You have big plans, but before your business can officially take off, you’ll need to make a bit of an investment.
And we’re not talking about renting office space or paying employees — before you sell a single product, there are startup costs associated with launching an LLC in Montana.
Make sure that you consider all the possible costs associated with starting an LLC. To help you out, we’ve compiled the most common Montana startup fees here.
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Overall Montana LLC Formation Costs
LLC Name Reservation Fee
This first step is an optional part of the LLC formation process. If you go directly to the Articles of Organization, that will officially register your name. But if you aren’t quite ready to start your business, you may choose to reserve your business name so that no one else takes it in the meantime. For $10, you’ll receive exclusive rights to your desired name for 120 days. Need more time? You can renew your reservation for subsequent 120-day periods by paying an additional $10 fee each time.
To clarify, most states don’t require name reservations, and they’re rarely necessary. If you’re concerned about someone else registering the name you want, you could opt to simply form your LLC instead of reserving the name.
Whether you reserve your business name or not, you should always perform a Montana business name search to make sure the name you want is available.
Articles of Organization Fee
This is the big one, the most important form that you’ll file to start your Montana LLC. The state won’t recognize your LLC or allow it to conduct business until you have the Articles of Organization on file. It costs $70 and must be completed online. There are also two options for faster processing: priority handling (24 hours) for $20 and expedited handling (one hour) for $100. The nice part is that you won’t have to pay this $70 again because the Articles of Organization is a one-time filing.
The information you’ll need to file your Articles of Organization includes your LLC’s official business name, the duration of your LLC (if applicable), your LLC’s principal office address, the name and address of your registered agent, the names and addresses of your LLC’s members and/or managers, the professional services your LLC will provide (if applicable), and your phone number, email address, and signature.
Before we move on, we’ll mention that Montana professional LLCs use the same Articles of Organization form used by standard LLCs. However, if you’re forming a Montana series LLC, you’ll need to use a specialized version of the Articles of Organization. For more information, consult our full guides to each type of LLC.
Depending on the type of business you’re registering and where you’re located in Montana, you may need to acquire certain licenses before conducting business. For example, a restaurant would need to obtain a “Food Service Certification” from the Department of Health before serving customers.
The state has particular licensure requirements, but so do individual cities, so you’ll need to check with both. Visit the Montana Department of Revenue to determine which licenses you may need.
What are some of the most commonly required business licenses for Montana LLCs? If your business operates in a regulated industry, you will probably need some sort of professional license to operate in compliance with state law. On the municipal level, things like alarm permits, building permits, and zoning permits are all very common.
LLC Formation Service
Starting an LLC in Montana can be a complicated and time-consuming process. If you want to spend less time on paperwork and more time planning your business, you might opt for an LLC formation service. These services take care of the registration process for you, so you don’t have to spend time on research, paperwork, and filings.
Most of these services (like ZenBusiness and Northwest) offer basic LLC formation services like Articles of Organization filing, tax consultations, and phone/email support for a flat rate, with options to pay more for premium packages with premium services like Employer Identification Numbers, operating agreements, and expedited filing.
Registered Agent Service
Appointing a Montana registered agent is an important part of your LLC formation process. Your registered agent is responsible for handling sensitive legal and tax documents and keeping your business compliant with Montana business law. In short, you need an agent you can trust.
While you can be the registered agent for your own LLC, this puts pressure on you to keep up with business filings and potential legal disputes. Sometimes it’s better to hand off that responsibility to a professional. A registered agent service ensures that your annual reports and other forms are filed efficiently, saving you from the penalties of delinquent filings and the stress of having to do it yourself.
If you have questions or concerns about the LLC formation process or if it’s the best business structure for you, sometimes it’s best not to take chances and consult an attorney. They’re not cheap, but they can provide essential business advice, professional filing assistance, and peace of mind.
Some attorneys offer free consultations (usually 30-60 minutes) but will charge by the hour after that. On average, business attorneys charge between $150-350 per hour. Some will offer a flat rate for setting up an LLC, which can range from $500-2,000.
Cost variations depend on the experience and location of the lawyer. But with so many options, how can you know you’re hiring the best fit? Using a site like Avvo will allow you to search, compare, and contact a whole database of Montana business attorneys, so you can be sure that you’re getting the right one for your LLC.
If you don’t want to go digging for your own attorney, we compiled the following list of highly rated business lawyers in Montana. All of these attorneys are primarily focused on the business world, they all receive five-star ratings from clients, and they all have excellent Avvo ratings.
Foreign Qualification Fee
This only applies if your LLC was formed in another state and is now expanding into Montana. In this case, a “Certificate of Authority” would take the place of the Articles of Organization.
All foreign business entities are required to foreign qualify in Montana, or they could incur some pretty severe penalties. Avoid them by filing the Certificate of Authority through the Online Business Filing System. The fee is $70, but like the Articles of Organization, you won’t have to pay it again, as long as the state accepts your application.
LLC Annual Fees
The fees we’ve discussed so far have primarily required payments, but Montana also requires recurring business fees, namely annual reports. Every LLC operating in the state must file an annual report online by Apr. 15 in order to keep the Secretary of State updated on your current information. Each annual report costs $20, so you can count on making this payment every winter/spring. Late fillings incur a $15 late fee.
The information required to file your annual report includes the official business name of your LLC, the name and address of your LLC, your LLC’s principal office address, an indication that your business is managed by its members or a manager, and the names and addresses of your members and/or managers.
For more info on annual reports for Montana LLCs, check out our full article on this topic!
