Form An LLC
Step 1) Verify & Secure Your LLC Name
First off, in order to launch a successful Maine LLC, you need to give it the right name. Your business name needs to be catchy for branding purposes and legitimate for legal purposes. We go into depth on this topic in our LLC naming guide, but we’ll go over the legal basics below.
Legally, your business name must:
- Contain the words limited liability company or limited company, or the abbreviation LLC or L.L.C.
- Not contain restricted words or phrases (these often include words like bank, attorney, and university) without the proper approval.
- Not contain obscene language.
- Not falsely suggest an association with public institutions
- Not inappropriately promotes abusive or unlawful activity
- Be distinguishable from any other entity or trade name registered in Maine.
For an exhaustive list of naming rules you can review Maine’s state LLC legislation.
If you’re having trouble coming up with a name that captures your brand, don’t let that stop you from forming your LLC. For now, you can focus on the legal requirements and consider filing an assumed (or fictitious) name after you’ve nailed down your branding.
What To Do:
Once you’ve decided what you’d like to call your LLC in Maine, do a business name search to find out whether or not it’s in the cards. If your business name is available, you’ll be able to lock it down when you file your Certificate of Formation.
Quick Note: Before you commit 100% to a name, you should see if there’s a decent URL available. Use Weebly to search your options. If there’s a quality domain name for purchase, we advise buying it right away because even if launching a business website isn’t on your radar right now, it’s going to be soon.
Step 2) Appoint A Registered Agent
When you file your Articles of Organization, you will be asked to appoint a Maine registered agent.
Your registered agent will be responsible for receiving important legal documents like tax forms and service of process notices on behalf of your LLC. Your registered agent can be an individual resident of the state or a company that’s legally authorized to represent businesses in Maine.
Maine does give you the option to act as your own registered agent, but many business owners choose to appoint a professional instead. Here are a few things to think about before you decide to act as your own:
- You’ll have to maintain normal (9 am - 5 pm) business hours at the address you provide.
- If you run your business from home, you’ll be required to make your personal address public.
- You must keep up on important notices, dates, and deadlines.
- You could be served in front of your family or coworkers.
What To Do:
If you’re considering acting as your own registered agent, do some research, starting with our registered agent guide. If you decide you’re up for the task, go ahead and list your own name and address on your Articles of Organization.
If you’re leaning toward hiring a professional, we recommend doing so through an online LLC formation service. Many of these companies (like Northwest) offer up to one year of registered agent service free when you form your LLC with them.
Step 3) File Certificate Of Formation
To legally register an LLC in Maine, you need to file the LLC Certificate of Formation. They're like the articles of organization in that they officially declare to the state all the very basic details of your company, like name and address, names and addresses of all owners, the registered agent, nature of the business, etc., for the public record.
Just be sure not to file this until you're ready and have all the needed information so there aren't any hiccups.
Filing Fee: $175
Step 4) Draft An Operating Agreement
In Maine, the operating agreement is mandatory. And for good reason!
Not only does it add a layer of protection for your brand (LLC status), but it also helps to deal with financial/management disputes and ensures your company is governed by your own internal set of rules rather than the default set on state books.
To get started, consider checking out this nifty LLC Operating Agreement template which you can customize yourself.
Step 5) Process An EIN
The Employer Identification Number (EIN), or Federal Tax Identification Number, is essentially a social security number for your company. State and federal agencies use this number to track your business activity.
Your EIN will come in handy when it’s time to:
- Open a business bank account
- File Federal and State taxes
- Hire employees
We think the best way to get an EIN is by using the free online application on the IRS website. We prefer this method because it’s the most efficient, but if you’d prefer to apply via phone, fax or mail, read through our guide to find out how.
Maintain Your LLC's Personal Asset Protection
Using dedicated business banking and credit accounts is essential for personal asset protection.
When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your LLC is sued. In business law, this is referred to as piercing your corporate veil.
You can protect your business with these two steps:
1. Opening a business bank account:
- Separates your personal assets from your company's assets, which is necessary for personal asset protection.
- Makes accounting and tax filing easier.
2. Getting a business credit card:
- Helps you separate personal and business expenses.
- Builds your company's credit history, which can be useful to raise capital later on.
Reduce the Liability of Your LLC
Business insurance helps you manage risks and focus on growing your business. The most common types of business insurance are:
- General Liability Insurance: A broad insurance policy that protects your business from lawsuits. Most small businesses get general liability insurance. In Maine, businesses are required to have general liability insurance.
- Professional Liability Insurance: A business insurance for professional service providers (consultants, accountants, etc.) that covers against claims of malpractice and other business errors.
- Workers' Compensation Insurance: A type of insurance that provides coverage for employees’ job-related illnesses, injuries, or deaths. In Maine, businesses with one or more employees, excluding business owners, are required by law to have workers' compensation insurance. Get a free quote with ADP.
Oh yes, we saved the best for last. This is where you go through the final steps of "taking care of the legal stuff" so to speak. How complex or simple this process will be depends on a number of variables including:
- Your specific location/county within Maine.
- Whether your work directly with the public.
- The nature of your business.
- Whether you have employees.
Bookmark the Augusta district office of the Small Business Administration, and the LLC section of the state’s Corporations Division because they’re likely going to be go-to sources. If you need additional help, there’s a Business License Service we recommend. They determine everything required on Federal, State, County and Municipal levels, get the forms, and provide step-by-step filing instructions.
Reduce Administrative Burden
There will be many demands on your time once you start your business. With that in mind, it’s a good idea to streamline your workflow and reduce administrative overhead from the get-go. The two most important business tasks to get help with are:
Getting your books in order right up front will save you headaches in the future. At the very least, you can have a professional setup your bookkeeping and accounting for you. This will save you money and time in the long run.
There are all in one services that will do your bookkeeping/invoicing/tax filing for you all for one monthly fee. Mazuma ($95/month) is a reliable all in one tax service.
2) Employee Payroll
If you have employees, a payroll service will save you a lot of time and also save you from having to become an expert on state compliance or employee tax withholdings and filings.
Gusto is a reliable and good payroll service for small businesses.
Need Help Forming an LLC?
If you’ve got too much on your agenda to worry about all the paperwork and state-requirements, there are a handful of LLC formation services that can take care of everything for you.
Here are the two most popular:
– Northwest ($49 + state fee) = Best Price & Overall Value
– LegalZoom ($79 + state fee) = Best For Brand Recognition
Note that this guide for forming a Maine LLC isn’t a legal document or legal advice. It’s for informational purposes and the information above is subject to change. For specific legal questions regarding how to form an LLC in Maine, consult with a business attorney.