Our picks for business formation services

ZenBusiness
  • Low cost
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  • Expert service and support
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northwest logo Northwest Registered Agent
  • Same day filing service
  • Affordable pricing
  • Strict ethical code
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bizee logo Bizee
  • Your first year is free
  • Wide range of services
  • Technical support
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This comprehensive guide to starting a business in Montana will walk you through all the important steps, such as drafting a business plan, registering with the state government, and acquiring federal and state tax ID’s.

Starting a business in Montana in 12 steps

1. Develop an idea

Every successful business starts with a good idea. Ask yourself these questions:

  • Which product or service can your business provide that doesn’t already exist on the market?
  • How does your business idea refine an existing product or service?

Determine your personal strengths and interests: Developing an idea that suits your personality and positive traits will provide motivation to put in the long hours necessary to address the myriad challenges you’ll face in getting your business off the ground.

Figure out how to market your expertise: If your business idea is not something you totally believe in and can sell effectively, it will be much harder to succeed.

2. Do the research

Once you have an idea, it’s time to put it through the wringer and decide if it’s viable in the market. Conduct market research to arrive at answers to these key questions:

  • Is there a demand for your product/service in Montana?
  • Who is your target market?
  • Do existing businesses in Montana offer a similar product/service?
  • What makes your business unique compared to the competition?

Be patient: Coming up with satisfactory answers may require refinement, or even a total overhaul, of your original idea. You’ll only want to proceed with the next steps after determining that a niche exists in the Montana market for your business idea.

3. Draft a business plan

Now it’s time to write the blueprint of your business. A great business plan should chart the path of your company from infancy to success while being able to attract investors to provide financing.

Your business plan ought to include the following sections:

  • Executive summary – An overview of your business and why it will be successful
  • Description of business – Explain the advantages of your business and the problems it solves
  • Market research – Provide research on your industry, target market, and potential competitors
  • Organization and staff – Detail the nuts and bolts of your business; how it’s structured and who will run it
  • Product or service description – State what you are selling or offering
  • Marketing plan – Explain your strategy for attracting customers
  • Fundraising – The money you’ll need in the next five years to grow your business and how you’ll spend it
  • Financial forecast – Data and balance sheets providing a financial forecast for your business
  • Appendix – An optional section with supporting and/or requested documents like resumes, letters of reference, permits, etc.

Plan on running your business well. Google Workspace helps with email addresses, team collaboration, productivity, and more.

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4. Secure funding

Every business needs money to get off the ground. In fact 82% of businesses that fail do so because of a lack of cash flow, U.S. Bank found in a recent study. Your business plan should include a detailed estimate of the funds you’ll need to cover expenses for at least a year, so now it’s time to acquire the money.

If you aren’t wealthy enough to self-fund your business, you can choose from a number of other funding options. These include a loan from the U.S. Small Business Administration, taking out a loan from a commercial bank, launching an equity crowdfunding campaign, or securing funding from an angel investor or venture capitalist group active in Montana.

An angel investor is a wealthy individual who invests their personal finances in a startup, typically in the beginning stages, whereas a VC is a group of investors that will fund a business throughout its existence.

Which route you choose depends on the specifics of your business: angel investors typically invest smaller sums to help get a startup off the ground, while VCs invest larger sums of money in exchange for a greater say in the operations of a business. Smaller startups usually opt to pursue funding from angel investors. Plenty of both types of investors are operating in Montana.

Montana Angel Investors and VCs

  • Next Frontier Capital – A venture capital firm with locations in Bozeman and Missoula dedicated to boosting Montana technology companies through financing, consultation, and marketing assistance. The firm plans to invest in 5-6 companies each year.
  • Frontier Fund II – A Montana angel investment fund that has invested $2.75 million in 10 portfolio companies, to date.
  • Goodworks Ventures – A VC firm founded in 2007 boasting a portfolio of 35 Montana companies.
  • Homestake Venture Partners – A venture capital firm with a unique investment philosophy based on tailoring their approach to the particular needs of a startup, and providing capital to local companies that traditionally have limited access to it.
  • AngelList: Montana Angel Investors – An exhaustive directory of 4,932 investors seeking funding opportunities in Montana. Individual listings provide a brief bio which includes professional background, a tally of total investments made, and areas of interest.

5. Decide on a legal business entity

The form of business entity you choose will affect many factors. There are three main structures to choose from:

  • Sole proprietorship – The name for running a business by yourself. Legally, you and your business are one and the same, with no separate legal entity for your business.
  • Partnership – It is legally identical to a sole proprietorship, except that it comprises two or more people.
  • Corporation – A complex legal structure that is a separate entity (providing legal protection to owners) from the owner and comprises directors, officers, and shareholders.
  • LLC – AKA “Limited Liability Company”, this is a hybrid entity between a sole proprietorship and a corporation that possesses advantages of both. An LLC provides the liability protection of a corporation, yet isn’t subject to double taxation as the profits go through your personal tax return.

LLCs are the option of choice for small business owners as they are easy to manage and provide the benefits of a corporation while lacking their complex structure. Taxwise, they operate more like a sole proprietorship.

You may want to consult with an attorney to help decide which entity works best for your business.

6. Register your business

After deciding on a business entity, it’s time to take the big step and register your business with the state government. The steps to accomplish this vary depending on your chosen business entity.

Establishing a sole proprietorship in Montana

Sole proprietors in Montana are free to use their own name to do business in the state without any special filing, however, if you intend to use a business name different from your legal name, you must file an application of the assumed business name.

