Starting a Montana LLC can feel intimidating at first. However, it can be surprisingly simple when you're armed with the right information.
This article will explain:
- The steps you'll need to take to create a Montana LLC
- Additional tasks you should complete after you register an LLC
- How long it takes to start an LLC in Montana, and how much it costs
Keep reading to learn all you need to know about your Montana LLC formation!
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Step 1: Name your Montana LLC
Before you can register an LLC, you need to decide on a business name. However, Montana laws restrict what is allowed. Certain words are not permitted, while others are required in an LLC's legal name.
We've explained these rules further in the sections below.
Words You Have to Use
Montana Code Section 35-8-103 says your LLC name must include one of the following identifiers:
- “limited liability company”
- “limited company”
The statute also lets you abbreviate “limited” as “ltd.” and “company” as “co.”
Words You Can't Use
An LLC name can't use identifiers or other words that make it seem like a different legal entity. It also can't suggest that the LLC is related to the government.
In addition, your LLC name cannot imply that you offer criminal or otherwise illegal services. For example, if your company is not licensed to provide a service, its LLC name can't even hint that it does.
The big rule is this: if you need a license to do your job, double-check with the Secretary of State to make sure your company name complies with the law.
Section 35-8-103 also requires your LLC name to be “distinguishable” from other registered business names. This rule was put in place to avoid any possible confusion between businesses.
Research the LLC Name You Want
Once you've picked the name you want to use, you can check to see if it is available using the Montana Secretary of State's Business Search.
If the name you want is taken, you can't use it unless the other business agrees to change its name. You can also use it if you have a court order that says you have the right to use it.
If your chosen name is available, Montana Code Section 35-8-104 says you can reserve it for 120 days. To do this, you must file a Reservation of Name online using your ePass Montana account. There is a $10 filing fee.
Montana requires all business registration documents to be filed online. There are no paper forms available.
Get a Matching Domain
Once you settle on an LLC name, we recommend you get a matching domain, even if you don’t have immediate plans for a website.
Competitors can buy your perfect domain and its variations to block you from using them.
Domain squatters sift through public records of newly registered LLCs and will buy their matching URLs, only to relist them with huge markups.
A domain name from GoDaddy.com or a similar registrar will cost you between $20 and $50 per year, with regular specials and sales where you can get large discounts.
It pays to check now.
Once you have your domain name, you can also create a branded email address through GoDaddy.
Montana DBA: Using a Trade Name
Many LLC owners use a “DBA” or “doing business as” name instead of using their company's real name. A DBA is an alternate name that lets your business “go by” a different name.
Business owners often choose DBA names that are less formal than their LLCs' legal names. You can also switch to new DBAs as your business starts to expand.
If your LLC's legal name is “Gary's Gizmos, LLC,” you could use a DBA of “Gary's Gizmos.”
But say that you eventually add gadgets to your inventory. You could use a new DBA of “Gary's Gizmos and Gadgets” to let people know what all your business offers.
Montana refers to DBAs as “assumed business names.” If you want to use a DBA for your LLC, Montana Code Section 30-13-203 says you must register it with the Montana Secretary of State. You can do this online with a $20 filing fee.
Step 2: Appoint a Registered Agent for your LLC
An LLC's registered agent is the person or business that accepts legal documents for the business.
Under Montana Code Section 35-7-105, all LLCs must appoint a registered agent. Your registered agent must have a street address in Montana and be available to accept service of process during regular business hours.
Accepting service of process means receiving the legal papers that are sent in a lawsuit. This means that if your LLC gets sued, your Montana registered agent will get all the documents.
In Montana, you can use a commercial or a non-commercial registered agent. The main distinctions are that commercial agents must register with the Secretary of State and are “in the business” of serving as registered agents.
Many new LLC owners want to serve as their own LLC's registered agents. And there are some benefits to taking this route:
- It's cheap: You're not paying someone else to do it for you.
- It's easy: The only address and contact information you have to keep current is your own.
- It's reliable: You will receive all important documents personally.
But, even though being your LLC's registered agent might seem like a good idea, it often turns out to be more trouble than it's worth.
Here are some of the disadvantages:
- No privacy: Your name and address will be published on the Secretary of State's website. This means that anyone with an internet connection can find your personal information.
- Junk mail/spam: You will get a ton of junk mail in addition to a small amount of real mail and any service of process.
- No breaks: You also must be available at all times during regular business hours to receive documents. This means no vacations, sick days, or leaving the office for lunch.
- Business interruptions: Client meetings can be interrupted by people serving process. That could be embarrassing or hurt your reputation.
