Maine can be a great place to grow your small business. The Pine Tree State is home to thousands of islands, hundreds of mountains, and countless acres of white pine forests, but it also packs a business punch.

Follow our step-by-step guide to learn how to start a business in Maine.

Step 1: Create a business plan for your Maine company

Taking time to write a business plan can save time and money, potentially avoid pitfalls, and set yourself up for a better chance of success. As you may expect, a business plan can get pretty detailed. You should conduct market research before you get started. Who is your local competition – and how can differentiate yourself?

Your business plan should include a description of the business, an assessment of “SMART” goals, a deep-dive on competitors, a detailed description of your target customers, a sound marketing plan, and a look at the company’s current economic status.

What to Include in a Business Plan

Starting and planning your business might include:

• Refine your business idea. The better you understand what problem you’re solving, the better you can set up operations and understand your target customers.
• Depending on your company and industry, your market — and your competition — could be local, statewide, national, or even global. How can you stand out from others in your industry? What could convince customers to try your business?
• Think through how you will finance the business and cover costs, from LLC filing to quarterly and annual business taxes. Also, list out SMART goals that track how the business is doing.

Maine offers business incentives too. SBA lenders are located statewide, and the Finance Authority of Maine (FAME) may be able to support your startup. Basing your business in one of Maine’s 32 Opportunity Zones could also bring favorable taxes and other benefits. Maine businesses may also be eligible for various federal grants, but check the requirements before applying.

Step 2: Choose a business structure

Two common business entity options are the sole proprietorship and the limited liability company (LLC).

Sole Proprietorships

If your business has multiple owners, a sole proprietorship isn’t an option. However, a sole prop is easy to set up. In fact, in Maine, you typically don’t have to register sole props with the state (though there may be other licensing, permitting, or local requirements).

Maine Corporations

With a corporation, your personal assets will enjoy some level of protection. However, income for Maine C corps is taxed twice — once at the corporate level and once on personal tax returns. S corporations tax the money only once, but it’s harder to qualify for an S corporation.

Maine LLCs

An LLC will need to be registered with the Maine Secretary of State, and you’ll register the LLC’s name with the state’s Bureau of Corporations. There may also be annual state filing requirements and fees. Also, consider an operating agreement that guides management and partners on day-to-day operations.

LLCs tend to offer more favorable taxation. They distribute their profits to owners, which are then taxed. By contrast, C corporation profits are taxed directly at the business level. Plus, the “limited liability” aspect of an LLC in Maine can shield your personal assets from harm resulting from business debts or lawsuits. With a sole prop, if the business gets sued, you as the owner get sued.

Step 3: Determine startup costs for your Maine business

There will be one-time, fixed, and variable expenses to budget for. Your LLC, for example, will have both one-time costs and an annual filing fee.

Ongoing Costs

If you have employees, you’ll need to budget for payroll (including payroll taxes and possibly Maine workers’ compensation insurance). You’ll also want to be ready to fulfill invoices for any contractors you work with, from electricians to website designers.

Other costs may include the leasing, purchasing, and/or remodeling of property, plus ongoing expenses like electricity, water/sewer, gas, and internet. Transportation, shipping, fuel, tools and technology procurement, and maintenance are other costs to keep in mind.

Taxes

Taxes are also a major factor. For example, if your business sells products, Maine requires you to have a Sales Tax Resale Certificate. Whatever your business tax situation is, though, various programs and tax credits may be available, such as Income Taxpayer Programs that can provide up to 80% reimbursement of employee income taxes. Or, you can check out Maine’s Business Equipment Tax Programs, which can provide relief on property taxes or capital investments.

Step 4: Name your Maine business

Maine business names range widely, such as Hannaford Supermarkets, Ripley & Fletcher Ford, Dead River, VIP Tires & Service, and Delorme Publishing. There’s no one way to name a business, but picking out the one perfect name is crucial.

Pick a Business Name

A critical step is to make sure no other Maine business has the name you want. There’s no central database of all business names in Maine, so this may take some legwork, such as searching the Bureau of Corporations or checking phone books or online telephone listings for your area.

A solid business name can do many things. It’s part of the first impression a potential customer gets about your business in Maine. Your business name can also communicate brand values or what services the customer may expect. It may reflect an aspect of state or local culture, history, or geography.

Consider a DBA

If you operate under an “assumed name,” known as a “DBA” or “doing business as,” register it in the Maine locality where the business is based.

Secure a Domain Name

Whichever name you pick, check for domain names you can register for your business website and email addresses. If you plan to post content to social media, make sure you can reserve your business name on platforms such as Facebook, Twitter, LinkedIn, Instagram, and YouTube.

Step 5: Register your business in Maine

Once you’ve chosen your business name, take care of the other logistics that help you open for business. You may need to file your business with the state of Maine as well as with the county clerk where your business is based. For entities such as corporations and LLCs, you’ll also register with Maine’s Division of Corporations.

Get an EIN

Your business will need a taxpayer ID. For a sole proprietorship, this can be your social security number. An employer identification number, or EIN, from the IRS, is required for other entities and can be a good idea for sole props too, especially if your business has employees. In addition to paying taxes, you’ll use your taxpayer ID for opening business bank accounts or managing state or local filings.

Licensing requirements vary by county and municipality. Call Maine’s Business Answers program at 1-800-872-3838 to discuss what business licenses you may need to apply for.

Business Bank Account

Once registered, your business can also have its own dedicated business bank accounts, such as checking and credit cards, to keep your business and personal finances separate.

Also, consider discussing insurance needs with a local agent. Depending on your industry and state requirements, your business may need coverage such as:

• Product liability
• Boiler and machinery
• Key person
• Fidelity and surety bonds
• Business Interruption
• Overhead Expense

To whittle down your options, see this guide to the best insurance for small business owners in Maine.

Step 6: Market your business

Your business may be trying to appeal to people down the street or across the country. Whoever your target market is, build a marketing plan into your business plan with the following:

Website

A basic business website tells people who your business is, who you are, and what your business can do for them.

Social media

Depending on your brand and customer base, you may want to have presences on major social networks, such as a Facebook Page, Instagram profile, or a Twitter presence.

Word-of-mouth

Ask customers for referrals, and consider setting up a rewards program when new business comes your way thanks to a satisfied customer. Also, consider networking via one of Maine’s 54 Chambers of Commerce.

Examples of Good Businesses to Start in Maine

Maine can attract a range of homegrown entrepreneurs and outside investment, such as:

• Used car sales
• Home-based baked goods
• Food truck
• Residential and/or commercial cleaning and janitorial
• Craft beverages, such as wineries and breweries
• Renewable energy
• Paper and wood products
• Nature guides and other tourism

Start Your Business in the Pine Tree State

From Augusta to Portland, Fryeburg to Lubec, Maine prides itself on being fertile ground for growing small businesses. As you decide where you want to have your Maine business and craft your plan, before you know it you could be on your way to building a successful, profitable Maine business you can call your own.

We can also help you transform your business idea into your dream business in Maine with our formation services.