If you’re one of the tens of thousands of entrepreneurs looking to build a business in Montana, LegalZoom can help you get started today.
So far this year, the Treasure State has already received a record number of new business registrations. It’s easy to see why, especially for a limited liability company (LLC): Montana has low filing fees, no statewide sales tax, and no corporate income tax requirements for LLCs.
That said, we understand that starting a new business is a major decision. If you want to learn more about the process first, read on as we walk you through the various steps, review the benefits, and answer common questions about creating a Montana LLC.
Why choose Montana to start an LLC?
Whether you’re in Missoula or Bozeman, there's a reason many entrepreneurs choose this state to create an LLC. Montana has developed a unique network of active local support organizations from both non-profits—such as universities—to successful private companies eager to mentor the next generation.
The Secretary of State, which handles business registration, has also done a lot to support small businesses and nurture Montana’s entrepreneurship ecosystem. The office recently digitized the filing process, reduced formation fees, and waived current annual report filing fees to help reduce costs for local businesses.
The benefits of creating a Montana LLC
For those looking to start an LLC, Montana offers several benefits, including the following:
- No general sales tax. Rather than a statewide sales tax, Montana only imposes sales and/or use tax on certain transactions, such as medical marijuana products, lodging/accommodations, and a limited tax on the base rental charge for rental vehicles.
- Affordable start up & maintenance costs. The average cost to start an LLC in the U.S. is between $35 to $500. Montana’s fees are the lowest in the country at just $35 to register a domestic business and $35/year to file annual reports.
- Privacy. Montana's LLC laws protect ownership information by regarding it as confidential information, not available to the public.
- Limited liability protection. As a limited liability company, your business is a separate legal entity from its owners. This means you generally aren’t personally responsible for your company's liabilities.
- Asset protection. Because your business is a separate legal entity from you, creditors generally can't go after your personal assets to resolve your company’s debts and other liabilities.
- Easy for non-residents. It's fairly straightforward and affordable to register a foreign business entity in Montana due to their digitized filing system. The $70 filing fee is also much lower than other states, which can charge up to $750.
- Simple annual reporting. Simply log into the SOS's online portal, fill in any changes to your business information, pay the filing fee, and submit your report. Or, work with an annual report compliance service like LegalZoom that will file annual reports for you.
- Vehicle registration. Many businesses that own vehicles choose to form their LLC in Montana because of the state's lack of sales tax and laws that allow foreign LLCs to register vehicles in the company's name.
Starting a business takes courage. LegalZoom makes sure the legal details don’t stand in your way, from the day you register until the day you retire.
How to create a Montana LLC in 6 easy steps
You can start a Montana LLC by following the steps below. Since the application process is entirely online, you’ll begin by setting up an account with the Montana Secretary of State Online Filing Portal, Okta.
1. Name your Montana LLC
Before registering your limited liability company with the Montana Secretary of State's Office, you must select an appropriate name for your business that complies with state regulations.
The following are some examples of Montana business naming requirements:
- Your business name must include the words limited liability company, LLC, or L.L.C.
- Your name must be different from an existing business in the state.
- The business name cannot contain words used to name a government agency (i.e., State Department, CIA, FBI, Treasury, etc.)
- Certain restricted words (bank, lawyer, attorney, credit union, etc.) may require additional documentation and licensure paperwork.
To ensure your business name doesn't already exist, conduct a Montana LLC lookup using the Montana Business Name Search tool. This lets you browse and see the names of already registered Montana businesses so that you choose a name that is unique and distinguishable.
If you've picked a compliant business name but you're not ready to register with the state yet, you can reserve the name for 120 days. Simply fill out the name reservation application with the Secretary of State and pay the $10 filing fee.
2. Choose your registered agent
Montana requires every business entity to appoint a registered agent. A registered agent is the person or legal entity authorized to oversee legal documents on behalf of your LLC.
Your Montana registered agent must meet the following criteria:
- They must have a physical address in Montana.
- Their address cannot be a P.O. box.
- They must be at least 18 years old.
- They must be available to accept documents during regular business hours.
When selecting your LLC's registered agent, you can appoint yourself or hire a professional. You can also go with a registered agent service that will manage all your official correspondence. At LegalZoom, we offer affordable and reliable registered agent services.
