Thinking of setting up a business in Maine? Great choice! Maine offers a friendly environment for businesses, and with today’s online tools, starting a C corp is simpler than you might think. Forget the complex jargon and lengthy processes; with online incorporation, you’re just a few clicks away from getting your business rolling in the beautiful Pine Tree State.

With MaxFilings, you get transparent and all-inclusive pricing, covering every fee associated with Maine. You can be confident knowing there won’t be any unforeseen expenses.

Maine business climate

In 2017, small businesses in Maine played a pivotal role in the state’s economy, employing 293,872 individuals. This represented a significant 57.2% of the private workforce. Interestingly, the firms with fewer than 20 employees held the largest share of this small business employment. The entrepreneurial spirit was further evident in 2018 when the number of proprietors increased by 2.5% compared to the previous year.

In 2019, Maine’s small businesses were on a roll, creating a commendable 5,924 net jobs. Again, firms with fewer than 20 employees led the charge, contributing 4,843 net jobs. Conversely, firms employing between 100 and 499 employees made the smallest contribution, adding just 239 net jobs.

What is a Maine C corp?

A C corporation, commonly called a “C corp,” is a legal entity separate from its owners, offering them limited liability protection. This means that the owners, or shareholders, are typically not personally responsible for the company’s debts or liabilities. Shareholders of a Maine C corp don’t include the business’s earnings or costs on their personal tax forms.

Instead, the corporation handles its own taxes, often at rates that might be more favorable than for individuals. It is a standard business structure subject to corporate income tax on its profits. After paying these corporate taxes, any remaining profits distributed as dividends to shareholders are taxed again at the individual level, leading to “double taxation.”

Shareholders of Maine C corp benefit from a shield against the company’s debts, responsibilities, and potential legal repercussions. Safeguarding shareholders’ personal belongings is a pivotal reason why many Maine entrepreneurs opt to incorporate. Typically, shareholders are at risk only up to the extent of their investment.

Should the corporation face bankruptcy, its shareholders remain untouched by its debts. If the corporation is sued and found responsible, while its assets can be seized to settle the judgment, a shareholder’s personal assets like their home, car, or savings remain untouched. However, there are specific situations where this protection might not hold, such as if the corporation causes deliberate harm or is utilized for fraudulent activities.

Businesses considering the C corp structure can benefit from the state’s defined tax system. Maine’s corporate income tax rates, ranging from 3.50 percent to 8.93 percent, will be particularly relevant to C Corps operating within its borders. Moreover, the state’s broader business-friendly environment and the ease of online incorporation tools make Maine an attractive location for establishing and growing a C corp.

Why form a Maine C corp?

Maine C Corporations are ideal for those seeking limited liability, a structured business setup, potential tax advantages, the capacity to grow assets within the firm, and streamlined methods to garner funds. To establish a Maine C Corporation, specific official documentation is needed. MaxFilings can assist with this process. Begin your Maine C Corporation journey today.

Some points to consider when forming a Maine C corp

• Official documents must be filed with Maine to establish a Maine C corp.
• State filing fees are required.
• By law, a Maine C corp is seen as a distinct entity, separate from its owners (shareholders).
• A Maine C corp can accommodate an unlimited number of shareholders.
• Maintaining minutes from shareholders’ and board of directors’ meetings is mandatory.
• There may be restrictions on the types of business a Maine C corp can undertake.

Limited liability

• Shareholders of Maine C corp typically have limited liability up to their investment amount.
• They are not usually responsible for the corporation’s legal judgments, debts, or obligations.
• One key reason for incorporating in Maine is the protection of shareholders’ personal assets.
• Some exceptions exist where shareholders might be held accountable beyond their limited liability.

Raising capital

• Maine C corp can easily raise capital by issuing and selling stock compared to other business types.
• Various financial instruments can be used as evidence of interest in the corporation.
• Stock sales might fall under Maine and federal securities regulations.
• Transferring ownership is straightforward through the sale of corporation stock.

Taxation

• Maine C corps typically undergo audits less often than sole proprietorships and partnerships.
• They file tax returns and pay income taxes, often benefiting from lower tax rates.
• Compared to pass-through taxation, owners can potentially accumulate more profits due to lower rates.
• Shareholders of Maine C corps experience double taxation on dividends.
• Maine C corps can help lower owners’ self-employment taxes.

Owners and employees

• Owners working in Maine C corp qualify as employees, making them eligible for group insurance plans, retirement and profit-sharing plans, tax-advantaged stock options, and bonus schemes.
• Employees often favor corporations that provide stock options and bonuses.
• Unlike some business models, a Maine C corp’s existence isn’t affected by a shareholder’s death, giving it a sense of perpetuity.

Public perception

• The general public often perceives corporations as more established than sole proprietorships and partnerships.

How to form a Maine C corp

1. Appoint a registered agent

Every Maine C corp needs to appoint a registered agent in accordance with 13-C ME Rev Stat § 511 (2019). This agent can also be referred to as a “clerk,” “commercial clerk,” or “noncommercial clerk.” While it’s not mandatory to hire an external registered agent, if you decide to, it’s beneficial to choose one who can list their address on your articles to maximize privacy.

2. Naming the corporation

Starting a corporation means you’ve likely already considered a name. To ensure your chosen name is available, visit Maine’s Corporate Name Search. The name should not be misleading and must be distinct enough to stand out from existing Maine businesses. Although not explicitly stated in the Maine Revised Statutes, it’s common practice to include designations such as “Corporation” or “Incorporated” in the name.

3. Filing the articles of incorporation

With a registered agent in place and a name chosen, you can proceed to file the Maine Articles of Incorporation. 

Here’s a breakdown of the requirements:

• Corporate name: Make sure your chosen name aligns with state regulations.
• Professional services: If you’re forming a professional corporation (like for doctors or lawyers), specify the services and choose an appropriate designation (e.g., “Professional Corporation” or “PC”).
• Benefit corporation: These are corporations aimed at generating a public benefit (societal or environmental). They have specific legal requirements in Maine.
• Clerk details: In Maine, the term “clerk” refers to the registered agent. Provide details of the registered agent, ensuring the correct category (commercial or noncommercial) is chosen.
• Clerk’s consent: An affirmation that the chosen registered agent has agreed to serve.
• Shares: Detail the number of shares for each class or series. If there are multiple classes or series, provide an exhibit describing each.
• Directors: Choose if there will be a board of directors or if shareholders will manage the corporation.
• Optional director information: This section is optional and can specify details about the number and liabilities of directors.
• Preemptive rights: This option allows shareholders first rights on unissued shares. Maine corporations default to no preemptive rights unless specified.
• Additional provisions: Any additional terms or conditions, like voting rights policies or corporation duration, can be listed here.
• Maine incorporator: The person authorized to submit the Articles of Incorporation. They provide their name, address, and signature to validate the document.

Remember, the official filing can be done via mail, in person, or through the Secretary of State’s mailbox. The filing fee is $148. Once the document is processed, your Maine C Corporation is formally established.