How to Create an LLC in Montana: Step-by-Step Guide

    by Benjamin Aronson
Updated August 17, 2021

Many business owners are looking to start an LLC in Montana these days, in large part because the state doesn’t have very high corporate or individual income taxes compared to around half of all other states. Furthermore, the state’s residents enjoy low sales taxes and reasonably low property taxes.

All of these factors combined make Montana a great state in which to start an LLC. But if you want to start your LLC in Montana, you’ll need to closely follow our step-by-step guide below to make sure you snag an appropriate name for your business and you don’t have to file costly documents more than once.

Our team of researchers and business developers have carefully put this article together to take you through the six steps in starting your LLC in Montana.

  1. Choose Your LLC’s Name
  2. Appoint a Registered Agent
  3. File Montana Articles of Organization
  4. Make an Operating Agreement
  5. Get an EIN
  6. Keep Your LLC in Good Standing

This article will discuss each one of these steps in detail.

Step 1 – Choose Your LLC’s Name

Whenever you make an LLC, you have to choose an appropriate name. According to Montana law, your LLC’s name has to include the following words

  • limited liability company
  • limited company
  • LLC
  • LC
  • etc.

In other words, your LLC’s name must distinguish your business as an LLC, as opposed to other organization types.

Furthermore, you can’t have the same name as another business already filed with the Montana Secretary of State. Fortunately, the Montana Secretary of State features a business name database so you can check as to whether a given name is available for your company.

Found a great name for your LLC?

The Montana Secretary of State allows you to reserve your name for up to 120 days! Just file a Reservation of Business Name form online with the Secretary of State and pay a $10 filing fee.

Filing the name for your Montana LLC is fairly easy. As noted, there are words that need to be incorporated in the name, but there are also words that are forbidden to use:

  • Your LLC can’t use certain restricted words, such as Bank, University, or D.D.S, unless your business qualifies as a provider of those services (so you can’t name your electronics company a bank, for example).

It’s a good idea to see if your LLC’s prospective name is available as a web domain. If it is, that’ll make setting up an online storefront or business page quick and simple.

If it isn’t, see if you can buy the URL from whoever owns it. If that doesn’t work, just be create and think of alternative LLC names based off of your original idea.

Step 2 – Appoint a Registered Agent

You’ll next need to appoint a registered agent for your Montana LLC. A registered agent, in a nutshell, is a business entity or an individual that acts as the point of contact on your business’s behalf. In most cases, it’s an individual who works for your company (that means you can serve as a registered agent, too).

But a registered agent can also be an external individual. Some companies choose to hire registered agents from registered agent services.

Most online formation services provide third-party registered agent services that take care of the necessary legal work. These registered agents provide businesses with professional representation that perform duties such as:

  • Receive court papers or summons
  • Transact business with other business entities
  • Receive important mail or documentation for the organization
  • And more

Not anyone can be a registered agent. To qualify for being a registered agent, you must fit the criteria below:

  • Be a resident of Montana or a corporation based in Montana
  • Have a street address registered in Montana for mailing purposes

If your LLC has a few people, and you’re looking to save some cash, have someone in your organization serve as the registered agent. But if you want to focus on your business and alleviate the headache involving being a registered agent, hire professional LLC formation services to handle the dirty work.

We reviewed the top LLC formation services and analyzed the best-registered agents. Check out our findings, I’m sure it will help you out with your Montana LLC formation journey.

Step 3 – File Montana Articles of Organization

After determining your LLC’s name and registered agent, you’ll next need to file Articles of Organization.

The Article of Organization is the main document that officially forms your Montana Limited Liability Company.

The Articles of Organization are essentially made up of a comprised of information detailing all the organizational specifics of your LLC, including:

  • The name of your LLC
  • The name of the registered agent
  • The mailing address for your LLC’s principal office or headquarters
  • The purpose of the LLC (i.e. to do business, to provide a professional service, and so on)
  • Whether the LLC will be in effect for a specific time period or in perpetuity
  • Whether the LLC is member-managed or has one primary manager
  • The names and addresses of at least one LLC member or manager
  • Signature(s) of all LLC managers or officers

More broadly, the Articles of Organization for your organization tell the Montana Secretary of State how your organization is structured overall, including indicating who oversees decisions and who has votes.

