Keeping your business running smoothly means keeping your business legally compliant. If you run a Montana business, you already know that paying your taxes at the federal, state, and local levels is a big part of that. Knowing exactly what taxes apply to your business and keeping up with all the due dates can cause anxiety for even the most experienced entrepreneurs. Luckily, we’re here to help. Let’s take a closer look at the types of state taxes you might face as a Montana business owner and how and when to pay them. We will also discuss which of our products and services can make the process of filing your taxes easier when the time comes.
If you’re looking for more complete compliance help, check out our Worry-Free Compliance service. This service keeps track of your filing and compliance deadlines and alerts you when they’re approaching. It also allows you to organize your business records.
If you’re looking for information about federal taxes, head over to our page on federal taxes for small businesses.
Step 1: Establish your Montana business’s corporate income tax obligations
Many Montana businesses have to pay state taxes on their income, although how much and at what rate depends on the business’s entity structure. Many corporations, limited liability companies (LLCs), and partnerships have to pay corporate income taxes. The standard Montana business tax rate for corporate income is 6.75%. Corporate income taxes are due on the 15th day of the 5th month after your fiscal year ends.
Some businesses that operate in another state and make only sales in Montana don’t have to pay corporate income taxes. Instead, many of these business entities can pay 0.5% on gross sales if they don’t rent or own real estate in Montana and their gross sales in Montana don’t exceed $100,000. Also, the income tax rules for pass-through business entities are different. Pass-through business entities in Montana are the same entities disregarded under federal income tax laws. These include:
- Sole proprietorships
- Single-member limited liability companies (LLCs)
- Certain partnerships
- S corporations
The owners of these businesses pay taxes on their share of the business income through their personal income taxes.
Step 2: Determine your Montana business’s employment taxes
If your business has one or more employees, you likely need to withhold taxes from your employees’ paychecks to cover their state income tax obligations. The state of Montana calls these withholding taxes. The amount you withhold from each paycheck depends on how much each employee makes and how often they get paid. As of 2021, the withholding rate for Montana small business taxes on an employee’s income is a wage-dependent flat rate plus 1.8% to 6.6% of an employee’s wages.
With the exception of new businesses, the due date for paying withholding taxes also depends on the amount your employees make and how often you pay them. The State of Montana establishes your withholding tax due dates by “looking back” at the amount of income you withheld in the previous year. The withholding tax payment due dates are:
- The 15th of every month for new businesses
- For businesses withholding $1,999 or less in the last year, January 31 of the following year
- The 15th of every month for businesses withholding $1,200 to $11,999 in the last year
- For businesses withholding $12,000 or more, the same as the federal withholding schedule
While withholding tax payment due dates can differ among businesses, businesses typically must file W-2 forms by January 31 of each year.
Step 3: Establish your Montana business’s additional state tax obligations
Income taxes and withholding taxes may be the most common taxes that many businesses pay. However, there are a lot of other Montana small business taxes you might have to pay to stay legally compliant. These taxes include:
- Sales taxes
- Franchise or privilege taxes
- Unemployment taxes
- Excise taxes
Many of these tax obligations are based on your business activities.
Sales and Use Taxes
Montana doesn’t have a general sales tax for the sale of goods, but businesses normally have to collect a 4% tax on the sale and use of accommodations, campgrounds, and vehicle rentals. These tax payments and/or reports are due quarterly on the following dates:
- 1st quarter: April 30
- 2nd quarter: July 31
- 3rd quarter: October 31
- 4th quarter: January 31
For lodging facilities, there’s 4% tax for the sale, and a 4% tax for the use, creating a combined 8% tax that many businesses need to collect from their patrons.
Franchise or Privilege Taxes
Franchise and privilege taxes are taxes that almost all businesses have to pay for the privilege of doing business in a state. The State of Montana doesn’t impose this kind of tax on its businesses.
Employers pay unemployment taxes on employees’ wages so that the state has money to pay qualified employees who have been separated from work. The rate of taxes an employer has to pay varies and depends on many factors. These factors include how many years the employer has been in business, the amount of employee wages, and the amount in the state’s Unemployment Insurance Trust Fund. You have to file quarterly reports and make quarterly payments on April 30, July 31, October 31, and January 31.
Sometimes the state charges excise taxes for business activities involving telecommunications, medical marijuana, fuel, alcohol, and nicotine products. You can find out more about these kinds of Montana small business taxes on the Department of Revenue’s Taxes and Fees page.
Step 4: Prepare to file and pay your Montana business taxes
You pay your unemployment taxes to the Department of Labor and Industry. The rest of your state business taxes are paid to the Department of Revenue. You can pay the Department of Revenue online through UI eServices, and you can pay the Department of Revenue online through the Montana TransAction Portal.
Gather and analyze all your important business documents to help make sure you fill out your tax forms properly. You’ll likely need the information from multiple kinds of business documents to fill out your taxes, including:
- Payroll documents
- Legal documents
- Accounting documents
This list illustrates how important it is to track your business’s income and expenses carefully.
As a business owner, you likely have a lot on your plate. If gathering and organizing your business documents isn’t your strong suit, that’s ok. We’re here to get your financial documents in order so they’re ready for tax time. With the Smart Dashboard on our ZenBusiness Money App, we help you manage your invoices, payments, and clients.
Not sure how to stay compliant? Learn more about legal compliance for small business owners.
Do I need an accountant?
Most small businesses need a tax professional to help them properly prepare and pay their taxes. The consequences of failing to submit a return or improperly fulfilling your tax obligations are so serious, you don’t want to skimp on the cost of hiring professional help.
If you’re concerned about spending your hard-earned money on the wrong kind of professional, you can use the IRS’s online guide on tax return preparer credentials and qualifications to help you make sure you find a professional who has the right education and experience.
How We Can Help
The word “taxes” can whip up dread and stress in the best of us, but having the right tools and team in your corner can put your mind at ease. Our ZenBusiness Money App allows you to easily send custom invoices, accept credit card and bank transfer payments, and manage your clients from an easy-to-use dashboard so that you’ll have the information you need when tax time rolls around.
No matter how big or small your Montana business is, we’re here to help.
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.
- How much can a Montana business make before paying taxes?
For businesses subject to corporate income taxes in Montana, there’s no minimum threshold for taxes on net income.
- What percentage does a Montana business pay in taxes?
The percentage a Montana business pays in taxes can vary, and it depends on the characteristics of the business.
- How does a Montana small business pay taxes?
You can pay your corporate income taxes online or by mail. If you have additional questions about how to file small business taxes in Montana, you can speak to a Citizen Service Representative at the Department of Revenue.
- Do I have to file small business taxes in Montana?
Your obligation to pay small business taxes in Montana depends on the specific characteristics of your business. If you think you might be subject to an exemption, it’s important to speak to a tax professional about your tax obligations right away.