Many self-employed Maine residents are eager to start their businesses. The simplest and most rational solution to this issue is to join the ranks of sole proprietors.
Organizing and managing a business in this format is the least difficult in America and has no service pitfalls. Although, future business owners will have to adhere to certain norms. Also, be prepared that you will have to face some restrictions regarding the functions of your sole proprietorship.
So, the main task of this manual is to help you answer the essential question – is the business format of an individual enterprise right for you? And, of course, we will tell you which aspects to pay attention to while opening a sole proprietorship and how to set up a business structure in this vein properly.
It is vital: business owners should be aware that a sole proprietorship is not a guarantor of the safety of personal assets. But with LLC, on the contrary – the assets will be safe. LLC is easy to organize by doing forming it yourself or hiring a cheap LLC service.
The Proper Way To Start Business As The Maine Sole Proprietor
There is no algorithm for organizing the business work of an individual entrepreneur in Maine as for LLC. In addition, the state does not charge additional service fees for the formation or management of this type of business or company. Are you looking to become an individual business owner and start a sole proprietorship in Maine? – Just start working!
Though, you still have to go through several additional legal formalities. These service stages are optional. Although many sole proprietors prefer not to neglect them, compliance with these formalities guarantees the legal protection of their interests.
Applying For DBAs
Almost every company and business owner prefers doing business as a DBA. There are many benefits to running a business under an assumed name compared with an entity or LLC. We are talking primarily about creating the business image of your company. Potential clients and consumers will find this approach more professional and give you more confidence. It turns out that a company that uses the real name of its owner is often not competitive.
Let’s clarify that a company owned by sole proprietors can use the DBA to open and manage a business bank account. Customers will appreciate it as one more advantage in favor of the business owner, so they feel more comfortable.
Maine differs from many other states in that it does not prescribe an exclusively owned enterprise that operates under a different name to complete the registration with the Maine Secretary of State. Nevertheless, you would most probably have to register the name that you have selected with the local municipal official in the county in which you intend to operate your enterprise, besides submitting it to the Bureau of Corporations, Elections, and Commissions.
Clarification & Compliance with Tax Requirements
You can run your business in this format and not hire third-party employees. In this case, you do not need to obtain an EIN (Federal Tax Identification Number) because your Social Security number will replace it. Of course, it would be correct to take care of your confidentiality and still use the EIN and not the SSN.
The nature and the structure of the business activity of individual entrepreneurship determine the list of tax requirements that the state will put forward (as with LLC).
There will most probably be specific enterprise taxes for you to pay in correspondence with the services and products that your enterprise intends to provide. In the majority of cases, they prescribe the enterprises established in Maine to pay the use taxes and the tax on the sales revenues, for example. The Main Revenue Service offers online access to the Tax Registration Service that provides all the specific information concerning the particular kinds of incomes for which they require you to pay taxes and the opportunity to complete online the registration procedure to submit your enterprise taxes.
Business Licenses & Permits
Even though they do not prescribe exclusive proprietors in Maine to obtain general business licenses, there might still be some additional licenses and permits to acquire for your kind of enterprise to establish it in agreement with the local rules and regulations.
There are all sorts of enterprise licenses that you have to obtain for operating your business in agreement with the local rules and regulations, like the alcohol license, the gaming license, and the rented accommodation permit, for example.
You might have to inquire with the county official at the municipality where you intend to establish your enterprise which specific licenses you would have to obtain to agree with their particular local licensing policies.
On the other hand, the Business Answers service greatly simplifies the process of establishing your enterprise in Maine by providing you with all the particular information concerning the taxation rules and regulations in the state and by letting you complete all your enterprise licensing obligations online.
You can visit their free of charge site to learn everything about operating an enterprise in the state; additionally, their Business Licensing Assistant is there to help you double-check whether you have done everything you need for your enterprise.
Besides that, you will also do well to inquire whether you have to obtain specific licenses and permits for your enterprise at your particular location in the state.
For instance, you might have to obtain a local enterprise license for the town or a city where you intend to operate your business to agree with their specific local licensing rules and regulations.
You can visit Maine’s Local Government Portal to discover all the information concerning your city’s office or to receive any assistance you may need in finding your town’s official website.
Maine Sole Proprietor: The Notion & Essence
A sole proprietor is not a legal entity! But any corporation and limited liability company (LLC) has this status. As a sole proprietor, you run the business alone (register and manage it on your behalf). It is worth noting that this gives the business owner advantages, though, imposes additional obligations and responsibilities on him.
Make Sure to Pay Attention to the Following Three Aspects
There are obligations to pay taxes to the state
A business owner and an individual entrepreneur are the same people. It means that filing tax returns is not a requirement, as with an entity or LLC. You need to declare your income and expenses and fill out the declaration of an individual;
Signing contracts
Business owners who are registered as sole proprietors have the right to enter into contracts on their behalf, unlike an entity. Also, receiving profit from clients, in checks they can indicate their name in the recipient column;
Flexible terms of business management
The advantage difference between individual entrepreneurship and any entity is the ability to combine work and personal assets. Whereas corporations and LLCs must separate personal assets from company assets. It has several positive and negative aspects. For example, if you have financial difficulties, creditors can seize or confiscate your personal property (house, car, etc.). In the case of corporations and LLCs (or any entity), creditors do not have this freedom, as their powers only apply to business assets.
Final Thoughts
Of course, the structure of doing legal business as a sole proprietor is greatly simplified while in Maine. You don’t even have to pay any commission fees provided for the entity or LLC. At the same time, based on the nature and structure of the business activity that you conduct, you will all have to go through a series of entity stages.
The issues of taxation, obtaining licenses, and permits require more detailed consideration. Also, pay attention to the possibility of obtaining and using DBA. These aspects are vital, as their omission can result in unnecessary legal penalties for you.
We have prepared this manual so that you can think over the structure of your business to the smallest detail. Manage it correctly and get more legal profit!