Frequently Asked Questions

...answers to commonly asked questions.


General Business Questions

How do I register my small business?
How you register your business depends on what type of business entity you choose and what activity you are going to be engaged in. If you decide to incorporate or become a limited partnership or a limited liability company, you will need to register that entity with the Bureau of Corporations at the office of the Secretary of State. That office can be reached at 207-624-7736.

If you organize your business as a sole proprietorship (a business owned and operated by an individual) or a general partnership, you do not need to register your business entity with the state. However, there may be certain state, city, or town permits or licenses that are required to operate your business (see question #3.) 

Do I have to register my business name? How do I determine if the name I choose is okay to use?
 State statute requires that every business enterprise operating under an assumed name must register that name in the city or town in which it is located. This is often called filing a "D/B/A", which stands for "doing business as," a nominal fee is typically charged. What you do beyond this depends on a number of factors.

If you incorporate, become a limited partnership or limited liability company, the name of the business would be registered with the Bureau of Corporations. To determine whether a name you're considering is in use by another corporation, or is protected by a trademark or service mark, you should contact Bureau of Corporations at 207-624-7736. Unfortunately, proprietorship names are not tracked by any one central agency. However, you can employ the following tactics to safeguard against using another business' name. Check the telephone listings of surrounding communities, your local library should have the various regional directories. You can also check for the name in the Maine Business and Professional Directory or the Maine Register.

Do I need a business license?
The State of Maine does not license all businesses; however, your business may need state and/or local licenses or permits depending on the particular activity you are engaged in.

To obtain more information about licensing you can contact Business Answers, a program of the Maine Department of Economics and Community Development at 1-800-872-3838 (in-state) or 1-800- 541-5872 (out-of-state). The office's operating hours are Monday through Friday between 9 a.m. and 5 p.m. Its One-Stop Business Licensing Center will give you the information needed to obtain the appropriate licenses for your business.

Business Answers has most of the various state department licensing applications which they will send to you. You will also need to check with your Town or City Clerk to determine local licensing requirements.

What legal form of business should I choose?

There are four primary legal forms of business from which to choose from: sole proprietorship, partnership, limited liability company, and incorporation (both C-corp and Subchapter S.)

A sole proprietorship is owned by an individual (or a married couple) and it may have one or more employees. Operating a sole proprietorship means that the owner is personally responsible for all liabilities of the business. Also, the owner is taxed on a personal level for all profits generated by the business.

A partnership occurs when two or more people agree to share ownership of a business. This form of business allows the partners to share complimentary skills and resources. The owners share, and pay personal taxes on, the profits of the business. Additionally, each partner is individually responsible for the liabilities of the business.

Another option is to form a Limited Liability Company (LLC). This legal form, which became effective in Maine on January 1, 1996, is a combination of the corporate form (providing limited liability) and the partnership form (allowing you to be taxed as in a partnership).

The corporate entity is created when your business registers with the Secretary of State's Bureau of Corporation. This enables the owners to take advantage of the limited liability aspect of the corporate ownership and to raise equity by selling shares of the company. For profit entities have the option to chose either a C-corporation or Subchapter S-corporation status. If you become a C-corporation, the corporate profits are taxed, and then the owners will be taxed on their share of the profits and compensation (i.e. dividends and wages) received from the corporation.

A Subchapter S-corporation does not pay a corporate tax. If you have any questions regarding these forms of business entities, please feel free to call your local Maine Small Business Development Centers and seek advice from an attorney.

What type of insurance should I obtain for my small business?

When you start your own business, there are various types of business insurance that should be considered essential and others that, while not essential, may be desirable and add to the security of a business. Most businesses will require some type of general liability insurance and many businesses obtain an "umbrella policy" that covers a variety of risks including personal property, liability, fire, theft, and medical payments.

If you have employees, you will need to obtain workers compensation insurance. Additionally, if your business owns or uses vehicles for business purposes, automobile coverage is necessary. Beyond this, what other forms of insurance obtained depends on what risks are incurred in operating your business, and what kind of supplementary coverage you want to employ to provide additional security for your business.

The following is a list of certain types of insurance that you may need to consider: Key Person Insurance, Flood Insurance, Fidelity and Surety Bonds, Boiler and Machinery Insurance, Product Liability, Business Interruption Insurance, Overhead Expense, Disability Insurance, and Life Insurance. The best course of action is to contact an insurance agent, or several agents, for a consultation regarding the appropriate types of insurance for you and your business.

