Step-by-Step Guide to Forming an LLC in Montana

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Montana LLC Quick Facts

How much does it cost to form an LLC in Montana?

Initial LLC Filing Fee – $70

 

Recurring Fee: Annual Report – $20

How long does it take to get an LLC in Montana?

It normally takes 2 weeks for the LLC paperwork to be approved in Montana.

 

Expedited processing is also available for an additional fee.

Don’t want to form an LLC by yourself?

Let IncFile or IncAuthority guide you through the LLC formation process, so you know everything was done right. Only pay state fees!

Quick Reference

The Limited Liability Company (LLC) is a popular entity structure for businesses starting in the state of Montana.  The LLC provides personal liability protection and has the potential to save money on taxes. With our guide, you can learn how to form an LLC in Montana.

Unlike a sole proprietorship or partnership where the small business owner can be held personally liable for lawsuits against the business, the LLC is a separate legal structure, protecting the business owner’s personal assets.

Related: How Does an LLC Protect You?

Besides the liability protection, the Limited Liability Company provides several other benefits over the sole proprietorship, partnership, and corporation because of the multiple tax options, ease of administration, and management flexibility.

Cost to Form a Montana LLC

To form a Limited Liability Company in Montana, file the Articles of Organization with the Montana Secretary of State.  The LLC filing fee is $70, and approval typically takes less than 2 weeks.  An additional $20 gets 24-hour priority handling if expedited processing is desired, and an additional $100 gets 1-hour processing.

If you have questions, contact the Montana Secretary of State at 406-444-3665

Steps to Form a Montana LLC

Step 1: Account Registration

Begin by creating a login with ePass Montana.  ePass Montana allows you to access authorized government services using a single username and password.

Forming an LLC can be both affordable and is something most people can do themselves. Entity formation companies like IncFile or IncAuthority help guide you through the process and make sure there are no mistakes.

Related: Should you use a Formation Service, Hire an Attorney or Do it Yourself?

Sign up for an ePass Montana Account LLC

Next, visit the Montana Secretary of State’s website and login with ePass.

How to form an LLC in Montana

Next, select form a Domestic Limited Liability Company

Form a Domestic Limited Liability Company in Montana

Step 2: General Details

Handling Options
Standard processing is 7-10 business days and costs $70.
24-hour priority handling is $90
1-hour expedited handling is $170

Select your preferred handling option.

Montana LLC Handling Option

Delayed Effective Date
If you want the LLC to start on today’s date, don’t enter a date in the box; otherwise, enter a date less than 90 days in the future to start.

Some will delay the LLC start date if they aren’t ready to go but want the filing out of the way, or if they are close to the end of a calendar year and want to delay until the following year so they won’t have to file business taxes.

Montana LLC Delayed Effective Date

Type of Limited Liability Company
If forming a regular LLC (that’s what most businesses will choose), select “Limited Liability Company.”

If the business activities require a professional license from the state, you will want to select “Professional Limited Liability Company.” Common licenses for professionals include accountants, attorneys, veterinarians.  See what licenses and permits are needed in Montana for more information on what businesses need professional licensing.

A “Series Limited Liability Company” provides liability protection across multiple asset groups or businesses, each of which would be protected from liabilities from the other series. The Series LLC is not a common choice and most common with real estate investment companies.  Click on the box if you want to form a Series LLC.

A “Professional Series Limited Liability Company” is a Series LLC that provides services that are licensed by the state.

Montana LLC Type of Limited Liability Company

An out-of-state LLC wanting to do business in Montana will have to register as a foreign LLC by filing the Application for Certificate of Authority with the Montana Secretary of State.

Name of Business Entity
Enter the company name you want for the LLC.  The LLC’s name also has to differ from other entity names registered with the Secretary of State.  You can do a name search and check on available Montana LLC names before filing to be sure the one you want is available, or just enter the name you prefer and click “Validate Name.”

Additionally, naming guidelines state the name of the LLC must include one of the following phrases or abbreviations at the end of the business name:

  • Limited Liability Company
  • Limited Liability Co.
  • Ltd. Liability Company
  • Ltd. Liability Co.
  • Limited Company
  • L.L.C.
  • LLC
  • L.C.
  • LC

A comma may be used after the business name and before the designator.  “Cowboy Cleaners LLC” and “Cowboy Cleaners, LLC” are both acceptable. Before finalizing a name, you may also want to see if a domain name is also available to have a matching website address.

Montana LLC Name Registration

Enter the proposed name and click “Validate Name.”  A message will show up at the top of the screen indicated whether the name is available.

