How to Start an LLC in Montana (Step-by-Step Guide)

When starting a new company, the founders’ most important decision is choosing a business entity. For most businesses with more than one founding member, forming an LLC is often the best option. An LLC is an uncomplicated business structure that affords business owners legal protection by separating personal assets from business debts.

Starting an LLC in Montana step-by-step

1. Select a name for your Montana LLC

Follow naming requirements

There are two major guidelines to follow when naming your LLC in the state of Montana:

1. An LLC’s name must be distinguishable from the names of existing businesses on file with the Montana Secretary of State.
2. An LLC’s name must contain one of the following phrases or abbreviations: “Limited Liability Company”, “Limited Company”, “L.L.C.”,  “LLC”, “L.C.”, or “LC.”

Need help coming up with a business name? Check out our free business name generator.

Check the availability of your LLC Name

In order to confirm that your chosen name is available for use in Montana, check the Montana Business Search provided by the Montana Secretary of State.

Reserve your LLC name with the Secretary of State

If your LLC name is available in Montana, you can reserve it with the Montana Secretary of State for up to 120 days to prevent another business from using it before you are ready to file your Articles of Organization. You can reserve the name online (an ePass Montana account is required), and the filing fee is $10.

2. Designate a registered agent

As in every U.S. state, forming an LLC in Montana requires the appointment of a registered agent service to handle state and federal legal documents and service of process on the business’s behalf.

The registered agent must either be a state resident or business entity with a street address in Montana OR if the individual or business is based out-of-state, they must have a business office in Montana.

3. File Articles of Organization

When ready, file Articles of Organization with the Montana Secretary of State to officially create your LLC in Montana. The articles must be filed online (requires an ePass Montana account) as there is no mail filing option. The filing fee is $35 which can be paid by credit card.

Montana Articles of Organization must provide the following information:

• LLC name and mailing address
• LLC type (regular, professional, Series, or Professional Series LLC)
• Registered agent’s name
• LLC’s purpose
• Whether the LLC is a tribal business
• LLC’s duration (perpetual or temporary for a specific period)
• A statement declaring whether the LLC is member-managed or manager-managed
• The name and address of one member or manager
• A list of members liable for LLC debts and financial obligations (if applicable), along with written consents
• The signature of the applicant

4. Create an operating agreement

Although not a legally mandated step for forming an LLC in Montana, drafting a comprehensive LLC operating agreement is strongly recommended for all nascent limited liability companies.

The operating agreement should do the following:

1. Describe the LLC’s business structure
2. Establish the individual responsibilities and obligations of LLC members
3. Detail how the LLC will be run

Without an operating agreement clarifying the specific duties of its members, an LLC may face significant legal and operational difficulties.

5. Obtain an IRS Employer Identification Number (EIN)

All newly formed LLCs in the United States must acquire an Employer Identification Number (EIN) from the Internal Revenue Service (with the exception of single-member LLCs). The nine-digit EIN is like a social security number for a business and is necessary to pay income tax, file tax returns, open business bank accounts, and perform many other important functions.

You can apply for an EIN online on the IRS website without paying a filing fee.

6. Fulfill additional legal obligations

Once an LLC is registered, its members must devote attention to fulfilling legal requirements that apply for the duration of the company’s existence.

File Annual Reports

All LLCs active in Montana must file an annual report with the Secretary of State to preserve good standing status. Reports are due every year by April 15th along with a $20 filing fee.

Late filing will result in a $35 fine, and not filing by a certain date results in serious consequences: LLCs that were formed in Montana that do not file a report by December 1 will be dissolved, and foreign LLCs doing business in the state that fail to file by November 1 will lose the right to do business in the state and must re-file a Certificate of Authority. An LLC must file its annual report online.

Obtain business licenses and permits

The exact licenses you need for your Montana business will vary depending on the type of business you are operating, its location, and the industry regulations that apply.

• No general business license: While Montana does not require a general business license for LLCs, there are specific permits and licenses that businesses may need to obtain.
• Occupational licensing: Certain professions and industries in Montana require professional licensing. This is particularly relevant for businesses in fields such as healthcare, legal services, construction, and any other sector that is heavily regulated. Professional licenses are issued by various state boards and agencies, each with its own set of requirements and application processes.
• Local licensing: Local regulations at the city or county level can also impact your LLC. Many Montana cities and counties have their own licensing and permit requirements for businesses operating within their jurisdictions. These could range from zoning and land use permits to home occupation permits if you’re running your business from home.

To learn about local license requirements in your area, contact a city clerk or local government representative in the municipality where your LLC’s principal office is located.

Understand state taxes

In Montana, LLCs have the flexibility to choose how they are taxed, which significantly affects their tax obligations.

For LLCs that operate under the default federal tax classification as pass-through entities, the business itself does not pay income taxes. Instead, the profits or losses are passed through to the members (LLC owners), who then report this income on their personal tax returns. This structure means that LLC members are subject to Montana’s individual income tax rates on their share of the LLC’s profits.

Montana tax rates: Montana’s rates are graduated and range from 1% to 6.75%, depending on income. Additionally, members who work in the LLC are subject to the federal self-employment tax, which is 15.3% of net earnings and covers Social Security and Medicare contributions.

LLCs in Montana also have the option to elect to be taxed as corporations by filing Form 2553 with the IRS. If an LLC makes this election, it is treated as a separate tax entity, similar to a traditional corporation. This means the LLC is subject to Montana’s corporate income tax rate of 6.75% on its net income earned within the state.

