There are many good reasons to start a business in Maine. You might want to create a thriving enterprise from scratch, you might want to build wealth and retire early, or you just might want more autonomy in your daily schedule. But regardless of your motivation, you’ll need to make sure your business is structured correctly and properly registered before you can begin operations. You could hypothetically start a business in any state, so why would you choose Maine? There are currently more than 145,000 small businesses in Maine, making up 99.3 percent of all Maine businesses. Together, these companies employ more than 284,000 Maine residents or nearly 57 percent of Maine’s total workforce. These businesses are major economic driving forces, responsible for 4,323 net new jobs in 2018 alone.
Steps to getting a Tax ID (EIN) Number and Forming a Business in Maine
- Forming a Business in Maine
- Federal Tax ID (EIN) Number Obtainment
- Maine State Tax ID Number
- Localized Licenses and Permits in Maine
The first big decision most new entrepreneurs face is how to structure their budding business. The ideal approach is to choose one of these main types of business structures:
- Sole proprietorships and partnerships. Sole proprietorships are the simplest type of business to start, and they can be highly beneficial for new business owners looking to start a small, single-person operation. They’re straightforward to start, easy to manage, and have straightforward taxes; you’ll just pay taxes as an individual on any money you make in the business. However, there’s no liability protection, which means you’ll be personally responsible for every business decision you make and any debts you need to take on. Partnerships work almost identically, except they involve two or more people.
- Limited liability companies (LLCs). The next step up in complexity are limited liability companies (LLCs). They’re treated as separate legal entities, so they can take on debts of their own and protect their owners and shareholders from liability issues. They’re also treated as pass-through entities; they aren’t taxed on the income they generate. Instead, you’ll be taxed as an individual on any money you take from the business, including salaries and profits. LLCs in Maine will need to apply for an LLC Tax ID Number as well as file an annual report.
- Corporations. Then there are corporations, including S-corporations and C-corporations. Corporations offer the possibility of issuing public shares as a way to raise funds, so they’re necessarily more complex. They’re harder to start and are subject to far more rules and regulations. Corporations offer much more liability protection, existing as separate entities that shield owners and shareholders. However, they’re subject to double taxation; they must pay a corporate income tax rate as well as having shareholders pay taxes on money they make as individuals. The corporate tax rate in Maine is somewhat complex, with four different tax brackets. The rate is 3.5 percent for income up to $350,000, 7.93 percent for income between $350,000 and $1,050,000, 8.33 percent for income between $1,050,000 and $3,500,000, and 8.93 percent thereafter.
There is no BEST company structure, so choose the one that best aligns with your business’s goals and inherent characteristics.
Most Maine businesses need a federal tax ID number, sometimes referred to as an employer identification number, or EIN. This is a 9-digit unique, identifying number similar to a social security number, but for your business. It’s given to you when you register your business with the federal government. You’ll need one if your business has multiple members, like in a partnership, LLC, or corporation, and if you’re going to hire employees. You’ll also need an EIN if you’re applying for a business license or permit, if you’re seeking a business loan, or if you’re going to open a business bank account.
If you use our federal tax ID number obtainment services, you could get your EIN in less than an hour. All you have to do is fill out a questionnaire about your business online. When you’re done, you’ll receive your tax ID via email in an hour or less.
Your business may also be required to get a Maine state tax ID number. This unique identifier applies at the state level, but is used for different purposes than your federal tax ID. You’ll need one if you’re going to hire any Maine employees, if you’re selling taxable goods and services in Maine, or if you’ll owe excise taxes, which apply to gasoline, tobacco, alcohol, and other regulated goods.
Make sure you get your federal tax ID number before applying for a Maine state tax ID. When you’re ready, make use of our Maine state tax ID number obtainment services. Answer a few questions about your business using our online form, and you’ll receive your state tax ID in just 4 to 6 weeks.
In Maine, you may need a general business license to operate, depending on your city and state. You may also need a license, permit, or other type of certification to operate, depending on your industry and where you’re going to operate. Because these demands can vary tremendously from region to region, and because there are literally thousands of potential permits you could need, it’s impossible to comprehensively list them here. Instead, it’s in your best interest to contact your local Chamber of Commerce to see which forms of documentation you’ll need. Just make sure you have your federal tax ID in place and ready to go before you apply.
Maine’s economic growth lately has been somewhat volatile. While the total economic output is almost constantly growing, there has been an ebb and flow in recent years. Still, with the sheer number of businesses and economic opportunities in the state, there are ample economic opportunities and incentives for entrepreneurs of almost any industry.
The sooner you can start your business, the sooner you can start making money. Get your federal tax ID and state tax ID faster by using our federal tax ID number and Maine state tax ID number obtainment services.