How to Start a Sole Proprietorship in Maine

Once you start a business, you automatically become a sole proprietor in Maine. But you should still take steps to start your sole proprietorship, including choosing a business name, applying for licenses and permits, and obtaining an EIN.

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Updated by David M. Steingold, Attorney

If you've started selling your homemade jewelry online or running personal training sessions out of your garage, you've likely formed a sole proprietorship already—and you're not alone. When an individual starts a business (sells goods or services) and they haven't filed any legal documents with their state officially registering the business, then they've automatically created a sole proprietorship.

A sole proprietorship is low maintenance. It doesn't typically require you to file any creation documents or submit renewal filings or fees, and you can usually report your income on your personal tax return. But sole proprietors are personally liable for the business's debts and obligations, so you might need to dip into your personal funds to satisfy any debts your business can't pay.

In Maine, you can establish a sole proprietorship without filing any legal documents with the Maine state government. Though no action is required to legally create a sole proprietorship, you should follow four simple steps to start your business:

  1. Choose a business name.
  2. File an Assumed Name Certificate with your city or town.
  3. Apply for licenses, permits, and zoning clearance.
  4. Obtain an employer identification number (EIN).

For more information, read our article on how to start a business in Maine.

1. Choose a Business Name

In Maine, a sole proprietor can use their own legal name or a trade name—also sometimes known as an "assumed business name" or "doing business as" (DBA)—to conduct business. If you plan to use an assumed name or trade name for your business, it can't be the same name as any other company currently registered with the state. You can find guidance on trade name protection on the Bureau of Corporations, Elections & Commissions website.

It's also a good idea to choose a name that's not too similar to another registered business to avoid trademark infringement. Under trademark law, your trade name can't be used by someone else in a way that would cause confusion among consumers. So, if you use a name that's the same as or too similar to someone else's trademark and you both provide similar goods or services, then you could be infringing on their trademark. If you find a competitor company already exists with a similar name, then it's best to choose another name.

For example, suppose you want to open food stand under the name Pine Tree State Lobster Rolls. But a restaurant in the next town over is called Pine Tree Lobsters. Because both businesses sell food and have similar names, customers might confuse the two or think they're related. Because using your name would cause confusion with an existing business, you should choose a different name.

To make sure your business name is available, you should run a search in the following government databases:

For more information, read our FAQ on how to choose and register a business name.

2. File an Assumed Name Certificate With Your City

If you use a business name that's different from your legal name, Maine requires you to register your assumed business name with the city or town clerk in the city or town where you plan to do business. (Me. Rev. Stat. tit. 31, § 2 (2023).)

For example, suppose Jessica Fletcher runs a bookshop called The Book Cove. Because Jessica's business name, The Book Cove, isn't the same as her legal name, she'll need to register her business name.

To file your assumed name certificate, you'll need to contact the city or town clerk where you plan to do business. They can provide you with the appropriate form and filing requirements. Once you complete the appropriate form, you can submit it to the town or city clerk.

3. Apply for Licenses, Permits, and Zoning Clearance

Depending on your business activities, you could need to apply for business or professional licenses. Maine's Office of Professional and Occupational Regulation (OPOR) provides a comprehensive database of every profession and occupation that requires a license. You can find the contact information for each regulatory agency as well as related laws and resources. You can also use the OPOR's online services, including applying for and renewing licenses.

You might also need to comply with local regulations, building permits, and zoning laws. Check with your city and county governments for more information.

    4. Obtain an EIN

    Sole proprietors who wish to have employees need to obtain an EIN. This is a nine-digit number issued by the IRS for tax reporting purposes. All businesses with employees are required to report wages to the IRS using their EIN. You can register for an EIN online with the IRS.

    Sole proprietors without employees aren't required to have an EIN. Instead, you can use your Social Security number to report taxes. Nevertheless, you might want to obtain an EIN. Some banks require an EIN to open a bank account, and having an EIN can reduce the risk of identity theft.

    In Maine, businesses are required to report taxes and file various employee reports. You might need to use your EIN when registering your business to report taxes through the Maine Tax Portal provided by Maine Revenue Services.

    Next Steps for Sole Proprietors

    You should consider taking the following additional steps once you've started your sole proprietorship:

    • Open a business bank account for your sole proprietorship. Using your assumed business name and EIN, set up a bank account to keep your business and personal finances separate. You should keep your business income and expenses separate from your personal funds so you can easily distinguish your business's financial profile for tax purposes. For instance, you can more easily report business deductions on your tax return if you've created a separate account.
    • Obtain general liability insurance. Because sole proprietors are personally liable for all debts and obligations of the business, a business liability insurance policy can offer financial protection against unforeseen events. You should also consider other types of insurance for your business, including property and auto insurance. For more information, read our article on the types of insurance your small business might need.
    • Report and pay taxes. Depending on your specific business activities, you could be required to report such items as sales tax and use tax. You can get more information about sales and use taxes from the business taxes section of Maine's state website. If you have employees, you must report and pay employment taxes on a periodic basis. You can use the Maine Tax Portal to pay and report these taxes. (For more information, see our section on business taxes and deductions.)

    To find out how to form a sole proprietorship in any other state, see our 50-state guide to establishing a sole proprietorship.

    Consulting a Small Business Attorney

    You might not need to submit paperwork to start a sole proprietorship in Maine. But your specific circumstances could require you to file forms at the state and local level and comply with various rules and regulations. As a business owner, it's important to understand what steps you need to take to legally start and operate your sole proprietorship.

    If you have business experience and only need to meet a few requirements to establish your sole proprietorship, you can probably do the work yourself. But if you need specific guidance or run into a complicated issue when starting your business, you should talk to a small business lawyer. They can help you register your business name, file your taxes, and obtain licenses and permits.

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