If you’ve been dreaming of establishing a Montana LLC, there’s no better time than now to take the necessary steps to turn your dream into reality. Montana’s business-friendly environment offers a great opportunity for embarking on a new professional journey in the Big Sky Country. Let’s learn how to start an LLC in Montana.
In recent years, Montana has gained an excellent reputation as an exceptional destination for starting new businesses. In 2021, it secured the top spot as the best state for commencing small businesses, accompanied by record-breaking figures for new entrepreneurial endeavors. Indeed, the possibilities are limitless in “Big Sky Country” when it comes to establishing your own Montana LLC.
Setting up your business for success requires time and effort. Fortunately, registering and starting an LLC in Montana is not as complex as you imagine.
The steps involved in starting a Montana LLC include:
#1: Name Your Montana LLC
#2: Hire a Montana LLC Registered Agent
#3: File Your Certificate of Organization
#4: Receive a Certificate From the State
#5: Create an Operating Agreement
#6: Get an Employer Identification Number
1. Name Your Montana LLC
Once you’ve decided that starting your business as a Montana LLC is the right choice, the first step is to select a name for your company. However, you can’t simply choose any name without conducting thorough research.
Check Name Availability
The state prohibits the use of a single business name by multiple entities. Therefore, performing a state business name search is essential before finalizing a name for your new venture.
When officially naming your Montana LLC, you must add a designation to the end of the name. This involves adding one of the following phrases or abbreviations to the legal name of your company:
- Limited Liability Company
- Limited Company
- Limited Co.
- Ltd. Company
- Ltd. Co.
- L.L.C. or LLC
- L.C. or LC
Check out the comprehensive list of Montana naming rules.
Ensure Distinctiveness
If your preferred name is available, you must also confirm that it is distinguishable from other business names already in use. Names that are similar to existing ones are likely to be rejected.
Check Nationwide Usage
After confirming that your name is available and distinguishable in Montana, conduct a nationwide search using the U.S. Patent and Trademark Office’s online database. This ensures that a competitor in another state is not using your company name. Reserving your preferred company name with the state for up to 120 days allows you time to conduct this nationwide search. Once you find an available name, it’s crucial to trademark it to protect it from use by others. Trademarking is essential for safeguarding your intellectual property rights, preventing competitors from trademarking your name and potentially suing you for its use.
Consider Registering a Trade Name
If you prefer not to use your formal business name (including the LLC designation) in your branding or marketing, you can register a trade name with the Montana Secretary of State’s office. A trade name is a more casual version of a company’s formal name and is often referred to as a fictitious name or doing business as (DBA) name.
Before registering DBA names, perform state business and nationwide trademark searches to avoid availability and intellectual property issues.
Additional considerations:
URL availability. Check the availability of your desired URL. Even if you currently don’t plan to create a webpage, it’s advisable to secure the option for the future by purchasing your domain name now. Before confirming your LLC name, it’s wise to verify the availability of the corresponding URL.
2. Hire a Montana LLC Registered Agent
In Montana, it is mandatory to designate a registered agent for your LLC.
A registered agent is an individual or entity with the authority to accept service of process and official legal documents and notices on behalf of your LLC.
Your registered agent can be either an individual (including yourself or an employee of your LLC) or an entity specializing in registered agent services. They must fulfill the following requirements:
- Entities (or companies) are eligible to provide registered agent services.
- The agent must have a physical address in Montana.
- The agent must be present at the specified location and available to accept documents during regular business hours.
3. File Your Certificate of Organization
The articles of organization serve as the official document that establishes your LLC by providing essential information about it.
To properly register your Montana LLC, prepare the articles of organization and submit them to the Montana State Corporate Commission. While it may seem like a significant task, it essentially involves completing a straightforward online form or sending it via mail.
In preparing your articles, you will typically need the following details:
- Your LLC name
- The name and address of your registered agent
- A brief statement explaining why you want to start your Montana LLC
- The LLC’s duration, specifying whether it is perpetual or has a defined end date
- Indication of members’ liability for debts and obligations, including names, addresses, and written consent
- Management structure: Specify whether the LLC will be managed by its members or appointed managers
- The person forming the LLC is required to sign the articles.
