Forming a corporation in Maine is done through the Bureau of Corporations, Elections, and Commissions (BCEC). This entity is a branch of the Maine Department of the Secretary of State. While Maine does not currently provide a fully digital platform for the creation of corporations, the Interactive Corporate Services option on the BCEC website can help with recurrent filings, such as annual reports.
This guide will take you through each detail of the incorporation process in Maine.
How do I form a corporation in Maine?
Steps to form your Maine Corporation:
- Name Your Corporation
- Appoint Directors
- Choose an Maine Registered Agent
- File the Maine Articles of Incorporation
- Create Corporate Bylaws
- Draft a Shareholder Agreement
- Issue Shares of Stock
- Apply for Necessary Business Permits or Licenses
- File for an EIN and Review Tax Requirements
- Submit Your Corporation’s First Report
To kick-start your corporation in Maine, you’ll need to file the Articles of Incorporation with the Maine Department of the Secretary of State. However, before you take this important step, you’ll need to complete a few things first.
To simplify the process of forming a corporation in Maine, we’ve put together 10 easy steps to form your business:
Step 1: Name Your Corporation
Choosing a name for your Maine corporation is one of the earliest chances to set the tone for your company. You want to think of names that are punchy but professional, relate to your specific goods or services, and do not come too close to the names of other businesses.
Conduct a business name search to see if any of the names you like have been taken. Maine forbids any new corporation from giving itself a name too close to be distinguished from the name of an established business.
Note that some terms are prohibited from use in the title of your corporation without specific permissions and verifications from the Secretary of State. Examples of these words include “Bank,” “Trust,” and “Credit Union.” Review Maine regulations on prohibited words before committing to your corporation’s name.
Other words must be included in the registered names of all Maine corporations. Those include “Limited,” “Incorporated,” and “Corporation” or the standard abbreviations of any of those three. You cannot register a corporation in Maine without including one of these three designators in your company’s title.
Once you have settled on a name for your Maine corporation, it is good to reserve your business name with the Secretary of State. This protects your chosen name from being claimed by another business for up to 120 days. The application and $20 filing fee for this service can be sent to:
Corporate Examining Section, Secretary of State
101 State House Station
Augusta, ME 04333-0101
It’s also good to check whether your name is trademarked. To check at the federal level, visit the United States Patent and Trademark Office (USPTO) website. You can also register your trademark if you choose to do so. Maine has a guide to state trademarks here.
Lastly, if you plan to conduct business under a name other than the one you registered as in your Articles of Incorporation, you will need to register an “assumed name.” This is also commonly known as a “doing business as” (DBA) name.
However, Maine law makes a hefty distinction between an assumed name and a “fictitious name,” and there is a significant difference in filing price. In most states, the terms are synonymous, but Maine uses “fictitious name” to refer specifically to a name that’s being adopted by a foreign (out-of-state) corporation because its original name is unavailable in Maine.
You can file your Statement of Intention to Do Business Under an Assumed or Fictitious Name for $125 for an assumed name and $40 for a fictitious name.
Step 2: Appoint Directors
Your Maine corporation will be required to appoint a board of directors in charge of looking out for your company’s best interests. However, the law allows for the board of directors to vote to do away with the board and be managed by the shareholders. Maine legislature specifies that no corporation in Maine can install a board containing less than three directors.
Your corporation’s directors are not required to be residents of Maine or shareholders in the company. Maine also lays out a fair number of guidelines regarding how directors are expected to handle their responsibilities.
Once you have selected your directors, you need to designate which one will function as your “incorporator” by signing the Articles of Incorporation. This incorporator might be yourself, a director from your board, or a shareholder.
Step 3: Choose an Maine Registered Agent
A registered agent functions as the official point of contact between your corporation and the state government. Registered agents might be single individuals or other professional entities. These individuals or entities receive important legal correspondence between your corporation and Maine.
In the case of domestic business corporations, the Maine BCEC office refers to these entities as “clerks,” either a “commercial clerk” or “noncommercial clerk.” “Registered agents,” for Maine’s purposes and paperwork, only apply to foreign business corporations and require different applications (commercial and noncommercial) for appointment. All clerks for Maine corporations must be residents of Maine or entities authorized to do business in Maine as commercial clerks.
When formally declaring your company’s intended clerk, Maine also distinguishes between a commercial and noncommercial entity. The difference here is that commercial clerks have commercial registered agent (CRA) licenses listed with the Maine Secretary of State.
Noncommercial clerks and the companies that utilize them are not penalized and may choose to register as “commercial” later if they wish. The $35 fee applies to the filing of both commercial and noncommercial clerk appointments.
All clerks and registered agents must be of legal adult age (18) and provide a valid street address in Maine where they can be found during regular business hours. P.O. boxes are prohibited as formal addresses for Maine commercial or noncommercial clerks.
The decision about designating a clerk is a weighty one. While you may initially be tempted to perform this function, this is not typically advisable. Here are a few of the advantages of hiring an outside agency to handle your company’s needs:
- Information security: The names of registered agents and clerks are a matter of public record in Maine. Using an agency means private information about you stays private.