- It's your fault if you miss something: You always have to make sure your address is correct and up to date. If you make a mistake or miss something, you are held responsible.
Professional registered agents will help you avoid these problems for only about $100 per year. Plus, they'll notify you if your business receives any documents.
If you are looking for a professional registered agent service, take a look at our Best Registered Agent ranking for some of our recommendations.
We recommend choosing a nationwide company if you plan to expand your business and need to register as a foreign LLC in another state. You only have to hire one service with a national company, even if you need multiple agents in different states. This will simplify the process if your business starts to operate outside of Montana.
Step 3: File Your Montana LLC Articles of Organization
Articles of organization are the legal document that creates a Montana LLC. They list basic info about your business and must be filed with the Secretary of State.
If you would like to avoid the hassle of handling your LLC filing yourself, you can also use a professional LLC formation service. Check out our Best LLC formation services article for some of our suggestions.
What to include in my Montana Articles of Organization?
According to Montana Code Section 35-8-202, your articles of organization must list:
- The LLC's name.
- If the LLC's duration is for a specified term.
- The mailing address of the principal office.
- The name and address of the registered agent.
- If the LLC will be member-managed.
- The name and address of the members and/or managers.
- If the members will be liable for the LLC's debts.
If you have a commercial registered agent, you only need to list their name. But if you are using a non-commercial registered agent, you must also include their address.
You can only file your Montana articles of organization online.
Montana LLC Filing Fee
According to the Montana Secretary of State's Business Services Filing Fees, the fee for LLC articles of organization is $70.
Read More: How Much Does It Cost to Form an LLC in Montana
Montana LLC Processing Time
Documents are generally processed in the order they are received. You can estimate how long it will take to process your submission by checking the “processed through” date on the Secretary of State's Online Business Services homepage.
You can also choose 24-hour priority handling for a $20 fee or 1-hour expedited filing for a $100 fee.
Step 4: Draft your Montana LLC Operating Agreement
Operating agreements are contracts between LLC members that set out how the business will be managed. They also define what each member's role is.
Montana law doesn't require you to have an operating agreement. However, making one can help the LLC's members make sure everyone is on the same page about how the business will run. It can also help prevent arguments in the future.
For example, if an LLC member wants to sell their share, the operating agreement will dictate the process. The contract can also outline how to divvy up the exiting member's duties.
Some of the reasons LLCs can be helpful include:
- They determine the rights and duties of LLC members. If one LLC member is responsible for running the business or managing the books, the operating agreement should say so.
- They say what the manager has the right to do. Managers also have special duties to the company and the members. The LLC operating agreement should state these.
- They outline what the LLC is legally able to do. The operating agreement should also set down how the company is allowed to conduct its business from day to day.
- They say how new members can join the company. They also have rules about how exiting members can leave.
- They set down how and when profits are paid to members. They can also create different types of membership and payment schemes.
- They say whether members or managers are in charge. They also say how to hire and fire managers.
- They say how and under what circumstances the LLC should end. You might not want to dissolve your business entity now, but you might in the future. It's best to think about it and plan before it becomes an issue.
- They say how to change the rules. You may need to amend your operating agreement in the future. The operating agreement should set down the rules for making changes.
All the LLC members should be involved in creating the operating agreement. The process will require many important decisions about how the business will function. Putting this in writing will help avoid future disagreements.
Montana Code Section 35-8-109 lays out some of Montana's rules for operating agreements, so make sure your contract complies with this law.
Step 5: Get an EIN (Employer Identification Number) for Your Montana LLC
An EIN is a nine-digit business identification number issued by the IRS. It is basically an SSN for companies.
Here are the most common times when you need an EIN:
- Does your LLC have more than one member?
- Does your LLC have any employees?
- Is your LLC taxed as a C corporation or S corporation?
If the answer to any of these questions is yes, your LLC must get an EIN.
The owner of a single-member LLC can use an SSN to file their taxes. But, it can still be a good idea to have an EIN. You might need it to open a business bank account, and it can help protect against identity theft. An EIN can also make some administrative tasks easier.
You can get an EIN on the IRS website, or you can mail in a Form SS-4. Both methods are easy and free. If you apply for your EIN online, you will also receive one immediately. You should never pay someone to get an EIN for you unless it's part of a larger service package.
Read More: How to Get an Employer Identification Number in Montana
First Tasks After Registering your Montana LLC
Setting up your Montana limited liability company is an essential first step. However, we also suggest you complete some additional tasks to make sure you're ready for business.
Open a Business Bank Account
We recommend that you open an LLC bank account. This will allow you to manage your company finances separately from your personal funds.
