- Understand how businesses are incorporated in Maine
- Get to know the procedures that need to be followed
- Learn the essential criteria that need to be met to form a corporation in Maine
- An overview of all the necessary guidelines that need to be followed
Here is a simple list of guidelines set to direct you down the right path when forming a corporation in Maine.
Understand the Benefits of Forming a Corporation in Maine Liability Protection
- Maine is a business-friendly state that has witnessed an increase in its GDP from $46.62 billion in 2006 and a further increase in 2017 to $52.8 billion.
- The growing business economy is responsible for the rising number of start-ups that have sprung up in Maine.
- One of the primary benefits or advantages of forming a corporation in Maine is that the labor costs are 6% less than the actual national per capita income.
- Maine has a graduated individual tax.
- It has a corporate income tax ranging from 3.50 percent to 8.93 percent.
- Maine also has a 5.50 percent state sales tax rate and doesn't levy local sales taxes.
Credibility and perpetual existence
Maine's business-friendly state allows small and medium businesses to flourish and grow over time.
Choose a name for your corporation
When forming a corporation in Maine, select a name that is easily distinguishable, easy, and unforgettable. The name must relate to the products or services you plan to provide.
Check Name Availability
It is essential to ensure that another company has not taken the name you chose for your corporation. To avoid this, you'll need to know if your preferred name is available prior. This can be done by visiting Maine's Corporate Name Search and browsing until you find the most suitable name for your corporation.
Consider trademark issues
- Your corporation name shouldn't be confused with another business name.
- Certain words, such as FBI, FDA, Maine Police etc. must be avoided.
- And any name that would imply a purpose illegal for your business to carry out is another restriction.
Follow naming guidelines
Some guidelines to keep in mind when choosing a name for your corporation includes the following:
- Go for uniqueness and authenticity, thinking outside the box rather than resorting to the same old popular titles or names in the industry.
- A short and straightforward name makes it easier to remember and retain in the minds of potential customers.
- Be intentional when picking a name for your corporation. The name must reflect the purpose of the brand and its personality. These are aspects that will make your target audience resonate with your brand.
Appoint a registered agent
A Maine registered agent is the main point of contact for your corporation. The registered agent will receive all the necessary legal notices, including services of processes (notice of a lawsuit) on behalf of your business. Most often, the Maine Commercial Clerk must have a physical location in Maine and be available during all business hours. You must choose a reliable Maine registered agent to ensure you get all your essential documents on time.
Who can be a registered agent?
The Maine registered agent could either be an individual or a company. Maine allows you to appoint or select a consenting individual as your registered agent. The individual must meet the following requirements to be deemed qualified for this role, these include:
- The person must be a resident of Maine
- They have to provide their name and street address to be included in the records of Maine as your registered agent. The street address, also called a registered address, must refer to a physical address in Maine. P O Box or mailbox service is also almost never allowed since the individual is required to come and sign in person for your documents.
- It is also essential that the individual be present at the address listed during business hours to sign for documents.
Responsibilities of a Registered Agent
When looking for an individual to be your registered agent, consider that individuals travel, meet with clients and take time off. Any absence from their side puts you at risk by not being able to receive your documents at the right time.
Benefits of Hiring a Registered Agent Service
Having a Maine registered agent helps with the following:
- Properly track the delivery of court documents
- Accept service of process in case the company gets sued
- Beneficial for the provision of proof when necessary
File Articles of Incorporation
Understanding and filing articles of incorporation is the first step in starting your business or corporation. When you get your document approved, it signals security for your corporation name and creates a legal entity for the corporation. Only after attaining this approval is the corporation suitable for applying for Maine business licenses, permits, signing contracts, tax Ids or otherwise to conduct the business.
Information Required in the Articles of Incorporation
As you prepare to fill out the documents, you must take the time to analyze and understand the specific information required.
- The name of your corporation
- The clerk or the registered agent
- Professional statements
- Clerks consent
- Authorized shares
Filing Fees and Payment Options
Maine charges a $145 filing fee for Articles of incorporation, with a standard filing time of 14 days. Along with this, there is a 24-hour expediting process that costs $50 and an immediate one that costs $100.
Online vs. Mail Filings
As of June 2021, there are no online or fax filing options. Instead, fillable PDF forms can be found on The Bureau of Corporations, Elections and Commissions website.
Draft Corporate Bylaws
Maine corporate bylaws establish the rules, management structures, and procedures for your corporation. The Board of Directors prepares them. They tend to have a complicated nature, and because of this, corporations often consult an attorney before they finalize their initial bylaws.
Purpose and Importance of Bylaws
The Maine corporate bylaws determine how decisions are made and who is granted authority to make them. The bylaws must cover your policies for appointing directors and officers, holding shareholders and board meetings, and dealing with conflicts of interest, among other things.