- Once you submit the articles, the secretary of state will review the filing. Upon approval, your LLC attains legal business entity status.
4. Receive a Certificate From the State
In Montana, the processing time for articles of organization is usually quick. They conduct the approval process online. Upon approval of the LLC’s formation document submission, the state will provide a certificate confirming your Montana LLC’s existence. You will receive the approval documents via email.
This certificate enables the LLC to acquire an Employer Identification Number (EIN), business licenses and open a business bank account.
5. Create an Operating Agreement
Creating an operating agreement in Montana is not mandatory, but establishing a multi-member LLC is a crucial step in the formation process. An operating agreement serves as a contractual agreement among members, providing an opportunity to formalize agreements on potential issues that could lead to unresolved conflicts and legal disputes.
Examples of matters addressed in the operating agreement include:
- Taxation structure: Whether the company will be taxed separately or on members’ personal tax returns.
- Indemnification and liability.
- Ownership percentage for each member.
- Member duties, powers, and responsibilities.
- Protocols for profit distribution and loss management.
Given that the operating agreement is a legally binding document, it’s advisable to review its terms with an experienced small business lawyer before signing. This ensures that your interests are protected while you strive to make your business profitable.
6. Get an Employer Identification Number
The Internal Revenue Service assigns a nine-digit Employer Identification Number (EIN) to identify your LLC for tax purposes. You can acquire your EIN either by mail or online through the IRS.
The EIN serves the following purposes:
- Facilitates filing and managing taxes at both the state and federal levels.
- Opening of a business bank account.
- Hiring of employees.
Next Steps
Secure Funding
- Develop a startup financing strategy ensuring adequate funding until your company profits.
- Connect with the U.S. Small Business Administration or the Montana Department of Commerce for guidance.
- Explore funding sources such as microloans, crowdfunding, federal small business loans, grants, and incentive programs.
Protect Your Company’s Interests
- Ensure the separation of personal and professional assets provided by your Montana LLC.
- Safeguard your company’s longevity by seeking financial protection and expert guidance.
Take Out Business Insurance
- Consult a small business insurance provider to tailor coverage for your unique business needs.
Connect With a Lawyer
- Work with a small business lawyer to ensure compliance with local, state, and federal laws.
- Obtain assistance with tasks such as drawing up contracts, resolving disputes, and navigating legal complexities proactively.
Seek Accounting Assistance
- Use reputable accounting software for small business operations or hire a knowledgeable accountant for complex finances.
- Maintain detailed financial records for effective business management, tax strategy, and potential audits.
Hire Employees
- Complete the necessary steps for hiring, including understanding the 1-9 process, registering with Montana’s New Hire Reporting Program, obtaining workers’ compensation insurance, and applying for unemployment insurance.
Start Marketing
- Implement your marketing strategy to raise brand awareness and inspire customer loyalty.
- Establish a brand-focused website and create business-related accounts on popular social media platforms.
- Consider seeking help to ensure a solid online presence for your Montana LLC.
Now that you know how to start an LLC, follow this complete guide to ensure your Montana LLC runs smoothly.
LLC State Guides
FAQs About How To Start an LLC in Montana
Do Montana LLCs file annual reports?
Yes, Montana LLCs must submit an annual report using the online system. The annual fee is $20, and failure to file by April 15 may result in additional fines.
What tax flexibility does an LLC provide?
Members of an LLC have the flexibility to minimize their tax burden by choosing to be taxed as sole proprietorships, partnerships, C corporations (C-corps), or S corporations (S-corps).
How much does it cost to file an LLC in Montana?
Both domestic and foreign entities creating a Montana LLC must pay a $70 filing fee.
Why can’t I find forms to download for my Montana LLC?
You are encouraged to use the Montana ePass system to submit your LLC paperwork quickly and easily.
Do I need a business license to operate an LLC in Montana?
Not all businesses need a license to operate in Montana. While the state doesn’t mandate a general license, certain cities, towns, industries, and professions may have specific licensing requirements. Check with the Business Services Division of the Montana Secretary of State’s office for information on any licensing needed for your unique LLC.
