your LLC will need to accomplish in order to start with the right foundation in Maine.
If your LLC is related to charity work or education, you may qualify as a “Low-Profit Limited Liability Company”. This is a type of LLC that is formed to accomplish charitable or educational purposes. The main things you’ll need to provide when forming a Low-Profit LLC or L3C are statements related to your goals and purpose. Low-Profit LLCs are formed to act as a middle ground between nonprofit and for-profit businesses while still treating profit as a secondary objective. The main benefit of forming a Low-Profit LLC as opposed to a nonprofit organization is that you have more access to capital, as the IRS imposes strict regulations on how much capital a non-profit legally has access to.
If your LLC will be offering professional services, such as attorney or accounting services, then you’ll need to follow the process and regulations for establishing a Professional LLC or PLLC. PLLCs are limited to providing one specific type of professional service and all members of the LLC must have the appropriate licenses and permits or be registered to provide the licensed professional service the LLC was organized to perform.
If your Limited Liability Company is operating outside the state of Maine, then you’ll need to file a Statement of Foreign Qualification to Conduct Activities by mail with the Secretary of State. The filing fee is $250, and you must provide a Certificate of Good Standing or Existence from your LLC’s home state from no more than 90 days prior to the filing. Your LLC must also appoint a registered agent with a physical address in Maine.
All LLCs in Maine are required to file an annual report. Your Maine LLC Annual Report form must be filed online with the Maine Secretary of State every year by June 1st. Annual reports can be filed online or by mail, with the state filing fee being $85 for domestic LLCs or $150 for foreign LLCs. To file an annual report online, follow this link. If you would prefer to file your annual reports via postal mail, then you can obtain a copy of the Maine LLC Annual report form here. When filing your annual report through either method, you’ll need to provide your LLC’s state charter number.
Depending on where your LLC is located and what type of business you’ll be conducting, you may need to acquire additional state or local business licenses and permits. For local business license requirements, check with your city or county clerk. To see which state business licenses and permits are required, you can check Maine’s Department of Economic and Community Development via their online Business Answers service.
If all this paperwork for the different LLC types, annual reports, and business licenses seems overwhelming, there are professional services available to help you. A Maine PEO service can assist with streamlining the filing process for your business license applications and other paperwork. Online legal services can also offer assistance with filing issues or other paperwork demands.
Maine LLC Fee Summary
When learning about how to form a Maine LLC, it’s natural to ask “How much does it cost to form an LLC in Maine?”. Whether you choose to enlist the help of an LLC formation service, or form your Maine LLC on your own, you’ll encounter a number of state filing fees and taxes. Here’s a look at some of the state filing fees and taxes you should expect to encounter when you start an LLC in Maine.
Certificate of Formation filing fee: $175
Name Reservation filing fee: $20
Registered Agent Fee: $99-$299
Annual Report filing fee: $85 for domestic LLCs and $150 for foreign LLCs
State Personal Income Tax: 5.8%-7.15%
State Corporate Income Tax: 3.50%-8.93%
After Starting Your Maine LLC
It’s quite a big step to form your own LLC, and it’s an occasion that should be celebrated. So have a glass of champagne or wine, have a fancy dinner, or throw a party with your friends to celebrate your business success.
But this celebratory moment will be fleeting. There’s still much work to be done to ensure that your LLC has the necessary business foundations to prosper. Here are some of the things you must do after you’ve formed your Maine LLC.
Step 1. Create An Operating Agreement
The state of Maine doesn’t have laws that require you to create and file an LLC Operating Agreement, but it’s still the best choice for your business in Maine to create one.
If you don’t create an Operating Agreement for your LLC, then your LLC will be forced to adopt the generic Operating Agreement that the Maine Secretary of State provides for LLCs who don’t create Operating Agreements. There’s no guarantee that you’ll like the rules that they put in place for your business, and everyone can agree that it’s best to make your own rules rather than being told what operational rules you have to follow.
To explain the importance of the LLC Operating Agreement more clearly, think of your computer as a thriving bee colony. The LLC itself would be comparable to the hive, which protects the bees from outside threats. The Operating Agreement would be more like the orders sent out by the queen that tell all the bees what their roles are, what to do and where to go.
*IMPORTANT* Before you draft the Operating Agreement for your LLC, you’ll need to decide on a managerial system. You can choose from a single-member, multi-member or manager-managed LLC. A single-member or manager-managed LLC is one in which one member or manager makes decisions for the whole business. A multi-member-managed LLC is one in which a handful of LLC members vote to make decisions for the LLC.
A well-written Operating Agreement will explicitly describe all of the financial, managerial, operational and structural aspects of your business.
When drafting your LLC, it’s important to make clear the roles and responsibilities of each LLC member. Your Operating Agreement should start by listing each LLC member, their responsibilities and roles, their shares of profits and losses and ownership percentages, who their superiors are and which members or departments they should work most closely with, and the responsibilities of each department. Poorly written Operating Agreements leave all of these aspects very vague and it can cause disagreements in the workplace.
