How to form an LLC in Montana in 6 easy steps
If you have a business idea that’s as big as a bison burger, you'll want to get it off the ground as quickly as possible. However, before you open a storefront and begin selling, you must first ask yourself, "Am I ready to start an LLC?"
A Montana Limited Liability Company (LLC) is a business structure where owners can limit personal liability. As a result, in the event of bankruptcy or legal difficulties, the business owners' personal assets cannot be seized as payment.
Because an LLC is treated as a distinct business entity, you may report the LLC’s earnings and debts on personal income tax returns. This makes it particularly helpful if you run a one-person business.
If you've determined that an LLC is the best option for your business, you'll be relieved to hear that the process is quite simple. You'll only need to keep a record of specific documents and due dates and be prepared to pay the appropriate filing fees.
This article will help you avoid headaches and wasted time and walk you through the step-by-step process of establishing a Montana LLC.
1) Check if your business name is available
The first step in launching a great company is to create the right business name. You'll want a distinct, easy name for new customers to find that follows the state’s naming requirements.
First, head over to the Montana Secretary of State's business name search registry to see whether an LLC name is available. In addition, you can go to the Business Services Division for an overview of the process. By submitting a Reservation of Business Name, you may secure a name for up to 120 days for a $10 filing fee.
Your company name MUST contain the phrase "limited liability company" or one of its approved abbreviations (LC, L.C, LLC, L.L.C, LTD). Yes, "My Montana LLC" is already taken.
There must be nothing in your Montana LLC's name that might be confused for a government entity. So, "IRS Tax Services" won't work for your accounting business.
If you want to use a restricted title such as "doctor" or "attorney," you'll need to prove that the owners hold the proper professional licensing. Although Montana doesn't have a statewide business license, depending on your type of business, you may need additional licensing, too.
When conducting business, you are not required to use the formal legal name listed in your Articles of Organization. An assumed name, often known as a DBA (Doing Business As), fictitious business name, or trade name, may be used instead. Assumed names are registered with the Montana Secretary of State, and the online cost is a $20 filing fee.
2) Find a registered agent
A Montana registered agent is a person or organization that serves as the state's primary point of contact with your company. Any legal or government papers that your business gets will be sent to your registered agent.
Your registered agent must be a Montana citizen who has a physical address or a company licensed to function as a registered agent in the state.
You, as the owner, may serve as the registered agent and provide your own business's street address, which is a straightforward option, particularly if you are a single-member LLC. However, there are certain disadvantages to becoming your own registered agent.
For example, during regular business hours, from 9 AM to 5 PM, the registered agent must occupy the specified location. Imagine you start a landscaping business where you'll travel from site to site. Being your own registered agent would be nearly impossible because you can't always be in the office.
Also, when you're your own registered agent, any service of process will be served at your place of business, possibly in front of customers, which may not only result in significant embarrassment but can also damage your company's reputation.
Many companies use a registered agent service, sometimes coupled with an LLC formation service, which will receive any legal or governmental paperwork at their office location and notify you when anything must be viewed. Some registered agent services will also publish your papers online, allowing you to determine whether documents are essential enough to justify a visit to the office.
3) Write your LLC operating agreement
An operating agreement specifies the conditions of your company's ownership and operation. For example, imagine your LLC has several members. In such a scenario, your operating agreement will specify how much of the firm each member owns and who can undertake specific tasks inside the organization. You may also select whether your LLC is administered by management or by members.
When you work out and document the details, it could help avoid infighting or even legal issues if members of your LLC disagree, and it can also be helpful if your business must go to court for whatever reason.
Although Montana state law does not need an operating agreement for your LLC, it is a wise idea to create one, even if you are in a single-member LLC.
An operating agreement, especially for single-member LLCs, helps define precisely how your company differs from a sole proprietorship, ensuring that you don't run into any problems with the Montana Department of Revenue.
For ideas on how it works, check out this free operating agreement template.
4) File your Montana Articles of Organization
After you've decided on a name and a registered agent, you'll file Articles of Organization with the Montana Secretary of State. Here's what you'll need to ensure that you fill it out correctly:
- Type of LLC (regular, professional, Series, or Professional Series LLC)
- LLC's name
- Registered agent's name
- LLC's Street address for its principal office (and mailing address if different from the street address, such as a P.O. Box)
- Term of the LLC (perpetual or a specified period)
- LLC's purpose (if it's a professional LLC, you must specify the professional service)
- LLC's status as a tribal business or not
- LLC's status as member-managed or not
- LLC's liability status (if one or more members are responsible for debts and obligations)
- Signature of the applicant
The state costs for establishing a Montana LLC go from $70 to around $200, depending on variables, such as whether you reserve your company name or if you want the paperwork expedited. Because fees vary over time, consult the Montana Secretary of State's website for the most up-to-date state fee schedule. Once you're at the site, create an ePass account, and fill in the required fields.
5) Get your Employer Identification Number
Your Employer Identification Number (EIN), also called a Federal Tax Identification Number (FTIN), functions similarly to your company's Social Security number. It distinguishes your company as a separate legal entity with the Internal Revenue Service (IRS) and enables you to differentiate your LLC's finances on your personal state income tax return. Your EIN keeps your personal assets distinct from your company assets, which is why you presumably formed an LLC.
You may establish a business bank account and apply for a company credit card with an EIN. Business accounts make it much simpler to keep your company and personal assets apart, and you're a lot less likely to see problems arise during tax season or be accused of fraud.
A company credit card is also essential for developing your business credit, which will differ from your personal credit score but operate similarly. For example, you may qualify for more extensive lines of credit with business credit if you need to make large purchases or update inventory.
An EIN also enables you to recruit workers if you need help. Remember that the state mandates that you provide worker's compensation insurance if you employ staff.
6) Prepare for your taxes and Annual Report
While you won't have to pay taxes on the first day of your company, you'll want to ensure everything is orderly when the time comes.
Montana doesn't charge sales tax, making it one of only five with such a policy. That means you won't need to get a seller's permit to market physical products.
If your Montana business employs workers, you must register with the Montana Department of Labor and Industry for Unemployment Insurance Tax and the Montana Department of Revenue for Employee Withholding Tax.
If business taxes and financial dealings give you a migraine, you can hire a bookkeeper or lean on accounting software. Depending on the type of business you run, your accountant may suggest it's advantageous that your LLC files as a corporation or S corporation.
You'll also need to complete your Annual Report each year after forming an LLC. The Annual Report gives the State of Montana comprehensive insight into your business's financial strength and checks if your business is in good standing. To maintain good standing with the Secretary of State's Office, your LLC must submit an Annual Report. Each year, the report is due by April 15, along with a $20 filing fee. Companies who submit after the fact will be assessed a $35 late fee.
If you have a Montana LLC and do not submit your Annual Report by December 1, the state automatically deems your business dissolved. However, for up to five years following dissolution, you may file an Application for Reinstatement.
Suppose you have a foreign LLC (one not based in Montana). In that case, you must submit the Annual Report by November 1, or the state will automatically revoke your Certificate of Authority, with no chance of reinstatement. To do business in Montana, you'd need to re-register.
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