Your business is growing, and you’re planning an expansion to other states. It’s a good problem to have!
But it’s not quite as simple as choosing another location. Because each state has different rules and requirements for business operations, you may need a “foreign qualification” in each state where you plan to do business.
It’s a common misconception that foreign qualification is only for businesses operating outside the U.S. But in this case, “foreign” refers to any business operating in a state that isn’t the state where the LLC was originally formed.
For example, if your LLC is registered in Washington and you are looking to open a second location in Montana, you may need to complete a foreign qualification in Montana before you can expand there.
What happens if I fail to foreign qualify before doing business in Montana?
Foreign qualifying is essentially asking permission to do business in the state of Montana. And the notion that “it’s easier to ask forgiveness than permission” doesn’t apply here. Failing to foreign qualify before starting a business in Montana yields consequences that are far costlier than registering in the first place. If you fail to foreign qualify, your business:
- Will be banned from enacting or maintaining lawsuits in Montana courts
- Can have any existing actions or proceedings stayed by a Montana court
- Will be penalized $5 per day that the LLC has been transacting unauthorized business in the state, with a maximum penalty of $1,000 per year
But it’s not entirely bad news. Transacting business in Montana without authorization won’t invalidate any of your current contracts, nor will it keep you from defending a lawsuit in Montana court. Still, given the hefty fines and legal consequences, it’s best not to risk it and foreign qualify as soon as you begin doing business.
For more information regarding these penalties, take a look at Montana’s LLC Act, Section 35-8-1002.
What is considered “doing business” in Montana?
We’ve established why you shouldn’t do business without a foreign qualification. But what exactly does it mean to “do business” in Montana? If you look for specifics in the state’s LLC Act, unfortunately, you won’t find them. However, we know from other state and tax laws that generally you are considered to be “doing business” in most states and required to foreign qualify if:
- You have some type of physical presence in the state. This can mean offices, warehouses, stores, or other structures
- Or, you have salespeople, agents, or other representatives transacting business on your behalf in the state.
While LLCs often operate as pass-through entities for taxation, depending on how your business is structured and what type of business you do, you may be required to pay certain business taxes in Montana. When you foreign qualify, you’re also letting the state know how to tax you. While it might seem thrifty to fly under the radar, this could lead to more severe penalties down the line. To learn more about business taxes in Montana, see the Department of Revenue website. It’s important to always stay on top of your LLC’s taxation requirements to avoid any unwelcome surprises.
If you’re unsure whether or not you need to file for a foreign qualification in Montana, we suggest seeking legal counsel.
Could I be exempt from foreign qualifying in Montana?
The foreign qualification, however, isn’t a hard and fast rule for all LLCs performing any kind of action in Montana. Certain actions do not qualify as “doing business” and therefore don’t require a foreign qualification. Some examples are:
- Maintaining, settling, or defending lawsuits in Montana courts
- Holding LLC member and/or manager meetings in the state, or other activities solely associated with internal affairs
- Maintaining bank accounts
- Holding offices for the transfer or exchange of the LLC’s own securities
- Selling products or services through independent contractors
- Creating or acquiring indebtedness, or collecting debts
- Owning non-income producing property not used in the performance of the LLC
- Transacting business in interstate commerce
- Conducting a single transaction within 30 days that is not part of a series or regular business proceedings
This list is fairly comprehensive, but for more detail on any of these exemptions, see the LLC Act, Section 35-8-1001. If your only business activities in Montana appear here, you’re likely exempt from foreign qualifying. Once again, if you’re at all unsure, it’s best to get some legal advice.
How to Foreign Qualify Your LLC in Montana
Foreign qualification in Montana is simple if you know where to find and send your forms. If you or your legal counsel has decided to foreign qualify your LLC in Montana, go ahead and navigate to the Secretary of State’s Online Business Filing System. You must apply for your registration via an online form.
