How to Form a Professional LLC in Maine

Last updated on: October 21, 2021

It’s pretty common when the licensed professionals deem it more beneficial, both legally and financially, to open a Professional LLC in Maine, or you may call it a PLLC, to provide services related to their professional skills.

Business people in Maine usually like this model because of the insulated nature of its limited liability, which is reinforced by certain operational benefits a typical PLLC brings to the table.

Hence, when you are looking into options to establish a PLLC in Maine with your colleagues, this guide will be a perfect starting point for learning the necessary information.

What Is a Professional Limited Liability Company in Maine?

Frankly speaking, a Professional Limited Liability Company is not too different from a standard LLC from the perspective of the legal mechanisms behind its launching and potential independence of business operation, which also come with it.

A traditional LLC in Maine is, above all, valued for the so-called independence of its business operations seen in other companies while functioning within the framework of a corporate venture without actually being registered. Thus, an LLC business model allows for greater adaptability and personalization in line with its respective ownership or partnership structure. Additionally, it can be run by a single owner or a group of partners in Maine with shared interests as well as responsibilities. 

What really separates a Maine Professional LLC as an entity from a normal LLC is the restricted nature of the ownership, meaning that only people, whose occupational titles have undergone licensure, are allowed to set up and operate such an organization in the state of Maine.

Maine allows PLLC partnerships for a number of licensed professionals, including dentists, surgeons, optometrists, physicians, osteopathic physicians, physician assistants, podiatrists, advanced practice registered nurses, registered nurses, chiropractors, veterinarians, accountants, attorneys, and all individuals “required by state law to have a license as a precondition to engaging in that person’s profession.”

Creation guidelines in Maine are firmly outlined, restricting Professional LLC membership by their licensing type, meaning that all members of the PLLC enterprise are obligated to hold licenses for operation in a single occupational field identical to the one designated in the company’s professional designation.

Therefore, to find out about more issues intrinsic to the Maine PLLC, let’s dip into the key aspects of this business model.

Limited Liability: How Does It Work?

Like a standard limited liability company, Professional LLC in Maine is specifically geared to protect the personal assets of the partnership group. Indeed, unlike the general partnership structure, which obligates every member to claim the business transactions on their personal tax returns, a Maine Professional Limited Liability Company separates these two notions and prevents the foreclosure of the personal property in a suit against the partnership itself.

It’s clearly preferable to never get involved in a lawsuit. Nevertheless, if it happens, Maine Professional LLC members will only face legal actions relating to the business assets of the organization. Keep in mind that debt collection, as well as civil lawsuits, are not about malpractice, which is a bit more serious and, in addition, can involve personal assets (when an owner is sued for misconduct or negligence).

What About the Types of PLLC Taxation?

The taxation procedure for Maine Professional LLCs tends to be more flexible at its core to accommodate the business owner’s needs. Whilst some corporate ventures can give you more options for taxation to work with, PLLCs are a little more accommodating. 

For instance, the mandatory Maine LLC tax can be filed in several ways in line with the company’s goals, as well as the methods of the partnership operations.

Pass-throughs

One of the most widespread Maine PLLC taxation practices is submitting it as a pass-through (or flow-through) business tax, which is often the case with an LLC, a sole proprietorship, an S-corporation, and also a partnership.

In accordance with its name, this type of LLC tax treatment allows an entrepreneur to avoid the typical steps involved with CIT and instead pass through to the personal income tax of each of the Maine LLC members. All profit shares are within the margins of taxable income as filed in individual tax returns of the PLLC owners, meaning that the company itself is exempt from paying tax.

However, there is one more step to this process: if a Professional LLC member files their tax returns as “disregarded ventures,” they are also required to pay the Self-Employment Contributions Act tax, which is deducted from the total revenue. As such, the SECA tax rate is set at 15.3% calculated from individual net earnings.

S-corporations

A firm using the S-corporation designation is eligible for taxation similar to that of flow-through businesses in Maine. Due to the nature of the IRS election (Form 2553), an S-corporation is still excused from CIT much like a general partnership in this state. Net earnings are filed through the Supplemental Earnings and Loss IRS form, also known as a Schedule E form, which is used by entrepreneurs in Maine as a part of the individual tax filing.

Unlike pass-throughs, business owners of an S-corporation organization in Maine are exempt from the SECA tax. Instead, the taxation procedure involves the FICA tax, which supports the Social Security program.

C-corporations

This structure is what most business people in Maine think of when they talk about a corporation as a legal entity. It’s also the most popular type of corporation in America. One of the main differences between flow-throughs or S-corporations and C-corps is the taxation system. All shareholders (owners) of a C-corp are subject to individual taxation in addition to the CIT imposed on the Maine organization as a whole. That so-called double taxation is actually what makes it less attractive to Maine PLLC owners who try to avoid choosing it as their corporate structure.

Forming a Maine PLLC

Given that the Professional Limited Liability Company establishing procedure has not been standardized nationally, the ins and outs of its registration can be different in every state. The formation of Maine Professional LLCs is actually not too dissimilar from that of regular LLCs in this state with a couple of key differences in the process. 

