How to Form a Professional Corporation in Maine


Steve Goldstein
Steve Goldstein
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Form a Professional Corporation in Maine

Are you considering starting a professional corporation in Maine? Congratulations! Establishing a professional corporation is an excellent choice for entrepreneurs and professionals alike who seek to benefit from a business structure that provides limited liability protection, tax advantages, and enhanced credibility. However, navigating the process of forming a professional corporation in Maine can be daunting.

This article aims to provide a comprehensive guide on how to form a professional corporation in Maine, covering everything from understanding the basics of this business entity to the essential steps and requirements you must comply with to launch your new venture successfully. Let’s dive in and explore the ins and outs of forming a professional corporation in Maine!

What is a Professional Corporation in Maine?

A professional service corporation (PSC), sometimes called a professional corporation (abbreviated as PC), is a type of organization authorized by state law to allow owners of particularly licensed professions in Maine. The owner of a professional corporation is responsible for their own negligence or misconduct, but they are not held personally accountable for the actions of other owners. PC or P.C. is a regularly used abbreviation to identify professional corporations.

PCs and LLCs provide personal asset protection; that is, the personal assets are free from business debts. However, they do not have similar tax benefits. There is no secret formula as to which type of business structure is better than the other. It solely depends on the requirements of your business. However, forming an LLC is easier than setting up a PC in Maine.

LLCBuddy Editorial Team

Unlike other types of corporations, owners of Professional Corporations get two types of citizenship. One is where they incorporated the corporation, and the other is where they conduct the business. This benefit is not available for other types of corporations. You can form a free LLC in Maine if you hire a professional service that provides LLC formation at $0.

How to Form a Professional Corporation in Maine

To form a Professional Corporation for the professional service you provide, you must follow a few steps that include verifying if you are qualified for a PC, naming your business, hiring a Resident Agent, filing the Articles of Incorporation, outlining an operating agreement, requesting for an EIN, opening a bank account, getting a business license, and filing for an annual report and taxes.

Step 1: Verify If You Are Qualified for a Professional Corporation

In forming a professional corporation in Maine, you should know if you are qualified. There are specific professions that are allowed to form a professional service corporation, including-

  • Doctors
  • Architects
  • Engineers
  • Accountants
  • Lawyers and others

You should be qualified to have a license to provide your service. In most cases, once you have graduated with your studies, passed the exam, and got your license, you may now form a professional corporation. However, if you work in an industry that doesn’t offer a license or professional certification, you should consider forming a corporation or limited liability company.

Step 2: Name your Professional Corporation in Maine

After you have decided on the idea to form a professional corporation in Maine, deciding the name for your corporation is significant. There is a complete guide on Maine LLC name guidelines for you to have a proper business name. Here are some regulations you must follow while naming your professional corporation.

  • The business name should have the word PC, frequently followed by the name of the principal owner in place of Inc or LLC. (Example. John Doe, MD, PC)
  • No confusion with a government entity name.
  • A unique name is needed with no match
  • Limit of restricted words that need a license.

In Maine, if you do not wish to file your professional corporation right away but want to hold the name that you have decided on, then you can reserve your corporation name for 120 days. To keep the name, you must file a name reservation application with Maine Secretary of State.

A professional corporation, professional association, service corporation, or professional service corporation must be present in the name if it doesn’t already. You might opt to register your business under a different legal name if your preferred name isn’t available. Once you have chosen a name, you can submit an application for a DBA (doing business as). In this manner, you can choose any name you desire to run a clinic or law firm.

Step 3: Choose the Maine Resident Agent

The next step in forming a professional corporation is hiring the Maine Resident Agent, a person that accepts legal paperwork on behalf of your business. This person or business will receive important tax forms, legal documents, all notices of lawsuits, and other official government correspondence in Maine. Forming a professional corporation for your service will be easier if you have Resident Agent in Maine.

Alternatively, you can serve as your own Maine Resident Agent if you have the time. However, you must stay compliant to avoid missing any important documents from Maine.

Step 4: File the Articles of Incorporation in Maine

After you hire a Maine Resident Agent to form a professional corporation, the next step is to file the Maine Articles of Incorporation. In writing the Articles of Incorporation, the business name, owner’s contact information, corporation address, and Resident Agent contact information should be written. You should also include the names of all co-owners. All owners have to prove they have the proper license to practice the specific profession they intend to.

Filing the Articles of Incorporation in Maine may be done with two ways, by mail and in person drop off. The Articles of Incorporation fee may vary from different states. However, in Maine, it costs $145 for filing in person and by mail. There’s no online filing available.. For offline filing, Send the form by mail or drop it off to Secretary of State, Division of Corporations, UCC and Commissions, 101 State House Station, Augusta, ME 04333-0101..

