How to Form a Professional Corporation in Maine (2024 Guide)

Steve Bennett
Business Formation Expert  |   Fact Checked by Editorial Team
Last updated: 
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Forming a Professional Corporation in Maine

If you would like to start and learn how to form a corporation in Maine, there are a few things that you should do now. However, in a professional corporation, professionals must create a special organizational structure to establish a professional or service corporation. Among the appropriate professions to organize a professional corporation in Maine are accountants, physicians, engineers, architects, and attorneys.

Forming a professional corporation in Maine or any business organization needs a certain number of steps. In this article, Webinarcare Editorial Team is going to share those steps. Keep in mind that these are general procedures. Depending on local law, it may be modified. For instance, your professional corporation may be subject to city or county-based rules.

What is a Professional Corporation in Maine?

A professional service corporation (PSC), often known as a professional corporation (abbreviated as PC), is a particular type of organization that is permitted by state law to allow owners of specifically licensed professions to practice in the Maine. A professional corporation’s owner is answerable for their own negligence or wrongdoing but is not held personally liable for the actions of other owners. The abbreviation PC or P.C. is frequently used to denote professional corporations.

This structure allows professionals to enjoy some of the benefits and protections of a traditional corporation while maintaining their professional status and abiding by the regulations of their respective licensing boards.

LegalZoom is the recommended corporation formation if you are thinking of forming a professional corporation from scratch. However, you can always start an LLC in Maine, if you changed your mind.

WEBINARCARE EDITORIAL TEAM

How to Form a Professional Corporation in Maine

To form a Professional Corporation in Maine 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-

To provide your service, you must be qualified and have a license. In most cases, you can now form a professional corporation after finishing your studies, passing the exam, and receiving your license. If you work in an industry that does not provide a license or professional certification, you should consider starting an LLC or corporation.

Step 2: Name your Professional Corporation in Maine

After you have decided to form a professional corporation in Maine, you must choose a name for your corporation. Here are some pointers to consider when 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)
  • Limit of restricted words that need a license.
  • A unique name is needed with no match
  • No confusion with a government entity name.

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. You must file a name reservation application in the Maine Secretary of State to keep the name.

If not already present, a professional corporation, professional association, service corporation, or professional service corporation must be included in the name. You may register your business under a different legal name if your preferred legal name is unavailable. Once you’ve decided on a name, you can apply for Maine DBA (doing business as). This way, you can run a clinic or law firm under your name.

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Step 3: Choose the Maine Resident Agent

The next step in forming a professional corporation is hiring a Resident Agent, who accepts legal paperwork for 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 Resident Agent if you have the time. Usually, in Maine, a Resident Agent costs is ranging from $50 – $150. To make it easier, you can hire Maine Resident Agent Services for your professional corporation.

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Step 4: File the Articles of Incorporation in Maine

After you hire a 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. Include the names of all co-owners as well. All owners must demonstrate that they have the necessary licenses to practice the profession in question.

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 state. 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 in Maine is a document that contains all of your company’s organizational details. It is optional to draft an operating agreement in most states. Yet, having one as an internal document is strongly advised. The operating agreement includes information like-

  • About Business
  • Members and management
  • Capital contribution
  • Profit Distribution
  • Change of membership
  • Dissolution

Step 6: Designate the PC Board of Directors in Maine

The next step is to form the first board of directors for your PC in Maine. All of the initial directors must provide the owner with their contact information. The owner must keep records and submit them by the Maine Secretary of State. As a shareholder and owner, you must ensure that a provision for appointing a new director is included in the By-laws. In Maine, you must have Three directors in forming your Professional Corporation.

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.

Creating comprehensive corporate bylaws requires specific knowledge about the company, its structure, and operations. However, I can provide you with a general outline of what corporate bylaws usually include. It is crucial to consult with Maine Business Attorney or a legal expert to ensure that your bylaws comply with the laws and regulations governing your jurisdiction and industry.

