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Start your S Corp at $0 + state filing fees
An S Corporation is not a type of business entity. It is a federal tax classification available to qualifying corporations and LLCs that elect to have their business income pass through to shareholders for tax purposes.
The S Corp designation is governed by Subchapter S of the Internal Revenue Code. When you elect S Corp status, the business itself generally does not pay federal income tax. Instead, income, losses, deductions, and credits flow through to shareholders, who report them on their personal returns.[13]
In Maine, an S Corporation files Form 1120ME, the Maine corporate income tax return. Maine corporate income tax generally does not apply to an S Corp unless the corporation has federal taxable income at the corporate level. Instead, the pass-through income is taxed to shareholders on their individual Maine returns at graduated rates from 5.8% to 7.15%.[1] [6]
One Maine-specific point matters here. Unlike most states, Maine has not enacted an elective entity-level pass-through entity (PTE) tax that works around the federal $10,000 SALT deduction cap. Maine instead requires pass-through entities with nonresident owners to withhold Maine tax and file Form 941P-ME, or to file a composite return on behalf of those nonresident owners.[7]
For business owners earning $60,000 or more in net business income, the S Corp election can provide meaningful self-employment tax savings. Only the salary you pay yourself as a W-2 employee is subject to Social Security and Medicare taxes; distributions beyond reasonable compensation are not.
| Action | Deadline | Notes |
|---|---|---|
| File IRS Form 2553 | Within 2 months and 15 days after the start of the tax year | For a January 1 tax year, the deadline is March 15. Late election relief may be available under IRS Rev. Proc. 2013-30.[3] |
| File Form 1120ME (Maine) | April 15 (calendar-year filers) | 15th day of the 4th month after the close of the tax year. Filers with a June 30 year end file by September 15.[9] |
| File Form 1120S (Federal) | March 15 (calendar-year filers) | 15th day of the 3rd month after the close of the tax year. Distribute Schedule K-1s to shareholders.[3] |
| File Form 941P-ME (nonresident withholding) | Same as the Form 1120ME due date | Required if the S Corp has any members or shareholders who are not Maine residents.[7] |
| Pay quarterly estimated tax (Form 1120ES-ME) | April 15, June 15, September 15, December 15 | Applies where Maine corporate income tax is due at the entity level.[9] |
| File Annual Report (Form MBCA-13) | June 1 each year | Filed with the Maine Secretary of State. The fee for a domestic corporation is $85.[5] |
| Set up payroll | Before paying yourself a salary | Register with the Maine Department of Labor for unemployment insurance and with Maine Revenue Services for income tax withholding before issuing W-2 wages. |
An S Corp is a tax classification, not a standalone entity. You must have an active Maine corporation or LLC on file with the Secretary of State before you can elect S Corp tax treatment with the IRS.
If you want to form an LLC first, check this guide.
If you want to incorporate as a C Corp first, check this guide.
Already have an existing LLC or corporation? Move to Step 1.
Form 2553, Election by a Small Business Corporation, is the IRS form that officially elects S Corp tax treatment at the federal level. It must be filed no later than 2 months and 15 days after the beginning of the tax year, for the election to take effect. For a calendar-year corporation electing S Corp status for 2026, the deadline is March 15, 2026.[3]
Form 2553 collects the following information:
All shareholders must sign the consent portion of the form before submission. An unsigned form will be rejected by the IRS.
You can submit Form 2553 by mail or fax. There is no filing fee.
If your principal business office is located in Maine, mail Form 2553 to: Department of the Treasury, Internal Revenue Service, Kansas City, MO 64999.[8]
Fax number for Maine businesses: 855-887-7734.[8]
Faxing is typically faster than mailing. Keep your fax confirmation receipt. The IRS will issue a CP261 acceptance notice to confirm your S Corporation election.
Maine follows the federal S Corp classification automatically. Once your federal Form 2553 is accepted, Maine treats your business as an S Corp for tax purposes when you file Form 1120ME. There is no separate Maine election form to submit.[1]
After your federal acceptance, keep a copy of your IRS CP261 acceptance letter with your corporate records and Maine tax filings as documentation.
As an S Corp shareholder-employee, you are required to pay yourself a reasonable salary through W-2 payroll. The IRS scrutinizes S Corps that pay unreasonably low salaries to avoid payroll taxes.
The IRS expects your salary to reflect what someone performing similar work, in the same industry and the same region, would typically earn. There is no fixed formula, but the IRS flags S Corps where compensation is well below market and most of the owner pay comes through distributions.
Setting your salary too low risks the IRS reclassifying distributions as wages, making them subject to payroll taxes plus penalties and interest.
