How to Do Payroll in Maine

The United States of America is a country where there are many different states. Each state has its own rules, taxes and regulations that people must follow in order to live their lives as they wish. Payroll is the process by which you collect your money from your employer so that it can be paid out into funds for things such as bills, food or rent

The “maine payroll taxes” is a process that involves the calculation of payroll and tax liability. The Maine Department of Labor, Bureau of Revenue Services provides information on how to do payroll in Maine.

It’s critical to understand Maine’s state payroll requirements while doing payroll, particularly for seasonal enterprises. The state levies a 5.8% to 7.15 percent income tax, as well as a 0.49 percent to 5.81 percent Unemployment Benefits tax (adjusted rate). Seasonal workers, as well as children, are subject to certain regulations. Continue reading to learn more about payroll in Maine.

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How to Run Payroll in Maine: A Step-by-Step Guide

Step 1: Register your company as an employer. You’ll need your Employer Identification Number (EIN) and an account with the Electronic Federal Tax Payment System (EFTPS) at the federal level (EFTPS).

Step 2: Register with the Maine Department of Revenue. Get a state EIN by registering your company with Maine Revenue Services. You’ll also be able to submit your taxes there. The ReEmployeME system allows you to submit unemployment contributions.

Step 3: Create a payroll system. You’ll need to set up a regular payment schedule that is at least twice a month, and you’ll need to be deliberate about which pay period each pay date will cover. You’ll need to give yourself enough time to obtain the necessary permissions and finish the payroll procedure in order to meet your deadline. You’ll also have to figure out when and how you’ll collect Forms for Payroll, as well as how you’ll pay personnel.

Collect employee payroll paperwork in step four. These Forms for Payroll are best completed during the onboarding process for new employees. W-4, I-9, and direct deposit information are among the forms. Employees in Maine must complete a W-4ME form. If they desire to claim greater personal allowances than the W-4ME allows, they may use a Withholding Allowance Variance Certificate.

Collect, evaluate, and approve time sheets in step 5. Remember that you must pay workers within eight days after the end of the pay period, and if the usual payday falls on a nonworking day, payment should be made the day before. This means you’ll need to set up a reliable procedure for collecting authorized time sheets from hourly and other nonexempt workers so that payroll is never late.

Step 6: Work out your payroll and pay your staff. To guarantee that workers, benefits providers, tax agencies, and other parties are paid correctly, you’ll need to do a variety of payroll computations. Payroll may be calculated using payroll software, a calculator, or even Excel.

Step 7: Submit payroll taxes to both the federal and state governments in Maine. For federal taxes, including unemployment, follow the IRS’s guidelines.

Maine Income Taxes: There are various options for filing and paying income tax withholdings in Maine. The I-File is the most practical option for small enterprises. The Maine Employers Electronic Tax Reporting System is for larger companies and payroll processors. Maine EZ Pay or electronic money transfer are the two methods of payment. If your yearly payments total more than $10,000, you must pay online.

You must pay semiweekly if you paid more than $18,000 in taxes in the previous 12 months ending June 30. This is the timetable for semiweekly payments:

• Remit withholding payment on or before the following Wednesday for wages earned on Wednesday, Thursday, or Friday.
• Remit withholding payment on or before the following Friday for salaries earned on Saturday, Sunday, Monday, or Tuesday.

Otherwise, you must pay quarterly in accordance with the SUTA schedule outlined below.

SUTAs (State Unemployment Benefits Taxes): Pay SUTA using your ReEmployME account on the dates listed below.

If a report or tax payment is due on a Saturday or Sunday, the report or payment is deemed timely if it is received on or before the next working day.

Step 8: Keep track of your payroll data. Employee payroll records must be kept for at least three years in Maine. Contact information, hours spent, and monies received should all be included. More information about keeping payroll records may be found in this article.

Step 9: Complete your year-end payroll tax returns. Send the W-2 (for workers) and 1099 (for non-employees) federal forms (for contractors). The W-3ME yearly reconciliation of income tax withheld is also required.

Maine Payroll Laws, Taxes & Regulations

You must obey federal law for income taxes, Social Security, Medicare, and federal Unemployment Benefits, regardless of where you live (FUTA.) You must deduct 6.2 percent of each employee’s wages for Social Security and 1.45 percent for Medicare, as well as pay a comparable sum from your corporate bank account. Learn more about FICA, Unemployment Benefits, and workers’ compensation in this article.

Taxes in Maine

You must withhold state taxes if you withhold federal income taxes for an employee. Withholdings for agricultural workers, as well as resident and nonresident employees, are included. Maine has a tier system for Income Taxes in Different States.