Some benefits of using a business bank account include:
- Convenience: Keeping things separate makes your LLC's bookkeeping much simpler.
- More business opportunities: Your LLC can only receive credit card payments through a business bank account. You can also do business with people who won't take personal payments.
- Personal asset protection: Mixing your personal and business funds could cause you to be held responsible for the LLC's debts.
Of the three, personal asset protection is the most vital.
One of the major reasons people start LLCs is to shelter their personal property from liability. The “corporate veil” stops creditors from going after your personal assets to pay company debts.
It can be tempting to keep corporate and personal funds in the same account, but make sure you keep them separate. Mixing the two can cause the “corporate veil” to be pierced if the company is sued. That means that you may end up personally responsible for any debts your LLC accrues.
Opening a separate business account will provide you with more security for your personal assets. The business will be treated as its own entity, so you would not be legally liable if it gets sued and owes another company money.
Get Business Insurance For Your Montana LLC
Purchasing business insurance is another way you can protect your Montana LLC. This will keep your company safe if something goes wrong.
Some common types of business insurance include:
- General liability insurance: You'll need this if there's an injury on your property. It pays for damages and a lawyer if you need one.
- Commercial automobile insurance: This works like your own car insurance. It covers drivers and vehicles for your business.
- Workers' compensation insurance: Montana law requires most employers to obtain workers' compensation insurance coverage. You can decide to buy a policy from a private insurance company or get approved to self-insure.
- Commercial property insurance: This protects your property in the event of damage. Keep in mind that flood insurance is often a separate policy.
- Professional liability insurance: Lawyers, doctors, architects, and other professionals need this insurance. It provides coverage and legal defense in the event of a malpractice case.
- Business income insurance: If you have to close for some time, business income insurance can pay back the loss of income. Policies vary, though. Make sure that you know exactly what kinds of losses will be covered.
Keep Your Montana Company Compliant
Once you start an LLC, you must ensure that you continue to follow the law. For example, you are restricted from working in certain industries without obtaining a license. Additionally, your LLC may be obligated to pay taxes.
You should always be aware of the latest laws and regulations in your area. That way, you'll know everything that changes and can stay compliant.
Montana Business Permits and Licenses
You may need to get a business license or permit depending on the type of business you're starting and where it's located. Check out the Small Business Development Center's Small Business Licensing Information page for more info.
Montana Tax Requirements
Montana does not have sales tax and does not require LLCs to pay income taxes. However, your LLC may need to withhold taxes on behalf of its owners. You may also be able to have your LLC pay composite tax on your behalf. The state Department of Revenue's website provides more details.
Federal LLC Tax Filing Requirements
LLCs are so-called “pass-through” entities, which means they don't get taxed. Instead, their profits must be reported as the owner's personal income using Schedule C.
However, your LLC needs to pay social security and Medicare taxes, even if you have no employees. And if you do have employees, you must deduct taxes from their paychecks.
Annual Report and other Filing Requirements
Montana Code Section 35-8-208 requires LLCs to submit an annual report to the Secretary of State. You must file your report online, and there is a $20 filing fee. Just find your LLC's record using the Secretary of State's Business Search and click the “File Annual Report” button.
Montana Business Formation Quick Links
- Internal Revenue Service — apply for an EIN online
- IRS information regarding the federal tax treatment of LLCs
- Online Business Forms (SOS)
- Online Business Services (SOS)
- Business Search (SOS)
- Business Services Filing Fees (SOS)
- Business Help Center (SOS)
- Name Requirements: Montana Code Section 35-8-103
- Name Reservation: Montana Code Section 35-8-104
- Assumed Business Name: Montana Code Section 30-13-203
- Registered Agent: Montana Code Section 35-7-105
- Articles of Organization: Montana Code Section 35-8-202
- Operating Agreement: Montana Code Section 35-8-109
- Annual Report: Montana Code Section 35-8-208
Montana LLC FAQs
How much does it cost to start a Montana LLC?
According to the Secretary of State's Business Services Filing Fees, the fee for Montana LLC articles of organization is $70.
What is the processing time to form my Montana LLC?
Documents are generally processed in the order they are received. However, you can choose 24-hour priority handling for a $20 fee or 1-hour expedited filing for a $100 fee.
What are the benefits of a Montana LLC?
An LLC can protect you from liability for business debt, whereas a sole proprietorship is not. Additionally, LLCs can have some tax advantages over corporations.
Where do I check if my Montana LLC name is available?
Once you've picked the name you want to use, you can check to see if it is available using the Montana Secretary of State's Business Search.