How to File an LLC in Montana

Montana is a great place to start a business. It’s consistently ranked as a top state for small business owners and entrepreneurs because of its pro-business tax policies and favorable regulatory environment. 

Whether you’re starting a new business from scratch or making your side hustle official, starting a limited liability company — also known as LLC — offers personal liability protection, a flexible tax status, and other benefits. In contrast with other types of businesses, such as a C Corp or S Corp, an LLC is also significantly easier to manage.  

In this article, we’ll walk you through the process of filing for your Montana LLC step-by-step so you can get your new business up and running in no time. 

Key Takeaways:

• Montana offers multiple pro-business policies, including no sales tax, transparent regulations, and a favorable climate for LLC owners. 

• Starting an LLC in Montana provides various advantages to business owners, including personal liability protection, pass-through taxation, and management flexibility. 

• LLCs are “disregarded entities,” which means that they can be taxed as a sole proprietorship (if it’s a single-member LLC), a partnership (if it’s a multi-member LLC), an S Corp, or a C Corp. 

What Is an LLC Formation?

An LLC — or a limited liability company — is a business structure formed under state statutes. This means that the process of LLC formation varies by state, and if you want to create an LLC in Montana, there are specific state-specific steps you need to take. You must file for your LLC with the Montana Secretary of State in Montana. 

Starting an LLC in Montana offers various advantages to business owners, including personal liability protection, pass-through taxation, and management flexibility. 

Personal Liability Protection 

Under Montana laws, your personal and business assets are separate. If your LLC faces a lawsuit, debt collection, or other forms of litigation, your personal assets, such as your house or car, will be protected.[1]

This works the other way around, too. If you are personally sued or have debts, only your personal assets are on the line, and your LLC assets are protected and can’t be seized. 

Separating personal and LLC assets gives many entrepreneurs peace of mind and confidence to grow their businesses. 

Pass-Through Taxation

One significant benefit of forming a Montana LLC is that you can choose how you want your LLC to be treated for tax purposes. LLCs are “disregarded entities,” which means that they can be taxed as a sole proprietorship (if it’s a single-member LLC), a partnership (if it’s a multi-member LLC), an S Corp, or a C Corp. 

Many LLC owners decide to report their LLC profits and losses on their personal income tax return instead of filing a separate return for their limited company. This way, they can avoid what is known as “double taxation,” which is when you are taxed both on your LLC income and your personal income. 

Management Flexibility 

You can decide how your Montana LLC is structured. You can run it yourself — in which case it’ll be member-managed — or appoint a manager to control day-to-day operations, making it manager-managed. 

Do I Need to Have an Established Business to Start an LLC? 

Some entrepreneurs wait to incorporate their LLCs until their business is more established. However, incorporating your LLC as soon as possible will allow you to take advantage of personal liability protection and stay in good standing with the law. 

Step-By-Step Guide to Starting Your Montana LLC

To incorporate your Montana business, you must complete specific paperwork with the Montana Secretary of State and cover your LLC filing fee (and potentially other state fees, depending on your situation). In the following sections, you can find a step-by-step guide on successfully starting an LLC in Montana. 

Step 1: Choose a Business Name for Your Montana LLC

The first step to starting an LLC in Montana is deciding on your business name. For the most part, you have complete control over what you want your LLC name to be. However, there are a few rules you need to comply with. 

1. Your official LLC name must include the words “limited liability company” or “limited company” or the abbreviations “l.l.c.”, “l.c.”, “llc,” or “lc.” The word “limited” may be abbreviated as “ltd.” and the word “company” may be abbreviated as “co.”.

2. Your LLC name must be “distinguishable on the secretary of state records” from the names of other business entities registered in the state and corporate names of domestic organizations that have been dissolved for less than 120 days.[2]

3. Your LLC name should be appropriate, and it can’t contain words that create a false impression that your business is associated with the government, such as “FBI.” 

To determine if your Montana LLC name is available, you can do a name search on the Montana Secretary of State website. Once you find the business name you want to use, you can reserve it for 120 days with a $10 fee. 

Should I Get My LLC Domain?

Virtually all businesses will need a website at some point. 

As you decide on your LLC name, ensuring a domain name is available for your desired business name is also a good idea. Even though you may not launch a business website right away, securing your domain name ahead of time can save you much headache down the road. 

Should I Trademark My LLC Name? 

Applying for a federal trademark is a smart way to protect your LLC name from being used (or misused) by others. Once you trademark your Montana LLC name, no one else can start a business under the same name in the U.S. 

Forming an LLC before applying for a trademark is typically advisable to protect your brand name. Every trademark needs an owner, and when it comes to trademarking your LLC name, it makes sense for your LLC to be the trademark owner. To do that, you need to create your LLC first. 

Step 2: Fill Out Montana Articles of Organization

Your Articles of Organization is one of the most important legal documents during the LLC formation process. It officially establishes your LLC and contains foundational information about your business, including: 

• LLC name, address, and mailing address 

• Registered agent’s name and address

• Reason why your LLC is being formed

• LLC duration (period over which it will exist or if it’ll be perpetual)

• Whether your LLC is member-managed or manager-managed

• Signatures of the organizers

Once you file your Articles of Organization, you’ll also need to pay your filing fee. If you file your Articles of Organization online, the filing fee is $35. If you file your Articles of Organization by mail, the state fees go up to $70. If you’re filing for a foreign LLC, the filing fee is also $70. 

