Starting a new business can be an exciting time. There’s nothing more satisfying than watching your business venture take off and grow into the company you always dreamed of owning.
Of course, if you’ve never started a business before, you may have many questions about where to start and how to form your limited liability company (LLC) the right way. Luckily, in Montana, setting up an LLC is a relatively straightforward process.
In this guide, we’ll walk you through how to start your Montana LLC, going through each step in detail. We’ll also offer advice on when to turn to an LLC partner or consultant for more information or administrative services to help ease the burden of launching your LLC.
We know that you’re excited to start launching and growing your new business — use this guide to make the setup process as easy and affordable as possible.
The 5 steps to form an LLC in Montana:
This guide aims to help you set up your new Montana LLC successfully and correctly. We’ll walk you through everything — from registering your new business to securing and reserving your name, designating a registered agent, drafting an Operating Agreement, and setting up a tax account with the Internal Revenue Service (IRS).
Step 1: Name Your Montana LLC
One of the first decisions you’ll need to make in any business is deciding on a name for your company. The name for your Montana LLC should meet multiple criteria. It should help market and sell your brand, be memorable and distinct, and adhere to all Montana LLC naming regulations.
If you already have a name (or a few) in mind, that’s great! We suggest you compile a list of naming options before diving into this step. You’ll want to have a few options that you like before reviewing the Montana LLC naming guidelines.
When selecting a name for your LLC, you’ll need to make sure it’s unique. In other words, you have to ensure that no other company already has the name you want. How do you find out if your name is available? Simple. You’ll complete a business name search through the Montana Secretary of State site. This search will bring up results for any companies with names that match your keywords. Continue with this search until you’ve found a name that’s available and that you (and all of your LLC partners) agree on.
Once you have your company name, it’s time to add the required LLC designation to its end. In Montana, you must add an LLC designation to your company name. This means you’ll add a suffix like “LLC” or “Limited Company” after your company name.
Here’s a full list of all legal LLC designations:
- Limited Liability Company
- Ltd. Liability Company
- Limited Liability Co.
- Ltd. Liability Co.
Keep in mind there are certain words that can’t be used in your name like “corporation.” You can find more information about what words aren’t permitted here.
Now that you have your name and LLC designation, you can reserve the name to prevent another company from scooping it up before your LLC is registered. This step is optional, but if you’re worried about losing your name, it’s an easy and affordable action. You can reserve your name online through ePass Montana. This reservation is good for 120 days and costs $10.
Something else to think about with your LLC name is the availability of website domains. Be sure to double-check through a domain name search on whether you’ll be able to use your business name through some sort of domain as well. ZenBusiness can help you reserve your website domain name once you’ve made your choice.
A few other things you want to think about are trademarks and a DBA. Visit the United States Patent and Trademark Office‘s site to see whether your business name or logo is federally trademarked, and if you’re in the clear there along with your state trademarks, you can find out more information about how to file it with the state of Montana here.
If you want your company to do business under a name other than its original name, you can get a “Doing Business As” (DBA). It’s often used when a business is unveiling a new store or product line and wants to differentiate it from the main company name. To apply for a DBA, use the Montana Secretary of State’s ePass website and fill out the DBA application.
Step 2: Appoint a Registered Agent in Montana
Once your name is selected and reserved, you’re ready to decide on a registered agent for your Montana LLC. A Montana registered agent is a person or business entity that will act on your behalf as a go-between for your company and the Secretary of State’s office. They’ll pass along important documents from the state of Montana, including any legal paperwork.
Every LLC in Montana must appoint a registered agent to their company. This registered agent must have an operating (business) address in Montana and be available at this address during normal hours of operation (roughly 9 a.m. to 5 p.m. local time). This address must be a physical address since legal paperwork might be served here and cannot be a P.O. box.
In Montana, you can serve as your registered agent. Many LLCs with few members or even one member opt to do this. However, some conflicts can arise from working as your own registered agent. First, doing so means some of your private information may need to become public record. Secondly, if you see clients at your office address, it is possible that you could be served legal paperwork in front of them.
Step 3: File Montana Articles of Organization
After your name is ready to go and your registered agent is assigned, it’s time to register your LLC officially with the state. Registering your business allows Montana to recognize your LLC as an official company and communicate with your business about regulation changes and other important updates. To register your LLC in Montana, you’ll need to complete your Articles of Organization. This form can be accessed online through the ePass Montana portal. You’ll want to have the below information handy to complete and file this form:
- LLC Name. This is your official LLC name with the LLC designation.
