If you’re looking for a reliable DIY guide for starting an LLC in Montana, look no further.
Below you’ll find all the information you need to launch your business and handle any associated costs. Follow each step carefully and your LLC will be established and ready to hit the ground running.
That said, the process can be complex, with various filings and costs, so if at any point you need help, you can hire an online incorporation service.
Need Help Starting Your LLC?If you want to make sure your LLC is formed correctly, hire an LLC service. Below are the top two that will take care of all the legal paperwork:
ZenBusiness – $39: If getting the most value out of an LLC service is your priority, choose ZenBusiness. They charge one of the lowest rates online and include all the most important features when starting a business. IncFile – $0: If you're on a strict budget and prefer using the cheapest LLC service, choose IncFile. They will form an LLC for free (plus state filing fee) and give you great features along the way.
ZenBusiness – $39: If getting the most value out of an LLC service is your priority, choose ZenBusiness. They charge one of the lowest rates online and include all the most important features when starting a business.
IncFile – $0: If you're on a strict budget and prefer using the cheapest LLC service, choose IncFile. They will form an LLC for free (plus state filing fee) and give you great features along the way.
Step 1: Name Your LLC
What’s in a name? Quite a bit, actually. Your business name is your Montana LLC’s identity, its personality, its reputation. Find a name that sticks in customers’ minds – while conveying your brand qualities – and you’ve struck gold. A unique, memorable name can draw in new customers and keep existing ones coming back.
Your LLC name is going to appear everywhere: business cards, marketing collateral, websites, legal contracts, bank accounts, invoices, directories, and much more. So be sure that it conveys your product, service, brand, and values.
While you can (and should) be creative with your business name, there are certain state requirements that it must follow.
Before you’re off and running with a particular name, confirm that it adheres to the state’s requirements. Your name must use 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.” And it must avoid all other business type designators, like “corporation,” “partnership,” or “incorporated.” Lastly, and most importantly, it must be distinguishable from every previously existing Montana business name.
But in the event that your name is already taken, how can you distinguish it? According to Montana’s Administrative Rules, Section 44.5.131, making changes to the following components will NOT be enough:
- Punctuation marks
- Special characters like @, #, $, and %
- The articles “a,” “an,” or “the”
- Business type identifiers like LLC or Ltd.
- Arabic vs. Roman numerals (4 vs. IV)
- Singular vs. plural nouns
In short, small changes to a name’s syntax just won’t cut it. To make your name truly unique and distinguishable, you must make significant alterations to its key words.
Consider this: your friend Fanny wants to open a flower shop in Helena, Montana. The name she wants, Flowers by Fanny, LLC is already in use. So she comes up with a new one: Fanny’s Florals and Design, LLC. This name is similar to the original but includes new words, distinguishing it in the Secretary of State’s records.
Determine the Name is Available
Of course, you will only need to make distinguishable changes if your name is already taken. Don’t make the mistake of ordering business cards, creating advertisements, and using a name on documents like the Certificate of Organization without first confirming it’s available. Use the Secretary of State’s Business Search to see if there’s an existing business using your desired name.
Maybe you pegged a distinguishable name right away, or maybe it took some modifications, but either way, once you have a unique name, you can lock it down by filing a name reservation.
Optional: Name Reservation
You may have fallen in love with a particular name, but still have some preparation and paperwork to sort out before starting your LLC, and you’re worried that someone will swipe it in the meantime. To calm your nerves, you can reserve that name in Montana for a total of 120 days.
Think about Fanny. After making her name distinguishable, she’s ready to make it official, but if she’s waiting on some paperwork to start her LLC, she can place a hold on her name online through the ePass Montana portal.
Reserving a business name costs $10 and standard processing time is 2-5 business days. Not fast enough for you? You can request priority handling (24 hour service) for an extra $20 or expedited handling (one hour service) for $100.
Of course, a name reservation is only beneficial if you aren’t ready to start your LLC yet. Otherwise, you can use your name on the Articles of Organization, which will register it automatically.
Step 2: Choose a Registered Agent
Fanny’s LLC is quickly taking shape, and if it’s going to operate in Montana, she’ll need a go-between for state and legal communications. This is called the registered agent.
A registered agent is a key component of your budding LLC, handling all of its sensitive communication with the state so you don’t have to.
According to Montana Code Section 35-1-114, a registered agent’s job is to “forward to the represented entity at the address most recently supplied to the agent by the entity any process, notice, or demand that is served on the agent and provide the notices required by this chapter to the entity at the address most recently supplied to the agent by the entity.”
Taxes, lawsuits, maintenance requirements, and more – the registered agent takes care of it all. If you had to do this yourself, it would pile additional tasks onto your already-full plate. Plus, your agent makes your business available to receive documents even when you’re out of town or away from the office. This is especially important if your physical office is outside Montana.
