Launching a business in Maine? After finalizing your business idea, the next phase is to make it official. While the specifics may vary, all new businesses in Maine must navigate a series of administrative tasks: choosing a structure, acquiring licenses, and filing with various government agencies.
For many new business owners, this process can be overwhelming. To help you get up to speed faster, we’ll walk you through stages, from selecting your business structure to obtaining necessary licenses and submitting the right paperwork to the correct agencies.
Related: Starting A Business In Maine Checklist
Step 1: Choose a Business Structure
The first step in registering a business in Maine is selecting a business structure (also called a business entity), which refers to how a business is legally set up to operate. This choice impacts how your business operates, its ownership structure, taxation, and the personal liability of the owners. Let’s look at the options:
Related: Comparison of Business Structures
Sole Proprietorship
This is the simplest type of business structure, where the owner is the sole decision-maker and is personally responsible for all business debts and liabilities. In Maine, a sole proprietorship doesn’t require formal registration (except possibly for an Assumed Business Name if operating under a specific business name), and the profits are taxed as personal income.
- Pros: Easy to establish, low startup costs, and complete control over business decisions.
- Cons: Unlimited personal liability, challenging to raise capital, and limited growth potential.
Related: How to Start a Maine Sole Proprietorship
General Partnership
In this structure, two or more individuals share ownership, management, profits, and liabilities. Although registration is unnecessary, you should create a partnership agreement outlining the partners’ roles and responsibilities. Profits are taxed as personal income for each partner.
- Pros: Easy to establish, pooled resources, and shared decision-making.
- Cons: Unlimited personal liability for each partner, potential for disagreements, and challenges in raising capital.
Corporation
A corporation is a separate legal entity owned by shareholders (owners) that offers limited liability protection. In Maine, corporations must register with the Maine Secretary of State and adhere to specific legal and reporting requirements.
- Pros: Limited liability for shareholders, ability to raise capital by selling shares, and increased credibility.
- Cons: Complex and costly to establish, and most administrative requirements (annual meetings, appointing a Maine registered agent, and more.
Related: How to Form a Maine Corporation
Limited Liability Company (LLC)
An LLC is a business structure combining the limited liability protection of a corporation with the tax flexibility of a sole proprietorship or partnership. In Maine, you need to register your LLC with the Maine Secretary of State.
- Pros: Limited liability for owners, flexible taxation options, and simpler management structure than a corporation.
- Cons: More complex and costly to establish than a sole proprietorship or partnership, and potential challenges in raising capital.
Related: How to Form a Maine LLC
Step 2: Select a Business Name
After selecting a business structure, the next step in registering a business in Maine is choosing a business name. This decision is more than just a creative exercise—it’s a legal requirement with specific considerations.
Sole proprietorships and general partnerships in Maine have more flexibility with naming. However, if they plan to operate under a name different from the owner’s legal name(s), they should register a Maine Assumed Name, also known as a “Doing Business As” (DBA) or Trade Name. This registration is filed with the Municipal or Town Clerk’s Office in the county where the business operates.
For example, if John Smith wants to run a bakery as a sole proprietorship under the name “Coastal Crust Bakery” instead of “John Smith,” he would need to register “Coastal Crust Bakery” as an Assumed Name with his local Municipal or Town Clerk’s Office.
For corporations and LLCs in Maine, the business name is selected during the formation process. These entities must have a unique name within the state to avoid confusion with existing businesses. Before submitting formation documents, a Maine business name search will ensure your chosen name is available.
Step 3: Federal Employer Identification Number
The next step for many businesses is obtaining a Federal Employer Identification Number (FEIN). This unique nine-digit number, issued by the Internal Revenue Service (IRS), is a tax identification number for your business.
You’ll need an EIN if:
- Your business has employees
- You’re operating as a corporation, partnership, or multi-member LLC
Sole proprietorships or single-member LLCs without employees can use the owner’s Social Security number for tax purposes. However, some sole proprietors choose to get an EIN for privacy reasons.
