How do I register a small business in Montana?
Montana has 118,315 small enterprises employing almost 244,000 people. Montana’s economy is expanding at a rate of about 2% every year. This is lower than the U.S. average of 3.4 percent. Montana’s tax incentives make it an appealing location for prospective business owners. There are numerous ways to save money on taxes, from energy conservation initiatives to property tax abatements and new or expanded industry wage credits.
In addition, the Montana Business Assistance Bureau can assist in locating startup capital, exporting to new markets, conducting research, and connecting to other local economic development resources. Montana has specific programs for female entrepreneurs, veteran entrepreneurs, and Native American businesses.
After you completed your business planning, you need to register your company with the IRS and the state of Montana. To do this, you must first choose which business structure best meets your needs. A sole proprietorship, a limited liability company (LLC), or a corporation are all viable possibilities.
Make a legal business entity choice
There are two key benefits to registering your Montana company as a legal business entity, such as an LLC, corporation, or nonprofit. You will obtain credibility and in the event of a claim against your company, you’ll be protected from personal liability.
Which business structure is best for your Montana startup?
A sole proprietorship is an unincorporated business structure in which the owner is not separated from the business. This means that the owner receives 100 percent of the earnings from the firm; nevertheless, the owner also bears 100 percent of the financial obligation if the business goes into debt or is sued.
A partnership is an unincorporated business structure having many owners, similar to a sole proprietorship. Similarly, unlike a formal corporate structure, partnerships do not provide liability protection.
The personal asset protection of a corporation is combined with the freedom of a partnership or sole proprietorship in a limited liability company (LLC). The LLC structure is preferred by most small firms due to its ease of administration and advantageous tax status.
A company is a separate legal body whose stockholders own it. Corporations have more formal laws and are therefore more appealing to investors than LLCs. The majority of huge corporations, such as Apple, fall under the corporate group.
A nonprofit organization is one that relies on donations rather than an investment to fund its operations. Nonprofit organizations are often formed to serve a social cause and are tax-exempt. A good example of this type of organization is the Red Cross.
You will be held personally liable for your company’s obligations and liabilities if you opt not to register it as a business entity.
Open financial accounts and register your Montana business
Register your small business with Montana’s state and, if necessary, your city/regional government entity, using the business entity you chose (sole proprietorship, LLC, or corporation). To receive an employer identification number, go to the IRS website (EIN).
And, using all of your papers, open a company bank account. It’s a good idea to open a separate account specifically for business funds, even if you’re a sole proprietor. This will allow you to understand exactly what is going on financially and make necessary adjustments.
Consult a Montana insurance professional to determine what kind of protection your company requires.
Finally, check with your local municipalities to see if you need any licensing or zoning permits. Although Montana does not require a general Montana business license, it does require licenses for some businesses.
There are a few basic steps to follow no matter what formal business structure you choose, including:
Choosing a business name;
Choosing a registered agent: a person or company who accepts tax and legal documents on behalf of your company.
Obtaining an Employer Identification Number (EIN): an EIN is a number that the Internal Revenue Service (IRS) assigns to businesses to help them be identified for tax purposes.
Aside from these processes, each business structure has its own set of needs that are specific to it.
Forming a sole proprietorship in Montana
In Montana, sole proprietors are free to do business under their own names without filing any paperwork; but, if you want to use a business name other than your legal name, you must file an application for an assumed business name.
First, check the Montana Business Search tool to see if the name you want to use is accessible in the state. Then, go to the Montana Secretary of State’s website and fill out an Application for Registration of Assumed Business Name. To get started, you’ll need to create an ePass Montana account. This application has a $20 filing fee.
Registering an LLC or corporation in Montana
The initial step in incorporating an LLC or corporation in Montana, as in all 50 states, is to designate a registered agent to handle process notifications and other government correspondence on the company’s behalf.
Those with a physical address in the state can be their own registered agent, but for first-time business owners, employing a professional is cost-effective ($50-$200 each year). After that, conduct a search to ensure that your desired business name is available, and then file the necessary paperwork to incorporate your company in the state.
Articles of Incorporation must be filed to form a corporation, and Articles of Organization must be filed to form an LLC. Each document can be filed online after registering with ePass Montana, and the filing fee for both is $70.
Obtain federal and state tax identification numbers
Now is the time to get a Federal Employer Identification Number (EIN), which acts as a business’s social security number and allows you to open bank accounts, manage payroll, and submit taxes. An EIN is not necessary for sole proprietorships, however, it is required for corporations and limited liability companies.
Each state has its unique set of business rules and taxes. Certain Montana enterprises are compelled to pay state-mandated taxes. For more information, go to the Montana Department of Revenue. Create a tax account for your business and file taxes through the DOR Transaction Portal once you’re ready.
Open a company bank account and a credit card. It’s critical to open a bank account for your business since it helps you to separate corporate funds from personal assets and makes tax filing much easier. Even if you run a sole proprietorship, this is a recommended step.
Obtaining a credit card for your business is also a good option because it will help you separate business spending and develop credit for your company, which may aid in gaining investment in the future.
Get the required licenses and permits
You must follow federal, state, and local government requirements in order to legally operate your new firm. This frequently necessitates the acquisition of one or more business permits and/or licenses. A restaurant, for example, will almost certainly require health permissions, construction permits, etc.
Obtain insurance
In Montana, business insurance allows you to minimize risks while focusing on expanding your company. The following are the most typical types of company insurance to consider:
Insurance for General Liability;
Insurance for Workers’ Compensation;
Insurance for Professional Liability.
A general liability policy is recommended for all small enterprises, including home-based businesses. Professional liability insurance is often recommended for businesses that provide professional advice or services, such as consulting and accounting firms.
Workers’ compensation insurance is required by law in Montana for enterprises with one or more employees, including LLC members and corporate officers.
Insurance coverage is required if an employee is hurt or becomes ill on the job, workers’ compensation pays for medical expenses and disability payments. Unemployment insurance provides payments to workers who have lost their jobs through no fault of their own.
Insurance policies that are recommended include property damage, medical expenditures, libel, slander, and negligence claims which are all covered by professional liability insurance. Commercial property insurance protects the assets and properties of a company in the event of a fire, theft, or storm. Disability insurance pays out short-term payments to employees who are sick or injured.
