Maine small business taxes

Pay Your Maine Small Business Taxes

Most small businesses are required to pay state taxes. Learn about your Maine business taxes and how we can help you stay compliant.

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If you are a Maine small business owner, you likely already know how paying your taxes is a crucial component to making sure your business stays legally compliant. Taxes can be complicated in the simplest of circumstances, and keeping track of the various federal, local, and state-imposed taxes only adds stress to the mix. Luckily, we are here to help. Read on to learn more about the kinds of business taxes you might need to pay in Maine, how to pay them, and which of our services and products can help you make things a little easier when tax time rolls around.

Our Worry-Free Compliance Service can help keep you compliant and timely on all your filings. You have enough to worry about. Make it easier on yourself by having all your administrative requirements in one place. 

If you’re looking for information about federal taxes, head over to our page on federal taxes for small businesses to learn more.

Step 1: Establish your Maine business’s corporate income tax obligations

Corporations in Maine are subject to a graduated corporate income tax. The Maine business tax rate generally ranges from 3.5% (for income up to $350,000) to 8.93% (for income in excess of $3,500,000). The tax does not include S corporations unless they have federal taxable income at the corporate level. 

For pass-through entities, such as S corporations, limited liability companies (LLCs), partnerships, and sole proprietorships, income “passes through” from the business to its individual owners. The income is then taxed to the owners at their personal income tax rate. 

The due date for corporate income taxes can vary depending on whether you are filing for the calendar year or fiscal year. Calendar year filers will file by April 15th. 

Step 2: Determine your Maine business’s employment taxes

Maine businesses have withholding taxes that may vary according to state law. Maine’s Revenue Service has the most updated information about withholding tax rates. Usually, the amount withheld is based on the information provided by the employee’s “Maine Employee Withholding Allowance Certificate.” Any business in Maine that withholds federal income tax from a payment must also withhold Maine income tax. Maine pass-through business entities must withhold income tax for nonresidents based on income from Maine sources. 

If your small business in Maine has employees, there’s a requirement to pay the state unemployment insurance tax. This tax funds unemployment compensation programs for eligible employees while they seek work. 

The unemployment insurance tax rate for new employers is subject to change but is generally around 2.6%. Employers are subject to higher or lower rates depending on “experience.” There are a number of things taken into account when determining experience, including claims that have been made for benefits.

Step 3: Establish your Maine business’s additional state tax obligations

There may be other business taxes that you need to consider. These may depend on the type of business structure you’ve chosen and the industry you are in. 

Sales Tax

Sales tax on goods sold in Maine is 5.5%. There are a few exceptions that include some groceries and medicines. Before you start selling any goods in Maine, you should determine whether those goods are taxable. Services are generally not taxable.

Service Provider Tax

Specified services are subject to Maine’s 6% service provider tax. Many states place the burden of this tax on the consumer. In Maine, it is imposed on the seller, but may be passed through to the consumer if the tax is identified to the consumer. Some Maine service providers include telecommunication services, community support services, fabrication services, and more. 

Use Tax

If you purchased items outside of Maine for use in the state, a use tax of 5.5% may apply. If the seller did not collect the tax, you must allow for it on your tax return.

Franchise Tax

Sometimes the same language can be something different from state to state. There is a Maine franchise tax for banks and financial institutions with income in the state, even those that are pass-through entities. There are two rate options. One is a .039% tax on assets. The second option is a combination of 1% of Maine income and .008% of Maine assets. 

Excise Tax

Maine charges an excise tax on vehicles, which is paid prior to registration. The tax is paid to the local office where the vehicle was purchased. Excise taxes are also placed on other items such as marijuana and railroads. 

Step 4: Prepare to file and pay your Maine business taxes

All taxes are paid to the Maine Revenue Service, which is part of the state Department of Administrative and Financial Services. The department now offers online filing for many Maine small business taxes. Check out the Maine Tax Portal for more information about filing online. This is a new program, and it has a four-year roll-out plan, which will allow all Maine taxes to be filed online. 

The system is not all-encompassing yet. Some Maine small business taxes are filed electronically through different systems. The Maine Department of Revenue has a comprehensive list of all taxes and their due dates on its website. You can also pay by mail or in person at the Maine Department of Revenue’s office in Augusta.

One of the most difficult parts about filing Maine small business taxes is gathering all the necessary information. You will potentially need receipts, accounting records, payroll information, and legal documents, so keeping track of your business expenses is key. One of the ways to stay more organized is by using our ZenBusiness Money App for invoicing and transactions, which you can read more about below. 

Not sure how to stay compliant? Learn more about legal compliance for small business owners.

Do I need an accountant?

Taxes are hard. Most small businesses need professional accounting help to file Maine small business taxes. It is easy to make accidental errors or omissions. Failing to submit your tax forms may result in fees and penalties that can escalate to a criminal offense if not handled properly. 

Not all tax professionals are the same. The IRS has a resource guide that helps consumers and business owners understand the differences between tax professionals, so you can make a more educated decision on what kind of help you need.

How we can help

A business that falls out of compliance at the state level will be hard to maintain. Even if revenue is strong, you still have to jump through all the necessary hoops to remain in good standing and earn the privilege of doing business in the state of Maine. Taxes are only a portion of the documents and forms you will need to file regularly. 

Our ZenBusiness Money App is also a great tool for keeping track of all your invoices, managing payments, and monitoring clients from one simple dashboard.

If your business is still in the formation stage, our Maine LLC Formation Services or Corporation Formation Services can help you get started.

Our business is making it easier for you to run your business.

Disclaimer: The content on this page is for information purposes only, and does not constitute legal, tax, or accounting advice. If you have specific questions about any of these topics, seek the counsel of a licensed professional.

FAQs

  • How much can a Maine small business make before paying taxes?

    All Maine businesses or their owners are required to pay some form of business tax. Corporations will pay the Maine corporate tax, and the owners of pass-through business entities will be responsible for income taxes. Employment, sales, and service provider taxes may also apply.

  • What percentage does a Maine small business pay in taxes?

    Maine corporations are subject to a graduated corporate income tax generally ranging from 3.5% to 8.93%, but subject to change. The corporation tax does not include S corporations unless they have federal taxable income at the corporate level. Income from pass-through entities is subject to Maine’s personal income tax rate.

  • How does a Maine small business pay taxes?

    All taxes are paid to the Maine Revenue Service, which is part of the Maine Department of Administrative and Financial Services. The department now offers online filing for many Maine small business taxes. Check out the Maine Tax Portal for more information about filing online.

  • Do I have to file taxes for my small business in Maine?

    There are consequences for failing to file small business taxes in Maine. This could include penalties, fees, and even criminal charges.

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