How To Set Up A Montana LLC

There are so many things to think about when starting a business in Montana – from the initial idea to taking orders and running the company. One of the first decisions you’ll need to make is what business structure to choose. While there are several different types, this guide will focus specifically on starting an LLC in Montana.

Related: Starting A Business In Montana Checklist

What is an LLC?

The Limited Liability Company (LLC) is a popular business structure (also called a business entity) for companies starting in the state of Montana.  The LLC provides personal liability protection and has the potential to save money on taxes.

Unlike a Montana sole proprietorship or partnership, where the small business owner can be held personally liable for lawsuits against the business, the LLC is a separate legal entity that protects the business owner’s personal assets. So, if the LLC is sued, the owner’s personal assets are usually protected.

Besides liability protection, the Limited Liability Company provides several other benefits over the sole proprietorship, partnership, and corporation because of potential tax savings and ease of administration.

What are the steps to Form a Montana LLC?

Step 1: Choose an LLC Name

One of the first steps in forming a Montana Limited Liability Company is to choose a name for your business. But before you can register your LLC with the state of Montana, you want to make sure the name you want to use is available.

This step is important because the name of each LLC must be distinguishable from other entity names registered in the state of Montana. The Montana Secretary of State makes it easy to do a Montana LLC name search, where you can quickly verify if your LLC name is available.  

In addition to the name being unique, the entity designator (identifier used at the end of the business name) must be either:

• Limited Company
• Limited Liability Co
• Limited Liability Co.
• Limited Liability Company,
• L C
• L L C
• L. C.
• L. L. C.
• L.C.
• L.L.C.
• LC
• LLC
• Ltd Co
• Ltd Co.
• Ltd. Co
• Ltd. Co.

A comma may be used after the business name and before the designator.  “Yellowstone Yarns LLC” and “Yellowstone Yarns, LLC” are acceptable.

Step 2: Appoint a Montana Registered Agent

In Montana, every LLC designates a registered agent. A registered agent is an individual or company with a Montana street address responsible for any legal correspondence, including receiving legal documents, such as lawsuit notifications, on behalf of the business.

While many LLC owners opt to fulfill this role, some hire a registered agent service. Utilizing a registered agent service ensures that your LLC adheres to state requirements while offering a layer of convenience and confidentiality since the owner’s personal address isn’t disclosed in public records.

Related: How Do You Appoint A Montana Registered Agent?

The selected registered agent will need to consent to be an agent for the LLC. When filing the Articles of Organization (next step), you will click on the box for the statement, “The appointment of the registered agent listed above is an affirmation by the represented entity that the agent has consented to serve as a registered agent.” Even though it’s not required, getting the agent’s consent in writing is recommended.

Step 3: File the Montana LLC Articles of Organization

The paperwork to officially create an LLC in Montana is called the Montana LLC Articles of Organization. To submit the paperwork, log on to ePass Montana, the Montana Secretary of State’s website.

There are a few sections and terms that can be confusing when filling out the Articles of Organization. Let’s review a few of these sections to help you get your LLC started correctly.

Delayed effective date: If you want the LLC to start on today’s date, don’t enter a date in the box; otherwise, enter a date less than 90 days in the future to start.

Some will delay the LLC start date if they aren’t ready to go but want to get the filing out of the way or if they are close to the end of a calendar year and want to delay until the following year so they won’t have to file business taxes.

Type of Limited Liability Company: If forming a regular LLC (that’s what most businesses will choose), select “Limited Liability Company.”

If the business activities require a professional license from the state, you will want to select “Professional Limited Liability Company.” Common licenses for professionals include accountants, attorneys, and veterinarians. 

A “Series Limited Liability Company” provides liability protection across multiple asset groups or businesses, each of which would be protected from liabilities from the other series. The Series LLC is not a common choice and is typically most common with real estate investment companies. 

An out-of-state LLC wanting to do business in Montana will register as a foreign LLC by filing the Application for Certificate of Authority with the Montana Secretary of State.

Term: In this section, you can indicate how long it will remain in existence.  Most LLCs will choose a “Perpetual” duration as there is no predetermined close date.  Some businesses (usually investment-related) will have a specific closure date.

Purpose: This box is optional unless this filing is for a Professional LLC.  Here, you provide some basic information about what the business does.  You can also use “engage in any lawful business activity for which a Limited Liability Company may be organized in Montana” in addition to the original purpose statement to keep the business purpose open-ended.

Managers & Members: This section asks if Members or Managers manage the LLC.

• Member-Managed LLCs have an active involvement in the day-to-day operations of the business.  Most LLCs are Member-Managed.
• Manager-Managed LLCs have managers hired by the members to run the LLC, similar to a CEO of a corporation.

What To Do After Forming A Montana LLC

Once the LLC has been formed, there are a few additional steps to take. Below is a list of the most common tasks.

Prepare a Montana LLC Operating Agreement

The LLC operating agreement is a document that governs the framework of an LLC and covers items like ownership rights, LLC member responsibilities, how profits and losses are distributed, and more.

Most states (such as Montana) do not require an LLC to have an operating agreement, but it is still worth considering. Without an operating agreement:

• The LLC could be subject to generic state rules that may be detrimental in the event of a lawsuit.
• Member’s personal liability protection may be diminished.
• Members may not fully understand their roles and responsibilities, which could lead to costly disputes in the future.

Obtain an EIN

If the LLC will hire employees or is owned by more than one member, an EIN is required. 

The EIN or Employer Identification Number (also referred to as a Federal Employer Identification Number, FEIN, or Federal Tax ID Number) is a unique 9-digit tax identification number assigned to a business by the Internal Revenue Service (IRS). Like an individual’s social security number, the EIN identifies business entities for tax purposes.

Related: How To Register For An EIN

Open an LLC Bank Account

Opening a bank account for your LLC is important for liability protection as the account separates the business’s funds from the member’s personal funds.

Several documents will be needed to open a business bank account, such as:

• A banking resolution is a document that authorizes the members to open a business bank account on behalf of the LLC.
• Copies of the original LLC formation paperwork from the state showing the creation of the LLC.
• Driver’s licenses of the members.
• In some circumstances, a Montana Certificate of Good Standing may be needed to prove the LLC is active and in good standing with the state.

Apply for Business Licenses and Permits

Depending on what your business does and where it is located, various business licenses and permits will likely be needed before starting your business. Some common registrations include:

• Business license: There isn’t a statewide business license, but some cities require businesses to obtain licensing before they can start.
• Professional license: Certain types of businesses in Nebraska, such as barbershops, massage therapists, salons, and others, must be licensed.
• Sales & use tax: While Montana has no sales tax, other states may require a business selling to residents of other states to collect tax, depending on their sales volume.

Related: How To Register A Business In Montana

File Montana LLC Annual Reports

Montana LLCs are required to file a Montana LLC annual report with the Montana Secretary of State.  The annual report filing fee is $20 and is due by April 15th of each year.

File the Beneficial Owner Information Report

Beginning in 2024, any individual who owns at least 25% or has “substantial control” of an LLC or corporation in Montana or any other state must file the Beneficial Ownership Information (BOI) form with the Financial Crimes Enforcement Network (FinCEN). BOI reports are filed electronically through FinCEN’s website.

Montana LLC FAQs