- LLC Operating or Mailing Address. This is your LLC’s office or operating address. If you do not have an office, you can use your residential address.
- Registered Agent’s Address and Name. This is your registered agent’s office or operating address (must be located in Montana) and the agent’s legal name.
- Management Structure. You will need to indicate how your LLC will be managed — by managers (outside parties) or members (partners).
- Manager or Member Names and Addresses. You’ll need to provide the names and addresses of all partners or managers.
- Organizer Signature. This is the signature of the person filling out the paperwork, along with the current date.
The cost to file your Articles of Organization is $70.
Step 4: Create an Operating Agreement
Whenever you’re forming an LLC, it’s good to have an Operating Agreement in place. Your Operating Agreement is an internal document that can serve as a guidebook for your company. It details how your company should be run, how operations are managed, and how decisions and voting structures work. Operating Agreements can be particularly important for LLCs with multiple partners.
Although Operating Agreements are not required by Montana law, they’re strongly encouraged. Even if you’re the sole member of your LLC, an Operating Agreement can help legally demonstrate how your business should be run if you are incapacitated or unable to run your business for a set amount of time.
Here’s a quick rundown of some of the benefits creating an Operating Agreement can offer your LLC:
- Operating Agreements can help you show that your and your partners’ personal assets and debts are separate from business finances and legal liabilities in case a court ever tries to question it.
- Operating Agreements can resolve conflicts and prevent disagreements by providing clear instructions on how partner votes and tie-breaking decisions are handled.
- Operating Agreements offer insights into how your business is run for new investors or partners, allowing everyone to ensure financial partnerships are a good fit in advance.
It’s pretty easy to draft an Operating Agreement for your Montana LLC, especially if you work with a trusted LLC partner.
Step 5: Apply for an EIN
The last step you’ll take to make your LLC official in Montana is to set up all tax information and obtain any necessary licenses and permits.
First, you’ll want to register your LLC with the IRS, so you’re set up to handle your business taxes. You’ll do this by applying for an Employer Identification Number (EIN) on the IRS website.
What is an EIN? Your company’s EIN is essentially a Social Security number for your business. It helps identify your LLC and allows you to file your taxes, apply for new business bank accounts, and hire and pay your employees.
While most LLCs will want to secure an EIN, you don’t have to complete this step if you’re the sole member of your LLC and have no employees. While not mandatory for all self-employed individuals, securing an EIN does have its benefits.
To apply for your EIN, visit the IRS website. The process takes just minutes, and your EIN will be ready to use as soon as you finish. Best of all, this process is completely free.
How much does it cost to start an LLC in Montana?
What’s the total for starting your Montana LLC? Let’s take a quick look at the baseline pricing.
Rundown of startup expenses:
- Reserving Your Business Name: $10
- Filing Your Articles of Organization: $70
- Applying for an EIN: $0
Overall, the bottom dollar cost for starting your Montana LLC is $80. Of course, this pricing does not include any expedited fees or costs for licenses or permits, which can fluctuate by industry. This pricing also does not include your time or expenses with setting up your business or any administrative costs to get a physical office up and running. Additionally, it doesn’t take into consideration that you’ll need to file your annual report each year, which costs $20.
What are the benefits of an LLC in Montana?
An LLC is a common business structure that most small businesses choose when forming their companies. LLCs offer great flexibility in managing your company with minimal regulations and red tape to cut through. LLCs also make it easy to separate owner and partner personal assets from company finances, offering more secure legal protections.
Here are some of the primary reasons many Montana business owners opt to form an LLC:
- They make it easier to separate your personal assets and debts from your business finances and liabilities.
- They offer flexible management structures, allowing you to organize and run your LLC in a way that makes sense for your industry and company.
- They protect you from double taxation. You’ll pay taxes for your profits earned as a partner or owner on your personal taxes only.
- They have very few reporting requirements, making them easier to manage administratively.
These are just a few of the main benefits of forming an LLC. For more information, check out this comprehensive guide.
How is a Montana LLC taxed?
We’ve already covered that Montana LLC owners and partners are protected from double taxation (meaning they’ll only pay taxes on profits on their personal tax returns, rather than on their personal and corporate filings). But there’s more to know about how LLCs are taxed in Montana. We’ll run you through the main tax requirements, but be sure to talk with an accountant or tax specialist for more guidance.
