Wondering how to start an LLC in Montana? The most crucial decision that the owners must make when beginning a new company is deciding on a business entity. For a variety of reasons, forming an LLC is often the best option for most enterprises with much more than one leading member.
In Montana, forming a limited liability corporation provides tax benefits and liability protection to business owners. However, in order to receive these benefits, you must follow a rigorous procedure to legally incorporate your LLC in Montana. The paperwork, forms, taxes, safety, and certification procedure can be intimidating for new enterprises.
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It is viable to operate a company without establishing a formal legal framework. The advantages of incorporating an LLC, however, greatly exceed the time & expense you’ll spend doing so. This article covers all you need to know about how do you start an LLC in Montana including a step-by-step overview.
The process of forming an LLC is a step-by-step procedure that begins with research and concludes with the submission of the proper documentation and fees. If you want to get more information on how to start an LLC in any state, you can read our complete guide on How To Form An LLC.
Before we start, here are the top picks for LLC filing services in Montana :
What Are The Benefits Of An LLC In Montana?
Montana is an amazing state that has a growing and stable economy and provides all types of business gains and state-provided incentives and grants. We can help you register a new business in Montana as one of the leading registered agents in the state so that you can take full advantage of all of the state’s business incentives and benefits and awards.
There are various benefits of starting an LLC in Montana. Take a look at some of the reasons why Montana is the best place to start a business:
1. Pass-through taxation
If you form a new company as an S corporation in Montana, the company or firm will not have to pay any taxes. Instead, the corporation’s profit or loss will be distributed to its stockholders. Earnings are taxed before being dispersed to owners, and profits are taxed again when owners declare their part of the profits on their personal tax returns.
2. Limited Liability Protection
“Personal liability protection” is one of the most significant benefits of founding a Montana LLC. As the proprietor of an LLC, you will not be held personally liable for any of the company’s debts. Your personal assets, such as your automobile, property, and bank accounts, will be protected from LLC creditors.
3. Independent life
When you set up a new business as a Corporation in Montana, it will be self-contained. This means that a stockholder’s incapacity or death would not have a serious effect on the company’s activities.
4. Tax Options
A limited liability business (LLC) can pay income tax in one of three ways. Being taxed as an S company is one alternative. An S corporation is a tax structure, not a specific sort of corporate entity.
5. Increased Credibility
Incorporating a limited liability company (LLC) gives your company more legitimacy. A limited liability company (LLC) is considered a more corporate management structure than a sole privately owned company. Customers and partners will recognize you as a respectable company if you include LLCs in your company.
6. Ownership Flexibility
There are limited constraints on how you can arrange the management and ownership of an LLC in Montana:
- You can form a single-member LLC or a multi-member LLC.
- Members can control a Multi-Member LLC, which is referred to as member-managed.
- Manager-managed LLCs are those that are controlled by a manager who is appointed by the members.
Limited liability businesses in Montana are simple to start and maintain, requiring minimal paperwork and cost. LLCs, unlike C companies, are not obliged to designate formal officer responsibilities, have annual meetings, adopt bylaws, or keep track of business records and decisions.
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Disadvantages Of Forming An LLC In Montana
- Members of LLCs must pay a high level of federal self-employment taxes
- Montana LLCs requires to pay a substantial yearly fee
- Starting an LLC is more expensive than starting a sole proprietorship or a partnership
Montana LLC has a number of other drawbacks, including the following:
- Since LLCs, like sole proprietorships, are pass-through businesses, LLC owners must pay taxes on their portion of the LLC’s net income, whether or not they get a payout.
- Running a sole proprietorship may be less expensive
- Businesses that need to carry large amounts of profit from tax year to tax year should consider a corporation.
Steps For How To Start An LLC In Montana
Montana’s LLC formation process is similar to that of most other states, so entrepreneurs shouldn’t have too much trouble beginning a firm in the state. A Montana LLC combines a corporation’s limited liability with a partnership’s or sole proprietorship’s flexibility and lack of formality. Let’s get started with how to form an LLC in Montana.
