How to Register for a Sales Tax Permit in Maine

Running a business on your own should be the dream of every aspiring entrepreneur. It is the ultimate goal in one’s business career. However, the majority ends up working regular jobs, spending hours, days, months and years in one company, working for someone else. But that does not have to always be the case. Almost everyone has the chance to turn a good idea into a lucrative business.

The environment has a strong influence on the individual, and despite your best wishes to leave your job and go on your own to create something new from scratch, you might find your family, friends, colleagues telling you to reconsider such decision. Often It is these doubts that stop people from taking the step forward and going on their own. This is why starting your own business is something you should look into yourself. Consider your skills, your experience, and count every hour you spent at every job as experience, no matter if it is not a managerial position, and very important, and ask yourself why are you looking to start your business.

Once you are sure you are determined to make it as a business owner, it is time to complete certain steps that will lead to the establishment of your company. And, although this is not an official document, it will serve as a guide that will point you to the right institutions in order for you to register a business in the state of Maine.

Preparing to Register a Business in Maine

As said above, you have to ask yourself questions and only if the answer is affirmative should you move on from your current job and enter the business world. First, make sure you use every bit of experience gained throughout the years and make it work for you. When you look at it, you will have some insight into the market conditions and what is it that you could do, and what market segment you could possibly exploit.

But, this is not all. Especially if you want to run a successful business. There is a lot more that goes into the preparation process. If done correctly, it will make your life as a manager easier. You must work out a business plan, and follow it. You could do this on your own, but it is advisable to consult an attorney or a business advisor in order to create a well-rounded business plan. There are many reasons to seek assistance. One, the research required, in order to gather all the data necessary for the business plan is extensive, and hard for someone to do it on their own. Attorneys and business advisors already have experience and established networks of data resources and can help you get to the necessary information a lot quicker, in addition to the data being thorough and accurate.

Why is this important? A business plan entails all the necessary information potential investors might want to look at such as the income projections, your revenue projections, the potential costs of running the business and a lot more. Without a well-developed business plan, you run the risk of getting rejected by the banks or any other financial institution that you might turn to for additional funding.

Also, a business plan will serve as a roadmap through the development process of your business. The research into the market conditions will not only show you the potential costs and benefits of your business, essentially showing whether your business is sustainable or not, but it will also show you the supply and demand levels within a market. As a result, you will be able to determine the competitiveness of a market. The higher the competitiveness in a market, the higher the chance of failure.

This might not be because your business model is not sustainable or you are providing low-quality products or services; it could simply mean that your company could not compare to the already established names that have a huge base of returning customers who keep buying their products, and the profits you might potentially make, are not really worth the effort. Because of this, it is better to look further into the findings of your market research and seek segments, niche markets that are undersupplied, where the demand outweighs the supply. Such markets are often considered the best starting point for a new business owner.

Let’s look a bit closer into the reasons why you should consider starting a business in an undersupplied market, even if it is far away from your desired segment or has no relation to the product you initially intended on working with. First, when starting you do not want to face pressure from the competition and will prefer things to come at a slower pace in order to grasp all the intricacies of running a business. An undersupplied market allows that. Also, you will have a customer base ready to be served and there is not much competition. If you’ve done your research right and found the right service to provide, or the product to sell at prices below those offered by your competition, you have a chance to establish yourself as a strong market player from the start. You get the chance to dictate the prices, and in combination with good customer services, you might start winning over customers that will become the advocates of your business.

The second advantage of starting in an undersupplied market is that with less competition you have more time to prepare and lay a path to grow your business. You will have built a customer base that will follow you into any market, and it is only the matter of gathering sufficient momentum before making the move to a new market. You will have built up a reputation with a number of customers that will then make the transition easier as they will know what to expect, no matter what the market is. And from a managerial point of view, it is only the question of repeating the steps you learned at a smaller scale in the niche market and expanding them into the new one. These steps can be repeated until you get to the point that you initially wanted to reach, the market you targeted initially, and the company that you envisioned.

The benefits of that are multiple. Once you reach that stage, you get to choose when to work and who to work with. You can also choose when to go on holiday, with your friends or family, and watch the company you built from scratch working your you.

But before opening the door to your business, and just after you have completed your research and developed a business plan, it is time to turn to the relevant authorities within the state of Maine and register your business.

Registering a New Business in Maine

To register your business in the state of Maine, the first address you have to turn to is the State Government’s Department of Economic & Community Development, which has an online Business Answers service in place for aspiring entrepreneurs and anyone looking to register a company and start their business in the state of Maine.

