The Business Taxes Your Maine LLC Will Need to Pay
There are a wide variety of business taxes that your Maine LLC will need to pay. These include tax that’s payable to the Maine government, like sales taxes and state tax. You will also need to pay federal, self-employment and possibly payroll tax to the IRS.
If you want help with your taxes, Incfile provides a complete Business Tax Filing service.
How Your Maine LLC Will Be Taxed
The profits of a Maine LLC are not taxed at the business level like those of C Corporations. Instead, taxes for a Maine LLC work as follows:
- Maine LLC owners pay self-employment tax on business profits.
- Maine LLC owners pay state tax on dividends and interest.
- All LLC owners pay federal income tax on any profits less federal allowances or deductions.
- Employers pay payroll tax on any salaries they pay to employees.
- Employees pay federal, state and payroll tax on their earnings.
Items 1, 2 and 3 are taxed as “pass-through” income for any LLC owners, managers or members who receive profits from the business. Any profits are reported on federal and Maine personal tax returns, and that’s where you will pay those taxes.
Taxes Payable to the Maine Revenue Services
There are two main types of tax that you will pay to the Maine Revenue Services: state income tax and state sales tax.
Maine State Income Tax Payable on LLC Earnings
As a Maine business owner, you will need to pay ME state tax on any money you pay to yourself. These earnings flow through to your personal tax return, which is where you will pay income tax. You will be taxed at the standard rates for Maine state taxes, and you will also get to apply regular allowances and deductions.
Any salaried employees will also need to pay personal state taxes.
The Maine state tax rates are 5.8 percent to 7.15 percent, depending on income.
Get details on the Maine state tax here.
Maine Sales Taxes
If you sell physical products or certain types of services, you may need to collect sales tax (also known as sales and use tax) and then pay it to the ME Revenue Services. Maine sales tax is collected at the point of purchase. Maine sales tax rates do vary depending on the region, county or city where you are located.
You will typically need to collect Maine sales tax on:
- Tangible, personal property and goods that you sell like furniture, cars, electronics, appliances, books, raw materials, etc.
- Certain services that your Maine business might provide
Most states do not levy sales tax on goods that are considered necessities, like food, medications, clothing or gas.
Get details on the Maine sales tax here.
Federal Self-Employment and Income Taxes for Your Montana LLC
There are a couple different federal taxes that every LLC will need to pay, including Montana LLCs. These are self-employment tax and federal income tax, which are taxed as “pass-through” income via your tax return forms.
Federal Self-Employment Tax
All Maine LLC business members or managers who take profits out of the LLC will need to pay self-employment tax. This tax is also known as FICA, Social Security or Medicare tax. It applies to all the earnings you withdraw from your Maine business. The current self-employment tax rate is 15.3 percent.
You will be able to deduct your business expenses from your income when working out how much self-employment tax you owe. Here are some examples of how much self-employment tax you may need to pay, depending on your earnings:
- On profits of $30,000, you would pay self-employment tax of $4,590.
- On profits of $60,000, you would pay self-employment tax of $9,180.
- On profits of $120,000, you would pay self-employment tax of $18,360.
- On profits of $140,000, you would pay self-employment tax of $21,420.
Pay Less Self-Employment Tax by Treating Your Maine LLC as an S Corporation
The Internal Revenue Service allows LLCs to ask to be treated as an S Corporation for tax purposes. This can help you reduce the amount of self-employment tax that you pay by declaring some of your income as salary and other income as distributions or withdrawals.
You can do this by making an “S Corporation Tax Election” with the IRS using a form known as Form 2553. We can file your Form 2553 with the IRS on your behalf.
Incfile Form 2553 S Corporation Tax Election for an LLC service
Speak to your accountant for more information on reducing your Maine LLC self-employment tax through an S Corporation tax election.
Federal Income Tax
You must also pay regular federal income tax on any earnings you take out of your Maine LLC. The amount of income tax you pay depends on your earnings, current income tax brackets, deductions and how you file.
You only pay federal income tax on your LLC profits that you take out of the business, less certain deductions and allowances. This includes your tax-free amount, plus LLC business expenses and other deductions for areas such as healthcare and some retirement plans. Speak to your accountant for more information.
Employee and Employer Taxes for Your Maine LLC
If you pay employees, there are some slightly different tax implications. Speak to your accountant to get clear guidance for your own unique situation.
Employer Payroll Tax Withholding
All employers must collect and withhold payroll tax from their employees when they receive their salaries. You would normally withhold 7.65 percent of the taxable salary that you pay to your employees.
Employer Federal Tax Withholding
You may also choose to withhold federal income tax on the wages you pay to employees. Speak to your accountant for more information.
Employees May Need to File Tax Returns
Regardless of whether you withhold federal tax, your employees may need to file their own tax returns.
Employee Insurance and Other Requirements
You may also need to pay insurance for any employees, like employee compensation insurance or unemployment tax. There will also be other requirements you have for employees.
Get more requirements from Maine Department of Labor website
Other Taxes and Duties for Your Maine LLC
Depending on the industry you are in, your Maine LLC may be liable for certain other taxes and duties. For example, if you sell gasoline you may need to pay a tax on any fuel you sell. Likewise, if you import or export goods you may need to pay certain duties. Speak to your accountant about any other taxes you may need to withhold or pay.
Estimated Taxes for Your Maine LLC
Most Maine LLCs will need to pay estimated taxes throughout the year, depending on the amount of income and profit you expect to make. The most common types of estimated tax are:
- Federal income tax
- Federal self-employment tax
- Maine state tax
Most Maine LLCs will pay estimated taxes four times a year. Speak to your accountant for more information.
FAQs on Maine LLC Business Taxes
Does Maine Have Sales Tax?
Yes. Maine does have a sales tax, which may vary among cities and counties. You can find more information above.
Does Maine Have a State Tax?
Yes. Maine does have a general state income tax. You can find more information above.
Do I Need to Pay Estimated Taxes?
Yes. In most cases you must pay estimated taxes on your Maine tax, federal income tax and self-employment tax. Speak to your accountant for more information.