How do I form a corporation in Montana?

Have you been thinking about starting your own business in Montana? There are plenty of business models out there that can be right for you, like a limited liability company (LLC), but if the corporation structure is especially appealing to you, then there are some things you should know about this business entity.

How do I start a corporation in Montana?

To formally begin the formation of your Montana corporation, you must register your company with the Montana Secretary of State. To do this, you will file the Articles of Incorporation. However, before you begin the registration and filing process, you will need to address a few details.

Use our Montana corporation guide

There are several steps to complete, like submitting your Articles of Incorporation and appointing a registered agent. We can offer the information you need to make your corporation into a reality. Our step-by-step guide explains how to form a corporation in Montana.

Step 1: Name Your Montana Corporation

Coming up with a name for your Montana corporation is one of the first steps to successfully start your business. You’ll need a corporation name that gives your customers/clients an idea of the goods and services you’ll be providing. And the name should be creative and catchy. Most importantly, you’ll need to make sure that your name falls in line with the state’s requirements.

Conduct a basic search for business names in Montana to see which are available. This will allow you to cut names that are too close to established businesses or do not meet state guidelines. Use our name search tool for help.

Name requirements for a corporation in Montana

All Montana corporation names must contain one of the following corporate designators:

  • Corporation (Corp.)
  • Incorporated (Inc.)
  • Limited (Ltd.)
  • Company (Co.)

Reserve your business name in Montana

When you’ve settled on a name that best fits your Montana corporation, reserve it using our tool. This will prevent anyone else from claiming your corporate name. Completing a name reservation puts your company name on hold with the state government for up to 120 days. 

Applications can be completed online through Montana’s ePass platform, a digital business resource that connects you to all online government services offered by the state. You’ll need to create an account to use it.

It’s important and recommended for business owners to double check that their company name isn’t infringing on any existing trademarks. To do so, you’ll need to look on the federal and state level.

Check for trademarks

Nationally, you can visit the United States Patent and Trademark Office (USPTO) website to see if the name you want has a trademark. If you need to check a name at the state level or file your own trademark, you can learn more about that process through the Montana Secretary of State. You may also register your Montana trademark using the ePass platform. Registering a trademark at the federal level can offer broader protections, but it’s often easier and quicker to file at the state level.

Get an “assumed business name” in Montana

Finally, if you plan for your Montana corporation to operate under a name other than the one specified in your Articles of Incorporation, you will need to register an “assumed business name” with the Secretary of State. This is also known as a “trade name,” “fictitious business name,” or “doing business as” (DBA) name. Filing for a Montana assumed business name costs $20 and can be completed online via the ePass system.

Step 2: Appoint Directors

Forming a Montana corporation requires you to name a board of directors who will look out for your company’s best interests. Montana law stipulates that a corporation must have at least one director at the time of its formation. Further requirements mandate that directors be elected for one year at an annual meeting.   

Appointing an Incorporator

One of your board of directors can also be the “incorporator” of your Montana corporation. This particular member will be the one to sign your company’s Articles of Incorporation. Remember that your incorporator does not have to be a director and can be one of your shareholders, you as the founder, or another person authorized to act on behalf of your corporation.

Step 3: Choose a Montana Registered Agent

Choosing a registered agent for your Montana corporation is the next step. Registered agents act on behalf of your business to receive “service of process,” which is legal correspondence, such as a notice of a lawsuit. You can choose an individual or a business entity as your registered agent, but Montana law does not permit a corporation to act as its own agent.

Your chosen registered agent will be named in your Articles of Incorporation and must also provide a physical street address in Montana. The agent will need to be able and willing to receive service of process at that stated address during regular business hours.

Commercial and Noncommercial Registered Agents

The Montana Secretary of State recognizes a distinction between commercial and noncommercial registered agents. The difference is that the first is registered with the Secretary of State as a professional provider of registered agent services, and the latter is not. The use of commercial registered agents in Montana follows the passing of the Model Registered Agent Act (MORAA) in 2007.

Using a Professional Registered Agent Service

Here is why it’s a good idea to seek a professional registered agent service for your Montana corporation:

  • Keeping legal matters private: If you or someone at your place of business is the corporation’s registered agent, they could be served with a notice of a lawsuit there, possibly in front of clients. 
  • Freedom to focus on business: Registered agents must be present at the Montana street address you provide in your Articles of Incorporation when you appoint them. This means directors and founders are not the best choices, as their time can be better spent on conducting business when you use a commercial registered agent.

