How to start a business in Montana in 8 steps

Did you know Montana is considered an up-and-coming state for starting a small business? Whether you’re looking to turn some farmland into a thriving family business or open a restaurant, Montana is fertile ground for entrepreneurs.

Running a new business isn’t without its challenges—even for the most energetic entrepreneur. In this guide, you’ll learn the 8 steps needed to start your small business off right.

1) Think about the type of business you want to start

If you’ve found yourself here, it’s likely you already have a business idea. But even if you’re still brainstorming, it’s important to understand that some business startups will require more planning than others.

Before ordering business cards or signing a retail space lease, do market research for your business idea. Be sure to create a business plan and research your competitors and estimated operating costs.

Although owning your own business can give some say over your work schedule, getting started can require late nights and weekends. Make sure you’re up for the challenge of starting a business and set expectations for your startup before you begin.

2) Set up the legal structure of your business

Once you know the type of business you’d like to start, you’ll need to determine the legal structure of your business entity. This will also affect how you register a business in Montana, so this step is important.

• Sole proprietorship: This is one of the simplest ways to begin a business, and this business structure is best for entrepreneurs who both own and run their business without employees. Under this structure, you take on all liability and tax responsibility but are also rewarded with all of the profits. There’s no need to register your business with the state of Montana under this structure, but if you’re doing business under a name that isn’t your legal name, make sure to register it through a DBA (more on that later).
• General partnership: If you’re running your business with others, you can structure it as a general partnership. Profits and losses are shared among business partners—but you also share liability and tax responsibility. You do not need to register your general partnership with the Montana Secretary of State to start doing business, but you may want to file a DBA to protect your business name.
• Limited partnership: This type of partnership is similar to a general partnership with a few additional regulations and protections. In Montana, there must be one general partner in a limited partnership who manages and accepts personal liability for the business, but the general partner can have additional investors or partners who do not manage the business with their liability limited to their investment. You’re also required to file a Certificate of Domestic Limited Partnership with the Montana Secretary of State for a limited partnership.
• Limited Liability Partnership (LLP): This structure is similar to a general partnership but with additional protections for all business partners. With an LLP, the business partners are not held personally liable for the actions of other business partners unless they’re supervising those actions. If you set up your startup as an LLP, you must include it in your business name. You’re also required to file an Application for Registration of a Limited Liability Partnership with the Montana Secretary of State’s Office.
• Corporation: If you’re planning to go big with your Montana startup, a corporation might be a good fit. This requires more complex filings with the State of Montana, but it comes with important legal protections for larger operations. This also allows your company to have shareholders, bylaws, and a board of directors. Corporations operating in Montana must register and file an Annual Report with the Montana Secretary of State’s Office.
• Limited Liability Company (LLC): An LLC provides a unique business structure blend. It provides the reduced liability of a corporation, which can protect your personal assets, but with the simplicity of a sole proprietorship or partnership. Starting a Montana LLC requires filing Articles of Organization with the Secretary of State’s Office.

While deciding on a structure may seem complicated, it’s a crucial step that will impact other business decisions down the road. Some entrepreneurs may find another setup, such as a nonprofit, is the best fit for their operations. Overall, your business’s legal entity has an impact on your taxes, liability considerations (including Montana business insurance), funding your business, and more—so take your time on this phase of business planning.

3) Create a business name and register your business in Montana

Here’s the fun part: Before you register a business in Montana, you’ll need to come up with a name. This can be an exciting stage in your business journey, and it’s an important one. Your business name will be included on business cards, your website, uniforms, and more—and it’s the name you’ll proudly share with your community.

But don’t order fresh business cards just yet! You’ll need to make sure the name you’d like to use isn’t already registered in Montana through the Secretary of State business search.

If you plan to operate as a sole proprietorship in Montana and use a business name other than your legal name, remember to register it via a DBA (also known as an assumed business name or fictitious business name) with the Montana Secretary of State.

Next—if you’re planning to run your business under a structure other than a sole proprietorship or general partnership—you’ll need to file the required paperwork. This protects your business name and allows you to start doing business under that structure officially.

You’ll also need an Employer Identification Number (EIN). If you’re operating a sole proprietorship with no employees and meet a few other requirements, you can use your Social Security Number. However, getting an EIN from the IRS for a sole proprietorship is easy—and you’ll have additional protection for your personal social security number.

4) Apply for licenses and permits

Applying for the appropriate licenses and permits is a crucial step for starting a business in Montana. However, not every business will require special permits or licenses.

While there isn’t a general business license required for all Montana businesses, certain types of businesses do require additional licensing. Examples include construction companies, agriculture businesses, restaurants and bars, cosmetologists, certain types of daycare businesses, and more. You’ll need to check with Montana’s Department of Labor & Industry to determine what special permits or licenses you’ll need to get before you start.