  • Name and Purpose of the Corporation
  • Registered Office and Agent
  • Shareholders
  • Board of Directors
  • Officers
  • Committees
  • Indemnification and Insurance
  • Conflict of Interest
  • Records and Reports
  • Amendments
  • Miscellaneous

Step 8: Hold the First Board of Directors’ Meeting

Gather the board of directors for the first meeting after drafting the corporate bylaws. This meeting will conclude with the appointment of directors to manage the company’s daily operations, approval of the bylaws, selection of the corporation’s financial reporting year, and approval of the stock issue. Minutes should be taken at all board meetings and kept with the company’s records.

Step 9: Request an EIN in Maine.

After the operating agreement’s documentation, you should get or request an Employer Identification Number (EIN) in Maine. The tax ID for your professional corporation will be an EIN. The Internal Revenue Service can provide an EIN (IRS). It has nine digits and is comparable to a social security number. Nevertheless, EIN is different from SSN. Only business-related tasks, primarily filing general taxes, are performed using it. The form needs to be filled out and submitted online to the IRS.

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 four 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 several ways. It will give your professional corporation the absolute advantage necessary to operate at full capacity without encountering legal or judicial issues.

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Step 10: Open a Bank Account and Prepare for Taxes.

You should open a business bank account as soon as you have applied for and received your Employer Identity Number because you will use this account for yourself, your clients, and your staff. Check out the Best Banks in Maine for you to decide on which bank you are going to open an account.

Due to your organization’s increased legality and liquidity, having a US business bank account may make conducting business in Maine easier. Most banks require an EIN for businesses other than sole proprietorships to open a business bank account. Also, keeping your accounts separate will prevent you from merging your personal and business finances. Also, filing taxes is simpler when you have an EIN. You can expect to pay employee and corporate taxes when you form a professional corporation.

Step 11: Get a Business License in Maine

Before your professional corporation operates in Maine, you must have Maine Business License first. A business license is a formal document issued by a state government agency that allows you to conduct business in the geographic area governed by that agency. The cost of business licenses and permits in Maine ranges from $50 – $300. You must check with the local authorities to see if any special licenses or permits are required.

Step 12: File Your Taxes in Maine

Finally, you’ve arrived at the final process. Remember to file your taxes when you have obtained a business license and are ready to begin operations. To avoid a large tax bill, you should begin paying taxes quarterly as soon as possible. Each state has different tax requirements. Start examining the Maine tax classification for the taxes that an LLC in Maine must pay.

Main Characteristics of a Professional Corporation

In forming a Professional Corporation, the main characteristics must be distinguished before forming it. These are the general characteristics of forming a Professional Corporation in Maine.

  • Limited Liability Protection: A professional corporation provides its owners, shareholders, or members limited liability protection like a regular corporation. This means the shareholders’ personal assets are generally protected from business debts, obligations, and lawsuits, except in malpractice or professional negligence cases.
  • Maine Licensing Requirements: All shareholders must typically be licensed professionals in the same field in a professional corporation. The corporation must also comply with specific state regulations and licensing requirements that govern the profession.
  • Governance and Management: A professional corporation is governed by a board of directors, who the shareholders elect. The board appoints officers to manage the day-to-day operations of the corporation. All directors and officers must be licensed professionals in the same field as the corporation.
  • Taxation: Professional corporations are taxed as C corporations, where the corporation pays taxes on its income, and shareholders pay taxes on dividends received from the corporation. However, some professional corporations may be eligible for S corporation status, allowing pass-through taxation. Income, losses, deductions, and credits flow to the shareholders, who report this information on their income tax returns.
  • Restrictions on Ownership and Transfer of Shares: Professional corporations often restrict the ownership and transfer of shares to ensure that only licensed professionals in the same field can become shareholders. This helps maintain the professional nature of the corporation and adheres to state licensing requirements.
  • Malpractice Liability: While a professional corporation provides limited liability protection for general business debts and obligations, it does not shield shareholders from liability for their own malpractice or professional negligence. Shareholders can still be personally liable for their actions in providing professional services.

