Start Forming an LLC in Montana Today
A Montana LLC business entity helps to protect personal assets just like a corporation, but it's also flexible and prevents double taxation. Creating a Montana LLC (Limited Liability Company) is not difficult and next are the steps involved in the formation process.
First, you need to come up with a recognizable name for your LLC and make sure that it is not violating any laws and is free to register.
Then, you file the formation documents called the Articles of Organization and pay the LLC formation fee of $70 with the Secretary of State of Montana.
Basically, this is it. However, there are more steps involved in starting a successful business, such as licenses, operation agreement, tax ID number, and more.
LLC stands for limited liability company, which is a US business entity that can protect the personal assets of a business owner from business debt and lawsuits. Unlike corporations, LLCs are relatively easy to form and maintain and are not subject to double taxation.
Decide on a Name for Your LLC
The name of your LLC is important since it not only helps customers to recognize you but is also a requirement under the law.
You cannot use the same name as an existing company, so you should always do a business name search to ensure that yours is unique.
Avoid using names that sound similar to yours. For example, Robert's Brewery seems very similar to Robert's Brewers and the state may reject your filing based on that.
You will not need to include LLC when you're doing a name search, since designators at the end of the name, such as LLC, do not affect uniqueness. Robert's Brewery LLC is the same as Robert's Brewery L.C.
Montana LLC Naming Rules
The Montana LLC Act gives you details on the requirements of LLC names. Your name must include one of the following or a similar, approved designator:
- Limited Liability Co.
- Ltd. Liability Co.
- Limited liability company
If you are not licensed in a particular area, such as medicine, you cannot use the professional designator in your LLC's name.
For example, you can't use a lawyer or a doctor in your business name.
If you think that your name is in demand, you can reserve it for 120 days in Montana by paying a fee of $10 and completing the Application for Reservation of Name.
Montana LLC DBA/ABN Name
A trade name, known as a "Doing Business As (DBA)" or an ABN (Assumed Business Name), is an alternative name that can serve as a brand name for your Montana LLC.
A DBA or an ABN is mainly used for marketing purposes and is not legally required in Montana.
If you decide to register a "Doing Business As" name in Montana, the filing fee is $20.
Assign a Resident Agent
Your Montana LLC is required to have a registered agent, so you'll need to assign an individual or a business entity that will serve in that capacity.
This is necessary for service of process, so they must agree in writing to accept legal papers for you if you get sued.
They can also serve as a general point of contact for your business in Montana. They must have an actual street address in Montana, since P.O. boxes are not allowed.
You, a family member, or even a friend can be your registered agent in Montana. Anyone who consents to become a registered agent must be available from 9 a.m. to 5 p.m., so they can accept legal documents.
The person selected must be a legal resident of Montana. However, some people who start their Montana LLC from home don't want their address in the public domain, so they request that a company that has its main place of business in Montana acts as their registered agent.
Benefits of Using a Registered Agent Service
It might be cheaper in the short-term to do all the filings yourself, but using a registered agent has several advantages:
- Convenience. Using a professional registered agent service is an affordable way to manage all government filings and legal notices for your Montana LLC.
- Lower risk. This way you can also avoid any fees or further legal trouble caused by missing or misplacing an important document or notice.
- Privacy. If you were thinking of using your home address, but would rather keep it off public records, you can hire a Registered Agent that will allow you to use their address throughout your Articles of Organization.
A registered agent (or a resident agent) is an individual or a business entity that has been designated by the LLC to receive service of process notices, government correspondence, and compliance-related documents on behalf of the LLC. The registered agent must be residing in Montana.
File the Articles of Organization with Montana SOS
You'll be required to file the Articles of Organization with the Montana Secretary of State to form your LLC. New businesses must do so online since a mail-in option is not available in Montana.
As of 2017, the Montana Secretary of State has gone digital to reduce the waiting time.
You'll have to pay a filing fee of $70 and payment can be made via your debit or credit card.
Once the Secretary of State approves your Articles of Organization, your LLC will be officially created.
They will email you to let you know and give you your stamped, approved Articles of Organization as well as your Certificate of Filing.
The entire formation process takes from 5 to 10 days. If you wish, you can pay $24 extra to have your filing reviewed in 24 hours or pays $100 extra to have it processed in just one hour.
Make an LLC Operating Agreement
Every Montana LLC should have an operating agreement to avoid potential management disputes but one is not required to have it. You can have your Montana LLC formed and start doing business without an operating agreement but it is not advisable for you to do so.
This is because this document states how your business will be run and what the roles and responsibilities of all the members are.
Once your business starts operating, it is very likely that conflicts will arise among the members. You can refer to your operating agreement to settle disagreements on the number of shares held by each member, who owns the company, how shares can be transferred, who will manage the business, and other things.
All members must sign the operating agreement and although it is not a matter of a public record, it is an internal document.
An operating agreement is an internal legal document that establishes how your LLC will be run. It sets out the rights and responsibilities of the members and managers, the ownership structure, and operating procedures.
Get an EIN - Employer Identification Number
Each Montana LLC will need an Employer Identification Number (EIN). This is used for tax purposes so you can apply for it by visiting the IRS website.
You should always wait until the Secretary of State has approved your filing before you apply for your EIN. Once you get your EIN, all the federal tax payments that are made by your business, such as Medicare, will be tracked with it.
EIN stands for Employer Identification Number. EIN is a unique nine-digit number assigned by the IRS to help identify your businesses for tax and filing purposes. An EIN is sometimes referred to as a FEIN (Federal Employer Identification Number) or FTIN (Federal Tax Identification Number).
File Annual Reports
When you create a Montana LLC, you'll have to submit an annual report each year. A fee of $20 is applied and your report must be submitted even if you haven't done any business during the previous year.
This keeps your LLC in compliance and as of 2017, your annual report must be sent in via the Montana Secretary of State's website.
Your annual report is due by April 15th every year, so you should submit it before that date, regardless of when your company was created. Once you upload it to the site, it will be processed instantly.
However, you can submit your annual report as promptly as January 1, in the year that it is due. if you don't file by September 15, the state will send you a written notice that your LLC is about to be dissolved.