In addition, many counties and cities in Montana may require licenses or permits to operate. Check with the appropriate government agencies in your county or city.

Ultimately, before you start doing business in your city, you’ll need to explore any permits or licenses fully—whether that’s at the city, county, or state level—you might need to legally and fully operate. Don’t skip this important step!

5) Choose a location

If you already know of a perfect location for your business, it may be tempting to secure a lease as soon as possible. But you might be getting ahead of yourself—you’ll need to have all the appropriate paperwork and licensure before you take on brick-and-mortar expenses.

In fact, many entrepreneurs successfully start their Montana businesses from home and grow from there. This can be a smart way to keep your operating expenses low and gain clients or customers first. However, some operations will require a retail storefront or office, and real estate will be an important early expense in the startup phase.

Finding the right location for your business can take some time, especially when including zoning, licensing, and inspection requirements. Make sure you go into your search for the perfect piece of property with clear goals and the right permits in hand.

6) Open a bank account and prepare for future taxes

Now it’s time to set up your business finances.

If you’re running your Montana business as a sole proprietorship, you can use your personal bank account. But it’s still a smart idea to separate your business finances and expenses from your personal finances, and many sole proprietors choose to do so.

If you’re operating under a business structure that’s not a sole proprietorship, you’ll need to open a business bank account. Many entrepreneurs also open a business credit card or research funding during this time.

A separate business bank account offers protection for your personal finances and property. It makes it easier to pay for business expenses and income taxes without mixing in your personal finances (AKA double taxation).

If you don’t consider yourself a fan of spreadsheets and numbers, consider paying for bookkeeping services for your business or hiring a certified public accountant. This will help keep you organized and make sure you’re paying the right business taxes, filing them correctly and on time both with the IRS and Montana Department of Revenue.

Whether you decide to hire bookkeeping help or do it yourself, you’ll need to have a clear and efficient record-keeping system to manage your profits, tax returns (both for federal taxes and state, if needed), earnings, expenses, and more. Ideally, you’d be able to implement this before you start paying for business expenses or taking on customers or clients. That way, you have a clear financial organization in place before you start making sales.

7) Purchase business insurance for your small business

Purchasing Montana business insurance is one of the last behind-the-scenes steps that needs to be completed—and it’s one of the most important.

Business insurance can help protect small business owners from financial liabilities or cover expenses when your business experiences an accident or unexpected circumstances. And in many cases, it’s legally required, as in the case of Montana’s workers’ compensation requirements.

Even if you’re operating as a sole proprietorship, below are common business insurance coverages you’ll need to consider for liability protection, depending on the industry you’re in, what sort of work you perform, and more.

• Workers’ compensation insurance is required in Montana if you have employees. This type of coverage can protect employees from lost income or cover medical treatment if they have an accident or illness on the job. Not only is this coverage required, but it’s also appreciated by those you hire and helps protect your business.
• Business interruption coverage works to protect your business from losses if you have to close due to a covered event temporarily.
• General liability insurance helps protect your business if someone sues for bodily injury or property damage. This type of coverage is important for any business, especially in skilled trades or where equipment is used.
• Business property insurance coverage can help cover your retail storefront or office building if it experiences damages, and business personal property coverage works to cover destroyed or stolen items and equipment in your workspace.

Suppose you need multiple coverages in addition to the required workers’ compensation coverage (and you probably do). In that case, you might consider a Business Owner’s Policy that can include all insurance coverages listed above in one simple package.

No matter what your insurance and business needs, Huckleberry makes it simple. You can get a quote for affordable business insurance—including the required workers’ comp coverage—in less than 5 minutes.

8) Create a marketing plan, hire employees, and get ready to do business

Once you have the right insurances in place, it’s time to get going! But your business planning isn’t quite done yet.

You’ll need to create a marketing plan. Many new Montana business owners start by building a website, creating social media accounts, and spreading the word via ads, brochures, or neighborhood groups on social media.

From there, you can dive deeper into a marketing strategy to grow your business. Your local Small Business Administration office or Small Business Development Center offers business resources and guidance for marketing in your area, as well as information about funding options to get your startup off the ground.

If hiring employees is something you need before you open, you’ll need to start the process. Check out the Montana Department of Labor and Industry Employment Relations Division to ensure you’re following state and local regulations. But know that it’s also perfectly fine to start small: Many businesses begin with just one hardworking, passionate person—the business owner—and grow from there.

No matter your business goals, Huckleberry is here to help protect your business along the way with easy-to-understand insurance coverage. Get a quote for Montana small business insurance today, whether you’re in bourgeoning Bozeman, happy Helena, or that mainstay, Missoula.