If you’re looking to form a Maine professional corporation (PC), it’s important to understand the details of what this type of business entity involves. The formation process can seem too complicated, but with some guidance, you can reach your business formation goals and get on your way to growing the business.
What is a professional corporation?
A professional corporation is a business entity made up of licensed professionals in the same field such as doctors, lawyers, accountants, or others. Unlike other entity types, the state requires certain industries to form a PC or a professional limited liability company (PLLC).
Determine whether a Maine professional corporation structure is right for you
A Maine professional corporation is a valid business structure option for licensed professionals. Certain licensed professionals wanting to start a corporation in Maine are required to form professional corporations. These include:
- Advanced practice registered nurses
- Osteopathic physicians
- Physicians and surgeons
- Physician assistants
- Registered nurses
In Maine, other licensed professionals also have the option of forming a PC but are not required to do so.
Licensed professionals also have the option of forming a professional limited liability company (PLLC) instead of a PC. Both entities are made up of licensed professionals, but they operate differently. Some key differences include:
- A Maine professional corporation has shareholders. A PLLC is made up of members.
- Professional corporation ownership is based on shares of stock. PLLC ownership is based on membership interest in the business.
- The two types of professional business entities may have different income tax obligations.
Both the PLLC and PC structure provide a degree of liability protection. Generally, PLLCs are a good option for those who seek fewer maintenance requirements, but a professional corporation is a solid choice for many higher-income ownership groups because of the tax structure.
How to Form a Professional Corporation in Maine
Once you have decided that a Maine professional corporation is right for you, it’s time to form your business.
Choose a name for your Maine professional corporation
Naming your Maine professional corporation is a very important step in the process of forming your business. One thing to take into consideration is that under Title 13, Chapter 22-A, Section 736 of the Maine Professional Service Corporation Act, your name must include the words chartered, professional corporation, professional association, or service corporation or the abbreviation P.C., P.A., or S.C. Though Maine professional corporations and PLLCs share some similarities, the terms “limited liability company,” “LLC,” or any other business designation can’t be included.
Using the same name as an existing company isn’t allowed, nor is it a good idea from a business perspective. You can certainly get creative, but make sure the name you choose doesn’t mislead the public (and potential clients) as to what services your PC provides.
Register your Maine PC name
Once you have decided on a name for your business, check that it’s actually available. Using ZenBusiness’s name reservation service will take care of the details by ensuring your name is available in the state where you’re registering. We can help you reserve your name so no one else takes it while you’re getting ready to register your business.
Secure your domain name
Online presence is crucial for most businesses in this day and age. Obtain your website domain before someone else does by using the ZenBusiness domain registration services and secure the URL that will best serve your corporation.
Select a Maine registered agent
Under Maine law, you’re required to designate a registered agent to receive legal correspondence on behalf of your professional corporation. All registered entities must appoint and maintain a registered agent and registered office within the state. The agent must be available during normal business hours to forward any service of process, notice, or demand pertaining to the entity to the appropriate individuals. An entity cannot act as its own registered agent.
You can choose as an individual to be your own registered agent, but this can be inconvenient if you need to leave the office for any significant amount of time. A good alternative is a commercial registered agent service. ZenBusiness can put you in touch with our Maine-based partners through our registered agent service.
Complete your Maine Articles of Incorporation
To register your business with the state, you need to submit Articles of Incorporation, the founding document of your PC. The person filling out the Articles of Incorporation for your professional corporation is known as its “incorporator.” Your Articles of Incorporation includes basic and pertinent information to the business, such as contact information and who your registered agent is. Once your Articles are complete, submit them to the Maine Secretary of State’s Division of Corporations, UCC, and Commissions. Online filing isn’t currently available for Articles of Incorporation in Maine.
Establish a corporate record in Maine
According to the Maine Business Corporations Act, professional corporations are required to document and retain a permanent record of all important business decisions made. This includes:
- Minutes of meetings
- Accounting records and financial statements
- Record of shareholders
- Articles of Incorporation and any amendments
- Bylaws and any amendments
- Contact information for directors and officers
- Annual reports
These documents can be kept as hard copies or electronic copies but must be easily accessible so they can be handed over to the Secretary of State if requested.
Designate a Maine professional corporation board of directors
The incorporator also names the initial directors for your Maine professional corporation. These directors must be listed on the Articles of Incorporation, but can be changed later on. According to Title 13, Chapter 22-A, Subchapter 4, Section 747 of the Maine Professional Service Corporation Act, not less than a majority of the directors of a professional corporation and all its officers, except the clerk, secretary, and treasurer, must be licensed professionals in the industry that the business serves.
