These businesses are tax-exempt, can accept donations, and may receive grants. This guide walks you through the steps to get your Montana nonprofit corporation off the ground, including applying for tax-exempt status.
How to Form a Montana Nonprofit Corporation
Select initial directors
The directors of a nonprofit help ensure the organization carries out its mission and has enough resources to do so.
When you form a Montana nonprofit corporation:
- The board must have a minimum of three directors
- Each director must be an individual and not an entity
Choose a name
The nonprofit’s business name should reflect the organization’s mission and be easy to remember. According to the Montana code, the name should not:
- Be used by another organization doing business in the state
- Include a business name identifier that suggests an entity other than a nonprofit
Confirming name availability
You can check the availability of your preferred business name by:
- Searching the Montana state business registry
- Checking the U.S. Patent and Trademark Office website
Once you’ve found an appropriate name, you can put a hold on it for 120 days with the state. Or, you can let ZenBusiness take care of it for you with our hassle-free name reservation service.
While you’re at it, this is the time to pick out the perfect domain name to start building your online presence. Use our domain name registration service to free up your time to work on other things.
Choose a Montana registered agent
A registered agent is a person or company available during regular business hours to accept certain letters on behalf of the corporation. This includes correspondence from the Secretary of State, court summons, subpoenas, and notices of lawsuits.
Some corporations choose to have the owner or employee act as the registered agent, but this has its challenges. You must always be available during business hours and having legal notices served in front of clients isn’t ideal.
ZenBusiness has a registered agent service that can connect you with our in-state partners, who can perform this role for your corporation. Be sure you have the consent of the registered agent before listing their contact information on your incorporation documents, as this is required by law.
File Articles of Incorporation in Montana
To form your Montana nonprofit corporation, you must file your Articles of Incorporation and have them approved by the Secretary of State. You can submit the these online. The Articles of Incorporation must include details such as:
- Business name
- Type of nonprofit (public benefit, mutual benefit, or religious corporation)
- Purpose of the corporation
- Name of your registered agent
- Names and addresses of each incorporator
- Names and addresses of initial directors
- Signatures of incorporators and directors
Foreign (out-of-state) nonprofit corporations must apply for a certificate of authority before doing business in Montana.
Draft corporate bylaws
Montana code requires nonprofits to have corporate bylaws in place that make it clear how the entity is governed. This helps to resolve conflict and ensures everyone understands the decision-making process. Bylaws typically include:
- Election and duties of directors and officers
- Terms of office
- Meeting frequency and quorums
- Amendment of bylaws
- Membership, if any
- Removing and replacing directors
- Dissolution of the nonprofit
Hold organizational meeting with the board of directors
To finish setting up the entity, the directors listed in the Articles of Incorporation must hold their initial meeting. This is to adopt the corporate bylaws and appoint officers. Other topics such as banking, board meeting schedules, and how to keep records can also be discussed.
Set up corporate records
Keeping detailed records is vital to maintaining tax-exempt status and nonprofit compliance. This means that your nonprofit should maintain official records, which include:
- Articles of Incorporation
- Corporate bylaws
- Board meeting minutes
- Financial statements
- Annual reports
The Montana state website has a full list of corporate records that you’re required to maintain. You can keep these documents as hard copies in a binder or digital files in the cloud, as long as they’re easily accessible.
Get tax ID numbers
Employee Identification Number
Your nonprofit corporation must apply for a federal Employer Identification Number (EIN) with the IRS. You need an EIN to open a corporate bank account, hire staff, and pay income taxes. You can use ZenBusiness’s EIN service to obtain one on your behalf, and make your burden a little lighter.
Montana withholding tax account
If your nonprofit is hiring staff and paying wages, you’re required to register for a state withholding tax account. This lets you deduct employee income tax from paychecks so your business can hold it in trust and pay it to the state.
Apply for all necessary Montana licenses and permits
Be sure to get all the required federal, state, and local licenses to run your Montana nonprofit corporation. If you’re operating games of chance, you’ll also need a license from the Montana Gaming Commission.
The registrations you need vary based on your industry, location, activity, and business type. Our business licensing partners can help simplify this process. They do the research and provide you with a single business license report that lists the permits you need to operate your particular nonprofit.
Apply for tax-exempt status
When the state of Montana accepts your Articles of Incorporation, it recognizes your business as a nonprofit corporation. However, you must still pay taxes until you apply for the appropriate tax exemptions.
Federal tax exemption: You must file Form 1023 with the IRS to be recognized as 501(c)(3) organization. This document can be submitted electronically. There’s a long-form version and a short one, fill out the one that best meets the needs of your nonprofit.
Montana state tax exemption: Once the IRS has approved your federal tax exemption, you can apply for tax-exempt status in Montana.
Register as a charity
Some jurisdictions require nonprofit corporations to register as a charity before they can solicit donations to help with funding. Montana doesn’t have this requirement at a state level. You may need to apply for charitable status in some counties or municipalities, or to solicit across state lines.
Acquire insurance for your nonprofit
Before you open your doors, have the right insurance in place to protect your nonprofit. A qualified insurance agent can assess your needs and recommend the right policies. Common types of business insurance include general and professional liability, property, vehicle, unemployment, and worker’s compensation.
Open a bank account
It’s important that your business has its own separate bank account to help with record-keeping and track income and expenses. Most banks ask for your EIN, copies of your Articles of Incorporation, and corporate bylaws when you open a corporate account.
Ready to Kick Start Your Business?
At ZenBusiness, we are proud to support small businesses through a variety of different tools and services. Whether you need a registered agent service, want to reserve a business name, or looking to register a domain, our goal is to help you stay on the road to success. Check out our services, and contact us today to see how we can help you grow your company.
Montana Nonprofit Corporation FAQ
Can the founder of a Montana nonprofit receive a salary?
Yes, a founder that’s also employed as a staff member can earn a salary. Compensation is usually set by the board.
What happens if a nonprofit makes money in Montana?
Net earnings from a nonprofit must remain in the corporation for future use.
What kinds of Montana businesses can be a nonprofit?
Any business focused on serving the public instead of making money for its owners can be a nonprofit. These entities may be involved in education, science, research, religion, the arts, sports, public safety, and the environment.
Can nonprofits sell products in Montana?
Yes. A nonprofit may sell products to help fund its work. The revenue from these sales must remain in the organization.