Maine has a lot to offer any prospective entrepreneur looking to expand and set up a company in America. Maine’s economy relies largely on its natural resource based industries, namely commercial fishing, forest products and agriculture. Traditional manufacturing jobs in shipbuilding and papermaking also still dominate but there are growing biotechnology and service sectors in the state that benefits from the outstanding telecommunications infrastructure already in existence.
Tourism in Maine is said to generate around $10 billion a year. Maine’s harbours particularly Portland have become a frequent stop for cruise ships with passengers boosting tourism revenues by as much $8 million a year.
Company structures for doing business in Maine
Each form of business has specific tax, liability and management characteristics that make them more favourable or less favourable for different business enterprises.
A sole proprietorship is an individual engaged in business. The tax return of the business and that of the individual tend to be one and the same. The sole proprietor has exclusive control over the business. The business ends at the pleasure of, or upon the death of, the sole proprietor.
General partnerships are two or more individuals engaged in any business activity. The partners are free to allocate rights, responsibilities, profits, and burdens as they wish. Any partner can bind the partnership. Although partnership taxation can be very complex, gains and losses are generally passed through the partnership to the partners. The pass-through feature avoids the entity level taxation characteristic of corporations.
A Joint Venture is a form of general partnership that is limited to a single business venture.
Limited Partnerships
A limited partnership has one general partner responsible for managing the partnership and at least one limited partner who is a passive investor. Limited partners enjoy limited liability so long as they do not interfere in management and cannot be bound by the actions of the general partner beyond the level of their investment. Any limited partnership organized in Maine must contain the words “Limited Partnership” in its title. Limited partnerships have similar management simplicity and flexibility of general partnerships. Tax gains and losses are also passed through to the partners.
Professional Service Corporations
Certain types of licensed professionals (e.g., accountants, doctors, veterinarians, and attorneys) in Maine are required to organise professional service corporations if they choose to incorporate. Other licensed professionals may choose to incorporate as either a general business corporation or a professional service corporation. The professional service corporation is treated much like general for-profit corporations except that the services of the corporation are only to be rendered through the licensed individuals and if there is liability arising out of negligent performance of these services, a shareholder who performed the services (or who directly supervised the person who performed the services) is personally liable. In addition, shares in the professional corporation may be issued only to the licensed professionals.
Limited Liability Companies
Maine is among the majority of states that have adopted the Limited Liability Company (LLC) business form. An LLC is a relatively new form of business that provides the flexibility and tax advantages of a partnership without sacrificing limited liability. LLCs establish the rights and responsibilities of “members” in an operating agreement. The LLC is controlled by managers that may or may not be members of the LLC. LLCs are gradually taking the place of general partnerships because of the flexibility and limited liability the form offers. Maine LLCs are formed by filing Articles of Organisation with the Secretary of State, and are governed by the Maine Limited Liability Company Act.
Corporations
Maine has its own corporate statute, which is based upon the Model Business Corporation Act. Corporations doing business in Maine may be organised in any of the United States. Corporations may be public or private. All corporations extend the benefits of limited liability to their shareholders.
Corporations in Maine are taxed at the entity level unless they are qualifying small business corporations which are taxed in a pass-through manner, similar to partnerships. Unlike partnerships and LLCs, corporations are governed by relatively rigid laws that can sacrifice flexibility in the absence of a shareholders’ agreement waiving those requirements. Managing corporations, particularly public corporations, can be very costly.
General guidelines for starting a business in Maine
1. Write a business plan with financial statements.
2. Decide whether your business is going to be a Sole Proprietorship, Partnership, Limited Liability Company or Corporation.
3. If you decide to incorporate, form a Limited Liability Company or a Partnership, you can obtain incorporation papers from the Maine Secretary of State, or from their website.
4. If you decide not to incorporate and wish to protect the name of your business, you may file a Trademark or Service Mark with the Secretary of State’s office.
5. Your company names must include the correct corporate or LLC identifier such as: Corporations: corporation, incorporated or an abbreviation. LLC’s: Limited liability company or an abbreviation.
5. If you operate a business with a business name that is different from your given name, you must register that name in the city or town where your business is located.
6. For those deciding to incorporate or if your partnership or proprietorship has employees you will need to register for a Federal Employer Identification Number (EIN). You must file this if you pay wages.
7.Register for Maine State Income Tax Withholding. File the Application for Tax Registration from the Maine Department of Lour, Central Registration Section.
8. Maine employers must report newly hired or rehired employees to the Maine Department of Human Services (DHS) within 7 days.