Your business is growing, and you’re planning an expansion to other states. It’s a good problem to have!
But it’s not quite as simple as choosing another location. Because each state has different rules and requirements for business operations, you may need a “foreign qualification” in each state where you plan to do business.
It’s a common misconception that foreign qualification is only for businesses operating outside the U.S. But in this case, “foreign” refers to any business operating in a state that isn’t the state where the LLC was originally formed.
What happens if I fail to foreign qualify before doing business in Maine?
Foreign qualifying is essentially asking permission to do business in the state of Maine. And the notion that “it’s easier to ask forgiveness than permission” doesn’t apply here. Failing to foreign qualify before starting a business in Maine yields consequences that are far costlier than registering in the first place. If you fail to foreign qualify, your business:
- WIll be prohibited from maintaining an action or lawsuit in Maine courts
- Can have any in-progress action or lawsuit stayed by the court
- Will owe the state a civil penalty of $500 for each year it has been transacting business in Maine
- Can be cut off from conducting business in Maine by the attorney general
Essentially, if you’re caught doing business without foreign qualification, your LLC will not only lose its revenue stream, but it could be charged with additional penalties and left without any power to pursue legal action. Those are pretty severe consequences, and simply not worth the risk. It’s best not to chance it and foreign qualify as soon as possible.
Interested in what Maine state law has to say on the subject? Check out Section 1629 of the state’s LLC Act.
What is considered “doing business” in Maine?
We’ve established why you shouldn’t do business without a foreign qualification. But what exactly does it mean to “do business” in Maine? The state’s Revised Statutes make reference to “transacting business” and “conducting activities” but don’t explicitly define them. However, we know from other state and tax laws that a company is typically considered to be “doing business” and required to foreign qualify if:
- Your LLC maintains warehouses, offices, stores or other physical presences in the state
- There are salespeople, agents, and/or other representatives operating on behalf of your LLC in the state
How you’ve set up your LLC will also determine if you’re liable for specific LLC taxes in Maine, and if the state knows how to tax you based on your foreign qualification. At first, it might be tempting to dodge taxes by flying under the radar, but this could lead to heftier fines down the road. It’s important to always stay on top of your LLC’s taxation requirements to avoid any unwelcome surprises.
If you’re unsure whether or not you need to file for a foreign qualification in Maine, we suggest seeking legal counsel.
Could I be exempt from foreign qualifying in Maine?
The foreign qualification, however, isn’t a hard and fast rule for all LLCs performing any kind of action in Maine. Certain actions do not qualify as “doing business” and therefore don’t require a foreign qualification. Some examples are:
- Defending or settling lawsuits in a Maine court
- Any activities that only concern internal affairs, like holding LLC member and/or manager meetings
- Maintaining bank accounts
- Having offices or agencies that transfer and exchange the LLC’s own securities
- Selling products or services through independent contractors
- Securing and collecting debts, or acquiring and creating indebtedness
- Transacting business in interstate commerce
- One solitary transaction, not in line with similar ones, taking place within 30 days
- Owning real or personal property in Maine
Cross-check this list with your business activities in Maine and see how they compare. If your only activities appear here, you’re likely exempt from foreign qualifying. To double-check, you can go straight to the source, Maine’s LLC Act, Section 1623. But if you’re harboring any doubts, it’s best to get some legal advice.
How to Foreign Qualify Your LLC in Maine
Foreign qualification in Maine is simple if you know where to find and send your forms. If you or your legal counsel has decided to foreign qualify your LLC in Maine, you need to get your hands on Form MLLC-12: Statement of Foreign Qualification to Conduct Activities. This is your ticket to doing business in Maine.
Download and complete the form with all required information. In addition to your completed MLLC-12, you will need to submit:
- A Filer Contact Cover Letter (pg. 4 of the form)
- A Certificate of Good Standing from the state where the LLC was formed
- A payment of $250
Once you’ve gathered your materials, package them up and mail them to:
Secretary of State
Division of Corporations, UCC, and Commissions
101 State House Station
Augusta, ME 04333-0101
Or, if you’d like to physically drop them off and happen to live near Augusta, you can hand deliver your documents to the same address.
The $250 fee is payable by check, made out to the “Maine Secretary of State,” or by card, but only if you include a “Credit Card Payment Voucher” with your other documents.
Processing times for foreign qualification applications are usually around 2-3 weeks. But if you’re in a hurry, the Secretary of State’s Office offers two expedited options: 24-hour service for $50 or immediate service for $100.
After your form is in and your fee is paid, sit back, take a deep breath, and pat yourself on the back. Your LLC is on its way to foreign qualification and you’re embarking on another chapter in the life of your business.
