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MAINE START-UP BUSINESS: THE LEGAL ENVIRONMENT

MAINE START-UP BUSINESS:  THE LEGAL ENVIRONMENT

The legal environment of business is complex and ever-changing.  Whether your start-up business is home-based, or whether you have several business locations throughout the State, it is important to understand some of the legal challenges facing entrepreneurs in Maine.  Here are some legal considerations that may help navigate the exciting process of becoming a Maine business owner – and help you to avoid some of the pitfalls that threaten the unaware.

Business Plan

A business plan is a formal written document that not only outlines the goals and objectives of your start-up business, but also defines the processes to be followed and the challenges to overcome in order to reach those goals.  A business plan should be the first step in moving forward with a start-up business idea.  Not only will you need a business plan for financing purposes, but you may also work out some of the uncertainties and better develop some of your abstract ideas.  And the process of creating the plan will motivate you and help you envision your business succeeding!

For business plan tips and samples, the Finance Authority of Maine has a helpful website:  http://www.famemaine.com/files/Pages/business/Reference/Business_Plan_Basics.aspx.

Licenses and Permits

Licensing and permitting requirements vary greatly, of course, depending on the type of trade or profession involved.  From doctors, to lawyers, to electricians, to hair and nail technicians, to funeral directors, many trades require Maine State licenses.

In addition, Maine and its municipalities regulate and apply special taxes to various businesses for revenue raising and consumer protection purposes.  For instance, a sales permit is required for selling retail products in Maine.  Of course, additional permits and licenses are required for the sale of tobacco, alcohol, and other heavily regulated products.

For more information about permits and licensing requirements for various Maine businesses, a factsheet can be found at http://extension.umaine.edu/publications/3014e/.

Zoning Requirements

Zoning regulations in Maine are handled by the local municipalities and, therefore, vary greatly across the State.  If you are unsure about whether or not your business locale is zoned for the particular purpose of your business, you should contact an attorney.  Your business can be shut down for violations of zoning ordinances!  A comprehensive manual about zoning and land use in Maine can be found at:  http://www.maine.gov/spo/ceo/documents/landusemanual2010.pdf.

Business Entity Formation

Another important consideration for any start-up business is whether or not to take advantage of the various entities into which a business may be formed.  A business owner does not legally need to form a business entity, such as a corporation; instead, an owner may choose simply to be a sole proprietor.  Depending on the scope and size of the business, however, incorporating or forming a limited liability company may have tax and other benefits, including limited personal liability for the owners.  For a comprehensive article about the various entity forms a business can take, please review the article by Attorney John Conway:  http://lcwlaw.com/2012/03/starting-your-own-company-know-the-basics/.

Employment Law

As your business grows, you may need to hire staff.  Being an employer brings with it additional legal requirements that are often overlooked – until a problem arises.  Generally, the more employees you have, the more legal requirements are imposed.  To avoid risks such as misclassification of employees as independent contractors, violating obscure employment laws, or inadvertently mishandling confidential employee information, it is wise to seek legal advice beforehand.

Consumer Laws

As a provider of goods and/or services in Maine, you may be subject to certain consumer protection laws, and you should familiarize yourself with at least the basics.  The Maine Attorney General’s Consumer Law Guide is an excellent resource for both businesses and consumers.  An on-line version can be found at:  http://www.maine.gov/ag/consumer/consumer_law_guide.shtml.

For instance, if your business involves direct sales, you should be aware of Maine’s laws regarding door-to-door or telephone sales.  Several laws apply to these types of sales practices, including the Consumer Solicitation Sales Act and the Home Solicitation Sales Act.  Maine law provides consumers with the right to a written contract that includes a three-day cancelation clause.  In addition, certain licenses may be needed before door-to-door sales can go forward.  The Maine Attorney General’s Consumer Law Guide contains some helpful information on this topic:  http://www.maine.gov/tools/whatsnew/attach.php?id=27932&an=1.

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This article is not legal advice but should be considered general guidance in the area of start-up businesses in Maine.