Income Taxes in Different States

Maine’s Income Taxes in Different States run 5.8% to 7.15%. The personal exemption amount is $4,300 for each withholding allowance. There are two ways to calculate your withholdings: by a percentage calculation or by referring to the withholding tables. Withholdings need to be paid quarterly or semiweekly, depending on how much you pay in taxes. See Step 7 in the instructions above for the schedule.

Unemployment Benefits

When you pay more than $1,500 in gross compensation in a calendar quarter or for labor done during any part of the day for 20 weeks in a calendar year, you are responsible for SUTA. SUTA is responsible for the first $12,000 earned by each employee in Maine. The percentages include SUTA, donations to the Competitive Skills Scholarship Program (CSSP), and contributions to the Unemployment Program Administration Fund. There are 20 stages based on your user experience rating (UPAF).

Seasonal workers may only file for unemployment benefits if they lose their jobs during the season in which they work. As a result, designating seasonal roles and personnel is in your best interests. The Maine UI Employer Guide has a list of seasonal jobs as well as dates for each season.

Maine’s Department of Labor mails you a Form ME TAX-13, Notice of Contribution Rate, every year. For the previous three years, this is based on contributions paid vs. liabilities. You will pay 2.11 percent if you are a new employer or if your contribution ratio is zero. Other rates range from 0.49 percent to 5.81 percent when adjusted. You also have to pay 0.07 percent CSSP and 0.13 percent UPAF.

The following are examples of exemptions:

• Those who are exempted by federal legislation
• Aliens allowed to the United States to work in agriculture
• Working spouses or children in the family business
• Those enrolled in a training program
• Students in summer camps
• Only commission-based real estate agents and salespeople
• Newspaper deliverers under the age of 18
• Some employees in religious or charity organizations

Maine’s Title 26 has a comprehensive list. Agricultural enterprises are responsible if they pay more than $20,000 in gross compensation in a calendar year or employ at least 10 people in agricultural work in each of the year’s 20 weeks. You must have hired four or more employees on the same day for 20 weeks in a calendar year if you are a nonprofit. When a domestic employer pays $1,000 or more in gross compensation in a calendar quarter, they are accountable.

What You Should Know:

You may be eligible for a 5.4 percent rebate on your FUTA taxes if you pay SUTA. Remember that FUTA is usually 6% of an employee’s gross pay up to $7,000.

Insurance for Workers’ Compensation

With the following exceptions, Maine requires all companies to buy workers’ compensation insurance or self-insure:

• Employers that have seasonal or casual workers working in agriculture or aquaculture, providing the employer has at least $25,000 in employers’ liability insurance and $5,000 in medical payments coverage.
• Employers of six or less agricultural or aquacultural workers must hold employers’ liability insurance in the amount of $100,000 multiplied by the number of full-time equivalent employees and $5,000 in medical payments coverage.
• Private-sector employers of domestic staff
• No-employee sole proprietorships

Workers’ compensation benefits may be waived by certain corporate officials of LLCs, NGOs, or family companies.

You can purchase Insurance for Workers’ Compensation from commercial insurance companies. You can apply to self-insure if you can afford to take on all the workers’ compensation losses; normally, only large corporations qualify for this option. There are also provisions to group with other businesses in a self-insurance co-op.

Check out the Maine employer’s guide to workers’ compensation for further information on how to insure your business or providers who can sell you workers’ compensation directly.

Maine’s Minimum Wage Laws

The minimum wage in Maine is $12.15 per hour. If their tips bring them up to minimum wage in a pay period, tipped workers earning more than $30 per month might be paid as low as $6.06.

The minimum wage in Portland, Maine is $18 per hour. Agricultural employees, taxi drivers, seasonal camp workers, fishers, home assembly workers, and direct family members operating in a family company are exempt from this.

Farmworkers, seasonal workers, full-time and vocational students in certain conditions (like work-study), and employees with disabilities in specific situations are among the exceptions to Maine’s minimum wage regulations, which closely reflect those mentioned in the Fair Labor Standards Act. For the first 90 days of employment, workers under the age of 20 may be paid $4.25 as part of a training program.

Overtime Regulations in Maine

Overtime must be paid at 1.5 times the employee’s usual salary for any time spent working more than 40 hours in a week. You can’t make an employee work overtime, and you can’t use comp time to “pay” for it.

In a two-week period, you cannot compel an employee to perform more than 80 hours of overtime. Exceptions to the overtime regulations apply to:

• Salaried workers in managerial or administrative jobs who earn at least $700.97 per week, as defined by the Fair Labor Standards Act
• Work done in response to a state of emergency issued by the governor
• Public services are essential.
• Salaried workers in executive positions who earn more than 3,000 times the state’s minimum hourly pay on a regular basis
• Seasonal workers
• Residents or medical interns
• Employees who are working extra as part of a yearly maintenance shutdown

Employees Can Be Paid in a Variety of Ways

You may pay using cash, cheques, direct deposit, pay card, or other electronic transfer in Maine as long as the employee can withdraw the whole amount without incurring any extra costs or pick an option that does not. Check out our guide on the many methods to pay your staff for more in-depth information on how to reward your employees.

