With around 500 localities, 389 new businesses in 2019, 67 lighthouses, and 90% of America’s lobster and toothpick production, 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.
Maine hosts several national brands like the Freeport-based L.L. Bean Company and South Portland’s Fairchild Semiconductor. Above all, it sports a $61 billion economy driven by nearly 150,000 small businesses. Just as these company owners got their operations off the ground, you too can learn how to start a business in Maine.
Benefits of Opening a Business in Maine
When you open a business in Maine, you can choose from being amidst the great outdoors, in a small town, along the breathtaking coastline, or in one of Maine’s vibrant cities, such as Portland, Lewiston, or Bangor. With an average personal income of over $84,000, you’re in line with many more heavily populated states.
Entrepreneur resources are available, too. In 2018 alone, the U.S. Small Business Administration (SBA) provided over $83 million in funding to 440 Maine small businesses, and nearly 10,000 entrepreneurs took advantage of training and counseling.
Other resources include 11 Small Business Development Centers, plus CEI Women’s Business Centers in Brunswick, Portland, Farmington, and Machias. The University of Maine Business Incubator in Orono even has office space for students.
How to Start a Business in Maine Checklist
Maine may not be home to Fortune 500 companies, but multi-billion dollar businesses such as IDEXX Laboratories, with 9,200 employees and $2.4 billion in 2019 revenues, call the state home. Maine takes pride in small and mid-sized businesses.
To set yourself (and your business) up for success from the start, you’ll want to knock out some planning, financial considerations, and the nuts-and-bolts details of starting your business, such as: Checklist for How to Open a Business in Maine
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. 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.
2. LLC vs Sole Proprietorship: Choose a Business Structure/Type
Two common business structures are the sole proprietorship and the limited liability company (LLC).
If your business has multiple owners, a sole prop 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).
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 the LLC 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.
Whatever your business entity, 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.
3. Determine Your Business Costs
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. 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 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.
4: Create a Business Name
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.
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. 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.
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.
5. Register Your Maine Business, Open Financial Accounts, and Get Insurance
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.
Your business will need a taxpayer ID. For a sole prop, 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 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.
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.
6. Market Your Maine 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.
How to Start a Maine Business FAQs
Does the Small Business Administration have offices in Maine?
The SBA has district offices in Augusta, Bangor, and Portland.
What is a good city to start a business in Maine?
Top cities to consider include Portland, Lewiston, and Bangor.
How much does it cost to open an LLC in Maine?
The Maine State LLC filing fee is $175.
Does Maine help entrepreneurs and startups?
Maine’s Department of Economic and Community Development provides various programs that can help startups and small businesses.
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