Step 3: Select a Registered Agent

A Montana Registered Agent must be identified when forming the LLC for service of process.  The Registered Agent can either be a resident of Montana (Select “New Agent”)or a registered Resident Agent service (Select “Existing Agent”).   The Registered Agent must have a physical address in the state (PO Boxes are not allowed), be available during normal business hours, and act as a point of contact to receive legal documents, tax notices, summons, subpoenas, etc. on behalf of the LLC.

You are not required to pay for a registered agent. Any individual meeting the requirements can be the agent; however, the agent’s name and address become public record, and with that comes a loss of privacy. This is more important for some entrepreneurs, especially when doing business from home or still employed.  Hiring a company like Northwest Registered Agent to be the Registered Agent will reduce unwanted phone calls and mailings.

Should you want a different mailing address for the registered agent, enter that address under mailing address.

After the Registered Agent consent to being an agent for the LLC, click on the box for the statement “The appointment of the registered agent listed above is an affirmation by the represented entity that the agent has consented to serve as a registered agent.”

Montana LLC Registered Agent

Step 4: Business Mailing Address of Principal Office

Postal Address – In this section, enter the mailing address of the principal office. This address can be the business’s physical address, the address where the business records are kept, such as your home address, or even a PO Box.

Physical Address – If you would like to add a physical address, open up the area for a physical address, and enter it there.

Term – In this section, you can indicate how long it will remain in existence.  Most LLCs will choose a “Perpetual” duration as there is no predetermined close date.  Some businesses (usually investment-related) will have a specific closure date.

Purpose – Unless this filing is for a Professsional LLC, this box is optional.  Here you provide some basic information about what the business does.  You can also use “engage in any lawful business activity for which a Limited Liability Company may be organized in Montana” in addition to the original purpose statement to keep the purpose open-ended.

Read more about answering the business purpose.

Tribal Designation – Another optional section, select your tribal designation from the drop-down menu.

Step 5: Add Managers & Members

This section asks if Members or Managers manage the LLC.

Member-Managed LLCs have an active involvement in the day-to-day operations of the business.  Most LLCs are Member-Managed.
Manager-Managed LLCs have managers hired by the members to run the LLC, similar to a CEO of a corporation.

Montana LLC Member Managed Manager

Click the “Add” button to add the names and contact information for members and managers.   Selections include “Individual,” which is most commonly used.  Other options include “Registered Business Entity” and “Non-registered Organization.”

Step 6: Upload Documents

Upload any additional documents that some LLCs will file, including:

Member’s Liability Statement – If one or more members of the company are liable for the LLC’s debts and obligations.
LLC Operating Agreement – While not required, an Operating Agreement is recommended in many cases.  An Operating Agreement is a legal document outlining the roles and responsibilities of the members of the LLC.  Read more about when an LLC needs an Operating Agreement.
Supporting Documents – Any additional documents regarding the operations of the LLC.

This is an optional section, as none of these documents are required.

Montana LLC Additional Documents

Step 7: Signature(s)

Read and click on the two terms and conditions boxes if you agree to them.  Then have at least one of the LLC organizers sign the Articles.  Enter this person’s name, title, date.

Montana LLC Signatures

Add a daytime contact number and email, so if the Secretary of State has any questions regarding the application, they can contact you to solve any issues quickly.

Step 8: Review

Review that all of the information is correct.  If there are no corrections, click “Save and Exit.”

Step 9: Pay and File

Pay and file the Articles of Organization.

If mailing, send to:
MT Secretary of State
P.O. Box 202801
Helena, MT 59620

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Tasks After Forming Your LLC

Once the LLC has been formed, there are a few additional steps to take care of. Below is a list of the most common tasks.

Prepare a Montana LLC Operating Agreement

The operating agreement is a document that governs the framework of an LLC.  This document covers items like ownership rights, member responsibilities, how profits and losses are distributed, and more.

Most states do not require an LLC to have an operating agreement, but it is still worth considering. Without an operating agreement:

  • The LLC could be subject to generic state rules that may be detrimental in the event of a lawsuit.
  • Member’s personal liability protection may be diminished.
  • Members may not fully understand their roles and responsibilities, which could lead to costly disputes in the future.

Related: Montana operating agreement template

Obtain an EIN

The EIN or Employer Identification Number (also called a Federal Employer Identification Number or FEIN) is a unique 9-digit tax identification number assigned to a business by the Internal Revenue Service (IRS). Similar to a social security number for an individual, the EIN identifies business entities for tax purposes. The EIN will be needed to hire employees, open a bank account, build business credit, register for business licenses and permits, file federal and state taxes, and more.

