A limited liability company is a legal entity that implies a certain degree of independence from its owners. As such, it needs state registration to be an eligible and lawful part of the business environment. Hence, if you’ve set your eyes on this legal structure, your business in Maine will start from formation formalities to bring this structure to life. There are five key moves you need to make and below, we’ll explain them in detail.
The state of Maine offers reasonable regulations, solid community support, flexible financing perspectives, and easy access to working capital for small business entities. So, it’s no wonder this state is so much favored by small business owners.
If you have any plans for opening a limited liability company in Main to support your private business, you’ve come to the right place. In this article, we’ll provide detailed instructions on how to form an LLC in the state of Maine and consider essential post-formation steps you need to take to set your company up and running.
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While a business starts with a good idea, a legal entity starts with a name. Registering a company without a name is impossible. More than that, a good name determines your future company's success to a great extent. So, take this step seriously and give it some thinking.
Selecting a name for your LLC is not only about picking a company moniker you like but also about ensuring this name satisfies the naming rules valid in the state of Maine. Complying with the naming rules is essential since your LLC’s legal name will appear on your formation documents. Should that name breach any of the state rules, your formation application will be declined and you’ll have to find another name version and try again.
So, to come up with a name version that will hit the spot from the first try, simply observe the following naming requirements set forth by the state of Maine:
The Maine Revised Statutes also provide a list of prohibited words you can’t use in your LLC name, otherwise, your filing will be rejected. By and large, those restricted words could be divided into two groups. The first group covers references to other types of business entities, government, military, educational, or financial structures. They are mostly meant to prevent confusion among customers and avert people from being misled. The second group includes words that are considered inappropriate. These are abusive, humiliating, rude, politically or socially incorrect, and intolerant words, as well as words implying some illegal or criminal activit.
You can’t mention services or professions in your LLC name that require licensing unless you have all appropriate permissive documents in place.
If you need some sort of license or permit for your business at the federal, state, or local level, you should be twice more attentive when choosing a name for your LLC. You should be 100% sure that the name version you’ve picked fully meets the law requirements.
When selecting a name for your prospective LLC, it’s advisable that you have a few name versions at hand. Before entering one of those versions into your formation documents, you’ll have to do a name search first to check the name availability. Should some versions appear to be occupied, you’ll have alternatives.
The Maine Secretary of State’s website offers a free corporate name search tool for future businessmen to be sure that business names they are going to use are not occupied by other businesses operating in this state. If a business name is already in use, the best choice is to use some other version distinguishable from the existing one. Yet, if you do want that existing name, you have two options. The current name holder should refuse this name and replace it with another variant or you could get a court decision allowing you to sue the desired name version.
If the name version you like appears available, under the Maine Revised Statutes, you can put it on hold for a period of up to 120 days. Just fill in a name reservation form and send it along with a $20 filing fee to the state office at the following address:
Secretary of State
Division of Corporations, UCC, and Commissions
101 State House Station
Augusta, ME 04333-0101
To expedite the reservation process, you can transfer the application by express mail to:
Department of the Secretary of State
Corporations, UCC, and Commissions
111 Sewall Street, 4th Floor
Augusta, ME 04330
More likely than not, you’ve heard the term “DBA” in relation to running an LLC. The abbreviation stands for “doing business as”. A DBA is a so-called fictitious, assumed, or trade name that can be used for operational and marketing purposes instead of a registered LLC name.
What’s the point in it you wonder? First of all, a DBA name can be used without an “LLC” tag. As such, it looks and sounds nicer and is a better option for marketing and advertising materials. Secondly, your Maine LLC could have only one registered name, and to change this name or modify it somehow, you’ll have to file those changes with the state and pass through the re-registration procedure. With DBAs, everything is much easier. Under the Maine Revised Statutes, to register a DBA, you just need to submit a basic Statement of Intention to Run Business Under a Fictitious name and pay a $125 filing fee. And the best thing is that you can register as many fictitious names for your LLC as you need. Thus, changing a DBA is as easy as simply filing a new one.
Business opportunities made available thanks to DBAs are hard to underestimate. Using different fictitious names, you can easily launch and run several product lines or establish several brands under the roof of the same LLC. No need to multiply legal entities. Likewise, expanding business to other states will be a doodle. This way, you can grow your business in the most convenient manner, without dragging yourself into bureaucratic formalities.
For example, you start a small business and call it “David’s Sandwich Bar”. Over time, you might enrich your menu with other drinks and dishes, and your small fast food bar can grow into something bigger. To catch up with business growth, it will be reasonable to change a DBA to “David’s Diner” or anything like that.
