If you’ve decided to form a corporation or limited liability company (LLC) for your Maine company, you’ve already made one of the most important business decisions you can make. Another crucial decision is whether you’ll form your new business entity yourself, hire an attorney to handle it for you, or opt for a business formation company.
Completing the formation process on your own will always be the most affordable option, but is it the best one? On the other end of the spectrum, hiring a lawyer will provide you with expert assistance, but the cost can be prohibitive for many startups. Somewhere in between these options are online business formation services. These companies can provide professional help while also saving you hundreds or even thousands of dollars compared to paying a business attorney.
If you’d like to learn more about your options for LLC or incorporation services for your Maine business, you’ve come to the right place. In this article, we’ll walk you through a few of the best options for business formation services. Which one is the right choice for you?
Should You Form a Maine LLC or Corporation?
Before we get started, it’s probably a good idea to run down the advantages and disadvantages of these two entity types.
There are some common aspects of the LLC and the corporation, starting with the personal asset protection they both provide. Also known as limited liability, this personal asset protection ensures that if your business is sued, only the business assets are at risk. Meanwhile, your personal assets — like your house, car, personal bank accounts, investments, etc. — are protected by your LLC or corporation’s business structure.
In addition, LLCs and corporations both provide their owners with business name exclusivity. If you own and operate a sole proprietorship or general partnership, you will not have exclusive rights to your business name. Instead, if another company decides to use your name as its own, you won’t be able to stop them. In fact, they could even register your business name and gain exclusive rights to it, forcing you to come up with a new one.
Advantages of the LLC
In general, an LLC is quicker and easier to form than a corporation. LLCs usually need to provide less information for their formation documents than corporations do, and there are fewer steps in the process as well. For instance, LLCs don’t need to draft corporate bylaws, name officers or board members, hold initial board meetings, or issue stock. On the other hand, corporations need to do all of these things and more.
The LLC is also a less rigid business structure that allows its owners greater flexibility. The business structure of a corporation is inflexible, with many regulations dictating how the business should look and function. Meanwhile, LLCs have options for business management structure and ownership responsibilities that corporations simply don’t have.
Another even more valuable option LLCs have is that they can choose how they want to be taxed. Most LLCs are taxed as pass-through entities, which means the business itself does not pay taxes but the profits are passed through the LLC itself to its owners, who pay taxes on this money on their personal returns. However, LLCs can also opt to be taxed like corporations (either as a C corporation or an S corporation), giving them more options for taxation than a corporation has.
Advantages of the Corporation
Corporations have some advantages too, like the ability to sell stock. It’s quite difficult for an LLC to attract outside investments because it cannot issue stock. The vast majority of investors prefer stock as their investment medium, and it’s also very rare to see venture capitalists investing in LLCs. For these reasons, the corporation is a much better option for businesses looking to attract investments.
In addition, the corporation has been around for hundreds of years, while the LLC is a newer addition to the American business landscape. This means that the corporation has more established legalities, and also that it’s easier to expand into other states because the corporation’s structure is essentially the same no matter where you form it.
The Best Maine LLC and Incorporation Services
Now that we’ve helped you discern the differences between the LLC and the corporation, it’s time to discuss who you should hire to form your new business. There are dozens of companies providing online business formation services, and many of them offer nearly identical packages. How do you choose the right one?
We welcome you to check out our comprehensive guide to the best LLC and incorporation services available, but we’ll also discuss a few of our favorite options for Maine businesses right here.
#1 – ZenBusiness
We think ZenBusiness is the most well-rounded business formation service available today. It’s tough to beat the ZenBusiness pricing model, as this company charges just $39 to form your business and provide a full year of registered agent service. In addition, ZenBusiness has outstanding customer feedback, with more than 6,200 reviews available online and nearly all of them being positive in nature.
We also appreciate ZenBusiness because this company gives back to the communities it serves. ZenBusiness partners with Kiva.org to provide loans to low-income individuals, and also donates money to help build businesses owned by women and minorities. Doing good while providing helpful business services is the ZenBusiness way!
#2 – Northwest Registered Agent
You don’t need us to tell you that Northwest’s $39 entry-level price point is a good deal. What does Northwest Registered Agent do that makes them stand out? In short, Northwest has the best customer support we’ve ever experienced in this industry.
While most of its competitors have rather mediocre customer service departments, staffed by outsourced call centers, Northwest has highly trained professionals answering its phones at all times. These experts can help answer many tough questions that competing companies’ support teams won’t have a clue how to answer.
In addition, Northwest also offers its customers a year of registered agent service, just like Incfile and ZenBusiness. However, only Northwest locally scans every document it receives as your agent, while Incfile and ZenBusiness only scan the government forms they’re legally required to scan.
#3 – Incfile
Incfile is one of a very small handful of companies in this industry that will form an LLC or corporation with no service fees. All you need to do is pay your state’s fee and Incfile will take care of everything else. That’s not the only piece of good news we have regarding Incfile’s business formation services though.
