Last Updated on June 13, 2022 by Fair Punishment Team
Creating an LLC or Limited Liability Company can seem like a daunting task. An LLC is a popular option for a lot of businesses in Maine as it allows you to separate personal assets and liability away from the company.
This means that you can act, as an individual, as a mostly separate entity from your company. If you’re looking to have a company that expands quickly and turns over large sums of profit, an LLC can help protect you from future business debts or lawsuits.
But here’s the thing – how do you get started? Well, one thing you’ll need to know from the jump is that starting an LLC comes with a long list of different tasks that you’re going to need to fulfill.
LLC’s have some more specialist requirements that separate them from the process of creating a regular company. If you feel worried about how to get started – don’t panic! You’ve come to the right place.
In this article, we’re going to break down how to start an LLC in the state of Maine in a series of simple steps.
With each step, we’re going to break down exactly how you can do it and any hurdles you might find standing in your way. We’ve also included a short FAQ at the end of this article to help cover and other issues you might encounter.
Let’s start an LLC today!
What Is An LLC?
An LLC is a company that has ‘limited liability.’ What this essentially means is that if you form an LLC you will be offered additional protection from lawsuits, and can be used to manage a lot of different situations and relationships within a business such as a proprietorship, corporations and partnerships.
LLC’s are quite a common form of business, and within the state of Maine many are made each year. Because of this, there is some bureaucracy and a standard wait time that you’re going to have to go through in order to get it to work.
LLC’s are specific to the US. Whilst there are similar forms of companies within companies, in this article we’re only going to be covering how to set one up within the state of Maine.
Why Form An LLC?
So let’s break this down a little further. If you are to form an LLC, one of the greatest advantages you have is that your personal assets are separated from the claims of creditors, or as a result of a lawsuit.
This means that you will not be liable for any bad outcomes of court cases or creditor claims – that will all come from the assets of your business.
This separation makes an LLC a popular form of company, as it protects the owner or owners of a business from any personal asset repercussions that they might face from an event as their business grows and thrives.
In short, LLC’s are great if you’re creating a large company that could run into legal problems or issues with creditors. It’s a great fail-safe that means your own assets are always protected.
Starting An LLC, A Step-By-Step Guide
In the steps below we’re going to take you through all the common hurdles you’ll need to get through in order to start an LLC in the state of Maine.
Requirements to form an LLC can differ depending on the state you’re in, with certain differences in fees, forms, and general practices. We’ve separated these with some specific information, so make sure you read it all carefully!
Step 1 – Naming Your LLC
The first step is probably the most fun and exciting part! You’ll need to find a name for your LLC that is both original, and one that corresponds with the State Of Maine naming laws and requirements. Let’s take a look at these:
- The company name must feature some form of the phrase ‘limited liability company.’ If that sounds too long for you, then you can get around it in a variety of different ways, abbreviating it to either LC, L.C, LLC, L.L.C or simply ‘limited company.’ This is a legal requirement as it allows others to quickly distinguish the type of company that you have created.
- The name must be original, or at least distinguishable from the other names of businesses already on the database of the Maine Secretary of State. If somebody already has the name you want to get, then you’re not going to be able to take it. Careful here, having a name that is too similar to another company can get you in legal trouble, so think carefully about it. Generally, you’re going to need to search the Maine Business Name Database here before making a decision.
- After this, you’ll need to reserve your name by filing an application for Name Reservation with the Secretary of state. This is something that has to happen via mail and the fee is usually around $20.
Step 2 – Choosing A Registered Agent
If you’re just looking into starting an LLC, you’ve probably seen this term already. But what exactly is a registered agent? Well, in short, a registered agent is someone who will represent your company and respond to any official legal papers that you’re likely to receive.
The official title of the person inquisition will be either Specific Statutory Agent, or SSA for short. Before you pick one, there are a few things you’re going to need to keep in mind. The person needs to be:
- An individual who resides within the State Of Maine.
- A business entity that has the authorization to do business in Maine.
- Most importantly, the person needs to have a specific address within Maine.
One good thing to know here is that you can be your LLC’s own SSA agent. This is something you should do only if you’re comfortable with having your name and address added to the public record.
You’ll also need to make sure you are onsite and keep regular business hours so that you can receive and respond to any official documents that your company might be sent.
Step 3 – File A Certificate Of Formation
This is where the paperwork really comes in. One of the most important steps to creating your LLC within the State of Maine is to fill out and sent a Certificate of Formation (otherwise known as an MLLC-6).