How Long Does It Take to Form Montana LLC? 

It takes the state five business days to process your Montana Articles of Organization after they receive the paperwork. However, you can also decide to pay additional fees for expedited processing. 24-hour expedited processing costs $90, and 1-hour expedited processing of your formation documents costs $170. 

Do I Need to Do Anything to Keep My Montana LLC in Good Standing with State Law? 

Once you form your LLC, you must file a yearly Montana annual report. It costs $20 to file your annual report. 

Step 3: Hire a Montana Registered Agent

According to Montana state law, your LLC must have a registered agent (RA) to receive important legal documents for your business, such as service of process and IRS notices. 

You can be your own registered agent as long as you have a Montana street address (not a P.O. box) and are older than 18 years old. 

However, being your own Montana registered agent means that you’ll have to be present at your physical address during business hours, which are 9 am-5 pm, Monday through Friday. This is an unrealistic expectation for many busy entrepreneurs because they often have things to do outside their business address or simply like having a flexible schedule. 

Moreover, being your own registered agent also raises privacy concerns, primarily if you work from home. Your registered agent’s address is public record. This means that if you have a home office, everyone can find out where you live with a simple Google search. 

Not complying with state law registered agent requirements can result in severe consequences for your business. 

Hiring a professional service instead of becoming your own registered agent gives you multiple advantages, including: 

• The freedom to leave your business address whenever you want

• Privacy protection

• No misplaced documents 

• Online dashboard to access your mail whenever and wherever you want

• Compliance reassurance 

Many business owners invest in registered agent services like Swyft Filings to keep flexibility and peace of mind. Swyft Filings offers a comprehensive and convenient registered agent service for just $199/annually. 

Step 4: Create an LLC Operating Agreement

Even though Montana state law doesn’t require business owners to create an LLC operating agreement, having a written operating agreement is highly recommended. 

A Montana LLC operating agreement outlines how your LLC will function so you can have more control over its day-to-day operations and efficiently resolve any disputes. If you don’t create an operating agreement, the state will apply default law to your business entity, which may not always benefit your LLC in the long run. 

What you include in your operating agreement is flexible, but typically you should have the following information on file: 

• Rules for LLC owners, such as shares, voting rights, and responsibilities

• Rules for transfer of ownership, dissolution, and division of profits and losses

• Protocols for admitting new members 

• Standard procedures for dispute resolution

• Rules for the management structure 

You can customize your LLC operating agreement to give you more control over how your LLC operates. 

Step 5: File for an Employer Identification Number and Business License

Before starting your new Montana business, apply for your EIN and any necessary business licenses. 

What Is an EIN?

An EIN — or an employer identification number — is a tax identification number that the IRS (Internal Revenue Office) uses to identify your LLC for tax purposes. It’s similar to a social security number but for your business. 

You need an EIN to open a business bank account, file your tax returns, and hire employees. You can apply for an EIN online on the IRS website. 

What Business Licenses Do I Need in Montana? 

Montana state doesn’t require a standard state business license. Moreover, Montana doesn’t have a state sales tax, meaning your LLC doesn’t need a seller’s permit. However, depending on the nature of your business or profession, you may need to apply for a specialty license. 

Moreover, some Montana counties or cities may require additional licenses to operate your business in compliance with the law. You must check with your local authorities to ensure you apply for all necessary business licenses for your LLC. 

Let Us Handle Your LLC Paperwork

Forming an LLC in Montana can take a lot of your time, and even tiny mistakes and inconsistencies can slow down the process and turn out quite costly. 

Swyft Filings helps you apply for your LLC in as few as 10 minutes. With some of the industry’s fastest LLC formation turnaround times, we’ve helped successfully form over 250,000 businesses and offer competitive rates to support entrepreneurs on their journey. 

FAQs:

How much does it cost to set up an LLC in Montana?

At the very least, you must cover the $35 filing fee when you file your Articles of Organization. If you file your Articles of Organization by mail for foreign LLCs, the filing fee is $70. You may also need to cover additional expenses if you want to reserve your LLC name, buy your business domain, or get expedited processing of your formation documents. 

How is an LLC taxed in Montana?

One of the essential benefits of forming an LLC is that you can choose how you want your business to be treated for tax purposes. Your LLC can be taxed as a sole proprietorship, a partnership, an S Corp, or a C Corp. Many entrepreneurs take advantage of the pass-through taxation option and report their business income on their personal tax returns. 

What are the benefits of a Montana LLC?

Montana is a great state to form an LLC and has been ranked as one of the best states to start a business.[3] It offers multiple pro-business policies (including no sales tax), transparent regulations, and a favorable climate for LLC owners.  

How do you dissolve an LLC in Montana?

To dissolve your Montana LLC, you must submit the Articles of Termination for a Limited Liability Company form to the Secretary of State by mail, fax, or in person. You will also need to cover a $15 filing fee. If you want your dissolution processed within one business day, you can expedite it for a $20 fee. One-hour processing costs $100. 

Bibliography:

1. U.S. Small Business Administration. Choose a Business Structure. Accessed March 13, 2023. 

2. Montana Code Annotated. General Provisions, Name. Accessed March 13, 2023. 

3. Montana Department of Commerce. Business Climate. Accessed March 13, 2023.