In summary, a professional corporation is a specialized corporate structure designed for licensed professionals, offering limited liability protection and a formal governance structure while adhering to state licensing requirements and regulations.

Maintain Professional and Business License in Maine

You must maintain or renew your professional license regularly now that you have established your professional corporation. Even if your company is well-established, it is only meaningful if you have a valid operating license. And it makes no difference if your professional license is still valid for a year or two, but your business license has already expired.

Make time at least once a year to check the status of your licenses. You won’t miss anything important this way. You can address any issues that arise.

Filing Annual Report in Maine

In Maine, you must submit a report. 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 the report every 1 year (1st June) in the Maine Secretary of State.

FAQs

What is a professional corporation in Maine?
A professional corporation in Maine is a corporation formed by professionals such as lawyers, doctors, accountants, and architects.
What are the benefits of forming a professional corporation in Maine?
Some benefits of forming a professional corporation in Maine include limited liability protection, tax advantages, and increased credibility for professionals.
How many people are required to form a professional corporation in Maine?
A minimum of two people is required to form a professional corporation in Maine.
Can a professional corporation in Maine be formed by a single professional?
No, a professional corporation in Maine cannot be formed by a single professional.
Can I have more than one professional practice in a single professional corporation in Maine?
No, a professional corporation in Maine can only have one professional practice.
Can professionals from different fields form a single professional corporation in Maine?
No, professionals from different fields cannot form a single professional corporation in Maine.
Are there any licensing requirements for the formation of a professional corporation in Maine?
Yes, professionals forming a professional corporation in Maine must have a valid and active license to practice their profession in the state.
What types of professionals can form a professional corporation in Maine?
Professionals such as lawyers, doctors, accountants, and architects can form a professional corporation in Maine.
Can a professional corporation in Maine provide services in other states?
Yes, a professional corporation in Maine can provide services in other states, but it must be registered in each state where it conducts business.
What is the process to form a professional corporation in Maine?
The process to form a professional corporation in Maine involves filing articles of incorporation with the Maine Secretary of State and obtaining any necessary licenses.
How much does it cost to form a professional corporation in Maine?
The cost to form a professional corporation in Maine varies based on various factors such as the number of professionals, legal fees, and filing fees.
How long does it take to form a professional corporation in Maine?
The time it takes to form a professional corporation in Maine varies based on various factors such as the number of professionals, legal requirements, and processing times.
Is it possible to form a professional corporation in Maine online?
Yes, it is possible to form a professional corporation in Maine online.
Can I hire someone to help me form a professional corporation in Maine?
Yes, you can hire a professional to help you form a professional corporation in Maine.
What is the annual fee for maintaining a professional corporation in Maine?
The annual fee for maintaining a professional corporation in Maine varies based on various factors such as the number of professionals, business income, and other fees.
Can a professional corporation in Maine engage in other business activities besides its professional practice?
Yes, a professional corporation in Maine can engage in other business activities besides its professional practice, but it must be related to the practice.
What are the record-keeping requirements for a professional corporation in Maine?
A professional corporation in Maine must maintain records that include meeting minutes, share registers, financial records, and other business-related documents.
What happens if a professional member leaves the professional corporation in Maine?
If a professional member leaves the professional corporation in Maine, they must sell their shares back to the corporation or to other shareholders.
Can a non-professional own shares or be a shareholder in a professional corporation in Maine?
No, a non-professional cannot own shares or be a shareholder in a professional corporation in Maine.
Who can be a director in a professional corporation in Maine?
Generally, any shareholder can be a director in a professional corporation in Maine, but certain legal requirements may restrict it.
How many directors are required for a professional corporation in Maine?
A professional corporation in Maine must have at least one director.
What is the role of a director in a professional corporation in Maine?
The role of a director in a professional corporation in Maine is to oversee the business affairs and uphold the legal responsibilities of the corporation.
Can a professional corporation in Maine convert to a different type of corporation?
Yes, a professional corporation in Maine can convert to a different type of corporation, but it must follow legal and regulatory requirements.
Can a professional corporation in Maine be dissolved voluntarily?
Yes, a professional corporation in Maine can dissolve voluntarily with a majority vote of its shareholders and directors.
What happens if a professional corporation in Maine is dissolved involuntarily?
If a professional corporation in Maine is dissolved involuntarily by the state or a court, its assets will be distributed based on legal requirements and obligations.
Can a professional corporation in Maine own assets and properties under its name?
Yes, a professional corporation in Maine can own assets and properties under its name.
Can a professional corporation in Maine take out loans or borrow money?
Yes, a professional corporation in Maine can take out loans or borrow money, but it must follow legal requirements and pay its financial obligations.