Another payment you may need to make every year is taxes. Because LLCs are typically classified as “pass-through” entities, they don’t need to file separate corporate tax returns; instead, their members report income and losses on their own individual returns. Plus, Montana doesn’t impose franchise or privilege taxes on its LLCs like some states do. Still, there are certain circumstances that would require your business to pay specific business-related taxes. For example:
What if I Don’t Pay?
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Looking at all these fees, you might be thinking: how can I pay less? While you might be tempted to look for loopholes or find a way around them, this could cause you bigger problems in the future.
Specifically for annual reports, late filings are assessed a $15 late fee, and if you don’t file by Nov. 28, your LLC can be administratively dissolved. Missing other necessary maintenance filings, like registered agent changes, can also result in dissolution. Administratively dissolved LLCs cannot do business in the state until they have been officially reinstated. Plus, outstanding filings will cause you to fall out of good standing with the state, which means you’re no longer able to foreign qualify in most other states, apply for business loans, renew professional licenses, and more.
Missing tax payments will result in some serious penalties too. The penalty depends on the type of tax, the amount due, and how late it is. Check out the Department of Revenue’s penalties page to learn more.
Planning Your Expenses
By now, your budget spreadsheet might be looking a little crowded, but have no fear! Most of these are one-time fees that you won’t have to worry about again. Plus, with all these on the books, there won’t be any surprise costs when you register an LLC in Montana.
Soon, you’ll have these fees behind you and you’ll be forging ahead, growing your business and earning profits. As you do, make sure to keep up with the few recurring fees — like annual reports and taxes — so your business doesn’t fall out of good standing.
Key Steps for Starting a Montana LLC
- The first step to forming a Montana LLC is to come up with a good name for your business. You’ll want to make sure the name you want is still available and hasn’t already been claimed by another business, so you’ll need to search the state’s business database to verify its availability.
- Next, you’ll need to choose your registered agent. While you can legally serve as your own registered agent in Montana, this role can actually be more of a hassle than you might expect. That’s why we always recommend hiring a reputable registered agent service that can handle the responsibility of this position on your behalf.
- The third step involves the preparation and filing of your Articles of Organization. You’ll need to fill out the paperwork and pay a $70 fee. Once the state processes this document, your LLC will be officially open for business!
- That’s not the end of the road for the startup process though, as you’ll also need to create an operating agreement for your LLC. There is no legal requirement for Montana LLCs to have written operating agreements, but it’s still an extremely important element of any LLC. The operating agreement is an internal document that outlines how your LLC will operate, and there are several aspects of this document that can prevent messy ownership disputes down the line.
- You will also need to acquire a federal tax ID number (also known as an EIN, or employer identification number). This is essentially a Social Security number for your business, as it is a nine-digit code used to file taxes, hire employees, open business banking accounts, and more.
- Next, you’ll need to register for any relevant taxes with the Montana Department of Revenue, and also obtain all licenses and permits that apply to your business type. Keep in mind that, depending on the nature of your business, you might require licenses from the federal, state, county, and municipal governments.
Once you’ve finished all of these steps, you’re ready to operate a compliant business entity with the state of Montana!
Key Steps for Maintaining a Montana LLC
After you’ve completed all of the items in the previous section, you’ll need to focus on maintaining your LLC. The first step in this process is to open a business bank account. This will help you keep your business and personal expenses entirely separate, and it will also help immensely with your accounting and taxation responsibilities.
You should also keep detailed records of every financial transaction that takes place with your LLC. This means maintaining a file of invoices for every purchase and sale you make, along with information regarding your employees or contractors and the work they perform for your business.
As we already mentioned, annual reports are a key component of LLC maintenance in this state, and there are harsh financial penalties for delinquent reports. Additionally, you might want to hold an annual meeting to discuss goals and priorities for your LLC, although this is an optional step.
Frequently Asked Questions
Before we wrap things up, let’s take a look at some of the most common questions we hear from readers regarding the LLC formation process in Montana.
What are the state business tax rates in Montana?
If your LLC is taxed like a sole proprietorship or general partnership, you’ll need to pay taxes on your business income at the state’s personal income tax rates (between 1% and 6.9%, depending on your income level). If your LLC is taxed like a corporation, you’re required to pay Montana’s 6.75% corporate income tax on your business revenue.
How quickly does Montana process LLC formations?
The Secretary of State should be able to process your LLC’s formation within 2-5 business days. If you’re in a hurry, you can pay a $20 expediting fee to shorten your turnaround time to roughly 24 hours or a $100 fee for one-hour processing.
How many small businesses are there in Montana today?
The state of Montana is home to more than 105,000 small businesses. Entrepreneurs of all backgrounds and business types find that Montana is a great place to own and operate a small business.
What are the top small business resources and websites in Montana?
The Montana chapter of the Small Business Development Center is a great place to start, as they offer a wide variety of tools and resources for Montana LLCs. The U.S. Small Business Administration’s Montana District Office is another valuable resource, and the state’s small business resource page also has plenty of good info.
Should I form my LLC in Montana, or choose a state like Delaware or Wyoming?
Some people like to form their LLCs in states with favorable legal settings. For instance, Delaware is often seen as the most business-friendly state, as it has an entire court system that’s dedicated solely to business matters. As for Wyoming, this state has some of the most generous anonymity laws for LLC ownership.
However, for most people, your best option is to simply form your business in your home state. Forming in a different state can be a tremendous hassle, and it can add some unnecessary complexity to tax issues as well.
Cost to Start an LLC in All 50 States
We break down the LLC costs in detail in all 50 states. View all of our State LLC Costs guides below.