You can file the Articles of Organization online or by mail, but keep in mind that you have to pay a $70 filing fee each time. If the Montana Secretary of State finds something wrong with your Articles, you’ll have to refile and pay the fee again. With that said, make sure you follow our directions closely in order to avoid errors and costly fees

How to File Articles of Organization Online

  • Create an ePass account by visiting https://app.mt.gov/epass/Authn/selectIDP.html
  • Log in and click “Create an Account”
  • Enter all the necessary personal information, like your first and last name and email address
  • Create a username and password and add a password hint (always a smart idea)
  • Create and answer three security questions. Your account will be complete after this point

After making an account with the Montana Secretary of State, you can file your Articles of Organization.

  1. Go to https://sosmt.gov/
  2. Click “Login with ePass” at the lower right-hand corner
  3. Log in if necessary, although the system may register you as already logged in
  4. You’ll be redirected to a “Complete Online Account Details” page. Leave the “I also want to create an Organization” box unchecked
  5. Select “Standard” under “I use the following for navigation”
  6. Confirm your email address and enter your mailing address. Click “Continue”
  7. You’ll now be at your online account dashboard. Click “Form a Domestic Limited Liability Company” on the left-hand side of the screen under “Action Items”
  8. Under Handling, select “Standard Processing” to avoid extra charges. You can alternatively expedite the processing of your application for extra fees
  9. Leave the Delayed Effective Date section blank if you want your LLC to be effective immediately upon filing. Or fill in the date in which you want your LLC to be operative depending on your business plans
  10. Choose the type of limited liability you’re forming by checking the appropriate box
  11. Enter your proposed LLC name and preferred capitalization or designator. Click “Validate Name” so the Montana Secretary of State makes sure that your name is available for use
  12. Under Registered Agent, select “Existing Agent” if you hired a registered agent from a registered agent service
  13. Alternatively, select “New Agent” if your registered agent is an individual person, including yourself. Enter the street address for either option, as well as the email address
  14. Enter the mailing address for your LLC, then the physical address
  15. Enter the term of your LLC. Most will select “Perpetual” so their business remains legitimate in perpetuity
  16. Fill in the “Purpose” and “Tribal Organization” boxes if applicable. Click “Next Step: Principals”
  17. Select “Managers” or “Members” depending on whether your organization is manager-managed or member-managed (more on those below)
  18. Add any additional members or managers if applicable, then click “Next Step: Documents”
  19. Upload any relevant documents to your Montana LLC application, like the operating agreement or liability statement. Click “Next Step: Signature”
  20. Check the two authorization boxes at the top of the screen, enter your first and last name, and select “Organizer” from the drop-down menu labeled “Position”. Fill in any remaining boxes and click “Next”
  21. Now you’ll be asked to review your application. If everything looks good, click “Submit”

The Montana Secretary of State portal will require you to use a credit card to pay the application fee.

How to File Articles of Organization by Mail

If you would rather file your Articles of Organization by mail, do so to the following address:

Secretary of State

P.O. Box 202801

Helena, Montana 59620

Include the filing fee as a check with your mailed Articles of Organization.

Step 3A – Decide the Structure of Your LLC

A “member-managed” LLC is an LLC with a relatively small number of members. As a result, each member in the LLC votes on major business decisions and participates in management.

Your LLC may also be “manager-managed” (i.e. it just has a single manager or a small number of managers relative to the total number of members). This type of LLC has a more consolidated management structure and is more appropriate for larger companies.

It’s important to determine which type of LLC you’re forming before you file the Articles of Organization with the Montana Secretary of State. How your LLC is managed can significantly impact how business decisions are made, how profits are shared, and more.

Step 3B – Decide the Tax Structure of Your LLC

The other major thing to decide as you organize your LLC is its tax structure or classification. Your LLC can be broken down into three different tax classifications:

  • A disregarded entity is an LLC with a single member or manager
  • A partnership is an LLC that has more than one member
  • An S or C Corporation is an LLC with a larger number of members that is nonetheless not incorporated like a true Corporation

Each tax classification status carries advantages and disadvantages.

In terms of tax requirements and are ideal if you run your LLC by yourself.

For example, disregarded entities refer to an LLC that is owned by a single individual. For tax purposes, the business owner would report the profit or loss of the business on his/her personal tax return.

