Starting a Professional Corporation in Maine 2024: Ultimate Guide

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How to Start a Professional Corporation in Maine

Licensed professional? Level up your business with Maine professional corporation! Enjoy unique benefits like Maine LLC, such as limited liability, tax perks, and a polished image. Our step-by-step guide unravels the essentials for smooth compliance and the right fit. LLCBase has your back with expert guidance, so make an informed decision and triumph in Maine with your professional corporation today!

This guide will review the requirements for starting a professional corporation in Maine, explore the advantages and disadvantages of this business structure, and help you determine if it is the right fit for your business goals.

What is a Professional Corporation

A Professional Corporation (P.C.) is a unique type of corporation designed for licensed professionals, such as doctors, dentists, lawyers, architects, and accountants. Forming a P.C. allows licensed professionals to offer their services through a corporate structure, providing them with the benefits of a traditional corporation, such as limited liability protection and tax advantages. Forming a professional corporation in Maine is a popular choice due to the thriving professional landscape and business-friendly environment. When starting a professional corporation, choose a reliable formation service in Maine.

The primary purpose of Maine Professional Corporation is to protect its owners from personal liability for the corporation’s actions. The shareholders’ personal assets are protected if the professional corporation faces legal issues. Moreover, Maine professional corporations can offer certain tax benefits, such as deducting employee benefits and operating expenses. These advantages make forming a professional corporation an attractive option for many professionals in Maine.

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Who Can File Under Professional Corporation Laws

Under Maine Professional Corporation laws, only certain licensed professionals are eligible to form a professional corporation. The specific professions allowed to form a P.C. may vary slightly by state, but in Maine, the following professionals can typically form a professional corporation:

  • Physicians and Surgeons
  • Dentists
  • Chiropractors
  • Optometrists
  • Podiatrists
  • Certified Public Accountants
  • Architects
  • Engineers and Land Surveyors
  • Psychologists
  • Marriage and Family Therapists
  • Clinical Social Workers
  • Professional Clinical Counselors
  • Veterinarians
  • Attorneys
  • Speech-Language Pathologists
  • Pharmacists
  • Registered Nurses
  • Physical Therapists
  • Occupational Therapists
  • Acupuncturists

Each profession has its governing licensing board, which sets specific rules and regulations for forming and operating a professional corporation. It is essential to check with the relevant board and state laws to ensure that your profession is eligible to form a professional corporation and to understand the specific requirements associated with your profession.

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Structure of a Professional Corporation

  • Shareholders: Maine Professional Corporation’s shareholders must be licensed professionals in the same field as the corporation’s purpose. For example, if a professional corporation is formed to offer legal services, all shareholders must be licensed attorneys. This requirement ensures that the professional corporation’s management comprises qualified individuals with relevant expertise.
  • Directors: The directors of a professional corporation in Maine are responsible for overseeing the corporation’s operations and making high-level decisions. The directors must also be licensed professionals in the same field as the corporation’s purpose. The number of directors required depends on the specific licensing board’s regulations, but typically a minimum of one director is needed.
  • Officers: The officers of Maine Professional Corporation manage the professional corporation. Officers typically include a President, Secretary, and Treasurer. However, additional officers can be appointed as needed. While not all officers must be licensed professionals, the President must hold a valid license in the same field as the corporation’s purpose.

Starting a Professional Corporation in Maine: A Guide

Here is a detailed guide to starting a professional corporation in Maine that you should follow.

Step 1: Appointment of Resident Agent

The first step in forming a Professional Corporation is appointing Resident Agent in Maine. This individual or company will act on behalf of the corporation, receiving official notices and legal documents. The agent must have a physical address in Maine and be available during regular business hours.

We compiled the list of the best registered agent services in Maine to help you choose the one you can rely on.

Step 2: Choosing the Name of the Corporation

Selecting a name for your Maine Professional Corporation is crucial. The name must be unique and appropriate, including the words “professional corporation” or the abbreviation “P.C.” It must also comply with the rules and regulations of the governing licensing board and should not be confusingly similar to an existing corporation’s name.

