How to Start an LLC in Montana
Getting a new business off the ground is no easy task. It starts with an idea, and quickly spirals into quite the to-do list! One of the most important foundational steps to take is forming the actual business entity with the state government. For those looking to start an LLC in Montana, this guide is for you.
An LLC is a popular business structure for Montana entrepreneurs, because it offers liability protection, while also being relatively easy to set up and maintain. The process of forming an LLC is handled by the Montana Secretary of State – Business Services Department. You will need to submit the Articles of Organization and pay a $70 filing fee.
But, it’s not quite that simple, as there are a lot of different aspects to handle. The guide below will show you how to start a limited liability company in Montana, from start to finish.
Consider using an LLC service
Before you get started, it’s worthwhile to weigh your options. The first option is to do the work on your own to start the new LLC. But a faster, easier alternative is available: Using a professional LLC formation service.
An LLC formation service – such as ZenBusiness or Northwest Registered Agent – will make your life much easier during the initial business formation process. These companies help guide business owners through the entire process, ensuring that every step is handled efficiently and accurately. They also offer a variety of other services that can be very helpful for new businesses.
The cost for these services is quite reasonable – ZenBusiness starts at just $49. Using a service can easily save you many hours and a lot of hassle, so for most entrepreneurs, it’s well worth considering.
Select a name for your LLC
Selecting a name for your business is the next step in the process. You will need to decide on a name before starting any paperwork or filings.
Choosing the right name is important. Of course, you want a name that is relevant to your business, and ideally one that is memorable. And, you’ll need to find a name that is not already taken by another business in Montana. To confirm that a name is available, you can conduct a business name search on the Montana Secretary of State website.
Montana does have some requirements for business names. They must be distinguishable from other business names in the state, and they cannot contain certain restricted words. Some restricted words/phrases include government-related terms (like “FBI”), as well as protected industries like “bank” or “lawyer”. In these latter cases, the terms may be able to be used, but special permission will be required.
Once you find a name, you can move on to the next step. Alternatively, you can reserve the name if you are not ready to file yet, but wish to keep the name you’ve selected. There is a $10 filing fee for this service (most businesses can simply find a name and immediately file the paperwork for the new LLC, rather than completing a name reservation).
Appoint a registered agent
Each Montana LLC must have a Registered Agent appointed. This Agent is required to be either a resident of Montana or a company licensed to do business in Montana. You can be your own Registered Agent (if you live in the state), but your business itself cannot serve as its own Registered Agent. You may also appoint an employee, or hire a professional Registered Agent service.
The Registered Agent is basically responsible for receiving documents, tax forms, a notice of lawsuits, etc. on behalf of the company. The Agent’s mailing address will be publicly listed on the online records for the business, and the most important documents will go straight to this agent.
You can be your own agent, although this means two things: Your mailing address will be publicly listed, and if you go on vacation, you could miss an important document.
The alternative is to use a service. Both ZenBusiness and Northwest Registered Agent are great options. They have Registered Agents in Montana, on hand and ready to serve you. Expect to pay around $100-$150+ per year for this service – but you will get the benefit of enhanced privacy, and you can rest assured that no important communications will be missed, even when you’re on vacation.
Complete an LLC operating agreement
Note: This step is optional, but recommended.
Most LLCs in Montana should have an operating agreement – however, this is not actually a requirement. The optional document is kept on file with the business itself and is not required to be submitted anywhere.
If it’s not required, why bother with an operating agreement? Well, this important document establishes the operating procedures and the ownership structure of your company. It is agreed upon by all involved parties in writing, and if drafted correctly, can be legally binding.
Because of this, an operating agreement is especially important for businesses with multiple owners/stakeholders. The agreement can establish clear terms for all the owners, which helps prevent future conflict over ownership.
Even single-member LLCs can benefit from an operating agreement. Do draft one, you can use a service like ZenBusiness, or you can contact a local attorney for help.
File Articles of Organization
The Montana LLC Articles of Organization must be filed with the Secretary of State, in order to form a new LLC as a business entity. This document must be filed online. The filing cost is $70, payable to the Secretary of State. This fee is non-refundable.
To file online
Head to this link and select “Articles of Organization for Domestic Limited Liability Company”. Register an account, and follow the instructions to file the document. Pay the $70 filing fee by credit card or bank transfer.
There is no way to file this document by mail at this time. If you have questions or wish to file in-person, you can contact the Secretary of State department for more information.
Wait for your documents
Once you have submitted the Articles of Organization, you will need to wait for the MT Secretary of State to process the application. This can take up to 2-3 weeks at times. Expedited service may be available for an additional fee. And if you use a service like ZenBusiness, you can upgrade to a better package to get expedited service in as little as 3-7 business days.
Apply for an EIN
An EIN, or employer identification number, is required to hire employees, so it’s quite important for most Montana LLCs. It’s also required to open most business bank accounts, and for various other important activities.
An EIN is a federal tax ID, issued by the Internal Revenue Service. Simply fill out this application on the IRS website to apply for one. There is no cost, and the application is quick and easy.
Apply for business licenses & permits
In many cases, businesses will need additional licenses and/or permits in order to operate legally. The Articles of Organization form the LLC as a legal entity, but they are not the only requirement in order to do business in Montana.
The requirements will vary depending on the type of business, the industry, and its location. There are various requirements on a state and local level, as well as a federal level. More info on Montana business licensing can be found here.
Montana does not require a statewide business license. However, state professional licenses must be obtained for certain industries (agriculture, gambling, liquor, medical, etc.)
Most Montana cities/counties require local business licenses in order to firms to operate. Check with your local government for details. If you have a multi-location business, you may need multiple licenses or permits. Specialty permits may also be required for some businesses, in addition to the standard business license.
Montana LLCs should apply for a federal employer tax identification number (EIN) – see step #7 above. Additionally, businesses in certain regulated industries may require federal permits. See this guide from the Small Business Administration for details.
At this time, it’s also wise to examine your tax reporting responsibilities. At a minimum, you will need to sign up for an unemployment insurance tax account, as well as a tax account with the Montana Department of Revenue. Montana does not have a sales tax, so no sales tax account is required.
Keep your company in good standing
Long after your business is formed and operating, there are various steps that need to be taken to keep the business in good standing. There are various requirements on a state, federal and local (city/county) level. Again, specific requirements vary depending on the type of business.
Most businesses will need to file routine tax returns, including federal taxes, federal employer taxes, state taxes, state employer taxes, and in some cases, local city/county taxes.
All Montana LLCs will also need to file the Montana Annual Report each year. The filing cost for this is $20, and most years it is due on April 15th (the same day federal taxes are due).
Businesses will also need to renew their various permits and business licenses, usually on an annual basis.
Your business may face other requirements, as well – this list is far from complete. It’s a good idea to take some time now to research all the requirements and due dates for your business. Then, make a list, and create calendar reminders for key due dates, so that nothing slips through the cracks.
Alternatively, services like ZenBusiness can help, as they remind you of key due dates, help with certain filings, and have a worry-free compliance guarantee.
Open a business bank account
MT LLC owners should strive to keep their business finances completely separate from their personal finances. This makes accounting simpler, and also protects the owners’ personal assets from liability relating to business activities.
To do this, it’s best to open a new bank account for your business – and use this exclusively for business activity.
Most financial institutions offer business bank accounts, so you can simply look around for one that fits your needs. You may also wish to apply for a business line of credit or a business credit card at this time.
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