If you haven’t already, you’ll need to create a Montana ePass account. Once you’re logged in, scroll down the business forms page until you find the Certificate of Authority for Foreign Limited Liability Company and you’ll be on your way. To make the process as streamlined as possible, have the following information handy:
- Your LLC name (or alternate name if yours isn’t available in Montana)
- The state where your LLC began and the date when it was formed
- Your LLC’s duration
- The address of your principal office (cannot be a P.O. box)
- Your Montana registered agent’s name and address
- Whether your LLC is managed by managers or members
- Names and addresses of managers or managing members
- An authorized signature
Got all that? Don’t forget, you’re also required to submit a Certificate of Good Standing (or Certificate of Existence) from the state where your LLC was formed and it can’t be dated more than six months before your filing.
There’s a $70 fee to foreign qualify, and you can pay it with a credit or debit card through the online filing system.
After your form is in and your fee is paid, sit back, take a deep breath, and pat yourself on the back. Your LLC is on its way to foreign qualification and you’re embarking on another chapter in the life of your business.
Name Requirements to Remember
There’s a lot to think about when you’re filing for foreign qualification, but don’t forget to confirm that your business name is compliant with Montana’s naming rules. Your LLC name must:
- Contain a term that identifies its business type, like “limited liability company” or “limited company” or the abbreviations “L.L.C.,” “L.C.,” “LLC,” or “LC”
- Not use any words that would imply it’s a business type other than an LLC, like “corporation,” “partnership,” or “incorporated”
- Be unique from all other business entity names on file with the Montana Secretary of State (perform a Montana LLC name search to make sure the name you want is available)
You can also reserve your Montana business name if you’re not quite ready to foreign qualify your LLC.
Should I hire a service to file my Montana foreign LLC?
Considering all the work that goes into expanding your business to a new state, you’ve likely got a lot on your plate. Rather than trying to juggle everything yourself, you can bring on an individual or company to help you secure your LLC’s Montana foreign qualification.
For example, business attorneys understand all the legal nuances involved, providing peace of mind that the job will get done correctly. But if you go this route, be sure you have the budget for it. Lawyer fees for Montana foreign LLC qualifications can be a prohibitively expensive option for businesses operating on tight budgets.
If you’re operating on a limited budget, but still want to have your Montana foreign LLC professionally registered, go with an online business service provider. There are plenty of reputable companies that can help you out with Montana foreign qualifications, but here are a couple of our favorites:
- MyCompanyWorks ($99): MyCompanyWorks is one of the only service providers offering foreign qualifications for less than $100. This company receives excellent customer reviews and has a great track record of success, making it a smart choice for a wide range of entrepreneurs.
- IncFile ($149): IncFile offers a free LLC formation service that we have always appreciated, and its pricing for foreign qualifications is a reasonable $149. IncFile has the best customer feedback reputation in the industry, with tens of thousands of positive reviews available online.
- Northwest Registered Agent ($225): Northwest is more of a premium service, with the best customer support in the industry, in our opinion. They also include a year of their namesake registered agent service with every foreign qualification. There’s a reason Northwest is our #1 pick among the best registered agent services!
Frequently Asked Questions
When Is the Best Time to Foreign Qualify an LLC?
We think you should foreign qualify your LLC before you begin conducting business in a new state. If you don’t, your business could be subject to a broad range of fines and penalties for operating an LLC in a state where you don’t have permission to do so.
How Long Does It Take Montana to Process a Foreign Qualification?
You’ll typically need to wait roughly 2-5 business days for Montana to process your documents. This state is quite efficient compared to many!
Where Can I Learn More About the Montana LLC Licensing and Permitting Requirements?
Chances are, you’ll require at least one license or permit to operate your LLC in compliance with Montana state law. For more information about business licenses and more in this state, check out the state’s excellent Small Business Licensing Information page, which breaks down everything from industry-specific licenses to county- and municipal-level permits.
Do I Need to File an Annual Report for My Foreign LLC in Montana?
Yes. Whether you operate a domestic or foreign LLC in this state, you are required to file a Montana LLC Annual Report.
What Is the Total Expected Cost of Operating an LLC in Montana?
The overall costs of operating a Montana LLC can vary considerably based on the specifics of your business. However, we created a helpful guide to help you identify and plan for every expense your LLC will face in this state.