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Step 3: Drafting of By-laws

By-laws are the internal rules and regulations governing the management and operations of the professional corporation. These should include provisions related to the appointment of directors, issuance of shares, and any restrictions imposed by the licensing board.

Step 4: Appointment of Board of Directors

The board of directors oversees the management and operations of the Maine Professional Corporation. Directors must be licensed professionals in the same field as the corporation’s purpose.

Step 5: Conduction of Board Meetings

Regular board meetings are essential for maintaining the proper functioning and compliance of the professional corporation. The by-laws should specify the frequency, notice requirements, and procedures for conducting these meetings.

Step 6: Issuance of Corporate Shares

Shares represent ownership in the corporation. The professional corporation must issue shares to its shareholders, who must be licensed professionals in the same field. Share issuance should comply with the by-laws and any restrictions imposed by the licensing board.

Step 7: Comply with State Requirements

Forming Maine Professional Corporation requires compliance with specific state requirements, such as obtaining necessary permits and licenses, paying fees, and adhering to rules and regulations the governing licensing board sets forth.

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Step 8: Filing of Statement of Information

Maine professional corporations must file an annual report with the Maine Secretary of State. This document includes essential information about the corporation, including its name, address, Resident Agent, and directors.

Step 9: Getting Tax Permits from the State

The professional corporation must obtain the necessary tax permits from the Maine Revenue Services, such as an Employer Identification Number (EIN) from the Internal Revenue Service (IRS).

Step 10: Opening of a Bank Account

Finally, open a separate bank account for the Maine Professional Corporation to maintain proper accounting and financial records.

Fees Associated with Professional Corporation in Maine

Here are some of the most common fees when starting a professional corporation in Maine.

  • State Laws and Regulations: To form a professional corporation in Maine, it is crucial to comply with the state laws and regulations governing professional corporations. The Maine Revised Statutes Title 13-C and the specific licensing board’s regulations for each profession outline the requirements and restrictions for professional corporation formation. Before starting the process, professionals should consult with their licensing board to ensure they meet the necessary qualifications.
  • Incorporation Process: Once the licensing requirements are met, the next step to form a professional corporation in Maine is to draft and file the Articles of Incorporation with the Maine Secretary of State. This document includes essential information about the corporation, such as its name, address, purpose, and number of authorized shares. Filing the Articles of Incorporation requires a filing fee currently $145 for most professions. However, it is essential to check with the Maine Secretary of State for the specific fee associated with your profession.
  • Naming Requirements: You must follow specific rules when choosing a name for a Professional Corporation in Maine. The name must include the words “Professional Corporation,” “P.C.,” or “Prof. Corp.” Additionally, the name cannot be misleading or too similar to an existing corporation’s name. Conducting a name search with the Maine Secretary of State is recommended to ensure the chosen name is available. This search is free, but reserving a name before filing the Articles of Incorporation requires a reservation fee of Not available online and $20 mail.
  • Articles of Incorporation: The Articles of Incorporation is a critical document for forming a professional corporation in Maine. It outlines the corporation’s essential information, such as the name, address, purpose, and number of authorized shares. The Articles must also include a statement that the corporation is a professional corporation and the specific profession it practices. Once completed, the Articles of Incorporation must be filed with the Maine Secretary of State, accompanied by the appropriate filing fee.
  • Additional Fees and Costs: In addition to the filing fees mentioned above, forming Professional Corporation in Maine may involve other costs, such as:
    • Annual Report: professional corporations must file an initial Statement of Information with the Maine Secretary of State every June 1st of filing the Articles of Incorporation. The filing fee for this form is $85.
    • Licensing and Permit Fees: Depending on the specific profession, the governing licensing board may require additional licensing and permit fees.
    • Resident Agent Fee: Hiring of Resident Agent service will likely involve an annual fee of $50 – $150, which can vary depending on the service provider.
    • Legal and Accounting Fees: Forming a professional corporation may involve consulting with attorneys and accountants, which can result in additional professional fees.