Good Operating Agreements include a section that describes the succession order and instructions for LLC members. This section should instruct members about what to do if an LLC member leaves or if new members join the LLC. Many LLC owners leave this section out because they either don’t think of it or they don’t understand its importance. However, designing your Operating Agreement this way ensures that your LLC members have a set of logical instructions in the event of a disagreement among LLC members that results in members leaving or being replaced.
The Operating Agreement for your LLC will be one of the most important formation documents that you create, and you’ll refer to it often during the beginning stages of your LLC. This is because it provides instructions about important aspects of your business ranging from everything from the compensation of your LLC members to how your business will run.
Your business is required to operate according to the directions you’ve instituted in your Operating Agreement, so it’s important that you get it right because a poorly designed Operating Agreement can hold back your business. Many business owners screw up their Agreement by not including a little wiggle room in the document for things such as change, innovation or business growth. But if you design this document properly, your business will grow and thrive.
Botching your Operating Agreement is absolutely something you should be concerned about. But if you’re inexperienced with writing Operating Agreements or nervous, there are a few options available to you that will make it easier.
The first option is the free Operating Agreement template for LLCs that’s available on Northwest Registered Agent’s website. The second is to subscribe to online legal services, which will help you with the wording of the document and ensure that it’s functional and legally sound. And the third is to hire an LLC formation service because they typically create and file Operating Agreements as part of their services.
Step 2. Apply For An Employer Identification Number
If your LLC has employees, collects sales tax, or has more than one member, you’ll be required to register with the Maine Revenue Services and apply for an Employer Identification Number (EIN) from the IRS.
An Employer Identification Number (EIN) is an identification number for your business that functions similarly to a Social Security Number. The EIN is what the IRS and Maine Revenue Services will use to identify your business for tax purposes, such as when you or your employees file income tax returns, in the same way that a social security number is used to identify individuals. If you form a single-member LLC, then you only need an EIN if you plan on hiring employees or if you elect to have your LLC taxed as a corporation.
You can obtain an EIN by registering online with the IRS. You can obtain an EIN and file your application anytime via this link.
Step 3. Open A Business Bank Account
After you’ve drafted your Operating Agreement and determined if you need an EIN, the last step to ensuring a successful start for your LLC is to open a bank account dedicated to your business.
Many first-time business owners overlook this crucial step because they feel it would be easier to manage one joint bank account for their business and personal finances. It’s easy to see why many would believe this, considering one is less than two, but in reality this actually creates more problems than it solves.
To start, when you use your personal bank account as the account for your Maine LLC you risk losing the limited liability and asset protection that many LLC owners treasure. Operating your business in this way blurs the separation between yourself and your LLC, leaving your personal finances and possibly your personal assets vulnerable if your LLC were to become bankrupt or get involved in a lawsuit.
The second reason you should open a bank account dedicated to your business is it makes tax paperwork easier. If you share your personal bank account with your business, then you’ll need to keep detailed records of all of your business transactions for state and federal tax filing purposes. If you open a business bank account, getting a record of your business transactions is as simple as going to your bank and requesting a statement.
It’s relatively easy to open a business bank account for your Maine LLC today. Most banks require what’s known as a “bank kit”, which is a collection of documents including your Operating Agreement, Certificate of Formation, and your LLC’s EIN. If assembling this extra collection of paperwork seems confusing or time-consuming, then consider hiring an LLC formation service. Many LLC formation services will assemble a bank kit for your LLC as part of their business services.
The decision to form an LLC is a big step forward toward the financial and legal security of your business in Maine, so congratulations!
If you’ve chosen not to use an LLC formation service (which can cost as little as $0 plus filing fees), here are the steps you must complete to form an LLC in Maine:
- Obtain the Certificate of Formation form from the Maine Secretary of State,
- Name your Maine LLC,
- Appoint a Registered Agent, and
- Sign and file the Certificate of Formation for your Maine LLC.
Forming a Maine LLC is a lot of work. It’s quite easy to become frustrated by all of the forms you need to file, the seemingly arbitrary filing fees that are required, the legal terms you’ll have to learn, and the forest of red tape you’ll have to cut through. But if you get through it all and complete this herculean task on your own, you’ll be rewarded with a deep sense of accomplishment that makes all the work worth it.
Congratulations on your decision to form an LLC, and good luck with your ongoing business experience!
You may have some additional questions relating to forming an LLC in Maine. Here are some frequently asked questions relating to LLC types and business formation in Maine and our answers to those questions.
What is a Low-Profit LLC?
A Low-Profit LLC is a special type of LLC that was created to fill the gap between a non-profit organization and a for-profit business. Low-Profit LLCs must be organized with an educational or charity-related purpose in mind and give the owners more access to capital and other resources typically unavailable to non-profit organizations.
What is a Professional LLC?
A Professional LLC is a type of LLC that specializes in providing a licensed professional service, such as an accountant, attorney, architect, dentist, or nurse. The main difference to a standard LLC is that all the owners or members of a PLLC must be registered or possess a valid business license to provide the specific service the LLC was organized for. PLLCs are also restricted to providing a single type of professional service and cannot provide multiple licensed services.