There is no cost for the EIN when registering through the IRS. The number is available immediately when applying through the IRS website; however, you can also register by phone, fax, or mailing IRS Form SS-4.

Related: How to Apply for an EIN

Elect the LLC’s Form of Federal Income Taxation

One of the significant benefits of the Limited Liability Company is the tax flexibility it provides.  When applying for the Employer Identification Number, you will choose how the entity will be taxed for federal income tax purposes. While there are some limitations, an LLC may be classified for federal income tax purposes as a:

  • Sole proprietorship
  • Partnership
  • C-corporation
  • S-corporation

While this may sound confusing, this refers to how the LLC is taxed, not the legal structure.

Related: How can an LLC be taxed?

By default, the taxation of an LLC is called pass-through taxation, which means the profits or losses of the LLC flow through to the members.

Single-member LLCs will, by default, be taxed as a sole proprietorship. The members can also elect to change the taxation to a C-corporation or an S-corporation.

Multi-member LLCs will, by default, be taxed as a partnership. The members can also elect to change the taxation to a C-corporation or an S-corporation.

In general, the difference between being taxed as a corporation and being taxed as a sole proprietorship or partnership the profits and losses are passed to the member’s federal income tax returns based on their percentage of ownership.  As a result, the owner will pay self-employment taxes on all business profits.  As an alternative, electing to be taxed as a corporation allows the members to take a reasonable salary and then pay payroll taxes.  Any remaining profits are distributed and aren’t subject to payroll taxes, resulting in potential tax savings.

Before electing how your LLC will be taxed, consider talking with an accountant to assess which one will be best for you. Some tax elections, such as the C corporation, may be detrimental for some people due to double taxation.

Open an LLC Bank Account

Opening a bank account for your LLC is important for liability protection as the account separates the business’s funds from the member’s personal funds.

Several documents will be needed to open a business bank account, such as:

  • A banking resolution is a document that authorizes the members to open a business bank account on behalf of the LLC.
  • Copies of the original LLC formation paperwork from the state showing the creation of the LLC.
  • Driver’s licenses of the members.
  • In some circumstances, a Montana Certificate of Good Standing may be needed to prove the LLC is active and in good standing with the state.

Related: How to Open a Business Bank Account for your LLC 

Apply for Business Licenses and Permits

Depending on what your business does and where it is located, there will likely be various business licenses and permits needed before starting your business. Some common registrations include:

  • Business Licenses – The state of Montana doesn’t have a general business license; however, many cities require a business license to operate.
  • Contractor License – Construction contractors will need to register with the Montana Department of Labor & Industry.
  • Professional Licensing – Some services such as barbers, cosmetologists, massage therapists, and landscape architects require licensing in Montana. While this isn’t a license on the business, licensing is required in order to operate.

Related: What business licenses and permits are needed in Montana?

Get Business Insurance

Even with the liability protection of the LLC, business insurance is important to protect the business. The most common types of insurance include:

General Liability Insurance – covers damages owed and medical expenses for accidents that happen at your place of business.
Business Property Insurance – replaces damaged, stolen, or lost business property. This includes your physical business location, equipment, supplies, and anything else you used to run your business.
Business Vehicle Insurance – covers company vehicles and may also include coverage for personal vehicles used for business-related activities. Many personal policies won’t cover your vehicle if there is an accident while being used for business purposes.
Workers Compensation Insurance – mandatory in most states if you have employees, this insurance covers medical expenses that occur because of an accident or injury that happens to one of your employees while they’re at work.

Related: 7 Types of Insurance Your Business May Need

File Annual Reports

LLCs are required to file an annual report with the Montana Secretary of State.  The annual report filing fee is $20 and is due by April 15th of each year.

Related: How to File a Montana LLC Annual Report

 

Common Questions When Starting An LLC

You can act as your own registered agent, provide you are a resident of the state and are generally available during normal business hours. 

It’s sometimes thought that the LLC and business license are the same, which they aren’t.  Business license requirements vary by location and the type of business being operated. 

An out-of-state LLC wanting to do business in another state will have to register as a foreign LLC with the new state’s Secretary of State.

Businesses that require state licensing and offer professional services such as accountants, attorneys, podiatrists, physical therapists, acupuncturists, etc. often must file as a Professional Limited Liability Company (sometimes referred to as a Professional LLC or PLLC) instead of an LLC. Filing for a PLLC is very similar to that of the LLC.

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