Forming an LLC in Montana

Running or owning a business in a US state with more than a million people can be fruitful, but only if you have yourself and your business legally protected.

If you are a business owner residing in the state of Montana and want to form an LLC, below are all the steps that you need to take. 

How to Form an LLC in Montana

  1. Naming Your LLC
  2. Designating a Registered Agent
  3. Filing of Articles of Organization
  4. Operating Agreement
  5. EIN
  6. Filing of Annual Reports

Let us have a look at each of these steps in detail.

Naming Your LLC

The first step in this process is to select a name for your business entity that is both available in the Montana Secretary of State’s business database, as well as acceptable under the laws of Montana that are concerned with the LLC name.

LLC Name Guidelines

According to Montana law, the name for the LLC should have the words ‘Limited Liability Company’ or ‘Limited Company’. The permissible abbreviations could be ‘LLC’, ‘L.L.C.’, ‘LLC.’ or ‘LC’. 

Moreover, the name should be distinguishable from other business entities, LLCs, partnerships and corporations that are already registered in the state of Montana. Once you have decided a name for your LLC, you can reserve it for a period of 120 days through the online portal with the Montana Secretary of State by paying a filing fee of $10.

Designating a Registered Agent

Once the LLC name has been decided, the next step is to appoint an agent for your LLC. This is mandatory under the Montana LLC laws.

A registered agent can be an individual or an institution that accepts and handles legal documents on behalf of your LLC. Registered agent can be someone who already resides in the state of Montana, or an entity that is licensed to operate in Montana. 

Hiring a commercial registered agent is not mandatory, however, if you do hire one, you need to make sure they list their physical address.

Filing of Articles of Organization

One of the most important parts in forming a Montana LLC is to file the Articles of Organization with the Montana Secretary of State. 

Here are the things that these articles should include:

  • LLC Type
  • LLC Name
  • Registered Agent’s Name
  • LLC’s Mailing Address
  • LLC’s term (perpetual or time-specific)
  • LLC’s Purpose
  • Specify whether the LLC is Manager-managed or Member-managed
  • In case of LLC’s debt liability, if any member(s) is liable, it should be mentioned in writing along with their consents

(You can also add any other provisions that you want to include on the public record)

The form can be filed online with the Montana Secretary of State, along with a filing fee of $70.

Operating Agreement

Even though an operating agreement is not a mandatory document under the Montana laws for LLC formation, it is recommended that you prepare one. It is an internal document that specifies how the LLC will be operated and managed.

Benefits of Having an Operating Agreement

Below are some of the reasons why an operating agreement should not be ignored:

  • Provides clarity in business operations and processes
  • Ensures transparency and keeps all management personnel on the same page
  • Reduces risk of disagreements or disputes
  • Comes in quite handy to assist banks, lawyers, vendors, lenders or other non-government entities

EIN

Whether your LLC has employees or not, you are required to obtain an EIN if it has more than one member. EIN (Employer Identification Number) is a 9-digit federal tax ID that is given by the IRS (Internal Revenue Service). This number is mainly used for tax purposes.

In case you go with a one-member LLC formation, you will need to obtain an EIN if the LLC will have employees at some point or if you want to have your LLC taxed as a corporation instead of any other business entity.

EIN can be obtained for free through the online EIN portal.

Filing of Annual Reports

After a Montana LLC has been successfully formed, it is mandatory for the LLC to file an annual report by 15th of April every year with the Secretary of State. The basic purpose of this report is to provide complete transparency of your business entity. 

Filing Charges and Penalties

A filing fee of $20 is applicable. In case you miss the filing date, a filing fee of $35 will be charged. 

If your LLC doesn’t report an annual report by 1st of December, it will be dissolved by the state. Once dissolved, you can file for reinstatement through the Application for Reinstatement within 5 years.