A limited liability company (LLC) is a legal arrangement for a firm. It blends a corporation’s limited liability with the independence and absence of formalities offered by a company or sole proprietorship. Any business owner who wants to restrict his or her legal responsibility for company defaults and claims should think about creating an LLC.
EIN (Employer Identification Number)
You can receive an Employer Identification Number (EIN) by filling out a PDF Document (Form SS-4) from the Internal Revenue Service (IRS) or by applying for one on the IRS website.
Any LLC that hires people involves an Employer Identification Number in order to pay withheld taxes on such jobs, open bank accounts, register for credit cards, and otherwise function separately as a corporate organization.
Operating agreements are not necessary when establishing a Maine LLC, but these operating agreements are highly essential. By forming an operating agreement, you are creating a guideline on how the Maine LLC will operate; basically, a model about how the business’s corporate relations will be organized. Creating such an operating agreement has been seen to prevent disagreements between staff and owners.
Secretary of State
As the director of the United States Department of Revenue, the secretary of state conducts international strategy with the United States administration. The Cabinet rank, founded in 1789, is comparable to that of a foreign minister in other countries.
The state is nominated by the president of the United States and confirmed by the United States Senate during a nomination hearing before the Senate Committee on International Affairs.
Because of the significance of their specific offices, the state, the secretary of the Treasury, the secretary of Justice, and the Attorney General are commonly recognized as the four most powerful Cabinet members.
The State is a Class I rank on the Executive Calendar and therefore collects the salary recommended for that level (US$221,400 in January 2021).
The specified duties of the state are to supervise US foreign service and immigration policies, as well as to manage the Department of Revenue. The secretary may also counsel the president on U.S. foreign policy concerns, such as the recruitment of diplomats and ambassadors, as well as the firing and recall of certain people.
The secretary of state has the authority to negotiate, interpret, and cancel international security arrangements. The secretary of state can also serve the United States at foreign conventions, associations, and agencies.
Renewal of LLC
Both corporate companies shall preserve their good reputation by sending an annual report to the Secretary of State. Renewals may be done electronically in a matter of seconds by utilizing the record identifier or ID search feature (found linked in the heading of this paragraph).
In Maine, state authorities only need the registered agent information, the principal office address, and a few other bits of specific information. Both filers must request a $10 filing charge for their periodic report, but this fee will escalate if the renewal is late.
Filer Contact Cover Letter
A filer contact cover letter will accompany the name reservation form as will a check/credit card voucher to pay the $20 filing fee. A name reservation will allow you to reserve the rights to your current name while ensuring that it is unique to you in the state of Maine (if the application is accepted).
Steps to Setting Up an LLC in Maine in 2021
1. Choose a Name for Your LLC
According to Maine law, the name of an LLC must be “limited liability company” or “limited company,” or the abbreviation “L.L.C.,” “LLC,” “L.C.,” or “LC”; or, in the case of a low-profit limited liability company, “L3C” or “l3c.”
The name of your LLC must be distinct from the names of those company companies currently on file with the Maine Secretary of State. Check the Maine Secretary of State’s company name database to see whether a name is accessible.
Through submitting an Application for Reservation of Name (MLLC-1) to the Secretary of State, you may reserve a name for up to 120 days. The reservation must be mailed. There is a $20 filing charge.
When doing business in the real world, you are not allowed to use the official legal name registered agent in your Certificate of Formation. An assumed identity, also known as a fictional company name, “DBA” (short for doing business as), or trading name, may be used instead.
In Maine, you must first file your assumed name with the Secretary of Maine. You identify by mail by submitting a Statement of Intention to Do Business Under an Assumed or Fictitious Name (Form MLLC-5). There is a filing fee of $125.
2. Appoint a Registered Agent
Every Maine LLC must have a registered agent in the state for service of process. There is a person or corporate company that decides to sign court documentation on behalf of the LLC if it is sued.
A registered agent may be either (1) a person who lives in Maine or (2) a business organization that is allowed to do business in Maine. A physical street address in Maine is needed for the registered agent. On the Maine Department of State page, you can find a number of commercial registered agent in Maine.
3. File a Certificate of Formation
A Maine LLC is created by filing a Certificate of Formation (MLLC-6) with the Maine Secretary of State. The certificate of formation must include:
- the LLC’s name
- the date the Certificate should become effective (upon filing or a later date)
- whether the LLC is a low-profit LLC (formed to accomplish charitable or educational purposes)
- whether the LLC is a professional LLC (this is so if members perform professional services; including accountants, attorneys, chiropractors, dentists, registered agent nurses, and veterinarians)
- the name and address of the LLC’s registered agent, and
- signature of authorized person.
