If you’re planning to start a limited liability company (LLC) in Montana, it’s vital that you understand what your expenses might be. This is often easier said than done, particularly when you’re not sure where to look.
This article will teach you everything you need to know about the cost of forming a Montana limited liability company.
By the time you finish reading, you will know:
- Mandatory costs when forming an LLC in Montana
- Optional expenses that can help your business thrive
- How to choose the best formation approach for your situation
Read on to learn all about Montana LLC formation expenses.
Total Montana LLC Cost – Starting at $70
According to the Montana Secretary of State's Business Services Filing Fees, the lowest possible cost of forming a Montana LLC is $70.
This only includes one item:
- Montana Articles of Organization filing fee: $70
Depending on your industry and location, your LLC may also need professional and local business licenses, the costs of which will vary.
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Montana LLCs – the Basic Costs
The total cost of forming an LLC in Montana will vary. However, the bare minimum cost is $70. In the sections below, we’ve outlined the required costs when starting an LLC.
Articles of Organization Filing Fee — $70
Articles of Organization are legal documents that formally start LLCs. To create your Montana LLC, you must file articles of organization with the Secretary of State. Although this sounds complicated, all you have to do is list some basic info about your business.
The state filing fee for Montana articles of organization is $70. You must file online.
Professional Licenses and Business Permits — Variable
Some LLCs will need a business license or permit based on their industry and location. The Montana Small Business Development Center's Small Business Licensing Information page provides more detailed information.
You may also need to get a local permit or business license. For instance, the city of Missoula requires all companies to get business licenses.
Montana LLCs – Optional Costs to Consider
In addition to your required expenses, some optional costs can benefit your LLC. Spending a bit more can help you get your Montana limited liability company function off to a good start.
Expedited LLC Filing Fees — $20 to $100
You can pay extra for expedited handling if you want to get your LLC started as quickly as possible. Montana offers 24-hour priority filing for a $20 fee or 1-hour processing for $100.
Registered Agent Fee — about $100 per year
All Montana LLCs must have registered agents. Your agent's job is to accept legal papers for your business. You will include info about your registered agent in your articles of organization at no extra cost. And, there is no fee if you ever want to change your agent.
New LLC owners often decide to name themselves as their companies' registered agents. But many don’t know the issues that can cause.
For one thing, registered agents must always be available during standard business hours to receive documents. Their addresses are also publicly available online, so they are often swamped with junk mail or have their privacy violated in other ways.
You can avoid these problems by hiring a professional registered agent service. These services only charge about $100 annually and manage all of your LLC's registered agent tasks.
Check out our Best Registered Agent Services article for some of our recommendations.
Operating Agreement — Variable
Montana LLC operating agreements are legal contracts that members use to set the rules for the company. They include crucial info like the rights and duties of the members and how to enter or leave the LLC.
Montana law doesn’t require LLCs to have operating agreements. Still, it is highly advisable to make one. While you can legally write your own LLC operating agreement, we suggest hiring an expert if you don’t have the necessary experience.
You can pay a lawyer to create an operating agreement for your LLC. This option will allow you to get a professionally-drafted, custom contract. Just remember that attorneys can be expensive. To save some cash, you can hire an LLC formation service to make one for as little as $39.
DBA Fee — $20
LLC owners often choose to use “doing business as” or “DBA” names for their companies. A DBA is a name that a business “goes by” that is not its legal name on the paperwork. For instance, it’s common to remove the “LLC” from a business name to make it less formal.
In Montana, DBAs are called “assumed business names.” If you want to use a DBA for your LLC, you must submit a Registration of Assumed Business Name to the Secretary of State.
There is a $20 state fee. You must file online.
Name Reservation Fee — $10
If you know the name you want to give your LLC but aren’t ready to start the business yet, Montana allows you to reserve an LLC name for 120 days. Doing so will prevent other people from registering the name while you have it reserved.
To reserve a name for your LLC, you must file a Reservation of Name with the Secretary of State online. There is a $10 filing fee.