- Legal barrier: Nothing could be worse than receiving a subpoena or court summons in front of a client. This can happen if you choose to stand in as your own registered agent or clerk. Hiring a professional or agency to represent your company in this way means all sensitive legal matters about your Maine corporation are handled behind closed doors.
- Freedom to focus on business: Having to remain at the stated address of your registered agent or clerk during business hours can take valuable time away from your business that could be better spent trying to grow it.
Step 4: File the Maine Articles of Incorporation
Now, it is time to file your Articles of Incorporation, the document that legitimizes your business in the eyes of the Maine government. The Articles of Incorporation must be filed before your company can conduct business in Maine.
To complete your application, you will need the following information about your company on hand:
- The corporation’s official name
- Whether the corporation status will be a benefit corporation or professional corporation (if not, leave these boxes unchecked)
- The name and street address of the corporation’s commercial or noncommercial clerk; if using a commercial clerk, include the Commercial Registered Agent (CRA) number
- Number and type of shares
- Whether the corporation will have a board of directors or be managed by shareholders
- Whether the corporation will have preemptive rights, meaning that current shareholders will be given first opportunity to buy unissued shares
- Any additional provisions you want to include in your Articles of Incorporation
- Name and address of the incorporators
Maine Articles of Incorporation must be accompanied by a $145 filing fee and mailed to:
Secretary of State
Division of Corporations, UCC, and Commissions
101 State House Station
Augusta, ME 04333-0101
Email inquiries may be submitted to CEC.Corporations@Maine.gov.
Step 5: Create Corporate Bylaws
While bylaws are listed as “optional” on your Maine Articles of Incorporation, they are an essential aspect of a successful corporation. Bylaws are intended to explain the established rules and expectations of your company. Everything from managerial structure to operating procedures should be included in your bylaws, and they should be kept with your corporation’s records.
Bylaws are where you can get specific about any aspect of your corporation’s internal workings. A few basic items that should be included in the bylaws include:
- Shareholder voting rules
- Record-keeping procedures
- Director responsibilities
- Number and type of shareholder meetings
- Stock structure
Step 6: Draft a Shareholder Agreement
Another step in the creation of your Maine corporation is the drafting of a shareholder agreement. This document represents a written contract between the shareholders of your company and the corporation itself. Unlike some of the preceding documents associated with the formation of your company, your shareholder agreement is private and only ever viewed by shareholders.
You can use your company bylaws as a guideline when constructing your shareholder agreement to ensure that expectations on both sides are met. Your shareholder agreement is where you can lay out specifics about stock share processes. It also outlines the rights and responsibilities of the shareholders.
It is important that every shareholder in your Maine corporation reads and signs the shareholder agreement to show their formal agreement with its contents.
Step 7: Issue Shares of Stock
The word “corporation” implies a group of people with shared responsibility. For your Maine corporation to be legitimate, it is mandated to issue shares of stock. Becoming familiar with Maine’s laws surrounding corporate stock issuance can help you understand this process fully.
Your Articles of Incorporation will ask you to identify a specific number of shares that you plan to make available. Keep some stock in reserve at your initial issuance.
Determining how many shares to issue to given shareholders depends on the ownership structure set up in your bylaws and shareholder agreement. Let’s say you began with just three shareholders, and each owns one-third of the stock in your Maine corporation. If you declare in your Articles of Incorporation that 1,000 authorized shares will be available, you would perhaps offer 100 shares to each shareholder and keep 700 shares in reserve.
You choose whether shares of stock in your Maine corporation are sold privately among shareholders and directors or on the public stock market. If you decide to take your company’s stock public, you will be required to submit quarterly reports detailing your stock information to the federal government. Form 10-Q can be found on the U.S. Securities and Exchange Commission (SEC) website.
Step 8: Apply for Necessary Business Permits or Licenses
The business permits or licenses your Maine corporation may require will vary according to several factors. Maine does not mandate a general business license. Once you have incorporated with the BCEC, you should find out what is required of your business at the county and city levels. Locate your local municipal website as a starting point.
Depending on your industry, specialized permits and licenses may be in order at the local, state, and federal levels. Professional licensure for many service-based fields like psychology, accounting, or teaching comes with their own requirements.
All corporations must register with the State of Maine Bureau of Corporations.
You can visit the Small Business Resources webpage of the BCEC to learn more about licenses and permits that may pertain to doing business in Maine.
Step 9: File for an EIN and Review Tax Requirements
Your Maine corporation will need to register with the IRS and receive an Employer Identification Number (EIN). The EIN for your company operates as a federal identifier and allows your business to open financial accounts, hire employees, and pay taxes. You will also need your EIN when securing any financing that may go into the creation of your Maine corporation.
An EIN can be obtained quickly and easily by completing an application on the IRS website. There is no charge associated with getting an EIN, and you should receive your unique number after applying.
You will need to review Maine’s corporate tax basics to gain a better understanding of your company’s state tax requirements. Business taxes surrounding common corporate needs like sales and use can be addressed online through the Maine government website.
Step 10: Submit Your Corporation’s First Report
One of the steps in forming your Maine corporation that will become a mainstay of your business requirements is filing your annual report. Your annual report consists primarily of your business’s name, purpose, owners, and other pertinent details that can be added in the “attached pages” section at your discretion.