Do I need a sales tax number and how do I register for one?

If you sell tangible personal property, or provide certain fabrication, rental, or other particular services, you must obtain a sales tax identification number, also known as a seller's certificate, from the State of Maine.

To obtain the appropriate forms you may visit the Maine Revenue Services Website or you can call 207-624-9693. If wholesalers and retailers are reselling your product(s) you would not charge sales tax, but would provide them your sales tax number for a resale certificate. Additionally, you would not charge sales tax to consumers who purchase your product outside of Maine, although they would be responsible for a use tax. Keep in mind that after you register, your sales, regardless if sales tax is charged or not, must be reported regularly to the State of Maine's Sales Tax Division. See also Maine Revenue Services FAQ for more information.

Catalog Sales and Internet Sales

A retailer which solicits sales through a catalog or internet web site is responsible for collecting sales tax in Maine if the retailer has - (a significant presence) in Maine. Retailers registered in Maine selling goods to Maine residents must collect Maine sales tax since the retailer has a presence in Maine and the sale occurs in Maine. This is true regardless if the sale occurred in the retailer's store, if the goods are ordered over the telephone or if the goods are ordered through the retailer's homepage.

If the retailer receives orders through mail-order or the internet from non-residents and the goods are shipped out-of-state, the sale is not taxable in Maine. If the retailer is not required to register in Maine, the sales are not subject to Maine's sales tax but the purchaser is subject to Maine's use tax on such a purchase. For more information, click here.

How do I finance the start-up of a small business?

To determine financing needs, you should first prepare a business plan with a complete set of financial projections including a balance sheet, income statement, and cash flow statement. With a properly completed business plan, you will have identified your funding needs. Keep in mind that most small business start-ups are funded through personal resources including savings, equity or loans from family, friends or other investors, home equity loans, cash value of life insurance, or other personal resources.

Banks will lend to some business start-ups if they are satisfied with your business plan, your level of equity investment, the collateral you have to pledge to the loan, your credit history and experience. If your request is denied, ask your bank if they would consider the loan with a guarantee from the Small Business Administration (SBA) or the Finance Authority of Maine (FAME).  In addition, there are a number of local and regional economic development agencies that have revolving loan funds that you may apply for.  Contact your local Maine SBDC office for help on writing a business plan and assistance in finding the type of financing that best suits your business.

See Financing your Business

How do I register to become an employer

To register as an employer, you need to obtain a federal Employer Identification Number(EIN) by filing IRS Application. You will also need to register for state income tax withholding and for an unemployment contributions by filing the Application for Tax Registration from the Maine Department of Labor, Central Registration Section, (207) 624-5644.

Have employees complete and keep in employer's files: Employee's Withholding Certificate W-4 obtained from the IRS and Employment Eligibility Verification Form I-9 obtained from the U.S.Citizenship and Immigration Services or call 800-375-5283. Obtain Worker's Compensation Insurance from your business insurance carrier. Maine employers are required to report newly hired or rehired employees to the Maine Department of Human Services (DHS) within 7 days. Contact DHS Support Enforcement and Recovery at (207) 624-4100 for more information. Obtain and post required labor posters from the Maine Dept. of Labor, 207-623-7900. For more information on becoming an employer, contact Business Answers 1-800-872-3838 (in State) or 1-800-541-5872 (out of State).

See also IRS Forms & Maine Revenue Services Forms

If I am self-employed, how do I report my taxes?

Self-employed business owners are required to pay state and federal income taxes, Social Security, and Medicare based on the profits generated by the business. Profits in a proprietorship are determined before you draw compensation from the business (i.e. your draw or wages are not considered an expense of the business.) Once your liability for federal income tax and self- employment FICA exceeds $500, you will need to deposit the tax payments to the IRS (whether this happens in any one quarter or combination of quarters.)

You can estimate and report your federal taxes by using the 1040-ES form, and your state taxes by using the 1040ES-ME form. You can also derive an estimate of your tax liability from your most recently completed Schedule C (profit and loss statement for a proprietorship) or by completing a monthly profit and loss statement. Be aware that if you don't deposit the appropriate taxes for any individual quarter, or for the year, the IRS can and will impose stringent penalties and interest. If you need these forms, contact your local IRS office or Business Answers for their Estimated Income Taxes and Self- Employment package.

For additional information on completing the forms or understanding the requirements, please feel free to call your local Maine Small Business Development Centers.

