As a business owner, you have the option of choosing the structure of your business operation. You can choose to operate as a sole proprietorship, a partnership, a corporation, or as a limited liability company.
What’s important is that this choice has to be made with due considerations to several factors which include the two most important; the impact on your taxes and the level of protection you have on your private assets as a business owner.
And the good thing is, these two factors are most met with LLCs, especially as an LLC in Montana. That’s exactly why I have created this easy guide on how you can start your LLC in Montana today.
Let’s get in.
What is a limited liability company (LLC)?
A limited liability company (LLC) is a form of business organization that integrates the limited liability features of a corporation with the easiness of partnerships or sole proprietorship.
It’s simply a business structure that merges the desirable characteristics of a corporation and a partnership.
In LLCs, owners enjoy the protection of limited liability. This means that in the eventuality of a bankruptcy whichever the business may incur, the owners shall not be liable for the same. Assets owned in the name of the LLC would only be offset to settle the debts.
Coupled with the benefits and protections of limited liability, the LLC is viewed as a non-taxable entity like partnerships, and as such, the income and expenses of the business are treated as the income and expenses of the members. This ensures LLCs’ owner(s) doesn’t have to worry about paying double taxes.
According to provisions of state laws, LLCs can either comprise of:
- Multi members
Asides from its limited liability and tax benefits, the simplicity and flexible nature of LLCs differentiates it and makes it stand out from other traditional businesses.
Things to Know Before Starting an LLC in Montana
Starting an LLC isn’t just restricted to that particular state where you live or operate your business. You can form an LLC in any state, irrespective of where you or your business is based. But it is recommended to start an LLC in the same state as your residence otherwise, you’ll have to set up additional foreign LLCs in this regard. More about foreign LLCs in the FAQ section.
Although regulations concerning limited liability companies vary from state to state in America, with some state laws being strict and others, a little bit more relaxed. Anyone can start an LLC in Montana as long as they fulfill the requirements needed for registering the same.
The registration of an LLC in Montana can now be filed online. While the old way of filing through mail-in option has been made unavailable.
The approval time for filing an LLC is usually about one hour or less though sometimes it can take several days depending on certain factors. After submitting your filling form online, and paying the necessary fees, your LLC approval documents will be sent to you via email (this takes less than 15 minutes).
How to Start an LLC In Montana
Starting an LLC in Montana is easy and cheap with just a fee of $70. Below are the steps to follow to be able to successfully form your LLC in Montana.
Step 1: Choose a name for your LLC
The stipulations of Montana laws regarding registering a name for an LLC holds that:
- No two LLCs shall bear the same name. The name you choose for your LLC must be different from a name that has already been filed with the Montana secretary of state. To ensure this, search through the business name database of the Montana Secretary of State.
- The name must also have the phrase ‘limited liability company’, or its abbreviation (LLC) attached to it.
- You can file for a reservation of name with the Montana secretary of state for 120 days.
- It is important to also know that the name you choose must not contain words that could confuse your LLC with some government agencies like Bank, banking, insurance etc.
- Additionally, it’s good to check if the name you chose is available as a web domain. You may not have immediate plans of creating a website, but it’s good practice if you can buy the URL so you can prevent others from acquiring it.
Step 2: Choose A Registered Agent
A registered agent is an individual or a business organization that shall be a liaison between your business and the state government. It is the job of the registered agent to receive government documents (such as tax records and annual periodic reports) or a legal process in case of lawsuits. Every LLC in Montana is expected to have a registered agent. For an Montana LLC, the registered agent must be based in Montana.
Your proposed registered agent can either be an individual or a registered organization that has a physical address within the state of Montana. It is highly recommended to hire a 3rd party service like ZenBusiness to act as your registered agent. This ensures that you will always have someone to receive legal mail whether you’re on vacation or live in another state.