Filing the annual report for your Maine corporation is a legal requirement that keeps your business in good standing with the state government. You can create a printable paper form with just the entry of your corporation’s charter number or take part in the online filing option.
The legal filing deadline is June 1 each year, and your first report will be due at the first deadline occurring after your official formation. For example, if you incorporate it on July 15, 2020, your annual report will be due on June 1, 2021.
The fee for submitting an annual report in Maine is $85, which can be paid by check or money order if sent by mail or by credit card if paid online. A $50 late fee is imposed for annual reports submitted past the established deadline.
How much does it cost to start a corporation in Maine?
The total cost of forming your Maine corporation will vary significantly based on multiple factors. Choices like whether you decide to reserve your name or use an assumed name make a difference in overall costs.
The bare minimum you can expect to pay to get your Maine corporation off the ground is $230. That figure represents only the Articles of Incorporation and annual report, the two steps every founder must take.
Partnering with a professional like ZenBusiness can spare you the struggle of handling all of the red tape. With our business formation plans, we can help you through every part of the filing process.
What are the benefits of a corporation in Maine?
With multiple business structures to choose from, you may wonder if a Maine corporation is the right choice. One of the major reasons a corporate structure is chosen by many is that this model formally separates the assets of the shareholders from the liability and assets of the corporation. As an individual, you cannot be held liable for financial concerns regarding your corporation.
Here are a few other reasons to incorporate in Maine:
- Business Answers program: With easy drop-down menus that let you quickly search for your specific business field, this helpful option offered by the Maine government takes all of the guesswork out of determining licenses and permits.
- Small Business Advocate platform: This regulatory fairness board caters to the needs of small businesses in Maine and ensures their interests are represented at the state and federal levels.
- Global market access: Being a corporation means you are not limited to conducting business solely in Maine and can extend your offerings outside the U.S. market.
- Stock offerings: As corporations have a legal responsibility to issue stocks, you have a built-in ability to grow your profits in a way not available to other business structures.
- Brand recognition: Having a corporate presence causes the public to take your business more seriously and lends a level of prestige to your company’s offerings.
Naturally, nothing in life comes with only good parts. There are a few disadvantages to the corporate structure that you will need to consider before forming your Maine corporation. These include:
- Double taxation: As a Maine corporation shareholder, you will be subject to federal and state income taxes at the personal and corporate levels, amounting to two sets of taxes.
- Reporting requirements: It can be challenging keeping up with the many expected and consistent filings that will come with the corporate structure.
- Formal managerial structure: Even though you may be creating your Maine corporation without the input of others, once you name a board of directors and incorporate, other voices have a say in how your business is run.
How is a Maine corporation taxed?
Maine imposes a graduated income tax on all C corporations that derive income from within the state. The range of rates extends from 3.5% for all Maine-source income up to $350,000 to 8.93% for any income in excess of $3,500,000. Form 1120ME covers all aspects of Maine corporate income tax reporting.
S corporations, regarded as pass-through entities, are generally exempt from this tax unless they have federal taxable income at the corporate level. This income tax does not apply to insurance companies already subject to the premiums tax or financial institutions subject to the franchise tax.
Maine nonprofits and public benefits corporations may not be immediately tax-exempt and will need to check the parameters of their unique setups. Additional filings with the state and federal governments may be required for your nonprofit to achieve tax-exempt status. Likewise, any salary you receive through the nonprofit will be subject to the individual income tax in Maine.
Maine Corporation FAQs
- Does running a corporation in Maine involve more paperwork than running other types of businesses?
In short, yes. A corporate structure is more complex and subject to more state and federal guidelines than something like a limited liability company (LLC) or a sole proprietorship.
Corporations in Maine must consistently adhere to strict reporting requirements regarding the company’s internal makeup, stock performance, bylaws, and shareholder agreement.
- What is the difference between an LLC and a corporation in Maine?
The major difference rests in the method of taxation. Corporations are subject to a corporate state income tax in Maine based on annual Maine-source net income.
While LLCs in Maine can elect to be taxed as corporations, this business structure typically places the responsibility for the company’s profits and losses on the individual owner when tax time comes.
Checking out the Maine Revenue Services Division can help you familiarize yourself with the different ways that business structure can affect taxation.
- How do I change my corporation’s name in Maine?
To legally alter your Maine corporation’s name, you will need to file the Articles of Amendment with the Bureau of Corporations, Elections, and Commissions. The fee for this change is $50.
- How many people are needed to form a corporation in Maine?
A Maine corporation calls for a minimum of at least three directors at the time of formation, unless you only have one or two shareholders. One of those stated directors must also be the official “incorporator” who will sign your company’s Articles of Incorporation.
- Can I form my Maine corporation online?
At present, Maine does not feature a fully digital incorporation platform. Certain aspects of the business formation process, such as filing annual reports, can be completed through Maine’s InforME system.
- How do I dissolve my Maine corporation?
The Articles of Dissolution must be filed with the Secretary of State to dissolve a Maine corporation. The fee for this service is $75.