Advantages of a Professional Corporation

  • Limited Liability Protection: One of the main benefits of a professional corporation is its limited liability protection to its shareholders. This means the shareholders’ assets are protected from the corporation’s debts and liabilities.
  • Tax Benefits: Professional Corporations enjoy specific tax benefits, such as deductions for business expenses and the ability to retain earnings within the corporation.
  • Business Credibility: Operating as a professional corporation can enhance the credibility and reputation of the professional services, demonstrating a commitment to compliance and professionalism.
  • Continuity of Operations: A professional corporation has a perpetual existence, ensuring the continuity of operations even if the shareholders or directors change.

Disadvantages of a Professional Corporation

  • Complexity and Cost of Formation: Forming a professional corporation can be more complex and costly than other business structures, such as sole proprietorships or partnerships.
  • Ongoing Compliance Requirements: professional corporations must adhere to ongoing compliance requirements, including regular board meetings, filing annual reports, and maintaining proper records.
  • Limited Flexibility in Management: professional corporations may need more flexibility in management, as the board of directors must consist of licensed professionals in the same field.

Taxation of Professional Corporations

Here are the taxes that your professional corporation must pay in Maine:

Federal income tax

A professional corporation in Maine is subject to federal income tax on its net earnings. However, a P.C. can elect to be taxed as an S corporation, which allows the corporation’s income, deductions, and credits to pass through to the shareholders. This can result in significant tax savings by avoiding double taxation.

State taxes

Maine Professional Corporation is also subject to state taxes, such as the Maine franchise tax, which is based on the corporation’s annual net income. Additionally, depending on the nature of its operations, the professional corporation may be subject to other state and local taxes, such as payroll and sales taxes permit in Maine.

Tax deductions and exemptions

A professional corporation in Maine can take advantage of various tax deductions and exemptions, such as deductions for employee benefits, operating expenses, and depreciation. These deductions can help reduce the corporation’s taxable income, ultimately leading to tax savings for the P.C. and its shareholders.

Alternatives to Professional Corporations in Maine

If you decide that a professional corporation is not for you, then you might consider the following alternatives.

  • Sole Proprietorships: A simpler business structure is where an individual operates the business under their name without limited liability protection.
  • Partnerships: Two or more individuals join to operate a business, sharing profits, losses, and responsibilities.
  • Limited Liability Companies (LLCs): A hybrid business structure that combines the limited liability protection of a corporation with the tax benefits and flexibility of a partnership.
  • S-corporations: Starting an S Corp in Maine avoids double taxation by allowing income, losses, and deductions to pass through to the shareholders’ personal tax returns.