Step 3: Filing An Articles of Organization
After you’ve settled on a name and the registered agent, the next step is to file the Articles of Organization with the Montana secretary of state. Your Articles of Organization must contain the following information:
- Name of your Montana LLC
- The name of the LLC’s registered agent
- The type of Montana LLC you want to operate—will it be a professional LLC, regular LLC, or a series LLC?
- Whether the LLC is for a perpetual term or it’s only going to last a specified period.
- Address of your Montana LLC’s principal office.
- The purpose of the LLC. If you’re filling a professional LLC, then you need to specify the professional service the LLC is going to render, and at least half of the managers must be qualified in that profession.
- The way the LLC will be managed. Will it be managed by the members as a collective unit or is it going to have an appointed manager?
- If it’s going to be member-managed, then you have to include the name and address of at least one member, but if it’s going to appoint a manager, also the name and address of the manager should be included.
- The name, signature, and address of the person filing the LLC.
Step 4: Create an Operating Agreement
An operating agreement is a document where you’ll specify how the LLC is going to operate.
It specifies the rights and responsibilities that are allocated to the members and managers, and also how you want the LLC to be managed.
Having a well-detailed operating agreement in place will help to reduce any risk of future conflicts that may rear up between members. Operating agreements ensure the operational boundaries of each member.
In Montana, this is optional. You can choose to prepare an operating agreement or you can decide not to, but it’s recommended you have a written operating agreement in place so
An Operating Agreement also ensures there is no interference of the state in the running of your LLCs.
Step 5: Apply for an EIN
You have to obtain an IRS Employer Identification Number (EIN) if the LLC is going to have more than one member, whether it has employees or not. An EIN is also necessary if you plan on opening a bank account or engage in import and export of goods.
An EIN can be obtained by completing an online application on the IRS website. No filing fee is charged for this.
Having an EIN for your LLC ensures you access to grants and loans in times of financial distress. Even though you might not need it for your particular case, it’s still best to have one handy for the various perks you get along with it.
Step 6: Filing Your Annual Reports
After you’ve filed and started your LLC, you’re required to file annual reports of the business on April 15 of every year. Filling your annual reports at the due date will only cost $20, but you’ll have to pay $35 if you delay.
And if by December 1, you still haven’t filled your annual report, then the company will be dissolved. If that happens, you can only apply for reinstatement five years after the dissolution. This is another added bonus of having a registered agent service as they will be able to file your annual reports on your behalf.
Frequently Asked Questions
What is a Registered Agent Service?
A registered agent service is a business organization that handles the responsibility of notifying LLCs and corporations whenever their business is sent a Service of Process or any other legal notices.
They act as third parties, and they operate in the same state in which the business is established. A registered agent service operates every day of the week and takes sole responsibility for the delivery of important legal and business documentation without delay.
What is the difference between a domestic Montana LLC and a foreign Montana LLC?
Domestic LLCs are LLCs that operate their business in the same state in which they’re formed. Once an LLC is formed in Montana and its businesses are localized within the state, then it is a domestic LLC.
A foreign LLC in Montana is created only when an already existing LLC that was formed in one state expands its business operations beyond the boundaries of such state where it was formed and starts business operation in Montana.
If you have an already existing LLC formed in another state, you’ll have to register a foreign Montana LLC if you decide to expand the operations of your business to Montana. It’s important to register a foreign LLC because you stand the danger of incurring financial penalties or have some of your legal documents voided for failure to register a foreign LLC in Montana.
Do I need a DBA for a Montana LLC?
DBA simply means ‘Doing Business As’. It is a name other than the official or legal name used during registration. It can also be called a ‘Trade Name’.
The state of Montana requires that all limited liability companies and other forms of business that wish to transact business regularly in the state under a name different from their legal name must file a DBA with the Montana secretary of state.
You can choose to operate and run a business with as many DBA names as you’d like, but you must register each DBA name in the state where you operate. Trade Names are most times used for branding purposes.