How to Qualify a Foreign LLC in Montana

Discover how to get a foreign LLC qualification in Montana for business expansion; explore our guide below for essential insights to ensure a smooth entry into the Treasure State's thriving market.

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Your business is growing, and you’re planning an expansion to other states. It’s a good problem to have!

But it’s not quite as simple as choosing another location. Because each state has different rules and requirements for business operations, you may need a “foreign qualification” in each state where you plan to do business.

It’s a common misconception that foreign qualification is only for businesses operating outside the U.S. But in this case, “foreign” refers to any business operating in a state that isn’t the state where the LLC was originally formed.

For example, if your LLC is registered in Washington and you are looking to open a second location in Montana, you may need to complete a foreign qualification in Montana before you can expand there.

Important Note: If you’d like to save time and have the foreign qualification paperwork taken care of for you, many of the best LLC services can handle this task for you.

What happens if I fail to foreign qualify before doing business in Montana?

Foreign qualifying is essentially asking permission to do business in the state of Montana. And the notion that “it’s easier to ask forgiveness than permission” doesn’t apply here. Failing to foreign qualify before starting a business in Montana yields consequences that are far costlier than registering in the first place. If you fail to foreign qualify, your business:

  • Will be banned from enacting or maintaining lawsuits in Montana courts
  • Can have any existing actions or proceedings stayed by a Montana court
  • Will be penalized $5 per day that the LLC has been transacting unauthorized business in the state, with a maximum penalty of $1,000 per year

But it’s not entirely bad news. Transacting business in Montana without authorization won’t invalidate any of your current contracts, nor will it keep you from defending a lawsuit in Montana court. Still, given the hefty fines and legal consequences, it’s best not to risk it and foreign qualify as soon as you begin doing business.

For more information regarding these penalties, take a look at Montana’s LLC Act, Section 35-8-1002.

What is considered “doing business” in Montana?

We’ve established why you shouldn’t do business without a foreign qualification. But what exactly does it mean to “do business” in Montana? If you look for specifics in the state’s LLC Act, unfortunately, you won’t find them. However, we know from other state and tax laws that generally you are considered to be “doing business” in most states and required to foreign qualify if:

  • You have some type of physical presence in the state. This can mean offices, warehouses, stores, or other structures
  • Or, you have salespeople, agents, or other representatives transacting business on your behalf in the state.

While LLCs often operate as pass-through entities for taxation, depending on how your business is structured and what type of business you do, you may be required to pay certain business taxes in Montana. When you foreign qualify, you’re also letting the state know how to tax you. While it might seem thrifty to fly under the radar, this could lead to more severe penalties down the line. To learn more about business taxes in Montana, see the Department of Revenue website. It’s important to always stay on top of your LLC’s taxation requirements to avoid any unwelcome surprises.

If you’re unsure whether or not you need to file for a foreign qualification in Montana, we suggest seeking legal counsel.

Could I be exempt from foreign qualifying in Montana?

The foreign qualification, however, isn’t a hard and fast rule for all LLCs performing any kind of action in Montana. Certain actions do not qualify as “doing business” and therefore don’t require a foreign qualification. Some examples are:

  • Maintaining, settling, or defending lawsuits in Montana courts
  • Holding LLC member and/or manager meetings in the state or other activities solely associated with internal affairs
  • Maintaining bank accounts
  • Holding offices for the transfer or exchange of the LLC’s own securities
  • Selling products or services through independent contractors
  • Creating or acquiring indebtedness or collecting debts
  • Owning non-income producing property not used in the performance of the LLC
  • Transacting business in interstate commerce
  • Conducting a single transaction within 30 days that is not part of a series of regular business proceedings

This list is fairly comprehensive, but for more detail on any of these exemptions, see the LLC Act, Section 35-8-1001. If your only business activities in Montana appear here, you’re likely exempt from foreign qualifying. Once again, if you’re at all unsure, it’s best to get some legal advice.

How to Foreign Qualify Your LLC in Montana

Foreign qualification in Montana is simple if you know where to find and send your forms. If you or your legal counsel has decided to foreign qualify your LLC in Montana, go ahead and navigate to the Secretary of State’s Online Business Filing System. You must apply for your registration via an online form.

If you haven’t already, you’ll need to create a Montana ePass account. Once you’re logged in, scroll down the business forms page until you find the Certificate of Authority for Foreign Limited Liability Company, and you’ll be on your way. To make the process as streamlined as possible, have the following information handy:

  • Your LLC name (or alternate name if yours isn’t available in Montana)
  • The state where your LLC began and the date when it was formed
  • Your LLC’s duration
  • The address of your principal office (cannot be a P.O. box)
  • Your Montana registered agent’s name and address
  • Whether your LLC is managed by managers or members
  • Names and addresses of managers or managing members
  • An authorized signature

Got all that? Don’t forget, you’re also required to submit a Certificate of Good Standing (or Certificate of Existence) from the state where your LLC was formed, and it can’t be dated more than six months before your filing.

There’s a $70 fee to foreign qualify, and you can pay it with a credit or debit card through the online filing system.

After your form is in and your fee is paid, sit back, take a deep breath, and pat yourself on the back. Your LLC is on its way to foreign qualification, and you’re embarking on another chapter in the life of your business.

Name Requirements to Remember

There’s a lot to think about when you’re filing for foreign qualification, but don’t forget to confirm that your business name is compliant with Montana’s naming rules. Your LLC name must:

  • Contain a term that identifies its business type, like “limited liability company” or “limited company” or the abbreviations “L.L.C.,” “L.C.,” “LLC,” or “LC”
  • Not use any words that would imply it’s a business type other than an LLC, like “corporation,” “partnership,” or “incorporated”
  • Be unique from all other business entity names on file with the Montana Secretary of State (perform a Montana LLC name search to make sure the name you want is available)

You can also reserve your Montana business name if you’re not quite ready to foreign qualify your LLC.

Frequently Asked Questions

  • We think you should foreign qualify your LLC before you begin conducting business in a new state. If you don’t, your business could be subject to a broad range of fines and penalties for operating an LLC in a jurisdiction where you don’t have permission to do so.

  • You’ll typically need to wait roughly 2-5 business days for Montana to process your documents. This state is quite efficient compared to many!

  • Chances are, you’ll require at least one license or permit to operate your LLC in compliance with Montana state law. For more information about business licenses and more in this state, check out the state’s excellent Small Business Licensing Information page, which breaks down everything from industry-specific licenses to county- and municipal-level permits.

  • Yes. Whether you operate a domestic or foreign LLC in this state, you are required to file a Montana LLC Annual Report.

  • The overall costs of operating a Montana LLC can vary considerably based on the specifics of your business. However, we created a helpful guide to help you identify and plan for every expense your LLC will face in this state.

  • The answer to this question lies in your personal preferences, but we can give some general pointers. An attorney will cost the most by a mile, but also provides expertise you won’t find with the other options. The DIY route is free of charge but can require quite a bit of legwork and provides no peace of mind that the process is being completed correctly.

    Using an LLC service means your business will be foreign qualified by professionals who know what they’re doing, while also costing significantly less than a lawyer. This “best of both worlds” attribute is what makes LLC services our preferred option.

  • Using an online LLC service removes much of the hassle from the foreign qualification process. With these services, all you need to do is provide them with the name, location, and industry your business operates in, along with some info about yourself and your Montana registered agent.

    The service then registers your Certificate of Authority with the state to qualify your LLC to do business in Montana.

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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