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.
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.
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.
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.
All Montana corporation names must contain one of the following corporate designators:
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.
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.
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.
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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.
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.
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.
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.
Here is why it’s a good idea to seek a professional registered agent service for your Montana corporation:
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.
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:
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.
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.
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:
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.
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.
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.
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.
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.
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:
Like most everything else in life, forming a Montana corporation is not all positive. Consider the possible disadvantages:
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.
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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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