Step 5: Write an Operating Agreement in Maine

An operating agreement is a document that contains all of your company’s organizational details. It is not required to draft an operating agreement in most states. Yet, having one as an internal document is strongly advised. The Maine operating agreement includes information like-

  1. About Business
  2. Members and management
  3. Capital contribution
  4. Profit Distribution
  5. Change of membership
  6. Dissolution

Step 6: Designate the PC Board of Directors in Maine

The next step is to appoint the initial board of directors in your PC in Maine. All the initial directors must submit their details to the owner. The owner must keep the records and submit them in accordance with the Maine SOS. When writing the By-laws, as a shareholder and owner, you must make sure there is a point mentioned about appointing a new director later.

Step 7: Write the Corporate Bylaws

Now that you are done forming the team of the board of directors, the next step is to draft corporate bylaws. Corporate bylaws are the basic rules that control a corporation. It includes the organization’s structure, processes, laws, and rules. As a result, all personnel, managers, and corporation members must obey the firm’s rules.

In creating corporate bylaws, you should include the following on how the decisions will be made.

  • The responsibilities are given to each officer.
  • How will judgments in business be made?
  • Where and when are the annual shareholder meetings?
  • The minimum number of shareholders required for decision-making.
  • Location and timing of dividend payments.

Step 8: Hold the First Board of Directors’ Meeting

After drafting the corporate bylaws, gather all the board of directors for the first meeting. This meeting will be finalized by appointing directors to manage the company’s daily operations, approve the bylaws, choose the corporation’s accounting year, and approve the stock issue. All board meetings should have minutes taken and stored with the company’s records.

Step 9: Request an EIN in Maine

After documenting the operating agreement, you should get or request an Employer Identification Number (EIN). An EIN will serve as the tax ID for your professional corporation. EIN can be obtained from the Internal Revenue Service (IRS). It is a 9-digit number similar to Social Security Number. EIN, however, is distinct from SSN. It is only used for business-related activities, particularly for submitting general taxes. The form must be completed and uploaded to the IRS website.

The application of an EIN in Maine can be through the following:

  • Apply Online- The online EIN application is the preferred method for customers to apply for and obtain an EIN.
  • Apply by Fax- Taxpayers can fax the completed Form SS-4 application to the appropriate fax number), after ensuring that the Form SS-4 contains all of the required information.
  • Apply by Mail- The EIN application Form SS-4 can be filed via mail. The processing time frame to receive the mail is 4 weeks.
  • Apply by Telephone-International Applicants – International applicants may call 267-941-1099 (not a toll-free number) from 6 a.m. to 11 p.m. (Eastern Time) Monday through Friday to obtain their EIN.

After you have your EIN number, you can benefit in a number of ways. It will give your professional corporation the final advantage necessary to operate at full capacity without encountering legal or judicial issues.

Step 10: Open a Bank Account and Prepare for Taxes

Once you have filed and received your Employer Identification Number, you should open a bank account since you will use this account for yourself, your clients, and your employees.

Your business dealings in Maine might be simpler by having a US business bank account because it boosts your company’s legitimacy and liquidity. For firms other than sole proprietorships, most banks demand an EIN to create a business bank account. Also, keeping separate finances helps you avoid combining personal and professional finances. Also, having an EIN makes tax preparation easier. With a professional corporation, you can anticipate paying employment and corporate taxes.

Step 11: Get a Business License in Maine

Before your professional corporation operates in Maine, you need to have a business license first. A business license is a formal document issued by the state government agency that allows you to operate your business in the geographic region that that agency governs. In Maine, business license and permit costs depend on the business’s nature and type. You must check with the local authorities if any special licenses or city-based permits are needed.

Step 12: File Your Taxes in Maine

Finally, you are down to the last step. After getting a business license and being ready to operate, do not forget to file your taxes first. You should start paying taxes quarterly as soon as possible to avoid a large tax bill. Each state has different tax requirements. Go through the Maine classification of taxes for the taxes an LLC in Maine has to pay.

Important Information

Maintaining Professional and Business License in Maine

Now that you have established your professional corporation, you must maintain or renew your professional license every now and then. Even if your business is established but you don’t have a valid license to operate, your business is irrelevant. And, even if your professional license is still valid for a year or two, but your business license is already expired, it is still irrelevant.

Make time to check the status of your licenses at least once per year. Then, you can keep from missing anything significant. If there are any issues, you can address them.

Filing an Annual Report in Maine

In Maine, you will be required to submit a report each year. The owners’ and Resident Agent’s names and contact details are listed in the annual report. Also, it should include all of your yearly financial activity. You must submit one yearly in Maine, and you can do it yourself or hire someone else to handle it. Everything must be precise and up to date.