Pay Stub Regulations

Each payday, you must provide pay stubs that include the date and pay period, as well as the hours worked, itemized deductions, and earnings received. If you’re not cautious, failing to produce pay stubs might result in fines, penalties, and even a lawsuit.

You’ll need to produce your own pay stubs if you’re not utilizing a payroll provider. To get started, use one of our free pay stub templates, which will save you time in the long run.

Minimum Pay Period

Employees must be paid at least every 16 days, which may be done on a semiweekly, bimonthly, or weekly basis. Employees must be paid within eight days after the conclusion of the pay month. If you don’t have a system in place, this might be difficult to monitor. Stay on top of your pay schedule and dates by downloading one of our free pay period calendars.

Payroll Deduction Regulations

Taxes, court-ordered garnishments, insurance premiums, retirement funds, loans or advances given to employees to pay for products bought from the business, and rent for a company-owned facility are all allowable deductions in Maine. Cash shortages, damages, customer walkouts, and credit card mistakes are not deductible.

Laws Regarding Final Paychecks

Employees who resign, are fired, or are laid off must be compensated in full by the next paycheck, or within two weeks, whichever comes first. Any paid vacation or leave time that has been accumulated is included in this.

Paid Time Off and Sick Leave have been accrued.

In the news: Maine’s Earned Paid Leave statute took effect on January 1, 2021, which means you may have to compensate your workers for time off.

If you employ more than 10 individuals in the ordinary course of business for more than 120 days in a calendar year, you must give all covered workers with up to 40 hours of unrestricted PTO. This is earned at a rate of one hour for every 40 hours worked by employees. While the employee’s leave begins collecting the moment they start working, you don’t have to allow them to spend it until they’ve been employed for more than 120 days.

Employees can use this leave for whatever reason they wish, but unless it’s for an emergency, illness, or sudden necessity, you can require that they give you advanced notice. This notice may be given up to four weeks in advance. Employees who work primarily in seasonal occupations are excluded from taking paid time off. The Department of Labor’s website has a list of seasonal industries and their operating dates.

Maine Family Leave Act (Maine Family Leave Act)

Employers with 50 or more workers must give qualified employees with up to 12 weeks of unpaid leave each year for specific family and medical reasons under the federal Family and Medical Leave Act.

Maine’s Family Leave Medical Act varies in that if you have more than 15 workers, you must provide up to 10 paid or unpaid weeks of leave in two years to any employee who has worked for the previous 12 months for:

• A child’s birth or adoption, or a child’s kid’s child’s child’s child’s child’s child’s child
• Serious sickness of an employee or a member of his or her immediate family, including a domestic partner
• Organ donation is a good thing to do.
• If the employee’s spouse, domestic partner, parent, or child dies or suffers a significant health condition while on active service, the employee is entitled to compensation.
• Serious sickness or death of a sibling with whom the worker has shared living and financial arrangements.

You must also take up to 40 hours of time off in a 12-month period to care for a sick close family member.

Furthermore, if an employee (or their kid, parent, or spouse) is a victim of violence, assault, sexual assault, stalking, or any conduct that would justify an order for protection under Title 19-A M.R.S.A., c. 101, you must enable leave. This would be a good time to get ready for and attend court procedures, get medical help, and get the help you need to get through the crisis.

Working grandparents will be entitled for job-protected leave to care for grandkids (including a domestic partner’s grandchildren) suffering from a severe health condition beginning September 2021 under Maine’s Family Leave Act.

HR Laws in Maine That Affect Payroll

Maine’s human resources rules are more stringent than those in other states. For example, instead of the typical 20 days, you must report new workers within seven days, and lunch breaks are required.

New Hire Reporting in Maine

New employees must be reported within seven days after being hired in Maine. This is much less time than most states. When you intend to pay at least $2,500 in salary in a year to any employee or independent contractor who receives a W-2, you must disclose them.

You’ll need information about your employer, such as contact information and EIN, as well as information about the employee, such as contact information, birth date, Social Security number, and date of hiring. Other information is requested by the state but is not required. Create a new hire record in the state’s format and submit it online via the Maine Department of Health and Human Services. You must first create an account.

Requirements for Lunch and Other Breaks

Unless the employee waives this privilege, preferably in writing, you must give at least a 30-minute unpaid or compensated rest break for every six hours worked. Although shorter breaks are not required by law, they must be compensated and not subtracted from working time. If you have less than three workers on duty at any one time or if the employee takes numerous short paid breaks throughout the workday, you do not need to provide breaks.

Nursing moms must be given unpaid breaks or be permitted to express milk during paid breaks or mealtimes. Employers must offer a hygienic area where milk may be expressed (not a restroom).

