Form a General Partnership in Maine

A Maine general partnership can be as simple as a hand-shake agreement between two or more people. It’s pretty easy to set up and use this business structure for your new company. But it may not be the best business structure for your needs. This article will discuss the pros and cons of using a Maine general partnership and other things you need to know so that you can make an informed decision.

If a general partnership isn’t right for your new business, we can help you with other options for a business structure. Use our Maine LLC Formation Services or Maine Corporation Formation Services to get started.

Step 1: Determine if you should start a general partnership

A general partnership may not be the right choice for your new company. There are pros and cons to a Maine general partnership you have to consider before making the decision. 

Pros

Some of the benefits of a Maine general partnership include the following:

• Can be created with the ease of just a handshake
• Very little necessary paperwork
• Not much yearly maintenance, other than filing taxes
• Profits are passed through to the partners, so no double taxation

Many small Maine businesses are using the partnership format to successfully run their companies. 

Cons

There are also negatives to using the partnership model to run your business, versus some other form of business structure:

• Sharing the potential debts and liabilities of partners
• More difficult to sell a partnership interest
• Conflict among partners
• Sharing decision-making authority
• Harder to attract investors

You just have to decide whether the pros outweigh the cons in making the decision to use a Maine general partnership for your new company.

Step 2: Choose a business name

Company names are very important, especially for marketing purposes. In Maine, you don’t have to register your company name at the state level. If you are operating your business as a general partnership, you are required by Maine law to file with the municipal clerk where your business is located. You have to file a certificate with the local municipality where the partnership conducts business, supplying them with the partnership name, address of the partners, and type of business. If you already have a name in mind, check to see if your business name is available.

Step 3: File a DBA name (if needed)

Some states require general partnerships who are using an assumed name or “doing business as” name to file with the state. Maine does not require this. There is no provision under Maine law for filing trade names (Maine’s version of a DBA) of sole proprietorships or general partnerships at the state level. However, as mentioned above, you have to register your partnership with the local municipality where the partnership is doing business.

Step 4: Draft and sign partnership agreement

Although you can create a general partnership in Maine with a simple handshake, it’s still a good idea to draft and sign a partnership agreement. A written agreement can establish the rules of the company, who is responsible for what, and how the partnership is to be organized and run.

Maine does not require you to file your partnership agreement with the government. But without an agreement in place, any disputes between the partners will be controlled by Maine’s Uniform Partnership Act. This may not be ideal. So creating an agreement can save you a lot of time and trouble going into the future.

Step 5: Obtain licenses, permits, clearances

No matter what type of business you’re creating, you’ll need to research and apply for all the licenses, permits, and clearances necessary to run your company. If you miss a license or permit, then the state of Maine or even your local municipality can shut your business down.

The state of Maine doesn’t require you to have a general business license to operate. However, each municipality may require you to obtain an operating license. That’s why we work with Business Licenses LLC, which provides a Business License Report to identify your licensing and permitting needs at every level of government.

Step 6: Get an Employer Identification Number (EIN)

Applying for and obtaining an Employer Identification Number (EIN) is a simple step, but it’s often missed. An EIN is an identification number for your business, similar to an individual receiving a social security number. We offer an Employer ID Number Service so that you can quickly request and receive your EIN. With an EIN, your business can file your taxes, open a bank account, and apply for business loans.

Step 7: Get Maine state tax identification numbers

You do not need a separate state-level tax ID for Maine. The federal EIN issued by the IRS is sufficient. However, if your company is a retail business, you will have to register to pay sales and use tax.

Forming a Business Partnership in Maine: Next Steps

Once you have everything set up and filed with the proper authority, don’t forget to open up a business checking account. Also, it’s a good idea to review your business insurance needs with an insurance professional to make sure you’re fully covered. You will also want to keep up with your taxes.

How We Can Help

A Maine general partnership is a great business structure to use, especially for small businesses. By using this guide and following the steps we’ve laid out, your company can be up and running in no time. We can also help you after your company is established with our business development and maintenance services, including our Worry-Free Compliance Service. With our services, you can spend less time on paperwork and more time on making money.