How to form a Montana corporation

Benefits of a corporation

When you form a corporation, your personal assets are not at risk if your business is unable to meet its financial obligations. This is because a corporation, unlike a sole proprietorship or general partnership, is a separate legal entity from its owners. Forming a corporation can also provide tax savings and help to protect you if an employee or business partner is sued, among other benefits.

Requirements for incorporating in Montana

Preparing your articles of incorporation

To form a Montana corporation, you must file articles of incorporation with the Secretary of State and pay a filing fee, at which point a corporation’s existence officially begins. At a minimum, the articles must include the following information:

• Name of the corporation
• Names and addresses of incorporators
• Name and address of registered agent
• Stock structure

Stock structure

A corporation can offer different types of stock, called classes or series. These classes can offer different rights to their shareholders, for example, some classes of stock may offer voting rights while others do not.

Regarding stock structure, the following applies:

• The articles must list the total number of shares the corporation is authorized to issue.
• If there is more than one class of shares, the articles must also state the number of authorized shares in each class and provide a distinguishing designation for each class. Before any shares are issued in a class, the articles must state the limitations, preferences and relative rights applicable to that class of shares.

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Naming your corporation

A new Montana corporation must have a name that is available to use in the state. You can check name availability by searching names online at the Secretary of State’s website.

If you need extra time to prepare your incorporation papers, you can reserve a corporation name for 120 days by filing an application with the Secretary of State.

Your corporation name must meet the following requirements:

• It must contain the words “corporation,” “incorporated,” “company,” or “limited,” or the abbreviations “corp.,” “inc.,” “co.,” or “ltd.”
• It must be distinguishable from the name of any other business entity in the Secretary of State’s records.

Specifying incorporators

An incorporator files the articles of incorporation with the Secretary of State. The following requirements apply to a company’s incorporators:

• There must be at least one incorporator.
• An incorporator may be a person or an entity.
• The incorporators’ names and business mailing addresses must be included in the articles of incorporation.
• After incorporation, the incorporators must elect directors if initial directors are not named in the articles of incorporation. They may also adopt bylaws, appoint officers and conduct other business. The incorporators’ duties end when directors are chosen.

Specifying directors

Corporate directors set corporate policies and strategies and oversee management of the corporation. They have the duty to exercise care and to act in good faith and in the best interests of the corporation.

Although there must be at least one person on the board of directors, there is no maximum number of directors. The articles of incorporation or bylaws should specify the number of directors and may also establish qualifications for directors.

Specifying a registered agent

Every corporation must appoint a registered agent to receive notices and legal documents on behalf of the corporation and forward them to the corporation. The following requirements apply when specifying a registered agent for your corporation:

• The articles of incorporation must state the name and street address in Montana of the corporation’s commercial registered agent, or if the corporation does not have a commercial registered agent, the name and street address in Montana of the corporation’s noncommercial registered agent.
• A commercial registered agent must be registered with the Secretary of State. A noncommercial registered agent can be an individual who resides in Montana or a corporation or limited liability company formed in or authorized to do business in Montana.

Stating a corporate purpose

All Montana corporations have a purpose of engaging in any lawful business. The articles of incorporation do not need to state any further purpose.

Determining incorporation bylaws

A corporation’s bylaws provide the directors, officers, and shareholders with guidelines for the corporation’s structure and operations. Bylaws can include anything that relates to managing the corporation’s business. Usually, bylaws address such things as the number and term of officers and directors and the way that shareholders’ and directors’ meetings are conducted.

The following guidelines apply when determining your company’s bylaws:

• A corporation must have bylaws, but they are not filed with the Secretary of State. The directors or incorporators may adopt the bylaws.
• Bylaws must be consistent with the law and the articles of incorporation.

Costs of incorporating in Montana

The Montana Secretary of State requires a fee when filing articles of incorporation or reserving a corporation name. Corporations are also required to pay state and federal income taxes.

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