Corporations, LLCs and Business Law
When starting a business, you may elect to operate as a sole proprietor, a corporation, a Limited Liability Company (LLC), or other business entity. Corporations and LLCs provide important benefits in protecting personal assets from the reach of creditors. These entities may also provide a significant tax advantage for your business.
We work with tax professionals to assist our clients in determining which form of entity is best suited for the client’s circumstances. We then prepare documents for the transition to the new business entity, assist with initial and annual meetings, and mandatory annual reports filed with the Maine Secretary of State.
A Maine corporation is a legal entity established by an individual or group of individuals under the laws of the State of Maine. When a corporation is properly formed and maintained, it can protect stockholders from claims of parties who did not receive personal guaranties from the stockholders in the event the business fails. A properly formed corporation generally limits the liability of stockholders to the amount of money or property invested in the enterprise.
Limited Liability Company (LLC)
In this flexible and relatively new form of business entity, the LLC combines the tax advantages of a partnership with the limited liability accorded to corporate shareholders.
Owners of an LLC are called members, not shareholders. Members may include individuals, corporations, and even other LLCs. Maine law permits single member LLCs or those having only one owner.
A partnership is an association of two or more persons who carry on, as co-owners, a business or other enterprise. These individuals are responsible for the business, including all liability and any profit or loss. Although the LLC has superseded partnerships as the preferred entity form, there may be instances when a general partnership or limited partnership may be more appropriate. Contact us to learn more.
There are many reasons why a nonprofit group should seek nonprofit corporate status:
- It allows the group to obtain exemptions from federal and state income taxes. The most common federal tax exemption for nonprofits comes from Section 501, Section c, Section 3 of the Internal Revenue Code, which is why nonprofits are sometimes called 501(c)(3) corporations. If your group obtains tax-exempt status, not only is it free from paying taxes from all income but people and organizations that donate to the nonprofit can take a tax deduction for their contribution.
- It protects the directors, officers, and members of the nonprofit from personal liability for the corporation’s debts and obligations.
- It is often a requirement for obtaining funds from government agencies and private foundations.
Maine corporations and LLCs must file an annual report with the Office of the Maine Secretary of State by June 1st of each year in order to retain their good standing to do business in Maine. For more information, click here.
Maine Condominium Associations and other non-profit homeowner associations must maintain their records annually with the Maine Secretary of State.
Do you jointly own property with another individual that is not your spouse? A carefully drafted Partnership or Co-ownership Agreement can avoid costly litigation if there is ever a parting of the ways.
Choosing between an LLC and S Corp? Let us help you determine what will best suit your needs.
Is your business, Corporation, or LLC in good standing with the Maine Secretary of State? Are you holding an annual meeting? Are you keeping your company minute book updated? Let us assist you with this annual task so that you can get back to business. Contact us for more information.