Starting LLC in Montana: Peculiarities & Detailed Manual
Want to start an LLC in Montana? It is a profitable decision for a business, as the state has waived corporate tax in favor of gross corporate income tax. So you’ve decided to start an LLC? Not sure how to initiate the process? To start an LLC in Montana, you need to get ready for several stages.
We’ve prepared a guide for you with just six steps to form your LLC and to get success! You can also refer to the virtual LLC formation service.
Note: ZenBusiness is the best service to file the LLC. You’ll surely appreciate reasonable prices, company values, and other peculiarities.
An Montana LLC: The Notion & Essence
Many Montana business owners choose to start an LLC. So, unlike a corporation, they can take advantage of flexible management. We’re talking about the protection of personal assets that sole proprietorships and general partnerships lack.
The state of Montana puts forward simplified requirements for registration and maintenance of LLC and invites business owners to choose the type of taxation. Do you still have doubts about the LLC?
6 Stages to Form an LLC Correctly
Stage №1: Choose Your LLC Name
The LLC name is a significant aspect, as it is the name of your company that makes the first and strongest impression on the audience of your potential customers! The name must be different from existing company names and must meet Montana’s regulatory requirements. Now get started with the following aspects.
LLC name in terms of jurisdiction
The State of Montana obliges business owners to include the abbreviation DDS or the phrase – limited liability company in the name. Please note that the terms corporation or registered are prohibited. In addition, you cannot use the designations of other forms of business: banks or law firms.
Take care of the explanations
You must include in the title an explanation of the nature of your business. For example, if you are engaged in the computers’ repairing, write in the LLC title – computer wizard. If you have any values or principles, also indicate this. For example, if you are farming, use the term natural, nitrate-free, etc.
So, you need to get a little creative and fully comply with Montana’s legal requirements.
Stage №2: Hire a Registered Agent
A registered agent is called a statutory agent in Montana and will help you to start an LLC. The agent can be an Montana resident, natural or legal attorney responsible for sending and receiving legal documentation on behalf of the future company. A company representative can also be an employee of the company or its owner. The State of Montana notifies:
A registered agent is in charge of handling lawsuits on behalf of the business entities they act as the voice of. Eventually, companies have started utilizing services of specific staff agencies, which provide registered agents.
A registered agent guarantees an excellent reputation for your Montana LLC. Also, if your business gets worse, Montana can take legal action against it without notifying you. The registered agent will always receive appropriate notification and will be able to take timely measures to protect your interests as an attorney.
You should apply to the online service to get started a business in compliance with all regulations and requirements. So, you will have the opportunity to filter spam and protect your personal and contact information. If you use the ZenBusiness and Northwest Registered Agent to form an LLC, you will receive the free services of a registered agent.
Stage №3: Applying for Registration
To register a business in Montana, you must file the Articles of Association with the Montana State Secretariat. If you are anxious about your LLC formation, you can submit your documents for pre-processing, which will allow the Secretary of State’s office to advise you of the eligibility. It can be a good option if you get started for the first time in an LLC without consulting an attorney. Be sure to provide:
- The desired name of your business.
- Personal and contact details of the registered agent.
- Business management form.
- Personal and contact details of the manager of your company.
- Signature of the applicant and registered agent.
- Date of application submission.
A convenient way to file this paper is by registering here.
Expenses to ground an LLC: Montana levies a $70 fee to ground an LLC.
Processing Time: Montana municipalities need around five business days to handle, finalize and mail back your documents. Though, the state offers entrepreneurs to make expediting payments to speed the processing up. For a $20 fee, your fillings will be prioritized and sent back within one business day. If you cover a $100 fee, you will get the finalized version within an hour. We draw your attention to the fact that processing begins after all required documents have been duly filled.
Stage №4: The Operating Agreement Background
While an operating agreement is not binding in Montana, creating one could significantly improve the company’s climate. An operating agreement is a document that describes the structure of a project, the way it works, the rights and obligations of each partner.
This document reflects the consistency of partners and thereby reduces the chance of controversy and disputes. Therefore, it is significant that all members of the future LLC carefully read this document before joining the company.
An attorney can help draw up an operating agreement and determine the way income and liabilities will be distributed among the owners of your LLC. You will find more information about the operating agreement here. Prepare to enter the following information:
- Names of all participants.
