Starting a Business in Maine

STEPS TO STARTING A BUSINESS IN MAINE

The Pine Tree State is one of the best states in the country to start a business. It has consistently been ranked in the top 5 fastest growing states for entrepreneurs. It has a common sense regulatory environment, local communities that support business, and working capital that isn’t far from arms reach. Maine has many opportunity programs for those starting a business and companies that want to run their operations from within the state. Common incentives come in the form of tax credits, exemptions, grant/loan programs, and to companies situated inside designated Development Zones. Those business located inside the special zones must make sure they have the right permits. Obtaining the correct business licenses will take time so researching the proper information is very important.

Another task that must be done after setting up a company with the Maine Secretary of State is registering for a Maine Sales Tax Permit (Seller’s Permit) online. The Maine Secretary of State governs business formations and help with filings, but it is Maine Revenue Services that sets tax policy for the collection of sales tax. After you receive your sellers permit, you must look up your Maine sales tax rate in order to file your Maine sales tax return. Companies in Maine can benefit from many outstanding programs. Here is a brief list of the incentive programs awarded:

• Financing is available through the FAME Direct Loan Program. The program is governed by the Maine Finance Authority. The program provides special financing to newly created or existing businesses located in Maine. Loan amounts are provided up to $500,000. The company must show that all other sources of financing have been attempted and exhibit sufficient need of financing. FAME also offers other various financing programs. Additional to the FAME program there is the State small business credit incentives program which gives loans up to $350,000.

• One of the standout tax credits available in Maine is the High Technology Investment Tax Credit. This incentive credit provides a tax credit towards leasing or purchase of technology related equipment such as computers, software or other technological materials. Businesses that qualify for the credit would be in the technology arena such as computer manufacturers, software developers, internet service providers and other electronic media companies.

• Maine has an entertainment tax credit called the certified Media Production Tax Credit. The program credit offers a 5% credit towards eligible production expenditures as long as the expenditures exceed $75,000. The program is offered by the Department of Economic and Community Development.

• The Maine Pine Tree Development Zone Program provides tax reduction benefits to incentivize businesses to create new jobs or relocate jobs to specific sectors in Maine. Qualified sectors include Information Technology, Environmental Technology, Financial Services and Biotechnology. Eligible benefits under the program include corporate tax credits, reduced energy rates, and Sales and Use Tax Exemptions taken against real or personal property.

• Maine Sales Tax Exemptions are offered for businesses within certain industries which include Research & Development, Biotechnology, Manufacturing and the energy used in the manufacturing process, and custom computer programming. Capital expenditures on equipment and machinery used in R & D as well as in the manufacturing process of tangible personal property that is for resale qualify for a Sales Tax Exemption. Additionally, a 95% Sales Tax Exemption is available for any energy (electricity or fuel) related expenses used in the manufacturing process. The cost of equipment and machinery used in a biotechnology capacity qualify for a Sales Tax Exemption. Any customized computer programming is also exempt from sales tax. A sales tax license is needed in order to take the various exemptions.

• One major employment incentive in Maine is the Employment Increment Financing Program which is geared to help companies expand their workforce. The program includes a rebate of up to 80% of the withholding tax paid by the business. Businesses must create at least 5 new jobs over a two year period and offer each employee a qualified health and retirement plan.