FAQs

What is a professional corporation in Maine?
A professional corporation in Maine is a business entity organized to provide professional services that require state licensure.
What professions are eligible to form a professional corporation in Maine?
Attorneys, accountants, architects, engineers, medical professionals, and other licensed professionals can form a professional corporation in Maine.
Do I need to file articles of incorporation to start a professional corporation in Maine?
Yes, you need to file articles of incorporation with the Maine Secretary of State to form a professional corporation in Maine.
What is the minimum number of shareholders required to form a Maine professional corporation?
There is no minimum number of shareholders required to form a Maine professional corporation.
What is the maximum number of shareholders allowed in a Maine professional corporation?
Maine allows an unlimited number of shareholders in a professional corporation.
Can a single professional form a professional corporation in Maine?
Yes, a single professional can form a professional corporation in Maine.
Is a professional corporation liable for the malpractice of its shareholders in Maine?
Generally, a professional corporation is not liable for the malpractice of its shareholders in Maine.
Are shareholder agreements required for Maine professional corporations?
Shareholder agreements are not required for Maine professional corporations, but they are recommended to define shareholder rights and obligations.
Can a Maine professional corporation be taxed as an S corporation?
Yes, a Maine professional corporation can elect to be taxed as an S corporation.
Are there any limits on shareholder liability in a Maine professional corporation?
In Maine, shareholders in a professional corporation are generally liable only to the extent of their capital contributions.
Are medical professionals required to have malpractice insurance in Maine?
Medical professionals in Maine are not required to have malpractice insurance, but it is strongly recommended.
Are there any residency requirements for shareholders in a Maine professional corporation?
There are no residency requirements for shareholders in a Maine professional corporation.
Can an out-of-state professional form a Maine professional corporation?
Yes, an out-of-state professional can form a Maine professional corporation if they comply with state laws.
Can a professional corporation in Maine have a partnership as a shareholder?
No, a partnership cannot be a shareholder in a professional corporation in Maine.
Do Maine professional corporations need a board of directors?
Maine professional corporations are not required to have a board of directors.
How do I maintain my Maine professional corporation’s license to practice?
To maintain your Maine professional corporation’s license, you must comply with state licensure requirements and pay any relevant fees.
Can a professional corporation in Maine have non-professional employees?
Yes, a Maine professional corporation can have non-professional employees.
What is the process for closing a Maine professional corporation?
To close a Maine professional corporation, you must file articles of dissolution with the Maine Secretary of State and pay any outstanding fees or taxes.
What is the annual report requirement for Maine professional corporations?
Maine professional corporations are required to file an annual report with the Secretary of State and pay any relevant fees.
Can a Maine professional corporation change its legal structure?
Yes, a Maine professional corporation can change its legal structure if it complies with state laws and regulations.
How long does it take to form a Maine professional corporation?
It generally takes 3-5 business days to process articles of incorporation for a Maine professional corporation.
Can a Maine professional corporation raise capital through the sale of stock?
Yes, a Maine professional corporation can raise capital by selling stock to shareholders.
Is a filing fee required to form a Maine professional corporation?
Yes, a filing fee is required to form a professional corporation in Maine.
Are annual meetings required for Maine professional corporations?
Maine professional corporations are not required to hold annual meetings, but they are recommended.
Can a Maine professional corporation be dissolved involuntarily?
Yes, a Maine professional corporation can be dissolved involuntarily by court order or administrative action.
Can shareholders of a Maine professional corporation be held personally liable for the corporation’s debts?
Generally, shareholders of a Maine professional corporation are not personally liable for the corporation’s debts, but there are exceptions.
Can a Maine professional corporation be formed without an attorney?
Yes, a Maine professional corporation can be formed without an attorney, but it is recommended to seek legal advice.
Can a Maine professional corporation implement a “buy-sell” agreement?
Yes, a Maine professional corporation can implement a “buy-sell” agreement to address the transfer of shares between shareholders.
What is a professional corporation?
A professional corporation is a special type of business entity that provides professional services in a specific field and gives owners limited liability for the company’s debts.
Who can start a professional corporation in Maine?
Individuals who hold a professional license in Maine can start a professional corporation.
What professions can start a professional corporation in Maine?
Attorneys, accountants, architects, doctors, dentists, and several others can start professional corporations in Maine.
Can a foreign business own a professional corporation in Maine?
No, only Maine residents can own a professional corporation in Maine.
Do I need to reserve a business name before starting a professional corporation in Maine?
Yes, you need to reserve your business name by filing a “Reservation of Name” with the Maine Secretary of State.
How long does it take to process a name reservation in Maine?
It takes about three to five business days.
Do I need to obtain a certificate of authority to do business in Maine?
Yes, if your professional corporation is not incorporated in Maine but offers services there.
How much does it cost to incorporate a professional corporation in Maine?
The fee to file articles of incorporation in Maine is $145.
How long does it take to process articles of incorporation in Maine?
It takes about three to five business days, and expedited service is available.
Do I need to appoint a registered agent for my professional corporation in Maine?
Yes, you need to appoint a Maine registered agent for your corporation.
What is the responsibility of a registered agent in Maine?
A registered agent receives legal and official documents on behalf of the corporation.
Can an organizer act as the initial registered agent in Maine?
Yes, one or more organizers can act as the initial registered agent.
How long is the term of a professional corporation in Maine?
The term of a professional corporation in Maine is perpetual, unless otherwise stated in the articles of incorporation.
What types of stock can a professional corporation issue in Maine?
Professional corporations in Maine can issue only one type of voting stock and non-voting stock.
Do I need to obtain federal or state tax identification numbers for my professional corporation in Maine?
Yes, you need a federal tax identification number from the IRS and a Maine tax identification number from Revenue Services.
What is the corporate income tax rate in Maine?
The corporate income tax rate in Maine is 8.93%.
What is the personal income tax rate in Maine?
Personal income tax rates in Maine range from 5.8% to 7.15%.
Can a professional corporation elect to be taxed as an S corporation in Maine?
Yes, if it meets the requirements of the IRS.
Do I need to obtain any other licenses or permits to start a professional corporation in Maine?
It depends on the profession. Many professions require special licenses or certificates in Maine.
Is there a residency requirement to be a professional corporation officer or director in Maine?
No, there is no residency requirement to be an officer or director in a Maine professional corporation.
How many directors are necessary for a Maine professional corporation?
One or more directors are necessary for a Maine professional corporation.
Do I need to file an annual report for my professional corporation in Maine?
Yes, you need to file an annual report each year with the Maine Division of Corporations.
Are there any fees or penalties for filing an annual report late in Maine?
Yes, a late fee of $50 may be assessed, plus interest.
Can I dissolve my professional corporation in Maine?
Yes, you can dissolve your professional corporation in Maine by filing Articles of Dissolution with the Maine Secretary of State.
What is the fee to dissolve a professional corporation in Maine?
The fee to dissolve a professional corporation in Maine is $10.
How long does it take to process Articles of Dissolution in Maine?
It takes about three to five business days to process Articles of Dissolution in Maine.
Can I revive my professional corporation in Maine after it has been dissolved voluntarily?
Yes, you can revive your professional corporation in Maine within two years of dissolution by filing an Application of Reinstatement with the Maine Secretary of State.