Here are the steps you need to take to form an LLC in Montana which will get you started today:
1. Choose A Name For Your Montana LLC
The first step in forming an LLC in Montana is deciding on a name. You won’t be able to proceed without a name because it will appear on all of your formal formation documentation. Every LLC operating in Montana is required to have a distinctive name. For branding considerations, your business name should be distinctive, as well as legal. The name of your LLC must be distinct from the names of other businesses registered with the Montana Secretary of State. For more details check Montana Naming Guidelines.
If you search the company database and discover that a name is available, Montana allows you to reserve it for up to 120 days. You can register a name reservation online or send a name reservation form by mail for a charge of $70. Filling out this form ensures that the name you want will be available when you complete the other processes of incorporating an LLC in Montana.
The following are the Montana LLC naming guidelines:
- The phrase “limited liability corporation” or one of its derivatives must be in your name (LLC or L.L.C.)
- Your LLC’s name cannot contain any words that could be mistaken for a government department (FBI, Treasury, State Department, etc.)
- Restricted words (e.g., bank, attorney, university) may need additional paperwork and the inclusion of a licensed professional in your LLC, such as a doctor or lawyer
- Your business name must be distinct from any other limited liability company, corporation, limited liability partnership, or limited partnership in PA.
- Check Name Availability: Do a name search on the State of Montana website to be sure the name you choose isn’t already used.
- Reserve Your LLC Name: It’s a great idea to reserve your LLC name with the PA Secretary of State as it protects the name from being used by another company before your LLC is formally incorporated in the state.
2. Appoint A Registered Agent In Montana
Before you can legally file to form your Montana LLC, you’ll need to choose a registered agent in the state. Your LLC must maintain a Montana Registered Agent at all times in order to do business in the state. A Registered Agent is a person or business that receives legal mail and papers directed to your Montana LLC.
Legal documentation and tax notices will be accepted on your LLC’s behalf by your Montana registered agent. When you submit your Certificate of Formation, you will identify your registered agent.
A Montana registered agent must meet the following criteria such as:
- The Registered Agent for your Montana LLC must have a physical address in the state
- If your LLC’s Registered Agent will be a single person, he or she must be at least 18 years old and a Montana resident
- If a person or company is based outside of the Montana business office
- A designated registered agent must provide an address of a registered office in Montana and must be found during normal business hours
- In order to be eligible as a registered agent in Montana, the business must already be operating in the state when the LLC is formed.
3. File Your Montana LLC Articles Of Organization
In Montana, a limited liability company (LLC) is founded by filing Articles of Organization with the Secretary of State. The Certificate of Organization is the paperwork you’ll submit to the Department of State to formally register your LLC. When you’re ready, submit Articles of Organization to the Montana Secretary of State to formalize your LLC.
Domestic entities must pay a filing fee of $125. Foreign entities are required to pay a fee of $250. In addition, every LLC is required to file an annual report with the Secretary of State. You can also apply for LLC in Montana online.
The following information must be included in the Articles of Organization:
- Name of the LLC, address of the principal office, email address (optional), and phone number
- Name and address of the registered agent
- Articles that are out of date are no longer effective (if not immediate)
- Names and addresses of the Articles’ signatories
- A member’s, organizer’s, or their representative’s signature
4. Establish Company Records
Your LLC’s books and records must be accurate and comprehensive. The articles of organization you filed are the initial documents in your LLC’s file. Many more public documents will be created by your LLC, including:
- Minutes of the meeting
- Operating Agreement
- EIN Verification Letter
- Throughout the LLC’s existence, amendments and other filings are made
5. Receive a Certificate From the State
Articles of Organization are often approved quickly in Montana. Approval applications are only accepted online. After the LLC’s creation paperwork is filed and approved, the state will provide you with a certificate confirming the LLC’s formal existence. The materials for approval will be forwarded to your email address.
The LLC will be able to obtain an Employer Identification Number (EIN), business licenses, and a business bank account with the help of this certificate.
