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Editorial 8 MIN READ

Maine in January 2020: an expensive certificate, a cheap upkeep

A $175 filing fee, an $85 annual report, and a state where LLC formation is pricier than the headline rate suggests

The Editors
Staff, Incorporator.org
8 min read Updated
Contents 7 sections
  1. The mechanics
  2. The statute behind the form
  3. Maintenance is the cheaper half
  4. Tax treatment, briefly
  5. Who this state actually makes sense for
  6. The filing-fee outlier, in context
  7. Sources

Maine LLC costs $175 to form and $85 a year to keep. The first number is among the highest LLC filing fees in the country. The second is modest. Together they describe a state that charges you on the way in and leaves you alone afterward, which is an unusual shape and worth understanding before you file.

This is a guide for someone forming in January 2020, written for the owner who has already decided Maine is in the mix and wants the mechanics, the statute, and the honest math.

The mechanics

You form a Maine LLC by filing a Certificate of Formation with the Secretary of State's Bureau of Corporations, Elections and Commissions. The form is MLLC-6. It asks for the name of the LLC (which must contain "Limited Liability Company," "Limited Company," or an abbreviation such as LLC, L.L.C., LC, or L.C.), the name and address of the registered agent, whether the LLC is a low-profit LLC or a professional LLC, and the signature of the organizer. The form is three pages including instructions. You can file by mail to the Bureau in Augusta. Maine does not offer online filing for a new LLC formation in January 2020; the paper filing is the default.

The fee is $175, payable to the Secretary of State. Expedited service costs an additional $50 for 24-hour turnaround or $100 for immediate processing; the routine queue runs five to ten business days depending on volume, and runs longer in March and April when tax-year-end filings crowd the desk. Rejections are common for name-availability reasons, so running the Bureau's online name-availability check before you mail is worth the two minutes.

Every Maine LLC needs a registered agent, called a "clerk" in older corporate filings but a registered agent under the LLC Act. The agent must have a Maine street address and be available during business hours to accept service of process. This is the standard arrangement; commercial registered agents in Maine price between roughly $50 and $200 a year, with the low end giving you a mailbox and the high end giving you a company that will catch service of process and forward it the same day. If you live in Maine you can act as your own agent, and plenty of operational owners do.

After the Certificate is accepted, you will need an EIN from the IRS (Form SS-4, online, a few minutes), an operating agreement (Maine does not require you to file one but the statute contemplates that you have one), and a bank account. Maine does not impose a publication requirement the way New York does, which saves you the several hundred dollars and the newspaper logistics.

The statute behind the form

Maine's Limited Liability Company Act lives at Title 31, Chapter 21 of the Maine Revised Statutes. The current Act dates to 2011, when Maine replaced its older LLC statute with a version closely patterned on the Revised Uniform Limited Liability Company Act (RULLCA). Sections worth knowing:

Section 1531 sets the formation mechanics and tells you that an LLC is formed when the Secretary of State files the Certificate. Section 1541 lays out the registered-agent duty and the consequences of failing to maintain one. Section 1521 establishes a duty of good faith and fair dealing among members, which Maine treats as non-waivable in core respects; this is tighter than Delaware's approach, which permits broad contractual waivers of fiduciary duties inside the operating agreement. If you are copying a Delaware-style operating agreement into a Maine LLC, read Section 1521 before you paste the fiduciary-waiver clauses that work in Wilmington.

Sections 1595 through 1604 cover dissolution and wind-up. Section 1601 spells out the administrative-dissolution path the Secretary uses when an LLC fails to file an annual report for two consecutive years. That is the compliance tripwire most owners hit if they hit any tripwire at all, and the reinstatement path is paved, not gravel: you pay the back reports, the late fees, and a reinstatement fee, and the state puts you back on the rolls.

Maintenance is the cheaper half

Maine requires an annual report from every LLC on file. The fee is $85, due June 1 every year, covering the calendar year in which it is filed. The state mails a postcard notice in the spring, and the filing itself is available online through the Secretary of State's annual report portal at www.maine.gov/sos/cec/corp/annual.html. The form asks for the registered-agent address, the principal-office address, and a list of members or managers; the factual universe is thin, which is how it should be.

Miss June 1 and the state charges a $50 late fee on top of the $85. Miss two consecutive years and administrative dissolution follows under Section 1601. Reinstatement is available, but by then the costs have compounded and you are explaining your good standing to a bank or a counterparty who has already noticed.

The arithmetic on maintenance, then, is $85 a year if you file on time, $135 if you miss the deadline but catch it inside the calendar year, and a several-hundred-dollar reinstatement if you let it run past the two-year administrative-dissolution line. For a solo LLC this is among the lowest annual-upkeep costs on the eastern seaboard. It is the formation fee that does the work of pricing Maine out of some comparison charts.