But maintaining an agent isn’t just a convenience, it’s required. Every Montana LLC is required to have a registered agent on file at all times, or else face administrative dissolution.
Now for the practical application, the “how-to.” Fortunately, declaring a registered agent is easy. All you need to do is include their name and address on the Articles of Organization. When the filing is accepted, this information will become part of your LLC’s public record. Be sure the agent agrees to take on the role before you register your business.
You have two options for who can serve as your registered agent: an individual or a company.
Individual as Registered Agent
You may think that an individual registered agent would need specialized training or experience, but this isn’t the case. Anyone can serve as your registered agent, as long as they are a Montana resident and have a physical address in the state.
Third parties like attorneys, accountants, and business partners are all good options, but friends and family members can work too. You can even serve as your own LLC’s agent, provided you meet these requirements.
Registered Agent Service
It can be a lot easier, though, to use an LLC formation service like ZenBusiness (or even IncFile and Northwest Registered Agent), so we highly recommend it. Not only will they take care of business formation requirements, but they’ll also include a free registered agent service. Or, if you’d rather start your LLC on your own, you can use a registered agent service to cover your agent duties.
During the life of your LLC you may, at some point, need to change your registered agent. Perhaps you want to switch from an individual to a professional service, or maybe your existing registered agent resigns. Either way, you’ll want to make the change as soon as possible because operating without an agent on file can lead to administrative dissolution.
Step 3: File the Formation Documents with the State
This is where the LLC formation process kicks into high gear. Let’s check back in with Fanny.
She’s reserved her unique business name, designated a registered agent, and she’s ready to get her LLC off the ground. It’s time for Fanny to take on the most important LLC document: the Articles of Organization. This filing creates a record for Fanny’s Florals and Design, LLC with the Montana Secretary of State, giving it the authorization to commence business in the state.
Apologies to all the paper application enthusiasts out there, because the Secretary of State only accepts Articles of Organization submissions online. But don’t worry, because electronic filing is fairly quick and easy.
You can take care of the entire process through the ePass Montana filing portal. You will need to create an account if you haven’t done so already. After you’ve logged in, go to “Action Items” on the left side of the page, then click “Form a Domestic Limited Liability Company.” From there, simply follow the onscreen instructions and you’ll be done in no time.
The Articles of Organization costs $70 and standard processing takes 2-5 business days. That’s a pretty fast turnaround, but if it’s not quite fast enough, you can request priority handling (24 hour turnaround) for $20, or expedited handling (one hour turnaround) for $100.
Once you’ve successfully filed the Articles of Organization, you’re well on your way to a successful Montana business.
Step 4: Create an Operating Agreement
The operating agreement is the framework that holds up an LLC, the vital underpinning that establishes processes for its procedures, activities, and conduct. Essentially, it serves as your company’s bylaws.
Your LLC isn’t technically required to adopt an operating agreement in Montana. That said, creating and following one will contribute significantly to your business success. Not only does it put in place valuable rules and procedures, but it also protects your assets and gives you company legitimacy in the eyes of banks, courts, and government agencies. So, think long and hard before starting an LLC without one.
Let’s say our friend Fanny sells a percentage of her company to two other owners. Her operating agreement could stipulate how the LLC’s assets would be distributed among them in the case of dissolution. But if she decided to maintain sole ownership, the agreement could be used in court as evidence that the LLC’s assets are separate from her personal ones. These are just two examples, but the operating agreement governs everything from member duties to tax structure.
If you’ve decided to draft an agreement, there are two ways to go about it:
- Write it yourself. Don’t be intimidated by this option. There are plenty of free online templates that serve as helpful guides. You can create an effective document from most of the templates out there, but we recommend getting one through ZenBusiness, which includes a free LLC operating agreement with every package. This will save you a lot of time and money.
- Hire an attorney. If you want to be absolutely sure that you don’t miss any important details, an attorney can write or review the agreement for you, ensuring that it complies with state law, includes all necessary information, and avoids the state’s default laws.
What are default laws?
Each state has its own set of generic, baseline laws for how LLCs should operate. These laws, however, only govern matters not included in your operating agreement. Take dissolution, for example. If your LLC ever dissolves, your operating agreement would determine what happens to its remaining assets and debts. But if you fail to include it in the agreement, the state will make that decision for you.
Because default laws are broad and not tailored to your specific business, they often aren’t in your LLC’s best interest, so it’s best to avoid them by being as comprehensive as possible in your agreement.
Step 5: Get an EIN
There’s simply no way to avoid taxes. In fact, it’s illegal to try, so don’t do it.
Federally, LLCs are classified as “pass-through” entities, businesses that don’t file corporate tax returns, but whose owners include income and losses on their individual returns. Still, there are certain circumstances that require LLCs to pay federal taxes, like classifying as a corporation or partnership, hiring employees, or selling merchandise. So, in Fanny’s case, if she plans on hiring additional florists and selling bouquets, she will need to apply for an EIN.