Step 4: File the Montana Articles of Incorporation

Filing your Montana Articles of Incorporation and getting them approved is your next step. If filled out correctly and approved, your corporation will be considered a legal business entity in Montana.

What to include in your Articles of Incorporation

Montana has recently shifted to an all-digital filing system. Before you begin your Montana corporation filing, you will need to have the following information prepared to enter into the application:

  • Corporation name
  • Corporation type — general for profit, benefit for profit, professional, close (with or without directors), professional close (with or without directors)
  • Name and official street address of the registered agent
  • The mailing address of the registered agent (if different)
  • Number of capital stock shares to be authorized
  • Name, address, and signature of the official incorporator
  • Names and addresses of each member of the board of directors
  • Effective date (if delayed from the date of the application)

Check out the newly annotated Montana code related to specifics that must be contained in your Articles of Incorporation. The cost to file is $70. The Montana Secretary of State offers a 24-hour priority handling of business fillings for an additional $20 and even a one-hour expedited filing for all documents for an additional $100.

Step 5: Create Corporate Bylaws

The creation of corporate bylaws is a vital step in establishing your company’s values and rules. Bylaws go into detail about all operating procedures, management structures, and legal requirements regarding your company’s running. 

Bylaws may also give further context into how company stocks can be shared, directors should be replaced upon emergency, and any other pressing concerns that you want in writing regarding your business. Your Montana corporate bylaws should be kept in a place and manner where you have access to them.

Step 6: Draft a Shareholder Agreement

Another essential guidepost for the effective governance of your Montana corporation is your shareholder agreement. A shareholder agreement safeguards the interests of the shareholders and outlines their rights and responsibilities. 

Details to include in your shareholder agreement might include:

  • The fair pricing of shares and the number issued
  • Directives on how to make decisions about what outside parties may become future shareholders 
  • A capitalization table outlining the percentage of company ownership by different shareholders
  • Restrictions on transferring shares
  • Details on payments in the event of a company sale

Step 7: Issue Shares of Stock

All Montana corporations are required to issue shares of stock. It is your responsibility to make certain that the number of issued shares doesn’t exceed the number of authorized shares you specified in your Articles of Incorporation. You must also keep track of how many have been issued. 

You can offer shares of your Montana corporation privately or publicly. Deciding to go public comes with the added responsibility of reporting quarterly stock statements to the U.S. Securities and Exchange Commission (SEC). You can apply to sell stock on the public market with form 10-Q. 

Step 8: Apply for Necessary Business Permits or Licenses

The business permits and licenses necessary to operate your Montana corporation will vary based on several factors. Details such as the area in which you choose to incorporate and your industry may require specific licensure.

Montana does not have a statewide general business license. In Montana, it’s local governments (city and county) that provide business licensing, while the state handles professional licenses. Specialized state licenses relating to regulated industries will be needed to participate in certain fields of business. Visit the official websites of your county and city to learn how local licensing requirements may affect your company.

In general, we advise our clients to check at the local, state, and federal levels for all necessary business permits and licenses. 

Step 9: File for an EIN and Review Tax Requirements

Getting your Montana corporation set up properly for taxation requires registering your business with the IRS and obtaining your Employer Identification Number (EIN). Your company’s EIN is essentially the Social Security number of your new business. 

The EIN is how the IRS will recognize your tax status and impose relevant taxation. The EIN is also what you will use when you seek funding for your business, hire employees, or open a business bank account. A business bank account is a great thing to have since it can make your taxes easier to handle. We offer a service to help you open an account.

Fortunately, applying for an EIN can be completed online for free via the IRS website. Your Montana corporation receives its EIN immediately after your successful filing.

In addition to federal corporate income tax, your Montana corporation will also be responsible for reporting corporate income tax to the Montana Department of Revenue. The standard corporate tax rate in Montana is 6.75%, with a minimum corporate tax of $50. You’ll first need to register your business with the Department of Revenue to pay your taxes.

Review further details regarding Montana’s corporate income tax and its tax rates and filing deadlines.

Step 10: Submit Your Corporation’s First Report

Annual reports will be a constant fixture of your Montana corporation. The annual report is a mandated document that you will owe the Secretary of State to keep your corporation in good standing. 

Annual reports typically include basic information about your corporation’s board of directors, stock profile, and structure. Much of the format and information will be identical to the Articles of Incorporation. If there are no major changes to your Montana corporation for the calendar year in question, filing your annual report is quick and simple.

