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When starting a new company, choosing a business entity is the most important decision that the founders must make. For most businesses with more than one founding member, forming as an LLC is often the best option for a number of reasons.
An LLC is an uncomplicated business structure that affords business owners legal protection by separating personal assets from business debts. Moreover, LLCs often enjoy a lower tax rate than corporations. Nevertheless, creating an LLC can get complicated depending on where you are based, with the formation process, filing fees, and continuing legal obligations differing from state to state.
Forming an LLC in Montana follows the same general process seen in most states, so entrepreneurs shouldn’t have too much trouble starting a business in the state. To avoid a misstep in the filing process, follow these steps to start an LLC in Montana, and refer to the checklist at the bottom of the post to familiarize yourself with the legal and financial requirements for LLCs in the state.
Starting an LLC in Montana step-by-step
1. Select a name for your Montana LLC
Follow naming requirements
There are 2 major guidelines to follow when naming your LLC in the state of Montana:
- An LLC’s name must be distinguishable from the names of existing businesses on file with the Montana Secretary of State.
- 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.”
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 $70 which can be paid by credit card.
A Montana LLC’s 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
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:
- 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.
- Appoint a Montana registered agent.
- 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.
4. Draft 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:
- Describe the LLC’s business structure
- Establish the individual responsibilities and obligations of LLC members
- 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 your Montana LLC’s 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 15 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.
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.
Obtain business licenses and permits
A Montana LLC might be required to acquire one or more state or local business licenses, permits, or certifications depending on the nature of its business and its location.
The Montana Governor’s Office of Economic Development Business Checklist (ePass required) provides extensive information on obtaining state business licenses and permits. 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.
Montana LLC checklist
A Montana LLC’s name must obey the following guidelines:
- Must be distinguishable from the names of existing businesses on file with the Montana Secretary of State.
- Must contain one of the following phrases or abbreviations: “Limited Liability Company”, “Limited Company”, “L.L.C.”, “LLC”, “L.C.”, or “LC.”
Formational documents and filing fees:
- Name reservation – $10 filing fee (optional)
- Articles of Organization – $70 filing fee
- Certificate of Authority of Foreign Limited Liability Corporation – $70 filing fee (foreign LLCs, only)
- An LLC is formed in Montana by filing Articles of Organization with the Montana Secretary of State.
Additional legal obligations:
- File Annual Reports – Required for all Montana LLCs
- Register with the Montana Department of Revenue – Required for certain types of LLCs
- Obtain state and local business licenses – Required for certain types of LLCs