Here’s an overview of the key steps you’ll need to take to start your own business in Maine.
The most common legal structures for a small business are:
There also are special versions of some of these structures, such as limited partnerships and S corporations. You’ll want to consider which business entity structure offers the type of liability protection you want and the best tax, financing, and financial benefits for you and your business. Check Choose Your Business Structure on Nolo’s website for more information on how to choose the best ownership structure for your business.
For LLCs and corporations, you will need to check that your name is distinguishable from the names of other business entities already on file with the Maine Secretary of State (SOS). Names can be checked for availability by searching the Maine SOS corporate name search. You can reserve an available name for 120 days by filing anApplication for Reservation of Name with the Maine SOS. There are also certain name requirements for LLCs and corporations (like including a word such as “LLC” for LLCs or “Company” for corporations). See How to Form an LLC in Maine and How to Form a Corporation in Maine for more information.
If you plan on doing business online, you may want to register your business name as a domain name. See Choose and Register a Domain Name for more information. In addition, to avoid trademark infringement issues, you should do a federal and state trademark check to make sure the name you want to use is not the same as or too similar to a name already in use. See How to Do a Trademark Search for more information.
Tax Registration. If you will be selling goods in Maine, you must register your business with Maine Revenue Services (MRS). If you will have employees in Maine, you must register with MRS and the Maine Department of Labor (DOL). For both kinds of registration, you can use the MRS/DOL application for tax registration.
EIN. If your business has employees or is taxed separately from you, you must obtain a federal Employer Identification Number (EIN) from the IRS. Even if you are not required to obtain an EIN, there are often business reasons for doing so. Banks often require an EIN to open an account in the business’s name and other companies you do business with may require an EIN to process payments. You can get an EIN by completing an online application on the IRS website. There is no filing fee.
Regulatory licenses and permits. These cover areas such as:
General licenses needed to operate a business are handled at the town or city level. You should contact the town or city office where your business is located for more information. You can find contact information for a particular town office through the Maine.gov Local Government portal.
Professional and occupational licenses. These cover people who work in various fields. You can find a list of state-issued professional and occupational licenses at the Resources by Profession section of Maine.gov.
You’ll need to pick a location for your business and check local zoning regulations. That includes if you work from home. You may be able to find zoning regulations for your town or city by checking municode.com.
Maine taxes every kind of business. See Maine State Business Income Tax for more information on state business taxes in Maine.
Sole proprietorships. Pay state taxes on business income as part of their personal state income tax returns (Form 1040ME).
Partnerships. Partners pay state taxes on partnership income on personal tax returns. If your partnership has non-Maine partners, you must also file Form 941P-ME for the partnership.
LLCs. Members pay state taxes on their share of LLC income on personal tax returns. In addition, the LLC itself must file an annual report and pay an $85 filing fee. See Maine LLC Annual Report and Tax Requirements for more information.
Corporations. Shareholders must pay states taxes on their dividends from the corporation. A shareholder-employee with a salary also must pay state income tax on his or her personal state tax return. Moreover, the corporation itself is subject to Maine corporation taxes. And, finally, corporations must file an annual report and pay an annual filing fee of $85.
If you have employees, you must also deal with employer taxes.
And, apart from Maine taxes, there are always federal income and employer taxes. Check IRS Publications 334,Tax Guide for Small Business, and 583, Taxpayers Starting a Business, available at irs.gov.
Insurance is a good idea for most kinds of business. While insurance often is regulated at the state level, the types of business insurance available are usually similar across the fifty states. Check Obtaining Business Insurance for more information.