Local taxes: Local jurisdictions in Montana may impose their own taxes, which will vary by location. Certain industries will also have their own tax laws. For example, businesses in the hospitality sector may be subject to hotel occupancy taxes, and those involved in gaming or gambling might pay taxes related to those activities.

Register with the Montana Department of Revenue

Certain LLCs active in Montana must register with the Montana Department of Revenue in order to fulfill a variety of state tax obligations, including LLCs that collect sales tax on retail goods and LLCs that have employees. LLCs formed in Montana, as well as foreign LLCs doing business in the state, must fulfill this requirement.

You can register with the Montana Department of Revenue online using the department’s TransAction Portal.

Understand BOI reporting

The Corporate Transparency Act (CTA) mandates a Beneficial Ownership Information (BOI) reporting requirement that affects certain business entities in all states. This requirement aims to enhance transparency about who owns and controls these entities.

Who has to file?

Most corporations, limited liability companies (LLCs), and other entities registered with the Montana Secretary of State, another state’s comparable office, or an Indian tribe are required to file.

What information do you provide?

The BOI report must include detailed information about each beneficial owner who directly or indirectly owns or controls 25% or more of the entity’s ownership interests. Required details include the beneficial owner’s name, date of birth, address, and a government-issued identification number, along with the nature and percentage of their ownership interest.

When’s the deadline to file?

• For the filing timeline, entities formed before January 1, 2024, have until January 1, 2025, to submit their initial BOI report.
• Entities established in 2024 need to file within 90 days of incorporation.
• For those formed in 2025 and onwards, the filing must occur within 30 days of incorporation.
• Additionally, any changes to the beneficial ownership information must be reported within 30 days of the change.

Learn more about BOI reporting.

Post LLC tasks

Set up business bank accounts

Setting up a business bank account for your LLC in Montana is a pivotal step that ensures the financial integrity and professionalism of your small business. Most importantly, it separates your personal finances from your business transactions, protecting personal assets from business liabilities. This separation is crucial for maintaining the legal structure of an LLC, which is designed to offer personal liability protection.

A business account also simplifies accounting practices and enhances credibility with customers and vendors, who may prefer or require dealing with a business account.

When choosing a bank for your LLC, consider factors such as fees, ease of use, customer service, and additional services that can support your business’s growth. Consider these seamless web hosting and banking solutions like Found, Relay, and Mercury.

Obtain a Certificate of Good Standing

In Montana, instead of the commonly known “Certificate of Good Standing,” businesses can obtain a “Certificate of Existence.”

• Why you need it: This certificate serves as proof that an LLC is duly registered, legally compliant, and authorized to do business in the state. The Certificate of Existence is available to anyone who wishes to request it for either domestic or foreign LLCs operating in Montana.
• How you get it: Requests can be made through the Montana Secretary of State’s office either online, by mail, or in person. The cost for obtaining a Certificate of Existence is $5 for standard processing times, and there’s an expedited service option available for $25 for those who need it quickly.

Build a website

Building a website for your LLC is an essential step towards establishing a strong online presence. The process begins with the crucial task of selecting and purchasing a domain name, which acts as your business address on the internet.

While every LLC owner knows a website is necessary, you might not know where to start. Follow these steps to get started:

1. Search for and purchase a domain name.
2. Sign up for web hosting.
3. Pick a web builder like Domain.com or GoDaddy to create a site with no coding experience necessary.
4. Tailor your site to your customers, adding appropriate pages, content, and images.
5. If you’re selling goods, add an e-commerce section to your site.
6. Review, test, and publish your site.

Using a website builder

Site builders, offered by platforms like Domain.com and GoDaddy, simplify the website creation process with their intuitive design tools, templates, and drag-and-drop features, allowing anyone to design a professional-looking site without needing deep technical knowledge.

By leveraging these integrated solutions, you can efficiently develop a website that not only aligns with your LLC’s branding but also lays a solid foundation for your online business presence.

Costs of setting up an LLC in Montana

Average cost to set up an LLC in Montana: $90-$290

If you’re ready to set up an LLC in the Big Sky State, here’s a look at the initial costs you’ll need to pay:

• Incorporation costs: The initial expense for starting your LLC is the filing fee for the Articles of Organization, which establishes your LLC with the state. This fee is $35 if you choose to file online. If you opt for a different filing method, the cost doubles to $70. Obtaining business licenses may also involve fees, which vary depending on the type of license and local costs.
• Operating costs: Once your LLC is operational, there are ongoing costs to consider that ensure your business remains in good standing with the state. The most common is the Annual Report Fee, which is $20 and a recurring expense due each year. Licenses can also require renewal depending on their specific regulations.
• Annual Report filing fee: Each year, LLCs are required to file an Annual Report. The report is filed with the state and allows you to inform the state of changes in your address, registered agents, or contact information. The fee to file this report is $20.
• Registered agent services fees: If you choose, you can hire a Registered Agent Service to handle legal documents and ensure your LLC meets the necessary compliance requirements. The cost for this service ranges from $50 to $200 annually, varying by provider.

Foreign LLCs in Montana

An LLC formed outside of Montana that wishes to do business in the state must register with the Secretary of State.

Follow these steps to do business in Montana as a foreign LLC:

1. Comply with Montana LLC naming guidelines and make sure that your LLC’s name is open for use in the state with the Montana Business Search. If unavailable, you must register an assumed name online to do business in Montana. The filing fee is $20.
2. Appoint a Montana registered agent.
3. File a Certificate of Authority of Foreign Limited Liability Corporation with the Montana Secretary of State. The certificate must be filed online and the filing fee is $70. The application must be accompanied by either a Certificate of Good Standing or a Certificate of Existence from the state where the LLC was formed.