This is going to be sent to the Maine Secretary of State office and there is a selection of specific things you’re going to need to include here:
- The LLC’s name (one that corresponds to naming conventions as mentioned above)
- The date that the certificate will become effective.
- If the LLC is a low-profit (this means that it has been formed without intentions of making large profits, most commonly seen with a charity or educational institute).
- Whether or not the LLC is a professional LLC (this basically means you need to determine whether or not the LLC will provide services and have customers).
- Details of the company’s Specific Statutory Agent (name, address).
- Their signature
It’s worth noting here that the entire filing fee for these documents is going to cost you around $175, which is slightly above average compared to other states.
Step 4 – Operating Agreement
Next up is something that is not a legal requirement, but something that we really recommend you do, as it can save you a lot of trouble in the future. In short, an Operating Agreement is a document that will help establish certain ethoses and rules within your company.
It will outline procedures, the rights, and responsibilities of team members, and will act as official documents to safeguard any future disputes that may occur.
Operating Agreements are particularly useful if your company has multiple owners, an Operating Agreement will ensure that everyone understands the procedures of the company and can look to it if ever there are any issues.
They’re also very important in the case of a change in ownership, and will usually outline scenarios such as the death of an owner and what happens to your LLC after this happens.
You’re going to need to get an attorney in the State of Maine to draft one up for you, as this needs to be an officially written, comprehensive document.
You may need to use it in future legal disputes, so it’s not something you want to skimp on. It will likely define the most common practices within your company and will be precise in its language and tone.
Step 5 – Getting An EIN Number
An EIN number is something that will identify your business as a business. It’s usually 9 digits long and will identify your business. EIN is an abbreviation for Employer Identification Number and will be assigned to you by the Internal Revenue Service.
The number will be used for a series of different purposes, for example, business identification and tax processes.
You might be wondering whether or not you need one if your company only has one member – yourself. In this case, you will still need to get an EIN number, as it is vital for your company to be taxed as a company instead of a Sole Proprietorship.
We’ve written a little more about Sole Proprietorship in the FAQ at the bottom of this guide, including the reasons why this might be a better option for your business.
You can obtain an EIN number by completing either an online or physical application with the IRS. If possible, we suggest you use the online application as it’s much simpler and there is no filing fee associated with it.
Extra Note On Filing Annual Reports
Within the State Of Maine, it is a legal requirement that all LLCs file an annual report with the Maine Secretary of State each year by the date of June 1st.
You can do this by getting a preprinted version from the Secretary of State’s website, and you’ll need to get ahold of your company’s State Charter Number to get hold of this form online. You can do this with a physical form, but just note that the common domestic charge to do this is $85.
So we reach the end of the long list of things you’re going to need to do in order to start your LLC. Before we part, one thing we want to highlight is that this process will only be as difficult as you make it.
Before you begin the process, carefully consider each step and try to see how difficult these will be for you.
Thankfully, most of the forms here can be filled out online within the course of a day or two. There will be some time that you’ll have to wait for your documents to process, but providing all the information is correct you’re going to see a turnaround within a week or two.
Starting this early for your LLC is important so that you can get into the more creative sides of running a business.
We hope that this article has told you everything you’ll indeed to know about starting an LLC in the State of Maine, and that you’re now feeling a lot more confident about the whole process.
If you still have some questions left over that we didn’t cover in our step-by-step guide, make sure to check our short FAQ section below for possible answers! We wish you the best of luck with your business and hope that the process isn’t quite as daunting as it felt before!
Frequently Asked Questions
Should I Start A Separate Bank Account For A New LLC?
You’re going to have to, as each LLC needs to have its own bank account separate from the owner. This is for legal reasons so that you don’t have any issues in distinguishing the differences between personal and company assets, or between the assets of different companies.
What Is A Sole Proprietorship?
We mentioned this in the article above and would like to take some time to discuss it with you. A Sole Proprietorship is one of the most simple ways in which you can start a business.
It is an unincorporated business that is owned and managed by a single person with no distinction between the business and owner.
It differs from something like an LLC as it means that you will be liable and there aren’t big differences between your assets and the companies.
There are pros and cons to creating a Sole Proprietorship, but it’s mostly chosen by people who have a very small business that doesn’t have a lot of turnovers.
Is Maine A Good State To Start An LLC?
Maine has some nice benefits if you choose it as the state of your LLC. For one, labor costs are 6% less than the standard national per capita rate, which means you’re going to be saving some extra money.
LLC’s in Maine also enjoy no franchise or privilege tax for your business to pay, nor charges included in any minutes of resolutions or meetings.