Name Requirements to Remember
As you’re compiling your business information, requesting your Certificate of Good Standing, and filling out your forms, don’t forget the little details, like making sure that your LLC name is compliant with Maine’s business name requirements. Your LLC name must:
- Contain the words “limited liability company” or “limited company,” or one of the following abbreviations: “L.L.C.,” “LLC,” “L.C.,” or “LC”
- Be completely distinguishable and available in the Secretary of State’s records (perform a Maine LLC name search to make sure the name you want is available)
- Not use obscene language
- Not promote abusive or unlawful activity
- Not suggest an association with public institutions
You can also reserve your Maine business name if you’re not quite ready to foreign qualify your LLC.
Should I hire a service to file my Maine foreign LLC?
Considering all the work that goes into expanding your business to a new state, you’ve likely got a lot on your plate. Rather than trying to juggle everything yourself, you can bring on an individual or company to help you secure your LLC’s Maine foreign qualification.
For example, business attorneys understand all the legal nuances involved, providing peace of mind that the job will get done correctly. But if you go this route, be sure you have the budget for it. Lawyer fees for Maine foreign LLC qualifications can be a prohibitively expensive option for businesses operating on tight budgets.
If you’re operating on a limited budget, but still want to have your Maine foreign LLC professionally registered, go with an online business service provider. There are plenty of reputable companies that can help you out with Maine foreign qualifications, but here are a couple of our favorites:
- MyCompanyWorks ($99): MyCompanyWorks is one of the only service providers offering foreign qualifications for less than $100. This company receives excellent customer reviews and has a great track record of success, making it a smart choice for a wide range of entrepreneurs.
- IncFile ($149): IncFile offers a free LLC formation service that we have always appreciated, and its pricing for foreign qualifications is a reasonable $149. IncFile has the best customer feedback reputation in the industry, with tens of thousands of positive reviews available online.
- Northwest Registered Agent ($225): Northwest is more of a premium service, with the best customer support in the industry, in our opinion. They also include a year of their namesake registered agent service with every foreign qualification. There’s a reason Northwest is our #1 pick among the best registered agent services!
Frequently Asked Questions
When Is the Best Time to Foreign Qualify an LLC?
We think you should foreign qualify your LLC before you begin conducting business in a new state. If you don’t, your business could be subject to a broad range of fines and penalties for operating an LLC in a state where you don’t have permission to do so.
How Long Does It Take Maine to Process a Foreign Qualification?
You’ll typically need to wait roughly 10-18 business days for the state to process your application, according to the Maine Secretary of State’s website. That site also includes updates to turnaround times in a red box at the top of the screen — if there is no such update at this time, you can assume the typical 10-18 business day turnaround is in effect.
Where Can I Learn More About the Maine LLC Licensing and Permitting Requirements?
Chances are, you’ll require at least one license or permit to operate your LLC in compliance with Maine state law. For more information about business licenses and more in this state, check out Maine’s convenient Business Licensing webpage.
Do I Need to File an Annual Report for My Foreign LLC in Maine?
Yes. Whether you operate a domestic or foreign LLC in this state, you are required to file a Maine LLC Annual Report.
What Is the Total Expected Cost of Operating an LLC in Maine?
The overall costs of operating a Maine LLC can vary considerably based on the specifics of your business. However, we created a helpful guide to help you identify and plan for every expense your LLC will face in this state.
Should I Use an LLC Service, Hire an Attorney, or Foreign Qualify My Own LLC?
The answer to this question lies in your personal preferences, but we can give some general pointers. An attorney will cost the most by a mile, but also provides expertise you won’t find with the other options. The DIY route is free of charge but can require quite a bit of legwork and provides no peace of mind that the process is being completed correctly.
Using an LLC service means your business will be foreign qualified by professionals who know what they’re doing, while also costing significantly less than a lawyer. This “best of both worlds” attribute is what makes LLC services our preferred option.
How Do Online LLC Services Work?
Using an online LLC service removes much of the hassle from the foreign qualification process. With these services, all you need to do is provide them with the name, location, and industry your business operates in, along with some info about yourself and your Maine registered agent.
The service then registers your Statement of Foreign Qualification with the state to qualify your LLC to do business in Maine.
Are LLC Service Websites Legit?
Absolutely. There are quite a few reputable companies offering LLC formation service and foreign qualifications these days, including the two options we discussed earlier: MyCompanyWorks and IncFile.
In fact, while we certainly have our opinions about which ones offer the best pricing and features, every one of the incorporation services we discuss on this website is entirely legitimate and trustworthy.
Need to save time?
Let’s face it, there’s never enough time in the day, especially when you’re running a company. And properly registering your LLC in Maine involves research and time, time that you could be using to continue growing your business.
If the thought of paperwork, fees and state correspondence makes your head spin, consider using a service like Northwest Registered Agent to foreign qualify your business. Services like Northwest ensure that your forms are filed correctly and on time, potentially saving you thousands of dollars in penalties, not to mention a bunch of time and stress.