Partnerships are also simple tax classifications. They can help you avoid being taxed twice for the same income, but they do not allow you to make the most of investments.

The S Corporation classification is ideal for avoiding double taxation and benefiting from the maximum amount of tax breaks possible. Thus, this classification is perfect for larger LLCs that have lots of profits to keep in mind.

Consider how you want your LLC to be classified before filing your Articles of Organization so you don’t have to refile at a later date.

Step 4 – Make an Operating Agreement

Montana state law does not require you to form an operating agreement for your LLC. But we highly recommend that your draft one up.

In a nutshell, the operating agreement for your LLC is an internal use document that establishes the rules by which your LLC will run. It’s the guiding document for your organization that:

  • Outlines rights and responsibilities for both managers and members
  • Explains how the LLC will be managed, including who makes what decisions and when
  • Preserves liability by proving that your LLC is a separate business entity from yourself

Perhaps most importantly, the LLC operating agreement allows you to run your company in whatever way you decide is best. If your LLC does not have an operating agreement, your company may be required to operate according to Montana state law in legal disputes or other instances.

By making an operating agreement, you reduce the risk of conflict between yourself and any other business owners or managers. Operating agreements can also act as important legal documents in case anyone in your organization ever tries to sue the company for one reason or another.

For instance, if a member of your LLC is fired for doing their job poorly, you can point to your operating agreement that explains you and the other managers have the right to do so at any time for any reason if they try to dispute the firing in court.

Step 5 – Get an EIN

The last step to starting an LLC in Montana is getting an EIN or Employer Identification Number. The EIN is a seriers of nine numbers assigned to your LLC by the IRS.

Think of an EIN as a Social Security number for your business. It helps the IRS distinguish your business from all other businesses for tax purposes.

Also called a Federal Tax Identification Number (FTIN) or Federal Employer Identification Number (FEIN), your company’s EIN allows you to:

  • Open a dedicated business bank account
  • Hire employees
  • File and manage federal and state taxes for your business

You always need an EIN when you form your LLC regardless of whether you have employees. If you already have a sole proprietorship, note that you’ll need to get a new EIN when you convert your business to LLC.

Good news – you can get your EIN for free by requesting one from the IRS. You can request an EIN either by the online portal or through the mail.

Requesting Your EIN Online

  1. Follow this link: https://www.irs.gov/businesses/small-businesses-self-employed/apply-for-an-employer-identification-number-ein-online
  2. Then click “Apply Online Now”. Read everything carefully
  3. Click “Begin Application”
  4. Click “LLC”
  5. Fill out the information in the pages that follow, including marking Montana as the state in which your LLC is being formed
  6. At the “Authenticate” section, choose whether your LLC qualifies as an individual or business entity and click “Continue”
  7. Verify your identity with your full name and Social Security number
  8. Give the IRS your contact information for your LLC, like its physical address and phone number. Note that you cannot use a PO Box address
  9. Click “Accept Database Version” and “Continue”
  10. Add more details for your LLC, like the country it was formed in and the state in which it was created
  11. Now all you have to do is confirm if you would like to receive an EIN confirmation letter online or in the mail
  12. Click “Submit” after reviewing your EIN application

Requesting Your EIN by Mail

You can mail a request for an EIN as well by using the below mailing address:

Internal Revenue Service

Attn: EIN Operation

Cincinnati, OH 45999

Alternatively, you can fax your EIN application to the IRS by faxing it to 855-641-6935.

Step 6 – Keep Your LLC in Good Standing

There’s technically one more step you should keep in mind as your LLC is finalized and begins to operate legally in Montana. If you want your LLC to stay in good standing with the Secretary of State’s Office, you’ll need to file an annual report by April 15 each year.

The annual report describes the status of your LLC, reaffirms that it’s the same kind of organization doing the same kind of thing, and prevents your Montana LLC from being involuntarily dissolved. This can occur if you don’t file an annual report by December 1 of any given year.

When you file your annual report, you must pay a $20 filing fee or a $35 late fee if you file after April 15.

Wrap Up

All in all, starting an LLC in Montana is relatively straightforward. Be sure to follow each of the steps above and don’t forget to file an annual report each year so your LLC can continue to thrive for years to come.

Menu