If you do not already have an EIN, apply at no charge on the IRS website (irs.gov). An EIN is a nine-digit federal ID used for tax filings, hiring employees, and opening business accounts.
Note: After obtaining your EIN, open a dedicated business bank account to keep your personal and business finances separate. This is essential to maintain your limited liability protection.
Every Maine corporation must file an annual report (Form MBCA-13) with the Secretary of State by June 1 each year. The fee is $85 for a domestic corporation. Failing to file on time can lead to late penalties and eventually administrative dissolution.[5]
File IRS Form 1120S and distribute Schedule K-1s to all shareholders by March 15 (calendar-year filers). File Maine Form 1120ME by April 15 for calendar-year filers, the 15th day of the 4th month after the close of the tax year.[3] [9]
Maine allows an extension of time to file Form 1120ME using Form 1120EXT-ME. An extension to file is not an extension to pay; any Maine tax due must still be paid by the original deadline.[9]
Where Maine corporate income tax applies at the entity level, estimated payments are made on Form 1120ES-ME on April 15, June 15, September 15, and December 15.[9]
If your S Corp has any shareholders who are not Maine residents, the entity must withhold Maine income tax on their share of Maine-source income and file Form 941P-ME, or instead file a composite return covering those nonresident shareholders.[7]
If you fail to file Form 2553 with the IRS on time, your S Corp election will not take effect for the current tax year. Your business will be taxed as a C Corporation (or as a sole proprietorship or partnership if the underlying entity is an LLC) for that year, costing you the self-employment tax savings until the next tax year.
The IRS offers late election relief under Revenue Procedure 2013-30. To qualify, you must file within 3 years and 75 days of the intended effective date, demonstrate reasonable cause for the late filing, and confirm that the entity has consistently filed as if the S election were in effect.[3]
Because Maine follows the federal S election automatically, there is no separate state late-election process. Once the IRS grants late election relief, Maine will treat the entity as an S Corporation for the same tax year.[1]
At the federal level, the S Corp election can be revoked by filing a statement of revocation with the IRS, signed by shareholders holding more than 50% of the outstanding shares. The revocation is effective the first day of the tax year if filed by the 15th day of the third month; later filings take effect the following tax year.[3]
Because Maine follows the federal classification, a federal revocation automatically terminates the Maine S Corp status. The entity then files as a C Corporation in Maine for tax years beginning after the federal revocation. Once revoked, you generally cannot re-elect S Corp status for five years without IRS consent.[1]
Maine corporate income tax is graduated, with rates from 3.5% on income up to $350,000 to 8.93% on income over $3,500,000. This tax generally does not apply to an S Corp unless the corporation has federal taxable income at the corporate level. Most S Corps therefore file Form 1120ME without owing entity-level income tax.[1]
| Maine Taxable Income | Corporate Income Tax Rate |
|---|---|
| Not over $350,000 | 3.5%[1] |
| $350,000 to $1,050,000 | 7.93%[1] |
| $1,050,000 to $3,500,000 | 8.33%[1] |
| Over $3,500,000 | 8.93%[1] |
Many states have enacted an elective entity-level PTE tax that lets the business pay state income tax at the entity level, preserving the federal SALT deduction for owners. Maine has not enacted such an elective PTE tax. Maine S Corp shareholders cannot use a state PTE election to work around the federal $10,000 SALT deduction cap.[7]
Instead, Maine requires a pass-through entity with one or more nonresident owners to withhold Maine income tax on the nonresident share of Maine-source income and file Form 941P-ME. The entity may alternatively file a composite return on behalf of its nonresident owners.[7]
Maine imposes a graduated individual income tax with rates from 5.8% to 7.15%. S Corp shareholders pay this tax on their pro rata share of pass-through income. Nonresident shareholders pay Maine tax only on the share derived from Maine sources, with withholding handled through Form 941P-ME.[6] [7]
Maine charges a 5.5% general sales and use tax rate. Different rates apply to certain items, such as prepared food and lodging. Businesses selling taxable goods or services must register with Maine Revenue Services and collect the tax.[10] [14]
| Item | Cost |
|---|---|
| Articles of Incorporation (Form MBCA-6) | $145[2] |
| Certificate of Formation, LLC (Form MLLC-6) | $175[12] |
| IRS Form 2553 filing | No fee[3] |