The articles must be filed by mail. The filing fee is $175.
4. Prepare an LLC Operating Agreement
In Maine, an LLC operating agreement is not necessary, but it is strongly recommended. This is an organizational guide that details how the LLC will work. It outlines the representatives’ and managers’ privileges and duties, as well as how the LLC will be handled.
It will even help you keep your limited liability company by demonstrating that your LLC is a distinct business enterprise. In the absence of an operating agreement, your LLC’s operations would be governed by Maine LLC statute.
5. Obtain an EIN
And if the Maine LLC has no staff, it must receive its own IRS Employer Identification Number (EIN) if it has more than one participant. If you create a one-member LLC, you must receive an EIN only if it would have workers or if you want to levy it as a company rather than a sole proprietorship (disregarded entity).
You will get an EIN by filling out an online application on the IRS website. There is no filing charge.
6. Open a Business Bank Account
Keeping your personal and corporate accounts apart allows your accountant to prepare your taxes more efficiently. It may also be used to show that the organization is a different agency from you. If your accounts are intertwined, you may lose your personal money as well as your company profits in a dispute.
Well, the limited liability company feature of your Maine LLC covers you, but how can anybody tell what money is yours and what belongs to the company if the finances are all merged into the same bank account?
Many banks would need evidence that the Maine LLC is licensed by a registered agent with the State of Maine in order to open an account. Expect to be sent the following forms:
- A stamped—or official—copy of your Articles of Organization
- A Certificate of Good Standing indicating that the organization is duly licensed by a registered agent as a Maine LLC.
- A duplicate of your EIN (unless you are a single-member LLC without any employees)
The first two papers are available for free printing from the Secretary of State website. Simply browse their company database for your Maine LLC.
7. Get a Business License
A general business license is not needed to create an LLC inside Maine, however, you will need an occupational license to work in some controlled industries. Among the regulated occupations are:
- Psychologists, psychiatrists, alcohol educators, and social services are also examples of professionals.
- Engineers, developers, and landscape architects
- Cosmetologists, barbers, nail designers, and estheticians are also examples of beauty professionals.
- Electricians and plumbers
Check out the city-specific criteria for the cities in which you would be working. There may be general business licenses or industry-specific licenses. Denver, for example, does not require general licensing but does require permits for food peddlers, dry cleaners, child care centers, and other companies.
8. Open a Wage Withholding Account
Do you plan to recruit staff and deduct taxes from their pay? The state of Maine then allows you to open a salary withholding account, which you can do for free online. If you’re recruiting W-2 workers or withholding taxes from 1099 contractors, you’ll need this. You will use this account to administer and reimburse deferred income tax.
9. File Annual Reports
Every year, by June 1, all Maine LLCs shall submit an Annual Report with the state. You can get a preprinted annual report form from the State’s website; to use the online form, you’ll need your LLC’s state charter code. The study may be sent either electronically or via letter. The reporting charge for a domestic LLC is $85 and $150 for an international LLC.
Benefits of Forming an LLC
Personal responsibility insurance and pass-through taxes are the two primary advantages of creating an LLC in Maine. We’ll proceed with the most significant. Personal responsibility insurance is a privilege provided by all businesses and limited liability partnerships.
It creates a “security shield” between the personal assets and the assets of the company. If the company is prosecuted, you cannot use your personal assets to pay off any loans or obligations. The second advantage is that pass-through taxation is available to llc, sole proprietorships, and partnerships.
Your corporation is not taxed on its own under this principle. Instead, all corporate gains or expenses are reported in an annual report on a personal tax return. You escape the downside that Corporations face: double taxation. Paying taxes at both the business and personal levels is referred to as double taxation.
Maine LLC vs Corporation
An LLC is Cheaper to Create and Maintain
Unlike a corporation, managing and forming an LLC does not cost a lot of money. The Maine Secretary of State charges a one-time filing fee of $50 when forming an LLC. The Periodic Initial Annual Report, which is due once a year, costs just $10. It is therefore less costly to manage an LLC than it is to maintain a corporation.