Out of name ideas? Check out our free business name generator

Forming an LLC or corporation in Montana

As in all 50 states, the first step in forming either an LLC or corporation in Montana is appointing a registered agent to handle process notices and other government correspondence on the business’s behalf. Those with a physical address in the state can be their own registered agent, however, hiring a professional is affordable ($50-$200 a year) and recommended for first-time business owners.

Next, run a search to verify that your chosen business name is available, and then you can file the required paperwork to form your business in the state.

To form a corporation, you must file Articles of Incorporation, and to form an LLC you must file Articles of Organization. Both can be filed online after creating an ePass Montana account, and the filing fee is $70 for both forms.

Our picks for registered agent services

ZenBusiness

ZenBusiness aims to help business owners start, run, and grow their businesses. When you’re getting started, take advantage of the filing options, like setting up an LLC and business formation plans. Later on, you might want to take advantage of their registered agent services, domain name registration, or annual report filing. Start for $0 + state fees.

Northwest Registered Agent

Northwest can help. You’ll need to file official documents to establish your business. The process is a little different in each state, but Northwest has offices all over the U.S. and helps business owners with this very thing every day. Northwest also offers registered agent services, annual report filings, and some free legal documents that pertain to starting a business.

Bizee

Bizee offers a great library of material to help first-time business owners figure out what kind of business they should set up. From there, Bizee will aid with documentation and filing procedures and demystify terms like registered agent, articles of organization, and EIN. The company has a strong reputation and great reviews online too.

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7. Acquire federal and state tax IDs

Now you should obtain a Federal Employer Identification Number (EIN), which is like a social security number for a business and allows you to open bank accounts, handle payroll, and file taxes.

For sole proprietorships, an EIN is optional, although it is required for corporations and LLC’s. You can apply online for your EIN through the IRS website, or fill out and mail this form.

Each state has its own laws and taxes regarding businesses. Certain businesses in Montana are required to pay state-administered taxes.

Visit the Montana Department of Revenue for more information. Once you’re ready, use the DOR Transaction Portal to create a tax account for your business and file taxes.

Be tax-ready all the time. QuickBooks keeps everything organized in one place.

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8. Open business banking and credit accounts

Opening a bank account for your business is crucial because it allows you to separate company assets from your personal assets, and makes filing taxes a lot easier. This is a recommended step, even if you are operating a sole proprietorship.

We recommend Novo for small business banking. Built for small business owners, entrepreneurs, and freelancers.

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It’s also a wise idea to obtain a credit card for your business because it will help you isolate business expenses and build up credit for your company, which may help in securing investment in later stages.

Montana banks for small businesses

9. Get the necessary licenses and permits

Depending on the type of business you are opening, you may need to apply for a number of permits and licenses to operate legally. For example, a restaurant will need a liquor license, and a pawn shop will need a reseller’s license. The paperwork may prove a hassle, but it’s a necessary ordeal that will protect you from fines, lawsuits, and other legal hazards.

Montana makes obtaining specialty licenses and permits convenient for entrepreneurs through its Business Checklist tool, which can be accessed with the same ePass Montana account used to register a business in the state.

10. Choose a location

Whether you are running an online business or opening a restaurant, location is everything. Be aware of the demographics of the neighborhood or town that you are considering: Are the local residents likely to visit your business? Will nearby competitors take a share of your potential profits?

11. Get insured

No matter what type of business you form, buying insurance coverage to protect yourself in the case of property damage or legal action is a good idea. In fact, businesses with employees are required by the federal government to have two types of insurance, while others are strongly encouraged, or required at the state level, depending on your business type. Consult with a licensed insurance agent to find out which types of insurance you should get.

Required forms of insurance:

  • Workers’ compensation: Covers medical costs and disability benefits if an employee is injured or becomes ill on the job.
  • Unemployment insurance: Provides benefits to workers after a loss of job through no personal fault.

Recommended forms of insurance:

  • Professional liability insurance: Covers losses as a result of property damage, medical expenses, libel, slander, and negligence claims.
  • Commercial property insurance: Covers property damage to business-owned properties and possessions as a result of fire, theft, or storm.
  • Disability insurance: Provides short-term benefits for employees suffering an illness or injury. Required in certain states such as California, New York, and Hawaii.

12. Develop an internet presence

Establishing an identity on the web is an important investment in a business’s future development. Here are some key steps in the process:

  • Register a domain name for a company website (You can use Domain.com, Bluehost, GoDaddy.com, Namecheap.com). Design the website and fill it with content.
  • Create profiles on the popular social media services (Twitter, Facebook, Instagram)
  • Register a Google profile for your business
  • Create accounts on review sites such as Yelp, Google Reviews, and TripAdvisor

More than a website builder. Bluehost will get you up and running with a professional website and tailored hosting plan.

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Montana small business resources

Montana small business statistics at-a-glance

  • 129,180 small businesses operate in Montana, which is 99.3% of the state’s total businesses.
  • 250,680 Montana residents are employed by small businesses, accounting for 66.8% of the state’s workforce.
  • Accommodation and food services are Montana’s leading small business employer industry, followed by health care and social assistance, and retail trade.
  • 0.36% of Montana’s population starts a new business, which is above the national average of 0.32%.
  • 81.04% of Montana startups survive their first year of existence.
  • In their first year, Montana startups create an average of 6.14 new jobs.
  • Montana’s property tax was rated the 21st most business-friendly in the nation, while its corporate and individual income tax rates are in the upper half of U.S. states for business-friendliness.

Sources: Tax Foundation, Kauffman, U.S. Census Bureau, Small Business Administration

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