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W W W. M A I N E B I Z . B I Z 29 Fact Book / Doing Business in Maine Q UA L I T Y O F L I F E T he number of companies moving to Maine increases each year. As com- panies relocate, they should understand the rules that involve moving across state lines. ese include legal and tax consid- erations 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 "qual- ify" 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. ere 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 alto- gether, at some point it makes sense to relocate the company entirely. is 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 "domes- tication out." If yes, then typically you can simply file documents in the other state and in Maine to accomplish the domestication. ose 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 lim- ited 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 tem- plates 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 docu- ments 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. e 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 prod- ucts 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, accoun- tants 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 i n b u s i n e s s a n d c o r p o r a t e l a w a t P e r k i n s T h o m p s o n , c an be r ea ched at any han @ p e r k i n s t h o m p s o n . c o m Move your company to Maine: a legal perspective B Y A D A M N Y H A N B Y A D A M N Y H A N H OW TO We're dedicated to understanding your business As professional wealth managers, our bottom line is met when our clients achieve their long-term financial goals. Yet, we also believe our clients should enjoy the two priceless assets that flow from wise financial management: peace of mind and confidence in the future. Asset Management Retirement Planning 401(k) Advisory Tax Services Estate Planning www.vancegray.com 1-888-992-2819 While Maine law makes it simple to domesticate here, not all states allow their companies to leave so easily..

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