See also IRS Forms


Counseling

How do I sign up for your service?
Register by clicking on the Orange  Box.
or click here

What is the Maine Small Business Development Centers (Maine SBDC)?
 The Maine SBDC is a grant-funded program that serves the Maine small business community. Offering confidential, one-on-one business counseling at no charge, we have certified business counselors located throughout the entire state. Our counselors advise on all aspects of starting, owning and operating a business.  And we offer training seminars and online workshops as well. We are accredited by America's of Small Business Development Centers (ASBDC). 

Why should I use your service?
Maine SBDC has been providing business counseling and training to thousands of Maine small businesses since 1977. Our staff of certified business counselors has years of business, financial, lending and business counseling experience. We have locations all over the state. Our services are free.  We are your first and last best stop for business counseling.

What will a business counselor help me with?
Our business counselors provide assistance with business and marketing plans, financial and cash flow analysis, accounting and record keeping, marketing and sales, start-up and buying or selling a business, market research, loan packaging and capital access, operations and personnel management, international trade, sources of credit and financing and more. It should be noted that the counselor will not do the work for you. They will certainly help you each step of the way if that is what it takes to make your business a success.

 

What can I expect from a meeting with a business counselor?
 The business counselor will ask pertinent questions, listen to your needs and tailor the session around your specific experience and concerns.

Does the Maine SBDC charge for its services?
 No. Maine SBDC counseling is provided free of charge. There may be a nominal fee for workshops or courses, but most are free. 

What are hours of operation?
Centers are open Monday – Friday during normal business hours.  Workshops are scheduled during the day and evening hours. We are not open on the weekends.

Do I have to make an appointment?
Yes, appointments are required in order to see a counselor. To get started, just click on this link and fill out the online form and questionnaire or call 207-780-4420. You will be contacted by a counselor or member of our staff at the location closest to you. 

 

What do I need to bring to my first appointment?
You are not required to bring anything but your thoughts, questions, ideas, etc. However, if you have information and/or materials that you think will help the counselor better understand your situation/business then bring them. If there is something in particular that the counselor would like to see, they will be sure to let you know before the appointment. 

Where are the counselors located?
In general, we have business counselors within a 30 to 60 minute drive, if not closer. Click here to see our locations.

Is there a limit on how many times I can see a business counselor?
You can see the counselor as often as you need.  If you find that you have all the information after one meeting, that's okay. But, if you need ongoing help or support, the counselor is more than happy to do that, too.

Will information I discuss with an SBDC counselor or staff be kept confidential?
All client information is kept strictly confidential and will not be released or shared without the client's written permission.  

 

Are you counselors qualified to help me?
Our counselors have extensive degrees, real-world experience and education. In addition, they are required to complete a professional development program in order to become a certified business counselor.  They attend professional development activities each year to stay current with small business information and trends. If your counselor does not have an answer to a question, he/she can reach out to our network of counselors. 

Does the Maine SBDC provide financing or grants?
Maine SBDC does not provide financing or grants.   But, our business counselors can help you find out if there are financial resources available for you.

Will you write my business plan?
Our counselors will assist you in developing a business plan, cash flow and other financial information. Our goal is to give you the knowledge, tools and ongoing guidance so you can develop your plan. With that said, we will help you, but will not write the plan for you.

Do you provide legal assistance or advice?
No, we do not provide legal advice. 

Do you host workshops, seminars or courses?
Yes. We post all of our workshops/seminars/courses to www.mainebusinessworks.org. Many other organizations post events on that website as well. The site provides a comprehensive list of events by topic, location and date. In addition, we have free, on-demand webinars on our website.

How is the Maine SBDC funded?
We are funded by the U.S. Small Business Administration (SBA), the Maine Department of Economic and Community Development (DECD) and the University of Southern Maine (USM).  We also receive support and space from hosting organizations:  Androscoggin Valley Council of Governments, CEI and Northern Maine Development Commission. 

Is the Maine SBDC the same as the SBA?
No, the Maine SBDC is funded in part by the U.S. Small Business Administration, but we are two separate entities.


Other Information

Business Answers 
 ...the one-stop business information line about doing business in
 Maine. exists to make it easier to start and conduct business in the State of Maine.
 Any comments or suggestions you have to make it more useful are welcome.
 If you can't find what you're looking for or need further assistance, please contact us weekdays between the hours of 9:00 a.m. and 4:00 p.m. eastern time at 1-800-872-3838 in Maine or 1-800-541-5872 from outside of Maine.
 You can also e-mail them at business.answers@maine.gov