Advantages of Forming a Professional Corporation in Maine

A professional corporation takes a lot of time to process and pursue. However, with the help of the Maine Resident Agent, everything will become easier. In fact, there are advantages that will help you form a professional corporation in Maine.

  1. Limited Liability: The biggest advantage of setting up a professional corporation is that the owners are not held personally responsible for the debts and obligations of the company. This indicates that only the company’s assets will be confiscated to settle claims and creditors if the business is sued or declares bankruptcy. Additionally, this protection exempts corporate owners from being held accountable for other owners’ reckless or criminally negligent acts.
  1. Tax Deductions: Similar company expenses, such as employee fringe benefits, startup and operating costs, and equipment purchases, can be written off by professional companies in the same ways they can be for other kinds of firms. However, there are several tax deductions professional corporations can take advantage of that other types of businesses can’t. For example, the salaries and bonuses paid to owners and employees are tax-deductible.
  1. Retained Earnings: Professional corporations can keep a portion of their profits under the corporate tax system to grow their companies.

FAQs

What is a Professional Corporation in Maine?
A Professional Corporation in Maine is a business structure that combines the limited liability of a corporation with the professional capabilities of its owners.
What are the benefits of forming a Professional Corporation in Maine?
The main benefits of forming a Professional Corporation in Maine include protecting your personal assets from business losses, obtaining business financing more easily, and building credibility for your business.
What types of businesses can form a Professional Corporation in Maine?
In Maine, Professional Corporations are available for certain types of businesses, including doctors, lawyers, accountants, engineers, dentists, financial advisors, and other licensed professionals.
Who can own a Professional Corporation in Maine?
The owners of a Professional Corporation in Maine must be licensed professionals in the same field. They can be individuals, other corporations, or LLCs.
What are the requirements for forming a Professional Corporation in Maine?
The requirements for forming a Professional Corporation in Maine include filing articles of incorporation with the Maine Secretary of State, obtaining a Certificate of Authority from the Maine Department of Professional and Financial Regulation, and obtaining a federal employer identification number.
What documents are required to form a Professional Corporation in Maine?
The documents required to form a Professional Corporation in Maine include Articles of Incorporation, a Certificate of Authority, a federal employer identification number, and any other documents required by the governing professional board.
How much does it cost to form a Professional Corporation in Maine?
The cost to form a Professional Corporation in Maine varies depending on the governing professional board, but typically includes filing fees, attorney’s fees, and other applicable fees.
How long does it take to form a Professional Corporation in Maine?
It typically takes about one to two weeks to form a Professional Corporation in Maine, depending on the governing professional board.
What taxes does a Professional Corporation in Maine need to pay?
A Professional Corporation in Maine needs to pay the same taxes as any other business, including federal, state, and local taxes.
What is the legal process for dissolving a Professional Corporation in Maine?
The legal process for dissolving a Professional Corporation in Maine involves filing Articles of Dissolution with the Maine Secretary of State, as well as any applicable professional board. The process also requires closing accounts with the IRS and other applicable agencies.
Is there a minimum amount of capital required to form a Professional Corporation in Maine?
No, there is no minimum amount of capital required to form a Professional Corporation in Maine.
How often does a Professional Corporation in Maine need to file a report?
A Professional Corporation in Maine needs to file an Annual Report with the Maine Secretary of State each year.
Does a Professional Corporation in Maine need to have a board of directors?
Yes, a Professional Corporation in Maine needs to have a board of directors, typically comprised of the owners of the corporation.
Can a Professional Corporation in Maine own property?
Yes, a Professional Corporation in Maine can own property, including real estate, intellectual property, and other assets.
Does a Professional Corporation in Maine need to keep formal records?
Yes, a Professional Corporation in Maine needs to keep formal records, including minutes of meetings, financial statements, and other documents.
Does a Professional Corporation in Maine need to register with the state?
Yes, a Professional Corporation in Maine needs to register with the Maine Secretary of State and obtain a Certificate of Authority from the Maine Department of Professional and Financial Regulation.
What is the difference between a Professional Corporation and a Limited Liability Company in Maine?
The main difference between a Professional Corporation and a Limited Liability Company in Maine is that a Professional Corporation is specifically designed for licensed professionals, while a Limited Liability Company is a general purpose business structure.
What are the rules for naming a Professional Corporation in Maine?
The rules for naming a Professional Corporation in Maine require that the name of the corporation include the words “Professional Corporation” or “P.C.”, as well as the name of the profession.
Are there ongoing reporting requirements for a Professional Corporation in Maine?
Yes, a Professional Corporation in Maine needs to file an Annual Report with the Maine Secretary of State each year.
How do I know if a Professional Corporation in Maine is right for my business?
The best way to determine if a Professional Corporation in Maine is right for your business is to consult with a professional business advisor.
Are there any restrictions on how a Professional Corporation in Maine can operate?
Yes, a Professional Corporation in Maine is subject to restrictions set by the governing professional board, such as restrictions on ownership and services offered.
What happens if I don’t follow the rules for operating a Professional Corporation in Maine?
If you don’t follow the rules for operating a Professional Corporation in Maine, your corporation may be subject to fines and other penalties.
Do I need to appoint a registered agent for a Professional Corporation in Maine?
Yes, a Professional Corporation in Maine needs to appoint a registered agent to receive service of process and other official documents.
What is the process for amending the Articles of Incorporation of a Professional Corporation in Maine?
The process for amending the Articles of Incorporation of a Professional Corporation in Maine involves filing Articles of Amendment with the Maine Secretary of State and obtaining approval from the governing professional board.
Does a Professional Corporation in Maine need to hold meetings?
Yes, a Professional Corporation in Maine needs to hold meetings of the board of directors, shareholders, and other applicable entities.
How does a Professional Corporation in Maine keep its records?
A Professional Corporation in Maine needs to keep its records in a secure and organized manner, typically using a record-keeping system such as QuickBooks or a spreadsheet program.
What is required to form a Professional Corporation in Maine?
To form a Professional Corporation in Maine, you must file Articles of Incorporation with the Maine Secretary of State. The Articles must include the corporate name, agent for service of process, duration of the corporation, and the purpose of the corporation.
Are there any special rules in Maine for forming a Professional Corporation?
Yes, in Maine, a Professional Corporation must include the words “Professional Corporation” or the abbreviation “P.C.” in its name. The corporation’s activities must be limited to those of a profession listed in the Articles of Incorporation.
What are the fees associated with forming a Professional Corporation in Maine?
The filing fee to form a Professional Corporation in Maine is $175. Additionally, the corporation must pay a $75 franchise tax.
Is it possible to form a Professional Corporation online in Maine?
Yes, it is possible to file Articles of Incorporation online in Maine. The online filing system is available on the Maine Secretary of State website.
Who is eligible to form a Professional Corporation in Maine?
Any individual, partnership, association, or corporation that is lawfully engaged in the practice of a profession may form a Professional Corporation in Maine.
What other requirements must be met to form a Professional Corporation in Maine?
Professional Corporations in Maine must also submit a Franchise Tax Payment Form and a Certificate of Acceptance. Additionally, the corporation must obtain a federal employer identification number (EIN) and a corporate surety bond.