As the name suggests, a registered agent is your LLC’s representative for some purpose. Once formed, your LLC will operate as a separate legal entity with its own registered address and will receive its own mail addressed to it as an entity. Many entrepreneurs don’t pay much attention to business mail, yet, for LLCs, business correspondence is crucial. Via mail, government and state authorities will maintain contact with your business.
Any requests, notifications, notes, requirements, and instructions will be executed in writing sent in the form of letters. Some of those letters will be informative while others will be a call for some action from your side. Besides, there are letters that will need responses and even set up certain deadlines. With that, keeping your business mail under control is highly important. And this is where a registered agent comes into play.
This role is a law requirement, i.e. you have to appoint an agent before filing your formation docs. Otherwise, your filing application won’t be accepted by the state. The main registered agent’s function is to handle your business mail. Tax notes, state requests, court notifications, lawsuits, and other services of process often need an immediate reaction. So, timely and diligent mail processing is a must. Failure to provide an opportune response or take some action might turn out to be a serious problem for your LLC. Hence, a registered agent function greatly contributes to your LLC’s compliance status.
With all the importance pertinent to this role, registered agent requirements are not very strict. In fact, any adult person (over 18 years old) or a legal entity could serve as your assignee. The main rule is that a person or entity should be a Maine resident and have a registered address in the state. Notably, PO boxes are not allowed for this purpose, a valid physical address is required.
Basically, you can either serve as a registered agent for your own LLC or delegate this function to someone. What is a better option? Are there any othe alternatives? Let’s figure it out below.
Being your own registered agent seems like a natural decision for many entrepreneurs. There is no need to search high and low for decent candidates and check if you can trust them. You don’t have to pay for the service and will do the job for your own LLC for free. Besides, no one but you will have access to your legal mail and sensitive correspondence, so, confidentiality is guaranteed. In the end, there is hardly anyone who will do this work better than you, right?
However, in practice, the whole situation is a bit more complex. And we recommend considering all other aspects before rushing into any decisions. Thus, the drawbacks you’ll have to encounter when serving as your own registered agent are as follows:
To conclude, by delegating a registered agent function to a third party, you’ll release yourself from the duties that will become a real burden for you sooner or later and arrange the work in a more efficient manner. So, it’s certainly a better alternative to fulfilling this job by yourself.
Setting your eyes on a hired registered agent, you face yet another dilemma. Should you designate some random person or company for this role? Or should you hire a professional service that is payable?
Speaking of non-commercial agents, the best option would be to appoint your accountant or tax consultant. Or you could entrust this task to some of your employees. In a word, anyone with some sort of specific expertise or appropriate professional background will do.
However, our best recommendation will be to hire a commercial service. All of them are usually registered with the state and provide professional assistance. Your mail handling process will be duly organized, with no lost letters, missed papers, and uninformed notifications. Besides, many of those registered agent services operate across the country, and you’ll easily find a registered agent in any US state, should you have some expansion plans in the future. The cost of such service usually falls anywhere between $100 and $150 per year, which is a fair price for the peace of mind you’ll get.
To quickly find good and reputed commercial service, check our Best Registered Agent Service review with a full list of options to match varying business needs
LLC registration with the state is what naming your company and appointing a registered agent are about. It’s the state registration procedure that brings your LLC to life and gives it an official legal status. While it sounds serious, formally, your Maine LLC formation is about filing a Certificate of Organization with the state and getting it approved by the Secretary of State.
You can file this formation document online, send it by fax or mail, or even bring it to the Secretary’s office in person if you live in Augusta where the state office is. If you don’t want to get into formalities and paperwork, you are free to let someone do it for you. Many entrepreneurs hire an attorney to handle the job.
Yet, one of LLC formation services is also a good option. Those companies come in numbers today and are established to serve as LLC organizers for others. In our Best LLC Service article, you’ll find a number of top-ranked services that will be ready to help you.
It should be noted that there is nothing special about this document. Generic by nature, it contains only basic company info that will be entered into public registries, thus, proving your LLC’s legal status. Under the Maine Revised Statutes, a Certificate of Organization valid in this state should include:
Filing a Certificate of Organization for the first time, many beginner businessmen also choose to establish their future LLC’s management and ownership structure along with operational procedures. While you can specify this info in your formation docs, we recommend that you rather reserve these details for your bylaws that we’ll talk about below.
Each state charges a filing fee to review and approve your LLC formation documents. The state of Maine is not an exception. The filing fee here is specified in the Secretary of State’s LLC Forms and Fees and amounts to $175. This rate hits the midground between the minimal fee of $40 and the top rate of about $500.