Minors in the Workforce

Minors under the age of 16 need work permits, and their academic status must be certified by the superintendent of schools. As an employer, you must maintain accurate payroll records that include the time the minor begins and ends work each day, as well as the total number of hours worked.

Agricultural labor does not need a minimum age or a work permit. Children under the age of 14 are only permitted to work in agricultural occupations (excluding those involving heavy equipment), school meal programs, or family enterprises.

Maine enables juveniles aged 14 and above to work in any non-hazardous employment that does not endanger their health. On the Maine Department of Labor’s website, you can find a complete list. Manufacturing, mining, dealing with explosives or dangerous materials, working with heavy equipment, and emergency response are all examples of forbidden employment. The more tasks that are disallowed, the younger the employee is. Minors under the age of 16 are barred from working on amusement rides, for example.

Minors 14 and 15 must work between the hours of 7 a.m. and 7 p.m. during the school year (not during school hours) or 7 a.m. and 9 p.m. during summer vacation. They are not allowed to work more than three hours per day on school days (including Friday) and no more than 18 hours per week throughout the school year. When school is not in session, that time is increased to eight hours per day and forty hours per week (if school is out for the entire week).

Minors aged 16 and 17 are not permitted to work for more than six days in a row. They are not allowed to work before 7 a.m. on school days or before 5 a.m. on non-school days. They may work until 10:15 p.m. on evenings before school; if there is no school the following day, they can stay until midnight.

Minors 16 and 17 cannot work more than six hours on a school day, ten hours on a non-school day, or for more than 24 hours in a week while school is in session. They are not allowed to work more than 10 hours per day and 50 hours per week while school is not in session. When a school week is fewer than three days long, they may also work 50 hours.

If you need more information on child labor laws, check out our guide on Minors in the Workforce.

Forms for Payroll

Although certain forms may be sent in, the majority of Maine’s payroll tax forms must be submitted online. The forms are available online, albeit some are not required when submitting electronically.

W-4 Form for Maine

The W-4ME is Maine’s withholding exemption form. Employees in Maine may also take out a form called the Personal Withholding Allowance Variance Certificate if they wish to claim extra allowances.

Other Payroll and Tax Forms in Maine

• If the payment is paid electronically, Form 900ME: Payment Voucher for Maine Income Tax Withheld (Semiweekly) is not required.
• Employer’s Return of Maine Income Tax Withholding (Form 941ME) (Quarterly)
• W-3ME: Annual Reconciliation Form, which is submitted online with any required payments at the end of the year.
• ME UC-1 ME: Unemployment Contributions Filing with the Department of Labor
• Quarterly Return Payment Voucher for Maine Unemployment Contributions (ME UC-1-PV)

Find other state Forms for Payroll on the Maine Revenue Services website.

Federal Forms for Payroll

• W-4 Form: Used by businesses to figure out how much tax to withhold from employees’ paychecks.
• W-2 Form: This form is used to report total yearly earnings (one per employee)
• W-3 Form: Reports all workers’ total pay and taxes.
• Form 940: This form is used to report and compute the amount of unemployment taxes owed to the IRS.
• Quarterly income and FICA taxes deducted from paychecks are reported on Form 941.
• Annual income and FICA taxes deducted from paychecks are reported on Form 944.
• Non-employee pay information is included on 1099 forms to assist the IRS in collecting taxes on contract labor.

Payroll Tax Resources/Sources in Maine

• Maine Department of Labor Labor Laws Site: Find all of the state’s labor laws, as well as FAQs, posters, and other resources.
• Regulation of Employment: Poster laying forth the most essential regulations governing salary and vacation time.
• The regulations for employment, labor, work hours, and more are found in Title 26, Labor and Industry.
• Maine Department of Labor’s Employment of Minors website contains all of the state’s child labor laws and limitations.
• Health and Human Services Department Employer Page: Everything you need to know about reporting new employees and filing child support garnishments.
• Employer’s Guide to Maine Unemployment Laws: Provides information on calculating and paying SUTA, filing SUTA and reporting new hiring, and appealing employee benefit claims.
• Employer’s Guide to Insurance for Workers’ Compensation: Who’s liable, how to insure or self-insure, and how worker’s comp works

Conclusion

Owning a business in Maine, you must pay state income tax withholdings as well as Unemployment Benefits and Insurance for Workers’ Compensation. The state’s Unemployment Benefits covers not only SUTA but also a scholarship fund and an administrative fee. Some of Maine’s rules are stricter than other states, such as those for reporting new hires and defining Seasonal workers.

Payroll in Maine is a complicated process. One of the most important steps is filing for and receiving your tax withholding form from the state. This form will tell you how much to withhold from each paycheck, when to file, etc. Reference: maine tax withholding form.

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