Also Read

How to Save Money While Forming Maine Professional Corporation

One of the best ways to save money when forming a Maine professional corporation is to do as much of the work yourself as possible. While it’s important to consult with a legal professional to ensure that all the necessary paperwork is completed correctly, there are many steps that you can take on your own to reduce costs. For example, you can research the process of forming a professional corporation in Maine online and familiarize yourself with the necessary forms and requirements. By taking the time to educate yourself, you can save money on legal fees by completing some of the paperwork yourself.

Another way to save money when forming a professional corporation in Maine is to consider using online services. There are many online platforms that specialize in helping professionals set up their own corporations. These services can often provide a more streamlined and cost-effective way to complete the necessary paperwork and filings. While it’s still important to consult with a legal professional to ensure that everything is done correctly, using an online service can help you save money by offering fixed fees and easy to use platforms.

Additionally, it’s important to consider the long-term costs associated with maintaining a professional corporation in Maine. From annual report filings to licensing fees to business insurance, there are ongoing costs that will need to be budgeted for. One way to save money on these expenses is to shop around and compare prices from different providers. By taking the time to research your options, you may be able to find more affordable solutions that still meet all of your business needs.

Finally, one of the most important things you can do to save money when forming a Maine professional corporation is to plan ahead. By creating a detailed budget and timeline for your corporation formation, you can better anticipate costs and avoid any unexpected expenses. Additionally, by keeping careful records of all expenses and receipts, you can ensure that you’re taking advantage of all potential tax deductions and credits available to you as a business owner.

Overall, forming a professional corporation in Maine can be a rewarding experience. By taking the time to educate yourself, consider online services, research ongoing costs, and plan ahead, you can save money while still creating a strong and compliant corporation. With the right approach, you can achieve your dream of owning your own professional corporation without breaking the bank.

Conclusion

Maine Professional Corporation can offer several benefits for licensed professionals. However, it is essential to carefully consider the proper structure and compliance requirements before proceeding. Seeking professional guidance in forming a professional corporation can help ensure a smooth process and enable professionals to focus on providing their services. Visit LLCBase for more information about starting a professional corporation in Maine.

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