Mind that to pay a filing fee with a credit card, you’ll also need to attach a credit card payment voucher to your docs.
Processing times vary by state. Some states appear to be pretty fast and can handle the filing in mere days while others are quite slow and will make you wait for several weeks. The state of Main is somewhere in the middle in this concern. The standard turnaround time here is from 10 to 15 business days. Yet, expedited options are also available. At $50, your documents will be approved within 24 hours and at $100, you can get them back the same day.
An Operating Agreement is an internal company document or a so-called bylaw. It specifies, describes, and establishes covenants and contracts between the LLC owners that will govern daily business operations. Besides, it outlines the member and manager rights and commitments, thus, ensuring smooth and well-coordinated relations between the company co-owners. As such, an Operating Agreement is a crucial operational tool that will work for efficient business control and management and prevent any disputes, disagreements, and conflicts between the LLC member and managers.
More than that, unlike in other states, in Maine, an Operating Agreement is a law requirement. You don’t have to file it with the state, but you should have it in place along with a Certificate of Organization.
To give you a better idea of why an Operating Agreement is so important, here are the key aspects it covers:
An EIN or an Employer Identification Number is a nine-digit code required by the Internal Revenue Service (IRS) to identify your LLC as a taxpayer. It works the same way as a Social Security Number for an individual.
Getting an EIN is as easy as visiting the IRS official website and filling in a digital Form SS-4. Online applications are processed immediately, and you’ll get your EIN number in mere minutes. No payments are needed and you’ll easily cope with this task on your own.
Many single-member LLCs ignore obtaining EINs and use the SSNs of their owners for business tax purposes. However, given how simple the EIN issue procedure is, we strongly recommend that you get this code for your LLC anyway. Beyond tax payments, you might need under the following circumstances:
Notably, multi-member LLCs should apply for the EIN issue anyway.
When your Maine LLC is formed and appears in state registries, you are only halfway to a properly functioning legal entity. There are a few more aspects you need to settle to let your newly formed company operate diligently and efficiently.
Plan to use your personal checking account for business purposes? It’s a wrong decision. Here is why.
First of all, by mixing your individual and business funds, you’ll put both your personal assets and your corporate veil protection at stake. In this situation, state authorities and courts will consider that you treat business assets and money as your own. Your liability shield might be nullified, and your personal assets will be used to offset business debts and liabilities, should any problem or lawsuit arise.
To continue, mixed assets hinder normal bookkeeping procedures since it will be very difficult to split personal and business cashflows and properly account for the company incomes and expenses. Meanwhile, transparent and accurate accounting is vital for keeping an eye on your LLC’s financial state.
Finally, the lack of a separate business bank account will limit your business opportunities in a way. Banks are reluctant to provide financing to companies with no dedicated bank accounts. At the same time, you never know when you might need a loan or credit to invest in a new project or maintain business growth.
One way or another, a separate business bank account is a must for a legal entity if you want to maintain its legal independence and let it efficiently function on the market.
Business insurance is yet another significant aspect to consider right after the LLC formation. Whatever the type of activity you are going to run, it will entangle certain risks and issues in the course of doing business. So, getting an added layer of protection will never go amiss.
Don’t neglect to consult with an insurance expert to work out an effective insurance scheme for your Maine LLC. The most common types of business insurance appropriate for different activities and industries include general liability insurance, commercial property insurance, workers’ compensation insurance for employers, professional liability insurance, and business income insurance.
Good standing status is essential for an LLC to stay eligible and lawfully run its business. Should your company fail to satisfy some of the key state requirements, it might cause penalties and even more serious legal problems. There are three core aspects you need to encounter here.
Each state has specific licensing requirements, and most companies do need some sort of local license or permit to run business in a town, city, or county. It’s a sensitive issue that needs time and close attention. You can find more info about this on the business licensing page of the Maine government website. Besides, consider consulting a licensing expert or attorney to learn everything you need to know about permissive documents for your LLC.
All in all, your Maine LLC will be taxed as a pass-through entity and use all the benefits of this taxation scheme in relation to income taxes. However, there is a whole range of state-specific taxes and business-related charges your company might be exposed to. Employment taxes, sales tax, service provider tax, franchise taxes, and excise taxes are to name a few. Check with the Maine Revenue Service to learn more about taxes your LLC will have to pay in Maine.
The Maine Revised Statutes require that you provide a general state report on an annual basis. You should submit it to the Secretary of State online or mail a paper version by express mail along with an $85 filing fee.
A limited liability company is a welcoming legal structure for many businesses. Start an LLC is easy. Select your state to start.