6. Obtain A Montana Business License
In order to operate in Montana, certain sectors will require a company registration. You may require one or more types of licenses, including:
- Licenses issued by your city or county.
- Certain skilled vocations require professional licenses.
- Environmental permits.
- Licenses for health and safety.
- Permits are required by zoning.
- Liquor licenses, for example, are regulatory permits.
- Sales tax exemptions are available.
7. Prepare Montana LLC Operating Agreement
Although preparing a detailed LLC operating agreement is not a legally required step for incorporating an LLC in Montana, it is strongly suggested for all emerging limited liability businesses. You should consider developing an operating agreement as part of your LLC strategy. The purpose of this paper is to establish how your firm will operate.
The operating agreement is the basic document that spells out the members’ rights, powers, responsibilities, debts, and obligations to one another and to the LLC. The agreement is strictly internal and has not been lodged with the Secretary of State.
If an LLC does not establish an operating agreement, the articles of organization, rules, and/or member control or limited liability company agreement will serve as the operating agreement.
The following should be included in the operating agreement:
- Define the business structure of the LLC.
- Determine each LLC member’s particular roles and obligations.
- Describe how the LLC will be managed.
An LLC may suffer substantial legal and operational challenges if it does not have an operating agreement that spells out the precise responsibilities of its members.
8. Hold The Organizational Meeting
The organizational meeting is the LLC’s initial gathering of members. To hold this meeting, you’ll need your filed articles of incorporation and your operating agreement. This meeting’s minutes should be kept and filed in your company’s record book.
9. Get A Montana LLC EIN
In the United States, all newly created LLCs must get an Employer Identification Number (EIN) from the Internal Revenue Service. The nine-digit EIN is a company’s equivalent of a social security number, and it’s required to pay income taxes, submit tax returns, open corporate bank accounts, and do a variety of other activities. Your Montana LLC’s “social security number” is a Federal Tax ID Number. For taxation and reporting purposes, the IRS uses it to identify your LLC.
You can apply for EIN online, by fax, or by mail. Federal tax ID numbers are free and don’t charge anything.
You will need an EIN number for the following:
- Open a business bank account
- Register for business licenses and permits
- Transact business with other companies
- Taxes are filed and managed at the federal and state levels
10. Comply With Montana Employer Obligations
In addition to the steps outlined so far, Montana LLCs with employees must also comply with the following requirements:
- Employers are required by state and federal law to report new employees to the Montana New Employment Reporting Program within 20 days of their hire date.
- Employers in Montana are required to withhold state and federal income taxes from their employee’s paychecks. Employers must remit withheld taxes to the state on a regular basis.
- Employers are liable to compensate unemployment taxes in Montana. Every firm is allotted a tax rate depending on its age, industry, and history of unemployment insurance claims.
- A small-business owner in Montana is required to acquire workers ’ compensation as soon as they recruit their first employee. Employers can self-insure or obtain workers’ compensation coverage from a private insurer or the state insurance fund.
9. Comply With Federal Requirements
In Montana, LLCs must follow both state and federal regulations. Most LLCs are treated as pass-through entities under federal law, just as they are in most states. On their personal income tax returns, LLC members disclose their portion of LLC income. The LLC does not have to pay federal income taxes.
An LLC’s members can choose to have it taxed as a C-corporation at the federal level, in which case the LLC will pay a flat federal corporate tax of 21%.
Important Steps After Forming The Montana LLC?
After registering your Montana LLC, you need to follow some important responsibilities. Here are some important steps you need to consider, after forming an LLC in Montana:
- Open a business bank account: A business bank account lets you keep personal and business costs separate, which is necessary to keep your LLC’s corporate entity intact. In the event that your LLC or business is sued, a corporate veil shields your personal assets from creditors. Also read, How To Open A US Bank Account As A Non-Resident?
- Get a business credit card: A company credit card will help you separate personal and business costs while also creating a credit record for your firm.