Step 1: Choose a Name For Your Professional LLC in Maine

Finding a proper business name for your Maine Professional LLC is the first step you should take. Keep in mind that the name of a Maine PLLC could be anything as long as it includes its designation type, though the exact phrasing can vary.

As such, a Professional LLC name may contain the words connected with a Professional Limited Liability Company. These could be:

  • Professional Association/Limited Liability Company;
  • P.A.;
  • Limited Liability Company, Chartered.

In addition, there is one point we should mention. This question is about clarity, meaning selecting a name, which will describe the goal of your enterprise in Maine, as well as the type of services the company can offer. Thus, a surgery-related PLLC may include certain words associated with such services as “rhinoplasty,” “surgical procedure,” “neurosurgery,” etc.

The list of desired names for your PLLC in Maine should always be referenced against the existing organizations in the state. This can be checked with the name search tool provided by the Secretary of State website.

Step 2: Assign a Maine Professional LLC Registered Agent

Each Maine Professional Limited Liability Company has to designate the services of a registered agent to facilitate the legal paperwork and communication between state agencies and the venture. As a third-party conciliator, the PLLC registered agent will handle important documentation from the state, including papers involved in potential legal action against the business.

If you wonder whether it is possible to designate yourself or any other individual to operate as a registered agent, we can state that you can choose that option. However, you should realize that there are availability requirements (be available during normal business hours to handle business documents). Therefore, it may seem like a challenge.

Perhaps, a more preferable course of action for you will be enlisting the help of an online registered agent service. Some LLC formation companies also offer the services of a registered agent, often for free for a limited amount of time.

Among the best formation agencies offering registered agent services in Maine are Northwest Registered Agent or IncFile, which are very popular among industry specialists.

Step 3: File the Certificate of Formation To Register a Maine PLLC

The mandatory documentation involved in the legitimate formation of a PLLC in Maine is known as the Certificate of Formation.

The form has to be filled out according to the requirements and contain the following information:

  • Company’s legal name and the official date of its formation; 
  • A statement designating the entity to be a PLLC;
  • PLLC registered agent info (name and legal address in Maine);
  • Detailing the services offered by the business venture;
  • Name and address of the organizer/individual filing the form;
  • Submission date.

Once filled out as per legal rules, the documentation should be submitted to the Secretary of State together with the $175 application fee. The submission can be done in person or via mail.

Applications are usually reviewed within the first 7-10 business days after filing, though it is possible to speed up the processing for an extra fee. One-day and immediate processing can be secured for $50 and $100 respectively.

Step 4: Prepare an Operating Agreement For Your Maine Professional LLC

Although Maine does not obligate the Professional LLC organizers to provide an LLC Operating Agreement, it is still recommended you create one for the internal purposes of your business.

At its core, the paper is intended to establish fundamental rules of managerial structure, internal operations, as well as financial details (like allocated profit shares among members) of your Maine PLLC.

A Maine Operating Agreement could be as detailed as your LLC partnership wishes, though it’s better to cover at least a few of the following areas:

  • Assigned business profits and losses;
  • Individual liability of the members and their legal as well as voting rights;
  • Detailing the ownership interest allocation;
  • Owner-operated or manager-operated classification;
  • Operational obligations;
  • Guidelines for possible restructuring, dismissing, or replacing a partnership member, company dissolution, etc.

Step 5: Acquire an EIN For a Maine Professional LLC

An Employer Identification Number works similarly to a personal SSN number, except this nine-digit code is given to a legal entity doing business.

Getting an EIN for a Maine Professional Limited Liability Company should not be overlooked, if you want to be able to issue payments (salaries or one-time compensation), file tax returns, open a business bank account, or provide services in Maine.

You might find it daunting, but receiving an EIN number is fairly simple. The IRS website supports online filing options via EIN Assistant. There is no need to pay any filing fee when you submit the application. Moreover, you will get your EIN almost immediately.

Step 6: Obtain Licenses and Oversee Further Maintenance 

Completing the Maine Professional LLC formation documentation doesn’t mean your work here is over. The next stage in launching a PLLC in Maine involves relevant licensing provided it’s required by the state for your Professional LLC to legally operate in the chosen professional area.

Certain professional fields in Maine require special permissions, which allow entrepreneurs to provide services legally, both on state and municipal levels. To see whether your venture is subject to licensing, check this convenient guide found on the state’s website or the local page of the relevant municipality. 

Maine entities of this type are normally subject to unemployment tax with registration available online via this link, as well as sales and use tax, and retention tax, the application for which can be done right here.

To Sum Up

Going through all the required phases to start a Maine PLLC entails some paperwork and legal knowledge.

If you do trust your own power and resources, it is completely permissible to handle the Professional Limited Liability Company establishment by yourself, though seeking qualified assistance in this endeavor will be more sustainable. An accountant may oversee that each step of the creation process complies with state law, allowing your PLLC in Maine to operate securely and lawfully.

Senior Business Tax Writer, etc
Jean Wilson Murray
https://bestllcservices.co/
(323) 789-5289
Senior Business Tax Writer, etc
Jean Wilson Murray

In this IncFile vs ZenBusiness review, we're going to compare two of the most popular LLC formation services based on pricing, features, and drawing out differences and similarities to let you see which is most suitable for you and your business.

You can learn more about @Mike here.

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