Domain Name — about $20 per year
Building a website is a crucial aspect of marketing in the modern economy. To make a business website, you will need to buy a domain. Fortunately, domain names are reasonably priced and easy to purchase.
Still, it’s essential to get your domain ASAP. If you wait too long, you might lose out on the domain name you want. “Domain squatters” often purchase possible domains for newly-registered LLCs and resell them for a profit.
You can get a domain from GoDaddy.com or a comparable service for around $20 to $50 per year. Plus, these websites often run sales and offer discounts, so you will probably be able to spend even less.
Getting an Employer Identification Number (“EIN”) — Free
An EIN is a 9-digit identification number that the Internal Revenue Service assigns to a company. It might be easiest to think of your EIN as your LLC’s social security number. Some LLCs are legally required to get EINs. Others can get away with using their owner’s SSN.
Either way, we recommend that all LLC owners obtain an EIN. For one thing, many banks require EINs for business accounts. An EIN can also help you avoid identity theft by keeping your SSN private.
Foreign LLC Qualification Fees — about $100 per extra state
If you want to do business in other states, make sure to set aside some extra cash. You don’t have to form a new LLC to operate outside Montana. But, you must register as a foreign limited liability company in every state where you want to do business.
Foreign LLC filing fees will vary between states, but most are around $100.
Writing Formation Costs Off
You can typically deduct your LLC formation expenses on your federal income taxes as business startup costs. The IRS offers considerable direction on this issue, so be sure to review the IRS website before filing your taxes.
By default, an LLC is classified as a “pass-through” entity. Because of this status, LLC owners can deduct up to $5,000 in startup expenses from their federal income taxes in the year they start their LLC.
Tanya decides to start a single-member LLC and open a craft store with three full-time employees in Missoula, Montana. Her formation expenses are as follows:
- Montana LLC Articles of Organization: $70
- Expedited (1-hour) LLC Filing Fee: $100
- Missoula Business License $160
- Operating Agreement: $50
- Montana Registered Agent Service Fees: $90
- DBA Fee: $20
- Name Reservation Fee: $10
- Web Domain Costs: $25
As a pass-through tax entity, the LLC isn’t subject to income taxes. Instead, Tanya will report her profits from the LLC and any deductions on her personal state and federal income taxes.
Tanya’s total formation costs were $525. Before she deducted her expenses, her total taxable income was $42,000. But by deducting these costs, Samantha drops her taxable income to $41,475. This lowers her 2022 federal income taxes from $4,989 to $4,873.
While this is not a significant reduction, business owners who regularly deduct expenses will save much more over time.
Cheapest Way to Start an LLC in Montana
Choosing a formation approach for your LLC can be tough. When deciding, it’s crucial to think about your LLC’s specific needs. We’ve outlined three of the most commonly-used formation techniques below.
Formation Service – $39 + state fees
Many new business owners opt to go with an LLC formation service. While formation services aren’t licensed to practice law, they specialize in starting all types of business entities, including LLCs.
A formation service is a sensible option for many LLCs. The benefits include:
- They’re easy. In most cases, a formation service will have helped hundreds of people through the exact process you are struggling with now. They have all the documents, information, and expertise you need right on hand.
- They don’t cost much. Because formation services have such a large volume of business, they don’t have to charge their clients that much money.
- They’re reliable. All of the formation services’ products and procedures have been tested hundreds of times over in the real world. That kind of experience should give you peace of mind and confidence going forward.
- They’re fast. Formation services have seen almost every business formation situation already. Chances are, they have many solutions for you that are ready right now before you even know you need them.
Still, a formation service won’t work for every business. The disadvantages to this approach include:
- They’re not the best solution for complex LLCs. If you are forming a complicated company or one in a heavily regulated industry, you will have concerns that probably need more focused expertise in that area of business.
- Even if a formation service is a good fit, you can expect upselling. Formation services have to make money too, and some of them may pressure you to buy formation products or business services you don’t need. Even when you are using a formation service, you need to be a smart and informed consumer.