Create Maine corporate bylaws
Establishing corporate bylaws for your Maine professional corporation is an important part of creating a solid foundation for the way the business will operate in relation to decision-making. Some important areas to address include:
- How shareholders will conduct voting
- Procedures for resolving internal disputes
- How often the board of directors will hold meetings
- The number of directors on the board and how they will be elected
- Types of officers and their roles
Initially, the incorporator or board of directors may prepare the company bylaws. The bylaws must not have any inconsistencies with the Articles of Incorporation. All Maine corporations must establish bylaws. However, these don’t have to be filed with the state.
Hold your first board meeting
The first board meeting for your Maine professional corporation is the ideal time to get the initial administrative work out of the way. There are several key items that need to appear on that first board meeting agenda, including:
- Determining the tax structure of the corporation
- Reviewing, amending, and approving the bylaws
- Choosing a financial institution
- Approving the issuance of stock certificates
- Designating officers to manage the daily affairs of the corporation
The incorporator will call the initial meeting. All designated directors need to be present and the minutes recorded. It’s an easy thing to forget at the first meeting, but is an important part of starting your PC on the right foot.
Secure an employer identification number
To conduct business as a Maine PC corporation, you will need an employer identification number (EIN), which is issued by the IRS. You will need this number to open business accounts, hire employees, and pay taxes. Using the EIN service from ZenBusiness is a great way to remove this task from your plate.
Handle Maine tax obligations
Once you have your EIN, it’s time to make a decision as to which tax structure is best for your Maine professional corporation. Your choices are to form an S corporation or a C corporation. There are benefits and downsides to both.
- S corporation. To file as an S corporation, you can’t have more than 100 shareholders, and you may issue only one class of stock. The corporation can’t be owned by another entity or have any foreign shareholders. One of the biggest benefits of an S corporation is pass-through taxation. Using this structure, profit is taxed only at the shareholder level on their personal income taxes, rather than at both the shareholder and corporate level.
- C corporation. A C corporation has fewer restrictions than an S corporation. However, profits are taxed at both the personal shareholder level and the corporate level, which is a concept called “double taxation.” All corporations default to a C corporation designation; you must submit extra paperwork to the IRS for an S corporation designation.
At the state level, your professional corporation could be subject to a variety of taxes. Some of these taxes may be dependent on the tax structure you choose but will likely include corporate income tax and sales tax. You may also be subject to taxes specific to the type of business you conduct and the location of your business.
Obtain Maine business licenses and permits
You will need to obtain all necessary industry-specific licenses for your business. Your licensing needs will differ depending on the type of service you provide. The State of Maine provides resources to help you learn more about potential licensing requirements on the state government website. However, you will also need to check with your local government town office to learn more about how to obtain a general business license and other necessary local licenses.
You can simplify the process by using ZenBusiness’s partner service, Business Licenses, LLC, to help you identify which licenses are required for what you do and where you are.
Acquire insurance for your Maine professional corporation
Generally, all Maine employers are required to carry workers’ compensation insurance. Failing to purchase workers’ compensation insurance could result in fines and open your business up to personal injury lawsuits.
Specialized industries often require insurance based on your occupation, such as malpractice insurance. It’s also a good idea to have general liability insurance for any business.
Open a business bank account
It’s very important to keep all personal assets separate from business assets. One of the things to consider at your first Maine professional corporation board meeting is which bank the business will use. You will need your EIN, but the bank might also ask for other paperwork as well.
Need help managing your Maine professional corporation?
AlthoughZenBusiness doesn’t form professional entities at the moment, we’re proud to support new businesses, like yours, through a variety of services and tools to help simplify the process. Check out our services, and let’s work together to build your company.
Maine PC FAQs
- What are the filing fees for a Maine professional corporation?
Filing fees change from time to time. A current version of Maine professional corporation filing fees can be found on the Department of Secretary of State website.
- Do I need a lawyer to form a Maine professional corporation?
Though an attorney can provide guidance on the best way to form your Maine professional corporation, you don’t need one.
- Does Maine have other professional entity types?
In Maine, licensed professionals have the option of forming a professional corporation or a professional limited liability corporation.
- Can professionals from different fields form a Maine professional corporation together?
Maine PC corporation shareholders must all be licensed in the same field.
- Will I be taxed as an S corporation or C corporation in Maine?
You have the option to choose which corporate structure your Maine professional corporation will use, depending on your preference and whether you meet the IRS’s qualifications.