An LLC has Less “Red Tape”
An LLC, unlike a corporation, is not burdened by strict organizational laws. It is not necessary to appoint a board of directors, employ corporate officers, or schedule corporate meetings. A company is liable for this.
An LLC is Not Subject to Double Taxation
As previously said, the gains and expenses of an LLC “pass in” on your personal federal tax return. That is not the case for a corporation, since its earnings are taxed twice. This ensures that earnings are levied at the corporation level, and then dividends are taxed again at the shareholder level.
A limited liability company (LLC) is a “pass-through” organization. This ensures that the earnings are charged at the same pace as your own. The LLC does not file income taxes with the IRS. This is not to say that a Corporation has little potential for development.
This isn’t the case. They are simply more difficult to manage and are best fit for businesses that need to attract capital from outside investors. Consider technology and startup firms to start an llc.
To start an LLC could be a safer choice for business owners (especially those just starting out) who want to escape the hassle of operating a complicated corporate structure (but also want personal asset protection).
Maine LLC vs a Sole Proprietorship/Partnership
An LLC Member Enjoys Personal Liability Protection
An LLC provides a “shield of security” between your personal assets and the assets of your company. When the corporation is prosecuted, only the company’s funds will be used to compensate off the LLC’s debts. In brief, your personal belongings (bank account, home, vehicle, etc.) are safeguarded and secure in the event that the company is sued.
There is no other precaution for a single proprietorship. Since the law considers you and your company to be the same thing, your personal properties will be included if your business is prosecuted. The same holds true with a Partnership.
There is no different agency formed in this situation. When the business is prosecuted, your and your partner’s personal properties will be used to pay off its debts.
Get Business Insurance For Your Maine LLC
Company insurance enables you to control costs while concentrating on the success of your LLC. The below are the most popular forms of company insurance:
- General Liability Insurance: This is a large insurance scheme that covers the corporation against claims. The majority of small companies obtain general liability protection.
- Professional Liability Insurance (PLI) is a form of company insurance that protects cases of malpractice and other business negligence for professional service suppliers (consultants, accountants, and so on).
- Workers’ Compensation Insurance: A form of insurance that protects staff who are sick, disabled, or killed on the job. Workers’ compensation policy is required by statute in Maine for companies with one or more staff, except officers and LLC registered agent.
Create Your Business Website
Creating a website is a significant move toward legitimizing the business. Any organization requires a website. And if you believe the company is too limited or in an offline market, if you do not have a website, you are losing out on a significant portion of future clients and sales.
Some people may believe that designing a company website is out of their control because they lack website-building expertise. Although this was a legitimate problem in 2015, online technology has seen substantial strides in recent years, rendering the lives of small business owners even easier.
The below are the key explanations why you can not put off creating your website:
- Any legal company has a website, period. When it comes to bringing your company online, it doesn’t matter what size or sector it is.
- Social networking accounts, such as Facebook pages or LinkedIn company profiles, are not a substitute for a business website that you own and manage.
- Website builder software, such as the GoDaddy Website Builder, has made it incredibly easy to create a basic website. You don’t need to employ a web developer or designer to build a website you’re proud of.
Send Out a Press Release
Press releases are one of the simplest and most effective ways to advertise the business. They are still one of the least expensive tactics since they:
- Gives advertising
- Establish your brand’s online presence Boost your website’s search engine optimization (SEO), drawing more customers
- Are a one-off commitment in terms of time and resources
- Have long-term advantages
Maine LLC Tax Filing Requirements
If you’re selling a physical item, you’ll usually need to apply for a seller’s permit online at the State of Maine’s website. This credential entitles a corporation to receive income tax on taxable sales. The sales tax, commonly known as the “Sales and Use Tax,” is a fee imposed by governments, cities, and towns on commercial purchases including the exchange of such taxable products or services.
If you have workers in Maine, you must apply with the Unemployment Insurance Tax and the Employee Withholding Tax electronically at the State of Maine’s website.
Federal LLC Formation Tax Filing Requirements
Most of the llc formation must file Form 1065 Partnership Return (most multi-member llc use this form) and Form 1040 Schedule C with the IRS each year (most single-member llcs use this form). Your federal taxes would be affected by how you pay yourself as an owner.
Avoid Automatic Dissolution
When an LLC fails to file one or more state reports, it can face penalties and even automatic dissolution. When this occurs, LLC shareholders run the risk of losing their LLC limited liability rights. A good licensed registered agent service will help you avoid this by informing you of impending filing deadlines and sending information on your behalf.