Corporate bylaws are internal documents that your corporation maintains a record on. Even if they aren't filed with the state, every corporation must adopt bylaws.
Key provisions to include
- Maine corporate bylaws should outline the policies important for all issues, including management and issues.
- Any rules can be included in your bylaws, Articles of Incorporation, or Maine Law.
- Topics such as meetings, stock, directors and offices, finances, records, amendments, and emergencies must be included.
- The number of directors in the company
- The election, qualification and length of their terms
Approval and Amendment Procedures
The incorporation articles may be amended by written consent of all the members who are entitled to vote on such amendments as stated by section 606. Suppose there are no members or members entitled to vote thereon. In that case, an amendment shall be adopted at the board of directors meeting upon receiving the vote of majority of the board in the office. And upon adoption, they shall be executed and delivered for filing as provided in sections 104 and 106.
Why do I need to incorporate bylaws?
- They are a legal requirement in Maine.
- It proves the legitimacy of the corporation.
Hold Your First Board of Directors Meeting
Establish Corporate Records
Corporate records such as the following need to be set up
- Registration corporation
- Corporate book
- Publication of formation
- Stock certificates
Appoint Officers and Adopt Resolutions
The directors are appointed by the commissioners from the county they represent. All the county commissioners in the jail authority must nominate the host county director. Some alternative directors who will act in the absence of the main director are selected. The operating and governance agreement defines the specific process for appointing directors. There should be a mix of individuals with sufficient managerial, financial and technical experience so that they may execute their duties efficiently.
Document the Meeting Minutes
This is an initial meeting of the incorporators of a company. It is also known by several alternative names, such as:
- Incorporators meeting minutes
- Incorporators meeting agenda
- Incorporators meeting record
- Corporate minutes
This is the initial meeting where the resolutions to organize the company are recorded. The notice for this meeting must go out to all participants under state law. The minutes are stored in corporate minute books for safekeeping. Once the initial matters are settled, further meetings can be conducted annually to review the company's performance or to address any other changes related to the company.
Obtain an EIN
What is an EIN and Why Do You Need One
The EIN stands for Employer Identification Number. This is a 9-digit unique identifying number similar to your social security number but for your corporation. This will be given to you when you register your company with a federal government or if your company has more than one member in the case of partnerships, corporations or even if you are looking to hire new employees.
How to Apply for an EIN ?
Most application processes can be completed online at the department's website. You will also find an extensive list of business types and the types of Maine business licenses, permits and other requirements for each one.
- Go to a good online EIN registration site
- Determine the best business structure for your business
- Fill in the information when prompted
- Hit submit
EIN vs. Tax ID Number
EIN typically identifies businesses for tax purposes. On the other hand, Tax Identification Numbers are generally unique nine-digit numbers used by the IRS to identify individuals or business entities.
Comply with Maine Tax and Regulatory Requirements
Maine Corporate Income Tax
Maine imposes Corporate Income Tax on all entities organized as corporations with Maine source income. Corporate Income Tax is generated with rates that range from 3.5% to 8.9%. This tax does not apply to S corporations unless it has a federally taxable corporation at the corporate level. It also does not use in the case of financial situations subject to Maine's Franchise Tax and companies subject to premium tax.
Sales and Use Tax
The Maine business taxes have several sales and use tax rates. Five percent is the general rate for most tangible personal property and services. However, it may still differ in various goods and services.
Other Licenses and Permits
You need general business licenses to operate and sometimes other permits based on the location and the type of industry you are in. The best way to attain your Maine business licenses and permits is to contact your local Chamber of Commerce and determine which type of documentation you will need. Make sure to have your federal tax ID number at hand prior.
Consider Hiring a Professional Service
Benefits of Professional Assistance
There are several advantages, such as:
- It provides overall assistance
- Provides expert guidance helping you navigate through
- Keep track of all procedures
- Timely completion of procedures
Factors to Consider When Choosing a Service Provider
While choosing a service provider, it is essential to ensure that they check the following boxes:
- Reputed agency
- In the same location
- Accessible at any point in time
Conclusion and Next Steps
Recap of the Steps to Form a Corporation in Maine
Beginning from the selection of the name, checking its availability, the appointment of a Maine registered agent and their responsibilities, filing articles of incorporation, drafting bylaws, holding the first meeting followed by the attainment of EIN and tax requirements and then finally taking the assistance of an agent or attorney, everything is a crucial step paving the way for the next in a Maine corporation formation.
Tips for maintaining your corporation in Maine
Four main tips that will guarantee you success in the end are:
- Operational excellence
- Customer relations or communications management
- Financial management
- Maintaining a proper record and consistent documentation
- Payment of additional bills
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Note: Our content is for general information purposes only. Levy does not provide legal, accounting, or certified expert advice. Consult a lawyer, CPA, or other professional for such services.