Here are a few tax requirements to be aware of:
- Self-employment tax: If you’re the owner of an LLC, you’ll be considered self-employed for your taxes. This means that you’ll report your LLC business profits and losses on your tax return and will be expected to pay into Social Security and Medicare.
- If you choose to be taxed as a corporation: Though most new LLCs prefer to be taxed the default way (as a sole proprietorship or partnership), for some LLCs (particularly those with very high earnings), it may be advantageous to be taxed as a corporation, either a C corporation or an S corporation. These options can have some distinct advantages, which you can learn more about here. To file as a C corporation, you’ll need to file an 8832 tax form with the IRS. For an S corporation, you’ll need Form 1120-S. Before deciding, consult a qualified accountant.
- If you want to avoid tax penalties: If you want to get ahead of tax penalties, it’s important to pay estimated taxes each quarter. You have to make these payments for both your state and federal taxes. If your LLC has employees, you’ll need to set up a withholding account with the Montana Department of Revenue to withhold taxes from their paychecks. You’ll need to make regular withholding payments to the IRS on behalf of your employees, and you’ll have to register for Unemployment Insurance Tax through the Montana Department of Labor & Industry.
- If you’re worried about sales tax: Luckily, in Montana, there’s no sales tax applied to goods or services, so you won’t have to worry about setting up sales tax accounts.
It may seem like there are many boxes to check off to ensure your taxes meet state, local, and federal regulations, but if you follow them one step at a time, you’ll have them completed in no time. You can also reach out to a tax expert to ensure your LLC is fully compliant.
Montana LLC FAQs
- What is the processing time to form my Montana LLC?
It can take up to seven to 10 business days for Montana to process your Articles of Organization. Many requests are processed much sooner, but if you need your formation rushed, you can pay an extra $20 to have your request processed within 24 hours or $100 for one-hour processing.
- Do I need to file an Operating Agreement with the state of Montana?
No, Montana does not require you to file an Operating Agreement with the state, but it is strongly recommended that you create this agreement to protect your company and its partners.
- What tax structure should I choose for my Montana LLC?
Most LLC owners decide to have their business taxed the default way, which is as a sole proprietorship (for single-member LLCs) or a partnership (for multi-member LLCs). This method only requires partners to pay taxes on their percentage of their profits on their personal tax returns. The LLC itself is not taxed. This avoids the “double taxation” that corporate shareholders pay, in which profits are taxed both at the business level and the personal level. Another option is to choose to be taxed as a corporation. If you have formed a large LLC or bring in high earnings, this option might make more sense. There are some disadvantages to consider when opting to be taxed as a corporation, so be sure to read this tax guide before finalizing your decision.
- Does Montana allow a Series LLC?
Few states allow Series LLCs to be formed, but Montana is one state where this is legal. A Series LLC refers to a business structure where a parent LLC is over several smaller or “child” LLCs. The process of forming each LLC follows the same steps outlined above, but you might be charged additional fees. You’ll also be required to pay an additional $50 for each Series LLC member (or child company) when filing your Articles of Organization.
- Which licenses and insurance are required for an LLC in Missouri?
Some types of businesses require special licenses or certifications to operate legally. Check with your local town, city, and/or county authorities to determine if your LLC needs any licenses or permits on the local level. Missouri has a page to help you determine what state licensing you may need. Remember that licensing can also happen at the federal level and is often industry-specific.
As for insurance, Missouri requires LLCs with five or more employees to carry workers’ compensation. Any vehicles used for work purposes must be covered by commercial auto insurance. Additional insurance coverage, such as general liability insurance, might be recommended based on your business operations. It’s best to consult with an insurance expert.
- Which licenses and insurance are required for an LLC in Montana?
Montana does not require general business licenses, but different industries and locations have different policies. To find out if you need to acquire any special permits or licenses, consult page 10 of this Montana small business startup guide for the next steps. You can also easily find what licenses are required at the state level here.rnrnIn any case, we recommend hiring a professional service like ZenBusiness, which will provide you with a comprehensive package of all the licenses and insurance required for your Montana LLC.
- How do you dissolve an LLC in Montana?
To dissolve your Montana LLC, you’ll need to close your business tax accounts and file Articles of Termination with the Secretary of State.