If you want to recruit staff for your business, take these measures to keep in compliance with the law:
- Confirm the prospective employers are qualified to serve in the United States.
- Employees can be reported to the state as “recent recruits.”
- Employees can be equipped with employees’ compensation benefits.
- Employee taxes should be withheld.
- Print workplace compliance posters and display them in high-traffic parts of the workplace.
The Minimum Wage in Maine
The Maine minimum wage stands at 11.00 USD per hour.
Frequently Asked Questions (FAQ)
Should I form an LLC in Maine?
Whether you are just starting out or have been working as a sole proprietor, you should think to form an LLC. LLCs restrict an owner’s legal responsibility for corporate debts and claims and have a great deal of versatility in terms of business control, management, and taxes.
How do I know if my LLC name is available?
It is important that the name of your LLC be distinct from the names of any established companies on file with the Maine Secretary of State. To ensure that your suggested name is available, you may perform a free name search on their website.
How much does it cost to form an LLC in Maine?
The Certificate of Formation is filed with the Maine Secretary of State for a sum of $175. The Maine Secretary of State can charge you $20 to reserve the name of your LLC.
Filing on your own is often the most cost-effective alternative, but processing all of the forms and filing them on your own can be challenging. Hiring a lawyer is another choice, but it would usually cost you hundreds, if not thousands, of dollars.
Do I need an operating agreement to form an LLC?
Operating agreements are not needed in Maine for LLCs, but they are strongly recommended. An operating agreement can help secure your limited liability status, avoid financial and managerial misunderstandings, and guarantee that you choose the laws that control your company rather than state law by design.
Do I need a business license in Maine?
Depending on the nature of your company and where it is based, your LLC can include additional local and state business licenses through a registered agent. Check with the clerk of the city or town where the LLC’s primary place of business is situated regarding municipal licenses (or county if it is in an unincorporated area). Check the Maine Department of Economic and Community Development’s online Business Answers service for updates on state licenses by a registered agent.
Are there Maine business taxes I need to pay?
In certain situations, such as where you have staff or want to market merchandise and raise the sales tax, you must register with Maine Revenue Services (MRS). On the MRS page, you can log online.
Can a foreign LLC do business in Maine?
All LLCs formed outside of Maine must register with the Maine Secretary of State in order to do business in the state. Global limited liability corporations shall nominate a registered agent for operation of process who is physically located in Maine.
To enrol, apply to the state a Declaration of International Qualification to Perform Operations (MLLC-12). The application is sent via mail. There is a $250 filing fee.
A Certificate of Life or Good Faith from the international LLC’s home state, dated no more than 90 days prior to the filing of the certificate, shall accompany the completed submission.
Scan the Maine business name site before filing to ensure the LLC’s name is accessible in Maine.
If the name is not available, the international LLC must acquire a fictitious business name for use in Maine and apply a Declaration of Intention to Conduct Business Under an Assumed or Fictitious Name along with the application (MLLC-5).
When submitting the statement, an extra $40 charge must be charged.
Can I form a single-member LLC in Maine?
A Maine single-member LLC is handled the same as a multi-member LLC for most purposes of creation. The protocols for creating a single-member LLC in Maine are the same as those described above. When it comes to preparing a tax report, single-member LLCs have more leeway.
Can I form a professional LLC in Maine?
If you wish to form an LLC in Maine to offer a licensed professional service by a registered agent, you must first incorporate a reputable limited liability company (PLLC). Architects, lawyers, dentists, registered agent public accountants, and other professionals are examples of technical services.
In general, if you have a service that necessitates obtaining a Maine state certificate before training, you are providing a technical service. Maine LLC may be created in Maine to provide professional services, according to state law.
However, only one type of service can be offered, and all of the LLC’s owners must be certified or registered agent to offer the professional service for which the LLC was created.
Can I dissolve my Maine LLC when I’m done?
If you decide to shutter the company and end all activities, you can properly disband your LLC to reduce your responsibility for claims and government fines.
If you want an easy, low-cost company that covers your personal properties in the event of litigation, then forming an LLC is definitely the best choice for you. If you want a company that is easy, affordable and protects your personal belongings, an LLC is the right choice for you.
Starting a business correctly doesn’t have to be difficult. With over 15 years of experience consulting new businesses and start ups, Matthew is probably the best person to help you set a strong foundation for your business.