Can a professional corporation in Maine sell its shares to the public?
No, a professional corporation in Maine cannot sell its shares to the public as it is only limited for licensed professionals.
Can a professional corporation in Maine merge with another professional corporation?
Yes, a professional corporation in Maine can merge with another professional corporation, but it must follow legal and regulatory requirements and get the approval of the state.
What is a professional corporation?
A professional corporation is a form of corporation that is specifically designed for licensed professionals, such as doctors, lawyers, and accountants.
Can I form a professional corporation in Maine?
Yes, Maine allows for the formation of professional corporations.
Can a non-professional be a shareholder in a professional corporation in Maine?
No, only licensed professionals can be shareholders in a professional corporation in Maine.
How do I form a professional corporation in Maine?
You will need to file Articles of Incorporation with the Maine Secretary of State and comply with all applicable state laws.
Do I need a lawyer to form a professional corporation in Maine?
While it is not required, it is recommended to consult with a lawyer specializing in business formation in Maine to ensure compliance with all legal requirements.
What is required to be listed in the Articles of Incorporation for a professional corporation in Maine?
In addition to the normal requirements for corporations, such as the business name, the name and address of a registered agent, and the number of shares authorized, the Articles for a professional corporation in Maine must also include a statement that the corporation is a professional corporation.
What is a registered agent?
A registered agent is a designated person or entity that will receive any legal documents or official notices on behalf of a corporation.
Can I be my own registered agent for my professional corporation in Maine?
Yes, as long as you have a physical address in Maine where legal documents can be delivered during normal business hours.
What is the liability protection offered by a professional corporation in Maine?
A professional corporation does offer limited liability protection, meaning that the personal assets of shareholders are generally protected from business liabilities.
Are there any limits on liability protection for professional corporations in Maine?
Yes, liability protection for professional corporations in Maine does not extend to cases of professional negligence or malpractice.
What regulatory bodies oversee professional corporations in Maine?
The Maine Board of Licensure in Medicine, the Maine Board of Overseers of the Bar, and the Maine Board of Accountancy all have authority over their respective professional corporations.
What is a Professional Service Corporation (PSC)?
In Maine, a Professional Service Corporation is another name for a professional corporation.
What happens if a shareholder of a professional corporation in Maine loses their professional license?
If a shareholder loses their professional license, they must sell their shares and will no longer be allowed to be a shareholder in the corporation.
Can a professional corporation be taxed as an S corporation in Maine?
Yes, a professional corporation can elect to be taxed as an S corporation in Maine.
Can a professional corporation have a DBA in Maine?
Yes, a professional corporation can operate under a Doing Business As (DBA) name in Maine.
Do professional corporations in Maine have to file annual reports?
Yes, professional corporations in Maine are required to file annual reports with the Maine Secretary of State.
What happens if a professional corporation fails to file an annual report in Maine?
If a professional corporation fails to file an annual report in Maine, the corporation may be dissolved and lose its legal standing.
Can a professional corporation convert to a regular corporation in Maine?
Yes, a professional corporation can convert to a regular corporation in Maine if the corporation’s board of directors and shareholders approve of the change.
Can a professional corporation merge with another corporation in Maine?
Yes, a professional corporation in Maine can merge with another corporation according to the state’s corporation laws.
What are the minimum and maximum number of shareholders for a professional corporation in Maine?
In Maine, a professional corporation must have at least one shareholder, with no maximum number specified.
Can an individual with multiple professional licenses form one professional corporation to encompass all their professions in Maine?
No, each professional corporation in Maine must only encompass one professional licensed field.
Can professional corporations in Maine provide multiple types of professional services?
Yes, the Maine Professional Service Corporation Act does not limit the number of professional services a professional corporation can offer, as long as they stay within its licensed profession(s).
Does Maine require the formation of a professional corporation for licensed professionals?
No, although recommended in certain circumstances, Maine does not make it mandatory for licensed professionals to form a professional corporation.
Is a professional corporation allowed to advertise its services in Maine?
Yes, a professional corporation in Maine is allowed to advertise its services, however, they must be truthful and not be misleading.
What is the difference between a Limited Liability Company (LLC) and a professional corporation?
LLCs are a business structure that can be utilized by any type of business, whereas a professional corporation is specifically designed for licensed professionals to form their own corporations.
Are professional corporations allowed to issue stock in Maine?
Yes, professional corporations are allowed to issue stock in Maine, though the shares are limited only to professionals licensed in the corporation’s professionally licensed field of operation.
Can an out-of-state licensed professional form a professional corporation in Maine?
Yes, out-of-state licensed professionals are allowed to form professional corporations in Maine, as long as they follow all regulations for corporations within the state.
Is an operating agreement required for professional corporations in Maine?
Although operating agreements are highly recommended for professional corporations in Maine, they are not mandatory.