3. Prepare and file articles of organization
The next step involves filing LLC formation paperwork, known as the articles of organization, with the Montana Secretary of State's office. Once the state approves your articles of organization, they'll send you a certificate confirming your limited liability company's legal status.
To prepare your articles, you'll fill out the form on the Secretary of State's online system and pay the $35 filing fee. You'll include the following information in the articles of organization:
- Your LLC business name
- Your business mailing address
- The name and address of your registered agent
- The names of the LLC's members
- The reason for forming your limited liability company
- The LLC's duration, or time period over which the LLC will exist
- The management structure
- The signature of the person forming the LLC
Building a business is enough work as it is. We'll help you start your LLC with confidence.
4. Create an operating agreement
The next step in the LLC formation process involves drafting an LLC operating agreement. Although Montana does not require your business to create one, having one can benefit your LLC as it can help settle disputes and avoid litigation. Without an LLC operating agreement in place, the courts make determinations based on Montana state law, not necessarily what is in the best interest of the LLC and its members.
When drafting your operating agreement for your Montana LLC, be sure to address the following:
- Name and address of your LLC
- Duration of the LLC
- Name and address of your registered agent
- Purpose of the business
- Montana LLC members and their contributions
- Instructions for dividing profits and losses
- Voting rights and decision-making procedures
- Procedure for admitting new members and exiting members
- Management structure
- Tax structure
- Indemnification and liability clauses
- Dissolution instructions
If you need help drafting your operating agreement, LegalZoom can create one for your LLC. If you're new to drafting such a document, using a Montana LLC operating agreement template can also serve as a starting point.
However, for more complex scenarios such as intricate profit-sharing arrangements, specific voting structures, or special tax considerations, it's worth consulting an attorney to ensure your operating agreement is comprehensive and legally sound. This professional help can help safeguard against future disputes by addressing your business’s unique needs more precisely.
5. Get an employer identification number and open a business bank account
Now, you're all set to obtain an employer identification number (EIN), also known as a federal tax identification number, from the Internal Revenue Service (IRS). Your Montana LLC will need this nine-digit number when filing taxes, hiring employees, and opening a business bank account.
To acquire your own EIN, submit Form SS-4 online at the IRS website, by mail, or by fax for free (there is no filing fee). Alternatively, if you'd like someone to take care of it for you, use LegalZoom's EIN services to simplify the process.
Once you have your employer identification number squared away, you can open a business bank account. This is an important step to help separate your business assets from your personal assets and establish personal liability protection. Visit your financial institution to open an account in person or apply for one online.
6. Register for state taxes and get business licenses
The next step is to register for state taxes. To get started, create a business income tax account with the Montana Department of Revenue.
Then, you can move on to business licenses and permits. Although Montana does not have a statewide business license requirement, your LLC may still need to obtain local and federal licenses and permits to legally operate. For example, your county may have special permit requirements, or the federal government may have certain occupational licenses required for your specific business operations.
The Montana Department of Revenue has established the eStop Business Licenses Program to help you obtain the necessary business licenses and permits. To learn more about what licenses and permits pertain to your business, use the Montana License Search tool. It's important to note that each license and permit will have its own required fee.
LegalZoom helps you handle every step—from choosing a business name to filing paperwork with your state.
Montana LLC registration costs
The good news is that in Montana, forming an LLC is actually quite affordable. The following are some costs you can expect to pay during Montana LLC registration.
- Name reservation cost: $10
- Formation cost: $35 to file the articles of organization
- Annual report cost: $20 if filed on time, $35 for late filings
- Certificate of good standing: $5
- Additional costs: Registered agent services, operating agreement drafting services, domain name and web hosting, licenses and permits, workers compensation insurance (if you plan to hire employees), and others
While the cost of forming your Montana LLC may vary depending on what services and licenses you need, the simple cost of establishing your business and filing your annual report on time is just $55.
Maintaining your LLC in Montana
Once registered, there are a few steps that will help keep your LLC in good standing with Montana.
- File annual reports. Montana requires all businesses to file annual reports. Your Montana annual report should include the most up-to-date information about your business entity. File by April 15 of each year to avoid late fees. If you fail to file by Dec. 1, your LLC will be involuntarily dissolved.