Obtaining an EIN is a straightforward process. The IRS provides a free online application that can be completed in minutes. Alternatively, you can apply by mail using Form SS-4.
Step 4: Professional Licensing
Many professions in Maine require specific licensing before practitioners can offer their services. It’s important to note that this licensing is separate from general business licenses or permits that may be required for certain types of businesses. The Maine Department of Professional and Financial Regulation oversees most professional licensing through various boards and offices. Some examples include:
- Forestry – Maine Board of Licensure of Foresters
- Electricians – Electricians’ Examining Board Landscape
- Architects – Maine State Board of Licensure for Landscape Architects
- Real Estate Agents – Maine Real Estate Commission
- Accountants – Maine Board of Accountancy
Each board has its own requirements for education, experience, exams, and fees. Professionals should check with their specific licensing board for detailed information.
Step 5: Business Tax Number
Businesses operating in Maine often need to register with the state to comply with tax requirements. This process ensures that companies are properly set up to collect and remit various state taxes.
Who needs to register:
- Most businesses selling goods or services in Maine
- Companies with employees in the state
- Entities required to file Maine income tax returns
Registration is typically done with the Maine Revenue Services (MRS). The specific registrations needed depend on the business type and activities. Common registrations include:
- Sales tax
- Use tax
- Income tax withholding
- Unemployment tax
Step 6: Resale Certificate
Many businesses in Maine need resale certificates, which allow them to buy inventory without paying sales tax at the time of purchase. Instead of paying the sales tax upfront, the business collects sales tax from the end consumer when the product is sold.
Who needs a resale certificate:
- Retailers
- Wholesalers
- Manufacturers who resell their products
To obtain a resale certificate, businesses must register for a Maine sales tax permit (see the step above for registering a Business Tax Number) through the Maine Revenue Services. Once registered, they can use their sales tax ID number to make tax-free purchases for items intended for resale.
Step 7: Local Business Licenses
The next registration step is to apply for local business licenses. Individual municipalities primarily govern local business licensing in Maine, as the state doesn’t have a general business license. Each city or town sets its own rules, including licenses for general business operations, specific industries, or particular activities. Some municipalities even require licenses for home-based businesses.
Examples of local licensing:
- Augusta: Requires an annual business license for most commercial activities, including retail stores, restaurants, and professional services. The fee is based on the type and size of the business.
- Bangor: Requires specific licenses for certain types of businesses, such as restaurants, taxi services, and door-to-door sales.
- Lewiston: Requires all businesses operating within city limits to obtain a business registration certificate.
Before starting your business, be sure to check with your local city or town clerk’s office to understand and comply with specific licensing requirements, to be on top of any local regulations.
Step 8: Local Building & Zoning Permits
Before finalizing the purchase or lease of a property for your business in Maine, it’s important to understand and comply with local building and zoning regulations. Some common requirements include:
Zoning Laws: Each municipality in Maine has its own zoning ordinances that dictate where certain types of businesses can operate. These laws divide areas into residential, commercial, and industrial zones. Check with your local planning or zoning department to confirm that your intended business activity is permitted at your chosen location.
Building Permits: If you plan to construct a new building or modify an existing one, you’ll likely need a building permit. This ensures that any changes or new constructions meet local building codes and safety standards. Contact your local code enforcement office for specific requirements.
Certificate of Occupancy: This document certifies that your building is in compliance with local codes and is safe for occupancy. It’s typically required before you can open for business in a new or renovated space.
Signage Permits: If you plan to install business signage, you may need a separate permit. Sign regulations can vary significantly between different areas.
Home-Based Business Regulations: Some Maine towns have specific rules for home-based businesses. For example, in Portland, home occupation permits are required for certain types of home-based businesses. These regulations often limit factors like traffic, noise, and signage.
To navigate these requirements, start by contacting your local municipal office. Many towns have a planning and development department or a code enforcement office to guide you through the necessary steps and approvals for your specific business location.
For only $99, you can save a lot of time and know your business complies with local, state, and federal requirements.