The online service will lead you through the registration process, posting a number of questions and determining the next step based on your answers. One of the questions is what type of a business legal entity you would like to register? Options in the state of Maine do not differ from other states in the United States. The legal entity that does not need registration is the sole proprietorship. However, if you plan on doing business as a sole proprietor, but would like to operate under a business other than your own, (Doing Business As – DBA) you are advised to contact your municipality.  All other business entities have to be registered with the Maine Secretary of State. Just as a quick overview, you have the option of registering Corporations, Limited Partnerships, Limited Liability Companies (LLCs), General Partnerships among others.

As the next step after determining the legal type of your business, you have to check whether there are any specific licenses you have to obtain prior to opening the doors to your company. According to the Maine government’s website, general licenses are handled at the town/city level. Corporations specifically need to contact the Maine Bureau of Corporations.

Before we move on to the next requirement, you should register for the Federal Employer Identification Number issued by the Internal Revenue Service (IRS). The EIN is closely linked with the permit that you will have to obtain in order to avoid potential tax issues with the state. Once you obtain your Employer Identification Number, it is time to look at the tax requirements of your business, see what is a sales tax permit and whether you actually need one.

Maine Sales Tax Permit

Tax is a very important part of the business registration process, and certainly not one you should gloss over. It is essential that you cover all the bases and learn as possible in order to avoid potential issues further down the line.

One of the permits that you will certainly be encountering is the sales tax permit if you plan on doing anything related to retail. The first thing that has to be determined is whether you have a sales tax nexus in the state of Maine, which usually entails operating or maintaining a store, warehouse, office or repair facility or having an employee, a representative or a contractor in the state.

Next, you have to look at the services or the products you plan on providing or dealing with. If it is a service you will be providing, you will not have to deal with sales tax, since services are generally not taxable in the state of Maine. However, if you are providing a service that will result in manufacturing a product, you might have to deal with sales tax. On the other hand, if you are dealing with tangible products, or engaging in retail you will probably have to apply for a sales tax permit, as these types of products are taxable, although there are certain exemptions.

If you do tick all the boxes and the products you are selling are taxable, it is time to register for a sales tax permit. According to the Maine Revenue Services, if a retailer makes retail sales within, they are required to register for a sales tax permit. The registration can be completed online through the Maine Revenue Service’s registration website. You will be required to provide personal identification information, including your Social Security Number (SSN) as well as the business identification information (this is where the aforementioned Employer Identification Number comes into play). You will also have to provide information about your business legal entity type as well as the information about the products your business will be selling.

The registration is free of charge, and the online registration enables you to receive the sales tax number within one or two days while the sales tax permit will be issued within 20 business days. Once you receive the permit, you do not have to renew it.

Sales Tax Exemptions in Maine

There are certain conditions under which a retailer may make a purchase of goods in the state of Maine without having to pay tax. Any retailer “purchasing tangible personal property or taxable services for resale are allowed to purchase those items exempt from sales tax provided the retailer presents to the seller a valid Maine resale certificate.”

Maine Revenue Services issue two different certificates, the Retailer Certificate and the Resale Certificate. A Retailer Certificate is issued to the entity that applies for sales tax registration with the Maine Revenue Services. A Resale Certificate is something you, as a retailer should be looking into more carefully, as this will enable you to make tax free purchases. If you qualify for the resale certificate, the Maine Revenue Services will issue you one. Upon making a purchase of goods you intend to resell, you have to provide the vendor with a signed copy of the resale certificate, in order to make a tax exempt purchase.

Initially, the Maine Revenue Services issues a provisional resale certificate to the applicant who expects to make over $3000 or more in gross sales over the coming year. The Revenue Services will review the retailer’s annual reports to determine whether the resale certificate will be renewed. This means the retailer’s account has to be active and the retailer must have reported $3000 or over in gross sales over the past 12 months.

As a seller, you might also come across a retailer looking to buy merchandise from you intending to resell it. In this case, as a seller, you have to retain the resale certificate on file for a minimum of six years. Make sure the resale certificate you are receiving is filled properly and signed by the buyer. More information on the Maine Resale Certificate, as well as a sample, can be found here.

While this article provides you with guidelines to the registration of your business and a sales tax permit in the state of Maine, we urge you to contact authorities or consult an attorney in order to make sure you are doing the procedure correctly.

Contact Details

Maine Revenue Services

Sales, Fuel & Special Tax Division
P.O. Box 1065
Augusta, ME 04332-1065
Phone: (207) 624-9693

Maine Secretary of State

148 State House Station
Augusta, Maine 04333-0148
Tel: 207-626-8400
Fax: 207-287-8598

Department of Economic & Community Development

Burton Cross Building, 3rd Floor
111 Sewall St
Augusta, ME 04330-6830
Phone: (207) 624-9800

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