Should I Use an LLC Service, Hire an Attorney, or Foreign Qualify My Own LLC?
The answer to this question lies in your personal preferences, but we can give some general pointers. An attorney will cost the most by a mile, but also provides expertise you won’t find with the other options. The DIY route is free of charge but can require quite a bit of legwork and provides no peace of mind that the process is being completed correctly.
Using an LLC service means your business will be foreign qualified by professionals who know what they’re doing, while also costing significantly less than a lawyer. This “best of both worlds” attribute is what makes LLC services our preferred option.
How Do Online LLC Services Work?
Using an online LLC service removes much of the hassle from the foreign qualification process. With these services, all you need to do is provide them with the name, location, and industry your business operates in, along with some info about yourself and your Montana registered agent.
The service then registers your Certificate of Authority with the state to qualify your LLC to do business in Montana.
Are LLC Service Websites Legit?
Absolutely. There are quite a few reputable companies offering LLC formation service and foreign qualifications these days, including the two options we discussed earlier: MyCompanyWorks and IncFile.
In fact, while we certainly have our opinions about which ones offer the best pricing and features, every one of the incorporation services we discuss on this website is entirely legitimate and trustworthy.
Need to save time?
Let’s face it, there’s never enough time in the day, especially when you’re running a company. And properly registering your LLC in Montana involves research and time, time that you could be using to continue growing your business.
If the thought of paperwork, fees and state correspondence makes your head spin, consider using a service like Northwest Registered Agent to foreign qualify your business. Services like Northwest ensure that your forms are filed correctly and on time, potentially saving you thousands of dollars in penalties, not to mention a bunch of time and stress.
Foreign Qualification in All 50 States
We break down the Foreign Qualification filing process in detail in all 50 states. View all of our Foreign Qualification guides below.
- Alabama LLC Foreign Qualification
- Alaska LLC Foreign Qualification
- Arizona LLC Foreign Qualification
- Arkansas LLC Foreign Qualification
- California LLC Foreign Qualification
- Colorado LLC Foreign Qualification
- Connecticut LLC Foreign Qualification
- Delaware LLC Foreign Qualification
- D.C. LLC Foreign Qualification
- Florida LLC Foreign Qualification
- Georgia LLC Foreign Qualification
- Hawaii LLC Foreign Qualification
- Idaho LLC Foreign Qualification
- Illinois LLC Foreign Qualification
- Indiana LLC Foreign Qualification
- Iowa LLC Foreign Qualification
- Kansas LLC Foreign Qualification
- Kentucky LLC Foreign Qualification
- Louisiana LLC Foreign Qualification
- Maine LLC Foreign Qualification
- Maryland LLC Foreign Qualification
- Massachusetts LLC Foreign Qualification
- Michigan LLC Foreign Qualification
- Minnesota LLC Foreign Qualification
- Mississippi LLC Foreign Qualification
- Missouri LLC Foreign Qualification
- Nebraska LLC Foreign Qualification
- Nevada LLC Foreign Qualification
- New Hampshire LLC Foreign Qualification
- New Jersey LLC Foreign Qualification
- New Mexico LLC Foreign Qualification
- New York LLC Foreign Qualification
- North Carolina LLC Foreign Qualification
- North Dakota LLC Foreign Qualification
- Ohio LLC Foreign Qualification
- Oklahoma LLC Foreign Qualification
- Oregon LLC Foreign Qualification
- Pennsylvania LLC Foreign Qualification
- Rhode Island LLC Foreign Qualification
- South Carolina LLC Foreign Qualification
- South Dakota LLC Foreign Qualification
- Tennessee LLC Foreign Qualification
- Texas LLC Foreign Qualification
- Utah LLC Foreign Qualification
- Vermont LLC Foreign Qualification
- Virginia LLC Foreign Qualification
- Washington LLC Foreign Qualification
- West Virginia LLC Foreign Qualification
- Wisconsin LLC Foreign Qualification
- Wyoming LLC Foreign Qualification