Using a professional LLC formation service can be a great way to set up a business. Check out our Best LLC formation services article for some of our suggestions.
Another option is to hire an attorney. This alternative gives you the peace of mind of entrusting your LLC to an experienced professional. But don’t forget that expertise isn’t cheap. Most lawyers bill hourly for their services, often several hundred dollars per hour.
Even though this approach is pricey, it comes with noteworthy benefits:
- Lawyers help you manage risk. If you are starting a business with complicated legal issues, hiring a lawyer would be the best choice.
- Lawyers offer more customization when you need it. Do you need specific things put in an operating agreement? Is your company going to have a unique ownership structure? You may need an attorney to make sure these issues are handled properly.
However, the drawbacks of this approach will often outweigh the advantages:
- Lawyers cost more than any other option. The price tag alone should convince you that if you don’t need a lawyer, it’s not worth hiring one.
- Finding a lawyer takes a long time. Getting a lawyer who specializes in what you need, costs what you’re willing to pay, and can work with you well is a tall order.
- Lawyers also take longer to form a business than a formation service. Because lawyers are also very careful people, they will generally take much longer to form your company than non-lawyers would. Fortunately, most people don’t need a lawyer. In 90% of cases, a formation service will do just fine.
Do it Yourself
Finally, you can simply complete and file the documents yourself. While many new business owners think this is the most cost-effective strategy, make sure to consider the value of your time. If you’re spending hours filling out formation paperwork, you can’t devote that time to other parts of your business.
Some of the benefits of a DIY formation method include:
- Personal knowledge. A DIY business owner will learn a lot about the process while forming their own business, and they probably will retain that knowledge for years to come.
- It costs less upfront. If you don’t account for the value of your time, a DIY solution is the cheapest option.
Still, there are disadvantages as well:
- You’re losing money when you consider how much time it takes to DIY. If you figure out that your time is worth $30 per hour, and you take 20 hours to complete your business formation, you have essentially spent $600 on business formation.
- There’s the risk of making a mistake. DIY business owners can easily make a mistake with all the paperwork that can cost them even more time and money.
- It’s a headache. State workers are very helpful, capable people. But they will also tell you that the laws and rules governing business formation are not easy, and they follow those rules for a living. It’s going to be even harder for you.
Annual Montana LLC Fees: How Much Will it Cost to Maintain your LLC?
Montana law requires all LLCs to file an online annual report with the Secretary of State. To submit your report, you must locate your LLC with the Secretary of State's Business Search and click the “File Annual Report” button. There is a $20 filing fee.
Additionally, your LLC’s licenses and permits may need to be renewed periodically.
Some of your optional costs will also be recurring. For instance, you might need to pay the following:
- Registered agent service fee: approximately $100
- Domain name registration: $20 to $60
How Much are LLC Taxes in Montana
As a “pass-through” entity, your LLC won’t have to pay income taxes. Rather, you must include your LLC’s earnings on your personal income taxes.
Montana does not have a sales tax, but your LLC may need to withhold taxes on behalf of its owners. Your LLC may also be able to pay composite tax on your behalf. Check out the state Department of Revenue's website to learn more.
Montana LLC Formation Costs Quick Links
- Montana Online Filing
- Montana Business Services Filing Fees
- Montana Secretary of State
- IRS — apply for an EIN online
- IRS information regarding the federal tax treatment of LLCs
Montana LLC Formation Costs FAQs
How much does it cost to start an LLC in Montana?
The lowest cost is $70. However, depending on your industry and location, you may need to spend more.
What is the cheapest way to start an LLC in Montana?
A do-it-yourself approach is the least costly in terms of cash spent. But if you consider the value of your time, the most cost-effective approach is often a reasonable LLC formation service.
Do I need to hire an attorney to form an LLC in Montana?
No. You won’t need a lawyer for a typical LLC. A DIY method or a business formation service will often suffice.
Can I pay to form an LLC more quickly in Montana?
Yes. Montana offers 24-hour priority service for a $20 fee or 1-hour expedited filing for a $100 fee.