Tax treatment, briefly

Maine does not tax LLCs at the entity level in the way Texas taxes them with a franchise levy or California taxes them with an $800 minimum. Maine taxes the owners. For an LLC taxed as a disregarded entity or partnership, income flows through to the members and shows up on Maine Form 1040ME at graduated individual rates from 5.8% to 7.15% for tax year 2019 (the brackets for 2020 are indexed; the top rate stays at 7.15%). Maine's corporate income tax applies if you have elected C-corp treatment or formed as a corporation, at graduated rates from 3.5% to 8.93% depending on taxable income, under Maine Revised Statutes Title 36, Chapter 817.

Maine also collects a sales tax at 5.5% on most tangible goods and some services, under Title 36, Chapter 211. If you are selling across state lines, you will want to read the state's post-Wayfair economic-nexus guidance, which Maine Revenue Services updated after the 2018 Supreme Court decision; the current threshold is $100,000 in gross sales or 200 separate transactions into Maine in the prior or current calendar year. That affects every out-of-state LLC with Maine customers, not just the Maine LLCs.

Owner-operator S-corp elections work the way they work everywhere else: you file Form 2553 with the IRS, Maine accepts the federal election without a separate state form, and the reasonable-salary analysis governs what the owner runs through payroll. For a Maine owner with a services business clearing $100,000 or more of net profit, the S-corp math usually pencils; below that, the payroll-administration cost eats most of the SE-tax savings. Our LLC vs S-corp payroll-tax crossover piece walks the arithmetic, and the thresholds have not meaningfully moved since.

Who this state actually makes sense for

Three kinds of owner belong in a Maine LLC.

The first is an owner who lives and works in Maine. The extra $125 on the Certificate of Formation (Maine's $175 versus, say, Ohio's $99 or Kentucky's $40) is a one-time cost, and everything downstream of that (the $85 annual report, the pass-through income tax, the sales-tax registration if you sell goods) is priced in line with other mid-population states. For an operator based in Portland or Bangor, paying more to form at home is cheaper than forming out-of-state and then foreign-qualifying back into Maine, which is the trap we see operators fall into whenever they read too much Delaware content. Our choose a state when you don't live there piece covers that math.

The second is an owner of real property in Maine. If the LLC's purpose is to hold a cottage on Mount Desert Island, a rental on Peaks Island, or a woodlot in Aroostook County, Maine is where the asset sits and Maine is where the LLC belongs. Forming in Wyoming to hold a Maine lobster shack is a confusion, not a strategy; the foreign-qualification fee and the second registered agent erase whatever privacy advantage the Wyoming entity was supposed to provide, and the litigation will still happen in a Maine court under Maine law.

The third is an owner in Maine's resource economies: a commercial fishing operation running out of Stonington or Port Clyde, a forestry contractor working for one of the paper-industry successors in the north woods, a wild-blueberry grower in Washington County, an aquaculture lease-holder in Cobscook Bay. These are businesses where Maine licensing, Maine zoning, and Maine workers' comp are all Maine-specific conversations; the LLC paperwork should be too. The Department of Marine Resources and the Bureau of Forestry do not care that your holding company was organized in Delaware, but your insurance broker and your lender will, and the answers are easier when the entity and the activity share a jurisdiction.

Who Maine does not make sense for: the venture-backed startup that will need Delaware eventually, the holding vehicle that plans to raise from out-of-state investors, the two-person SaaS company with no Maine nexus other than one founder's summer house. For those the Delaware premium is small and the integration tax of non-Delaware formation is real. Start where you will end up.

The filing-fee outlier, in context

Maine's $175 formation fee sits near the top of the national range. In January 2020, Kentucky charges $40, Arkansas $45, Missouri $50, Ohio $99, Florida $125, and Wyoming $100. The upper neighborhood is thinner: Massachusetts $500 (an outlier), Tennessee $300 (with a per-member component), Illinois $150, California $70 for the LLC-1 plus the $800 annual franchise tax that everyone hates. Relative to that spread, Maine looks expensive on the Certificate and benign on the upkeep.

The policy logic, as best it can be reconstructed from legislative history, is that Maine funds its corporate-services infrastructure through formation fees rather than through franchise taxes or annual reports priced like tolls. The state gets its money at the door. Once you are inside, the ongoing obligations are small. Owners who will maintain the entity for a decade or more end up paying less total to Maine than to Delaware, which flips the conventional wisdom about which state is "expensive."

If you are forming this quarter and the business is local, mail the MLLC-6 with a $175 check and move on. If the business is anything expected to raise institutional capital, form in Delaware and foreign-qualify into Maine when you open the office; the $250 Maine authority-to-do-business fee is cheaper than a future conversion.

Sources

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