The annual report for your Montana corporation will be filed online via the Montana Secretary of State’s Business Services Division; click on “File an Annual Report.” The cost to file the report is $20. All Montana corporations must file their annual reports between Jan. 1 and April 15 of each calendar year. Late penalties apply for reports not submitted during this time frame. 

Corporations who have not rectified their annual report situation by Sept. 1 of a given year face involuntary dissolution and revocation by the state government.

How much does it cost to start a corporation in Montana?

The complete expense list for the creation of your Montana corporation will depend on a multitude of factors. Items such as your business location and the field in which you are in will affect what you pay when forming.

At a bare minimum, you will owe $90 to begin legally conducting business. That sum consists of the $70 Articles of Incorporation fee and the $20 filing of the annual report, both of which are compulsory. Review Montana’s comprehensive list of business service filing fees to gain a better understanding of the total cost that your corporation will incur.

If you would rather avoid the headaches and confusion, reach out to ZenBusiness and try one of our business formation plans. We can assist with everything from your company’s compliance with state law to registered agent services.

What are the benefits of a corporation in Montana?

With so many business types to choose from, you might wonder why a Montana corporation is the most advantageous. It can be helpful to review Montana’s guide to organizational structures to get a sense of the major differences between forming a corporation instead of other entities, such as limited liability companies (LLC), sole proprietorships, or partnerships.

One of the most attractive bonuses of forming a corporation is that substantial financial and legal protections extend to corporation owners. The following represent other major benefits of forming a Montana corporation:

  • Access to a global market: Incorporating means you do not have to restrict your business to the U.S. market. Being able to engage the global market means more possibilities for growth.
  • Stock options: As corporations are required by law to issue stocks, this provides an opportunity for expansion that would not otherwise be there.
  • Official recognition: Customers and clients take corporations more seriously than more simple business structures. Incorporating lends your company prestige.
  • Small Business Development Center Network: This network, sponsored by the Montana Department of Commerce, specializes in supporting small businesses and giving particular attention to entrepreneurs who are veterans, women, or native.
  • Made in Montana: This program seeks to support all business owners in the state via cross-industry networking and an emphasis on local entrepreneurs.

Like most everything else in life, forming a Montana corporation is not all positive. Consider the possible disadvantages:

  • Double taxation: Owning your business means signing on for two sets of taxes, one for your personal earnings and one for your corporate profits.
  • Strict filing requirements: Keeping up with the meticulous nature of corporate filings, law complicity, and stock reporting can be exhausting.

How is an Montana corporation taxed?

The exact tax structure of your Montana corporation will depend on its type. As corporations are a bit more complex, there are several ways to be labeled and taxed.

A standard corporation or “C corporation” exists as a separate taxable entity. As such, Montana corporations face federal and state income taxes set apart from the personal taxes of their founders. This results in “double taxation,” meaning that the corporation’s profits are taxed at the business level and again when they are distributed to the shareholders.

S corporations are known as “pass-through entities” and typically do not pay taxes at the business level. Profits are only taxed when they go to the individual shareholders, thus avoiding double taxation. A corporation must apply to the IRS for S corporation status. If granted, it applies both to federal and Montana income taxes.

Nonprofit corporations exist to serve the public good rather than make profit for their founders. They can apply to the IRS to be exempt from federal income tax. If successful, they can also apply to be exempt from Montana income tax. Employees of nonprofits still pay federal and state income tax on their earnings.

Montana Corporation FAQs

  • Yes, corporations are considered a more complex business structure because they entail rigid adherence to reporting requirements and meticulous stock management.

  • A major difference between these two business structures is the tax status. Limited liability companies (LLCs) are viewed as pass-through entities, which means that owners are not subject to double taxation. The LLC structure is also typically more flexible and does not have as many requirements for government reporting.

  • Changing the name of a Montana corporation involves filing the Articles of Amendment on the ePass platform and paying the $15 filing fee.

  • A Montana corporation must have at least one director listed in the Articles of Incorporation.

  • You can complete Montana corporation requirements, such as registering your business and filing annual reports, via the ePass Montana system.

  • The Articles of Dissolution have to be filed with the Secretary of State for any Montana corporation to be dissolved. A $15 fee is associated with this service.

Disclaimer: The content on this page is for information purposes only and does not constitute legal, tax, or accounting advice. If you have specific questions about any of these topics, seek the counsel of a licensed professional.

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Written by Team ZenBusiness

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