Weiss DeRice PA
Legacy, LLC & Legacy Title

Characteristics of Business Forms in Maine

Types of Business Forms in Maine

Sole Proprietorship

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  • Liability Protection:  no statutory protection
  • Tax Aspects:  individual taxation
  • Creation:  no action required

General Partnership

  • Liability Protection:  no statutory protection; partners are jointly and severally liable for debts and liabilities of the partnership.  31 MRS 281 et seq.
  • Tax Aspects:  pass-through, unless an election is made to be taxed as a corporation
  • Creation:  must be at least two partners (state law)

Limited Liability Partnership

  • Liability Protection:  protection from liabilities "arising from omissions, negligence, wrongful acts, misconduct or malpractice committed by another partner, employee, agent or representative of the partnership."  No protection for normal debts or a partner's own act or omission "or that of any person under the partner's direct supervision and control."  31 MRS 295-A
  • Tax Aspects:  pass-through, unless an election is made to be taxed as a corporation.  61 Fed. Reg. 66,584, amending esp. Reg. 301.7701-1 through 7 ("check the box")
  • Creation:  a general partnership with filing requirements; if those are not met, can revert to a regular general partnership.  31 MRSA 801 et seq.

Limited Partnership

  • Liability Protection:  General Partner- no statutory protection; partners are jointly and severally liable for debts and liabilities of the partnership.  Limited Partner- limited to investment unless "veil" is pierced, as long as the limited partners do not participate in the control of the business
  • Tax Aspects:  pass-through unless an election is made to be taxed as a corporation
  • Creation:  must be at least one general partner and at leas one limited partner (state law) 31 MRS 401 et seq.

Limited Liability Company

  • Liability Protection:  limited to investment unless "veil" is pierced
  • Tax Aspects:  pass-through, unless an election is made to be taxed as a corporation
  • Creation:  state law and tax regulations now allow one member, if desired

Sub S Corporation

  • Liability Protection:  limited to investment unless "veil" is pierced
  • Tax Aspects:  pass-through, with some restrictions.  IRC 1361 et seq.
  • Creation:  limit of 75 shareholders, no non-resident aliens or entities (except for certain trusts)

C Corporation

  • Liability Protection:  limited to investment unless "veil" is pierced
  • Tax Aspects:  separate entity with double taxation of dividends
  • Creation:  may have one or more shareholders, directors, and officers