| Federal EIN (Form SS-4) | No fee |
| Annual Report (Form MBCA-13) | $85 for a domestic corporation[5] |
| Registered Agent service (typical commercial) | $100 to $300 per year |
| Optional: expedited filing service | Additional fee per filing[2] |
| Feature | S Corporation | LLC |
|---|---|---|
| Formation Document | Articles of Incorporation ($145) | Certificate of Formation ($175) |
| Federal Tax Treatment | Pass-through (Form 1120S) | Pass-through by default (Form 1065 or Schedule C) |
| Maine Tax Treatment | Files Form 1120ME; generally no entity-level income tax | Pass-through; members taxed individually |
| Annual Report | Form MBCA-13 ($85) | Form MLLC-13 ($85) |
| Annual Report Deadline | June 1 | June 1 |
| Self-Employment Tax | Only on W-2 salary | 15.3% on all net earnings |
| Ownership Limits | Max 100 U.S.-person shareholders, one class of stock | Unlimited members, any type |
| Management | Directors and officers required | Flexible; member or manager managed |
| Reasonable Salary Required | Yes | No |
| Nonresident Owners | Form 941P-ME withholding or composite return | Form 941P-ME withholding or composite return |
| Best For | Owners earning $60K+ wanting SE-tax savings | Small businesses prioritizing simplicity |
The S Corp election makes the most financial sense when your net business income is high enough that the self-employment tax savings outweigh the cost of running payroll and the additional compliance burden. Use this guide:
| Net Business Income | Recommendation |
|---|---|
| Under $40,000 | An S Corp likely does not make sense. Payroll and compliance costs typically erase the savings. |
| $40,000 to $60,000 | Borderline. Run the numbers with a CPA. Savings may be modest after payroll-service fees. |
| $60,000 to $100,000 | S Corp election usually saves $2,000 to $5,000 per year in self-employment taxes. |
| $100,000 to $200,000 | Strong candidate. Savings often $5,000 to $10,000 or more per year. |
| Over $200,000 | Almost always advantageous unless you have specific reasons (foreign investors, IPO plans) to remain a C Corp or LLC. |
Keep in mind that Maine’s $85 annual report fee, payroll setup costs, and ongoing CPA fees together add roughly $800 to $2,500 in annual costs. S Corps also have ownership restrictions that may not suit every business model.
| Requirement | Details |
|---|---|
| Form 1120S (Federal) | Due March 15. Reports S Corp income. Distribute K-1s to shareholders. |
| Form 1120ME (Maine) | Due April 15 for calendar-year filers. Maine corporate income tax return; an S Corp generally owes no entity-level tax.[9] |
| Form 941P-ME (Maine) | Filed where the S Corp has nonresident shareholders, to report nonresident withholding or a composite return.[7] |
| Annual Report (Form MBCA-13) | Filed with the Maine Secretary of State by June 1. $85 fee for a domestic corporation.[5] |
| Form 941 (Federal Payroll Tax) | Filed quarterly. Reports federal income tax, Social Security, and Medicare withheld. |
| Form 941ME | Maine income tax withholding return filed with Maine Revenue Services.[1] |
| Maine Unemployment Insurance | Quarterly UI contribution and wage reports filed with the Maine Department of Labor.[11] |
| W-2s and 1099s | Distributed by January 31. Filed with the IRS, Social Security Administration, and Maine Revenue Services. |
| Estimated Tax Payments | Form 1120ES-ME quarterly payments where Maine corporate income tax applies.[9] |
| Registered Agent Maintenance | Keep a registered agent (clerk) with a Maine address current with the Secretary of State.[4] |
Bibliography
[1] Maine Revenue Services. Corporate Income Tax (1120ME). Accessed May 20, 2026.
[2] Maine Secretary of State. Business Corporation Forms (MBCA-6, Articles of Incorporation). Accessed May 20, 2026.
[3] IRS. Instructions for Form 2553. Accessed May 20, 2026.
[4] Maine Legislature. 13-C M.R.S. Section 501 (Registered Agent). Accessed May 20, 2026.
[5] Maine Secretary of State. Filing an Annual Report. Accessed May 20, 2026.
[6] Maine Revenue Services. Individual Income Tax (1040ME). Accessed May 20, 2026.
[7] Maine Revenue Services. Pass-through Entity Withholding (941P-ME) and Returns. Accessed May 20, 2026.
[8] IRS. Where to File Your Taxes (for Form 2553). Accessed May 20, 2026.
[9] Maine Revenue Services. List of Forms and Due Dates. Accessed May 20, 2026.
[10] Maine Revenue Services. Sales, Use and Service Provider Tax Rates and Due Dates. Accessed May 20, 2026.
[11] Maine Department of Labor. Maine Department of Labor. Accessed May 20, 2026.
[12] Maine Secretary of State. Limited Liability Company Forms (MLLC-6, Certificate of Formation). Accessed May 20, 2026.
[13] IRS. S Corporations. Accessed May 20, 2026.
[14] Maine Revenue Services. Sales, Use and Service Provider Tax. Accessed May 20, 2026.
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