Also Read

Why Maine Professional Corporation is So Important

One of the key reasons why Maine Professional Corporation is so important is the protection it provides to its shareholders. By creating a separate legal entity, professional corporations shield their owners from personal liability for business debts and liabilities. This means that individual shareholders are not personally responsible for the company’s obligations, such as lawsuits or debts, thus safeguarding their personal assets from potential risks associated with the business.

Moreover, professional corporations offer a sense of professionalism and credibility to the businesses operating under this structure. Being recognized as a professional corporation indicates that the business has met certain standards and requirements set forth by Maine state laws. This status can enhance the reputation of the business in the eyes of clients, partners, and other stakeholders, ultimately leading to increased trust and credibility in the marketplace.

Another benefit of Maine Professional Corporation is the tax advantages it offers to its shareholders. Professional corporations are often eligible for special tax treatment, such as the ability to deduct certain business expenses and pay lower corporate tax rates. By taking advantage of these tax benefits, professionals can maximize their after-tax profits and reinvest more capital back into their businesses for growth and expansion.

Furthermore, professional corporations provide a structured framework for governance and decision-making within the organization. By establishing clear rules and procedures for how the business should be managed, professional corporations can reduce internal conflicts and promote smoother operations. This structured approach also ensures that the company complies with legal and regulatory requirements, minimizing the risk of penalties or sanctions.

In addition to these benefits, Maine Professional Corporation also fosters long-term sustainability and continuity for professionals and their practices. By structuring the business as a professional corporation, professionals can facilitate smooth ownership transitions, such as selling or transferring shares, or passing down ownership to the next generation. This seamless succession planning allows professionals to secure the future of their businesses and ensure their legacy lives on.

Overall, Maine Professional Corporation is an integral component of the state’s business environment, offering a range of benefits and advantages to professionals across various industries. From liability protection and tax benefits to enhanced credibility and governance, professional corporations provide a solid foundation for professionals to thrive and grow their practices. As such, it is crucial for professionals to consider the benefits of forming a professional corporation and understand how this specialized business structure can positively impact their businesses in the long run.

Conclusion

In forming a professional corporation in Maine, having someone to help you build it is not necessary but suggestible. Even though it is easy because of the listed benefits and advantages above, forming your group of professional individuals will make it somehow successful. Just make sure to be guided by the steps and ensure that every one of the details and records is accurate and precise. And if you have any questions, share them in the comment section below.

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