- The rights and obligations of each of the listed participants.
- Description of procedures for voting or resolving differences between members.
- Regulations on the financial share of participation of LLC members.
- Description of the way you’re going to manage the LLC.
So, do not neglect this stage of LLC formation. It largely guarantees your safety and the observance of your rights by all members of the business project.
Stage №5: Tax Compliance
To conduct a business that you want to register as an LLC successfully, you need to comply with several tax requirements at various levels.
Requirements of Federal Significance
Does your LLC involve multiple owners? Then you need to take care of the EIN! The EIN, or Employer Identification Number, is a unique nine-digit number assigned by the IRS to US corporations. This number must be obtained by all business owners under whose leadership the hired employees work. A business owner can obtain an EIN from the IRS in person or by mail.
Your state’s cess requirements
Montana determines the nature and the sum total of the LLC state taxes according to the legal formation of your business. In case you own a flow-through entity, either by sole authority or in partnership, the income taxes will be calculated according to individual tax returns. If you’ve decided to be taxed as a corporation, you’ll have to cover income levies of the state’s corporate type. The current rate of this type is 6.75%. You’ll access more details on corporate taxes in Montana here.
As distinct from some states, Montana doesn’t charge sales, transactions, or use taxes. Nevertheless, an LLC with employees is to cover several fees related to the labor force. Entrepreneurs must arrange withholding taxes. The fees are extracted from the staff’s income and send to the state’s fund.
Detailed instruction on managing withholding taxes in Montana is available here. Entrepreneurs must also fund the state’s unemployment insurance by forwarding correspondent levies. It is not a tax per se, but a regular payment, so we mention it in this section. We recommend checking the data on the fund at the Montana Department of Labor and Industry.
Besides taxes obligatory to all companies, Montana charges industry-related taxes, which apply only to some business branches. You’ll access a fuller list of business taxes in Montana here.
Local Tax Business Demands
You may need to cover some local taxes if your county municipalities require it. Contrary to many states, Montana does not extract many local fees. Usually, you’ll cover just one dedicated to the property you own. Still, we advise you to consult a county clerk to get a full picture of taxation.
Stage №6: Getting Business Licenses & Permits
You won’t have to acquire a general business license to run a business in Montana. By the state demands all entrepreneurs to acquire permits needed for the federal government. However, this licensure is relevant only to specific branches like, for example, aviation. You will find all federally-regulated industries, which uphold specific permits in the listing by the Small Business Association.
Montana deals with industry-specific taxation, so naturally, the state upholds specific permits dedicated only to LLCs operating within those branches. The state issues hundreds of the papers in question, covering all business spheres. It won’t take much time to find the license appropriate for your company.
We advise every entrepreneur to consult a list of licenses for businesses, offered by the state here. Please take into consideration that you might need to acquire some permits from local municipalities as well. We recommend discussing the matter with a clerk from your city or county government office.
Other Stages for Business Owners After LLC Registration
After completing the six mandatory steps towards starting an LLC, you need to take care of the following.
Opening a business bank account
Separate your personal and LLC accounts. Thus, you will be sure of the safety of your personal and financial data. Besides, you won’t have any hassle when filing your charge returns. Your EIN will help you open a business account quickly, no matter what you choose a bank or credit union.
All owners of companies/corporations, regardless of their form of management that attracts employees, must go through the compensation insurance procedure. All basic and detailed information is available with the Montana Bureau of Workers’ Compensation.
This policy aims to protect the rights of workers who are injured at work and unable to work. It will not be superfluous to get a civil liability insurance policy, as well as pay attention to some other types of insurance.
All entrepreneurs must inform the state of the profits they make by presenting an annual report, which comprises the data on their income. It’ll be used for your taxation. Be aware, you must submit the form regardless, even if your company suffers from losses. Montana offers several convenient sources to ease you through reporting. You can access them as well as needed forms here.
Referring to the services of a qualified accountant
All LLCs registered in Montana must submit an annual report. You can sign up here and file the paper per Internet. If you submit by April 15, you’ll have to cover a $20 fee. In case you postpone presenting the report, you’ll be charged an extra $15. The annual report is meant to forward all pertinent information to the state, so the government will be updated on the way your LLC has changed over a fiscal year.