Adam Nyhan
Updated: August 2, 2021
How To
Move your company to Maine: a legal perspective
By Adam Nyhan
The number of companies moving to Maine increases each year. As companies relocate, they should understand the rules that involve moving across state lines. These include legal and tax considerations as well as practical matters.
Qualifying vs. domesticating
First, good news: a company that is newly doing business in Maine may not need to move the company to Maine. Suppose you own a Texas company. You have just moved to Maine, but your company in the near term will keep operating in Texas. In this case, Maine law generally will require your company now to “qualify” or register to do business here, but that is as easy as filing a form with a small fee while continuing to operate from Texas. There is no legal need to close the Texas company or relocate it.
On the other hand, if you will stop operating in your original state altogether, at some point it makes sense to relocate the company entirely. This is called domestication, and it comes with powerful benefits: it allows your company to avoid tax consequences and keep its credit history, because it remains the same company in the eyes of tax authorities as it crosses state lines.
While Maine law makes it simple to domesticate here, not all states allow their companies to leave so easily, so the first step is to confirm that your current state of organization allows for “domestication out.” If yes, then typically you can simply file documents in the other state and in Maine to accomplish the domestication. Those documents usually require approval from the company’s principals — shareholders and directors in the case of a corporation, or members and any managers in the case of a limited liability company.
If the first state does not allow domesticating out, then you may need to form a new company in Maine, transfer to it the assets of your existing company, and then dissolve the first company.
Know the Maine laws
You’ll want to understand the Maine laws relevant to your business — some of which may differ considerably from those in your original state. In Maine, for example, using the same non-compete agreement that you used for your employees in other states may subject your company to a $5,000 fine.
Update contract templates
Most companies have contract templates that they use with customers, suppliers or other companies such as resellers. As soon as you domesticate in Maine, you’ll want to update the contact information in them as well as the clauses that select a state whose law will govern disputes. Your employee handbook and other employee documents should also be reviewed.
Secure permits and licenses
Many professions in Maine require state licenses, from foresters to acupuncturists. Other business activities, from cannabis cultivation to food trucks, require city permits. The Maine Secretary of State and your city hall can confirm which ones you may need.
Tax issues
Domesticating in Maine should not require a change to your company’s Employer Identification Number, but you will likely need to file a Form 8822 with the IRS to update your address. You will also need to determine with an accountant whether and when the products you sell are taxable and when you must apply for a Maine sales tax permit.
More tips
To do business in Maine, you’ll want to work with local attorneys, accountants and banks or credit unions. Other relationships are powerful too. If you’re a startup, get to know the Maine Center for Entrepreneurs and Maine Technology Institute (MTI). If you’re an investor, consider MTI as well as the Maine Venture Fund and Maine Angels.
Adam Nyhan, who specializes in business and corporate law at Perkins Thompson, can be reached at anyhan@perkinsthompson.com
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