- Hire a business accountant: An accountant for your business can help you save money on taxes and prevent penalties and fines. Accounting and payroll are made easier with the help of an attorney.
- Get Business Insurance For Montana LLC: Risk management is aided by business insurance. General liability, professional liability, and workers’ compensation are the most prevalent types of business insurance.
Keep Your Company Compliant
- You need to research and get a Montana license and permits
- File your North Carolina annual reports statement online with the Montana Department of State at the end of the month in which the LLC was formed
- In the next step, you need to understand Montana sales tax requirements and seller’s permits
- Understand the federal tax requirements to report income to the IRS each year using Form 1065 Partnership Return
In Montana, forming an LLC is one of the most straightforward procedures that can be completed in a matter of hours. An LLC is a better and less expensive alternative in Montana than other business structures. When owners form a limited liability corporation, their personal liability is lessened and their individual protected and fulfilled.
If you decide to create an LLC in Montana, you’ll need to fill out the relevant paperwork, pay the required costs, and comply with all of the name and formation requirements. When it comes to assisting entrepreneurs in Montana who wants to start a firm, the state follows a set of guidelines. A variety of LLC formation firms can help you register your business more quickly.
We highly recommend Incfile, a successful business formation solution that makes forming and managing your own private limited corporation straightforward. Forming an LLC with Incfile is absolutely free, and filing the formation and recruitment application costs only $125. In case you are looking for a simple LLC formation, ZenBusiness is the right option.
Are you ready to start an LLC in Montana? If you have any questions just leave them in the comment section below! Our experts will reach you soon!
Frequently Asked Questions (FAQs)
1. How do I set up an LLC in Montana?
Here are some steps on how to start an LLC in Montana:
1. Choose A Name For Your Montana LLC
2. Choose Your Registered Agent
3. Prepare and File Articles of Organization
4. Receive a Certificate From the State
5. Create an Operating Agreement
6. Get an Employer Identification Number
2. Can I be my own registered agent in Montana?
There is no sales tax in Montana. You will save money on taxes and fees if you make a large purchase through your LLC, such as a car. You can even save even more money by registering a vehicle in Montana through your LLC, as LLCs are free from paying registration fees.
3. Do I need an operating agreement for my Montana LLC?
Although operating agreements are not required in Montana, they are strongly recommended. An operating agreement will assist protect your limited liability status, eliminate financial and managerial misunderstandings, and ensure that you, not state law, choose the rules that govern your corporation.
4. Is Montana a good state for an LLC?
The cost of creating a Limited Liability Company in Montana is $70. It has a minimal filing charge and an annual payment of only $20; while being a low-cost state, the filing technique makes it one of the best places to register an LLC.
5. Does Montana require a business license?
Montana does not have a typical state business license, and firms are not needed to get a seller’s permit since there is no state sales tax. However, businesses in particular professions are required to have hundreds of state licenses.
6. How long does it take to register LLC, Montana?
In Montana, forming an LLC usually takes one to two weeks, but you can pay the extra to have your LLC registered the same day. However, you must first confirm that your company requirements meet and select a designated person.
7. How much does it cost to form an LLC in Montana?
Although filing on your own is frequently the most cost-effective choice, completing all of the paperwork and filing them on your own can be difficult. The cost of filing the Articles of Organization with the Montana Secretary of State is $70. For $10, you can reserve the name of your LLC with the Montana Secretary of State.
8. Does Montana require a DBA?
All sole proprietorships, partnership firms, companies, limited liability companies ( LLC (LLCs), limited liability partnerships (LPs), and out-of-state companies that conduct business in Montana under a name other than their legal name are required to obtain a DBA.
9. How much is an EIN number in Montana?
It is entirely free to apply for an EIN for your Montana LLC. The IRS does not charge a fee for obtaining an EIN.
10. How do I register a business name in Montana?
When you incorporate your company entity (LLC or corporation) with the state of Montana, you must register your business name. You must first decide on your business structure before conducting a business name search to guarantee that the name is available. After that, you must register your entity with the state under your business name.