- Pay income taxes. LLCs are "pass-through entities" in Montana. This means that each owner reports business gains and losses through their individual tax report to avoid double taxation. Montana's individual income tax rates vary.
- Pay for insurance. Montana businesses with employees must provide workers' compensation insurance.
- Maintain business licenses. While Montana doesn't require a general business license, the state does provide certain professional licenses.
Cities and counties also have their own requirements, such as the following:
- Missoula County requires most businesses that earn over a certain threshold and/or operate within city limits to obtain a business license.
- The City of Billings instructs all individuals or organizations doing business in the city to obtain a business license.
- The City of Bozeman necessitates that those conducting business for profit within the city obtain a business license, including "home-based businesses."
- The Town of Whitehall requires businesses operating in the town to obtain a business license at the town hall.
- Butte-Silver Bow County states that all businesses that operate within the city and county must maintain a business license.
Mistakes to avoid if you create a Montana LLC
Look out for these common errors when you start an LLC in Montana or any state.
- Skipping the operating agreement. Montana doesn't require operating agreements, but they're an important legal tool that defines the rights, responsibilities, and obligations of each member. Having one in place will help ensure smoother business operations and inform future conflict resolutions.
- Neglecting to choose the right registered agent. Registered agents receive official correspondence between your LLC and the courts. It's important to have a registered agent who you can trust to stay on top of important legal documents and official notices.
- Registering before conducting a business entity search. The Montana SOS won't allow you to register a business under a name that another registered business is already using. Filing formation documents without conducting a local entity search could lead to wasted effort and registration fees if your desired business name is already taken.
- Using a personal bank account. Limited liability protection is one of the quintessential perks of forming your business as an LLC. However, mixing personal and business finances could potentially jeopardize your limited liability status. For this reason, it's important to open a business bank account for your Montana LLC.
Montana LLC FAQs
How much does it cost to start a Montana LLC?
To start a Montana LLC, it costs $35 to file articles of organization, $10 to reserve your desired business name, and any other additional costs, such as hiring a registered agent and purchasing local or professional business licenses.
Do I need a registered agent in Montana?
Yes, Montana requires registered businesses to have a registered agent. You can choose to be your own registered agent or hire a registered agent service like LegalZoom.
Can I form a Montana LLC if I live out of state?
Yes, you can form a foreign LLC if you live and operate your business out of state. Or, you can form a domestic LLC if you live out of state but have a Montana street address that your business will operate from.
How long does it take to register a Montana LLC?
After you file your articles of organization, it usually takes the Montana Secretary of State five to six business days to establish your business.
Do I need a business license to start an LLC in Montana?
While you don't need a general business license to start an LLC in Montana, you may need a local or professional business license based on the services you provide and where your business is located.
Can I use a Montana LLC to register a vehicle?
Yes, a Montana LLC can register a vehicle.
Can I operate under a different name?
Yes, you can operate under an assumed business name, also called a “doing business as” (DBA) in Montana if you want to use a name for your Montana LLC that's different from the legal name of your company.
Is an attorney required to create an LLC in Montana?
No, you typically don't need an attorney to start a Montana LLC. However, it's smart to consult an attorney if you have legal questions about the process, such as on which business structure is right for you or how to use a Montana LLC to register a vehicle.
Should I use an LLC formation service?
You may want to use an LLC formation service if it will give you peace of mind to leave the process in a professional's hands. Formation services, such as LegalZoom, are familiar with the process and can help you navigate it with ease.
LegalZoom can help you file your state's formation paperwork for as little as $0 + state filing fees.
Start an LLC in Any State
Why use LegalZoom for your Montana LLC
LegalZoom has over 20 years of experience helping businesses form all across the country. Our service is fast, simple, and comprehensive. Because we're familiar with the process, you can feel confident that your LLC will form according to local compliance laws; all you need to focus on is growing your business.
Ready to start a Montana LLC?
If you're ready to start your LLC, LegalZoom is here to help. If you aren’t ready to register a Montana LLC right at this moment, we're here whenever you are! Don't hesitate to consult with one of the attorneys in our network for more personalized advice.
Rudri Bhatt Patel and Chloe Packard contributed to this article.
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