Like ZenBusiness, Incfile also receives excellent feedback from its customers, with around 27,000 positive reviews available online and just a few negative reviews.
The main reason we rank Incfile behind ZenBusiness is that Incfile has more third-party offers and upsell attempts than ZenBusiness does. However, if you don’t mind promotional partnerships and upsells, Incfile could be a great fit for your new LLC or corporation.
Hiring an Attorney to Form Your Maine LLC or Corporation
If your business is especially complicated, or you simply prefer the peace of mind you get from having a qualified business attorney forming your entity, you could hire a lawyer instead of using a formation service. Hiring an attorney will definitely be far more expensive than using an online service, but you will receive the level of expertise and experience you can only get from a lawyer.
We took a look at a wide range of Maine business attorneys to help you find the best person to assist your new business. To find the best of the best, we consulted Avvo’s list of the top-rated business lawyers in Maine. Here are our top three choices in this state:
The Total Cost of Forming and Maintaining a Business in Maine
In addition to the costs of a business formation service or hiring an attorney (which are optional, as we’ve discussed), there are quite a few other required and optional expenses when forming and maintaining a Maine business. You cannot form an LLC in Maine without filing the Certificate of Formation, or the document that officially registers your business within the state. This filing costs $175 to submit. Meanwhile, if you’re hoping to form a corporation, you’ll file the Articles of Incorporation instead. Maine charges just $145 for the Articles.
No matter what entity type you’re forming, your business will need to file Annual Reports each year. This filing is pretty simple, but it keeps the state up-to-date about some basic but vital information about your business, such as your address and registered agent information. Maine charges an $85 fee for this filing.
Then, of course, there are taxes to consider. Like most states, Maine charges slightly different tax rates for corporations and pass-through entities. Maine’s tax rates are higher than some other regions, but they also aren’t the most expensive you’ll find. On top of that, you’ll also have to pay federal taxes, along with several others. For instance, if you have employees, you’ll pay unemployment insurance tax. If you sell goods or services, you’ll pay sales and use tax. Depending on the nature of your business, there could be other taxes required, so check with the Maine Department of Revenue to make sure.
Other than that, the other potential expenses only apply to certain businesses. These include things like professional or industry-specific business licenses and business insurance.
Frequently Asked Questions About Maine Business Formations
Before we wrap things up, here are the answers to some of the most commonly asked questions about forming LLCs and corporations in the state of Maine.
What are the business tax rates in Maine?
That largely depends on what your business taxation structure is. Businesses taxed as corporations will be taxed at rates ranging between 3.5% and 8.93%. Meanwhile, businesses taxed as pass-through entities pay rates between 5.8% and 7.15%. But state rates aren’t the only ones to consider. Of course, C corporations will also be taxed at the federal rate of 21% (and so will your LLC, if you choose to be taxed as a C corp), while LLC profits are still subject to federal personal income tax brackets.
How long does it take to form an LLC or corporation in Maine?
Business formation turnaround times vary considerably from state to state. Due to high volume, Maine currently takes 9-15 business days to process most formation paperwork. If you need faster processing, expediting is available. $100 guarantees same-day processing, while $50 gets a 24-turnaround.
How many small businesses are there in Maine today?
There are currently more than 150,000 small businesses currently operating in Maine, comprising all but 0.8% of businesses in the state. Approximately 57% of Maine workers are employed by one of these businesses.
What are the top official state resources for entrepreneurs?
The Maine Small Business Development Center is a fantastic resource for businesses at any stage of the game, but they’re especially helpful for entrepreneurs. With over 20 locations, the Center offers no-cost business advising, financial analysis, free templates, on-demand ecourses, and more.
What sets Maine apart when it comes to forming businesses?
Maine’s income taxes aren’t anything to write home about, but the tax situation is pretty fair in Maine, especially the sales tax, which is the 8th lowest in the country. Maine also places in the top 10 for early start-up survival rates. Pair that with fair fees for formation documents and annual reports, and Maine is a good place to put down roots.
What else can online business formation companies do?
Companies like ZenBusiness and Incfile don’t stop after forming your LLC or corporation. They also offer many other services that can help your business save time and hassle. For instance, these companies can provide registered agent service, annual report service, EIN acquisitions, and much more.
These three companies are our top choices for a reason. Among the dozens of reputable companies offering to form your LLC or corporation in Maine, ZenBusiness, Incfile, and Northwest Registered Agent clearly stand out from the pack. We love ZenBusiness’ well-rounded nature and dedication to giving back, and it’s impossible to complain about Incfile’s pricing model. Meanwhile, Northwest has outstanding customer support and premium registered agent service.
No matter which company you choose to form your new business — or if you opt to form your own, or hire an attorney, etc. — we hope this guide helped you iron out some of the wrinkles regarding LLC and incorporation services in Maine.