Also Read

How to Save Money While Forming Maine Professional Corporation

One of the keys to saving money during the formation of your Maine professional corporation is to consider the resources you already have at your disposal. Start by assessing your skills and determining what tasks you can handle yourself. It is tempting to outsource everything, but taking on services like name search, preparing articles of incorporation, and even making phone calls can save you money that would otherwise be spent on professional assistance.

Another way to save money is to research and compare prices before committing to any professional services or purchases. Don’t settle for the first service provider you come across; instead, do your due diligence and seek out multiple quotes and reputable providers. This approach will ensure that you get the best value for your money and avoid unnecessary expenses. Furthermore, consider utilizing online platforms and tools that offer affordable or free services to expedite the process, such as using templates for various legal documents.

Creating a budget and sticking to it is crucial when forming a professional corporation. Setting a realistic budget will help you prioritize your expenses and limit any unnecessary spending. This not only applies to the formation phase but also to the initial years of your business. By monitoring your finances closely and keeping your expenses in check, you can free up resources to invest in the growth and success of your professional corporation.

Another area to save money is by exploring various options when it comes to office space and equipment. While having a physical office might be desirable, it might not be financially viable for a new professional corporation. Consider alternatives such as shared office spaces or working from home until your business grows and generates enough revenue to support a physical location. Additionally, you can opt to lease or rent equipment instead of purchasing it outright, which can significantly reduce your upfront costs.

Networking and collaborating with like-minded professionals can be a valuable tool to save money while forming your professional corporation. Seek out organizations and associations that offer resources, discounts, or cooperative purchasing options exclusive to their members. By joining forces with others in your industry, you can leverage collective bargaining power and gain access to cost-saving opportunities that would not be available to you as an individual.

In conclusion, by taking a strategic approach and being mindful of your expenses, it is entirely possible to save money when forming a professional corporation in Maine. The key is to assess your resources, compare prices, set a budget, explore alternatives, and seek out cost-effective solutions through collaboration and networking. With a little extra effort and some smart choices, you can launch your professional corporation without breaking the bank.

Conclusion

In conclusion, forming a professional corporation in Maine is a strategic decision for licensed professionals who seek to combine their expertise and services under a single corporate entity. This business structure offers limited liability protection, a formal governance structure, and compliance with state licensing requirements. However, it also comes with certain restrictions on ownership, transfer of shares, and personal liability for professional malpractice. By carefully considering the advantages and disadvantages of a professional corporation, professionals can determine whether this structure aligns with their business goals, regulatory requirements, and risk management needs, ultimately contributing to a more organized, secure, and compliant professional practice.

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