The Employer Identification Number (EIN) is a nine-digit number that the IRS will use to identify your company’s tax accounts, so if you pay any business taxes, it’s extremely important to have one. Click the “Do I need an EIN?” link on this page to see if you fall into this category. If so, apply for an EIN one of three ways:
Need to get this done quick? File online – it’s by far the most efficient method. You can only complete the process between 7 a.m. and 10 p.m. EST, Monday through Friday, but you’ll receive your number immediately upon finishing the digital form. Keep in mind that you will need to provide a valid individual taxpayer number (like a Social Security Number) as part of the process.
You might prefer the feel and security of a paper form. In this case, download Form SS-4, complete it, and fax it to (855) 641-6935. You will receive your EIN within four business days.
Or, there’s always trusty postal mail. However, this is the slowest option, as processing typically takes around four weeks. If that doesn’t deter you, fill out Form SS-4 and send it to:
Internal Revenue Service Operation
Attn: EIN Operation
Cincinnati, OH 45999
Okay, so you’ve filed the Articles of Organization, designated a registered agent, adopted an operating agreement, and filed for an EIN. Time to start doing business, right? Sorry, there are a couple of additional steps you may need to take first. But don’t worry, you’re almost there!
Step 6: Taxes, Licensing & Income Reporting
For all intents and purposes, most LLCs will be official after completing all the prior steps. Still, it’s important for business owners like Fanny to keep looking ahead, as there are certain maintenance requirements to keep a Montana LLC running smoothly and in good standing with the state.
Before you start doing business, create a plan for the following potential LLC requirements:
As mentioned earlier, LLCs are almost always classified as “pass-through” entities, which means that they don’t pay income taxes directly to the federal government. That responsibility falls instead on the owners, who must include business income and losses on their personal 1040 tax returns and/or Schedule C. LLCs are flexible with tax structure, so you can choose to have yours taxed like a corporation instead. In this case, it would need to file a separate corporate tax return.
Like federal income taxes, state ones “pass through” to the owners’ personal tax returns (unless they take on the tax structure of a corporation). Plus, Montana doesn’t impose a “franchise” or “privilege” tax on its LLCs, so you won’t need to worry about that either.
Certain single-member LLCs, however, must file a Montana Disregarded Entity Information Return each year. See here to learn more and find out if you need to file.
Montana’s taxes don’t end there, though. Depending on your LLC’s circumstances, it may be responsible for other business-related taxes. For example, if your LLC hires employees, it will be responsible for a Withholding Tax (register here) and an Unemployment Insurance Tax (register here).
Most states require businesses that sell merchandise to pay a Sales Tax and Use Tax, but Montana doesn’t have either.
Plus, depending on your LLC’s location, it may owe a local tax to its city, municipality, or county. Consult your local government’s website to find out.
The Articles of Organization may have already made your business legitimate, but your LLC might still need to obtain a license before doing business. This all depends, however, on the type of business you run.
Our friend Fanny, for example, may need to obtain a Nursery License from the Department of Agriculture before she opens her flower shop’s doors. And if she wanted to sell handmade sandwiches out of the shop, she would need licensure from the Department of Public Health. Don’t know if your LLC needs any licenses? Check out Montana’s Small Business Development Center’s Licensing page to find out.
Certain cities and counties require their own specific licenses on top of any state ones, so you should also check with your local government.
Once you’ve taken all the steps to start your LLC, you’ll be off and running, making deals and growing the company. But when things are moving 100 miles per hour, don’t forget that Montana requires all of its businesses to submit one important recurring filing: the Annual Report.
The Secretary of State uses Annual Reports to ensure that they have updated and accurate information for all business entities. Each year, your LLC must file a report online by 5:00 p.m. on April 15. There is no paper form.
Make sure you mark it on your calendar and set a reminder on your phone! Late reports incur a $15 penalty, and if you don’t file by November 28, the state will administratively dissolve your LLC. Need some help filing? The state provides a comprehensive set of instructions here.
And we’ve come to the end. It’s a long process, and not always easy, but the reward is well worth it. If you’ve made it this far, congratulations! Your Montana LLC is ready for takeoff. So go ahead and start with that big sale, promotional campaign, or business deal. Maybe you’ll see Fanny out there in the business world, selling her beautiful floral creations.
Need Help Creating Your LLC?
If you even skimmed this guide to look over the steps, you likely got a sense of how many moving parts there are when starting an LLC. Can you do it all yourself? Absolutely. We have complete confidence in you.
But if you’d rather hand it off to someone else and not have to worry about it again, we recommend using an business formation service. This way, you can go about your other business responsibilities with the confidence that everything will be submitted correctly and punctually.
Plus, an LLC formation service can handle maintenance items like Annual Reports, so you can take them off your to-do list. And on top of that, many services also provide a registered agent.