Choosing a Limited Liability Company is a solid business decision. LLCs are easily the most popular business structure, thanks in part to personal asset protection and additional tax benefits that you wouldn’t receive if you chose a corporation instead. But there’s a LOT of information to learn about LLC formation, and it can all be overwhelming. We’ll give you all the information you need in this comprehensive, but easy to digest, guide and answer all of your questions about formation times.
Discovering Montana
Montana is called “The Treasure State”. Back in around 1805, Meriweather Lewis, William Clark and Sacagawea came through the area, and people came to settle it shortly after. Somewhere around 50 years after it was settled, gold was found, and it spurred the “Gold Rush” of the late 1800’s where people flocked to the Western region of the United States in hopes of finding gold and getting rich.
Montana has borders with Idaho, Wyoming, North and South Dakota, and Canada. There are two geographic regions in the state, the rocky mountain region, which makes up the western ⅖ of the state. Obviously, this is a mountainous region, and it’s home to Granite Peak (the highest point in the state) and Glacier National Park which contains glaciers that are as much as 7,000 years old. The second geographic region is the Great Plains, which makes up the Eastern section of the state. This section contains rivers, valleys, grain fields, and hills. The Great Plains Badlands is in this region, which is mostly barren and it has these oddly shaped and colorful rock formations.
Of course, some of the biggest natural resources in Montana are gold, copper, silver, and sapphires. It’s one of the biggest producers of talk in the world, which is a type of mineral that’s a major ingredient in many types of cosmetics. But even bigger than the mining industry in the state is now petroleum.
Economic Overview of Montana
Montana’s GSP (Gross State Product) is $50.7 billion, and it had a 13.7k% growth rate from 2018-2023. The top five industries in the state by revenue are Petroleum Refining, Lotteries & Native American Casinos, Gasoline & Petroleum Bulk Stations, Hospitals, and Scientific Research & Development. The five companies that employ the most people in the state of Montana are Walmart Inc., Albertsons Companies, Inc, Montana State University, Logan Health, and Billings Clinic. And the sectors that contribute the most to the state’s GDP are Real Estate & Rental & Leasing, Healthcare & Social Assistance, Professional, Scientific & Technical Services, Retail Trade, and Manufacturing.
Business Environment in Montana
Montana ranks #6 for Economy according to Usnews.com, #32 in Business Environment, and #7 in both Employment and Growth. So, they have a high employment rate, and job growth is high in the state (1.8% as opposed to the national average of 0.2%). They received #20 for both Higher Education and Pre-K-12 education, so the workforce is reasonably educated.
The state has pretty good infrastructure, sort of. It’s #7 in Energy and #11 in Transportation. Only 12.7% of roads in the state are in poor condition (19% on average nationwide) and the average commute time is 19.1 minutes (25.6 national average). But for internet access? They got #41, which obviously isn’t great.
The most interesting section is the “Opportunity” section. It ranks #19 for affordability, but #31 in Economic Opportunity and #46 in Equality. Affordability makes sense because the Cost of Living Index in the state is 91.6 (the national average is 100.0), the median household income is $63,249 ($69,717 nationwide), and the poverty rate is 11.9%, below the national average of 12.8%. So, it’s generally affordable to live in the state, but it’s apparently difficult to do business in the state.
This may explain why. When it comes to Short-Term Fiscal Stability, the state ranks #11, but for Long-Term Fiscal Stability it was rated #28. That means that it’s easy enough to start and maintain a business in the state for a short time period, but not so much over the long term.
State-Specific Regulations and Incentives for Forming an LLC in Montana
Here’s a look at the incentives and programs in place to help new business owners in Montana.
New Industrial Property Tax Abatement: If you’re a manufacturing business that’s established a new location in Montana, you may qualify for a reduced taxable valuation rate of 3% on personal and real property for 3 years. In addition property that’s used for R&D is also eligible for a reduced taxable valuation rate of 3%.
Enterprise Data Center Class 17 Property Tax: You may qualify for Class 17 incentives if you own a data center that’s a minimum of 300,000 square feet and have made a minimum investment of $150 million, or at least 25,000 square feet in either a new or expanded area where the total cost (land, improvements, software and personal property) are at least $50 million. Data centers that qualify for these incentives have their property tax liability reduced by either 75% or by 50% of their taxable value during the first five years after the issuance of the construction permit, and it’s increased in increments until the full taxable value has been reached during the tenth year.
Grow Montana Jobs: This is an annual job creation credit applicable against state corporate and individual that’s applied from 2022-2028. It’s equal to 50% of the state’s FICA taxes that are paid by employers, multiplied by the number of new employees certified each year.
Reduced Rate for Remodeling of Building or Structures: This is an incentive that’s available for properties being remodeled, expanded or reconstructed which cause an increase to the taxable value of the property of at least 5%. Your project may qualify to receive a property tax exemption not only during the construction period, also up to 5 years after the construction is completed. These buildings and structures may also qualify for a property tax reduction for up to four years after the exemption.
Industrial Park Property Tax Exemption: If approved for this incentive, an industrial park that’s operated by either a port authority or local economic development organization could qualify for a local property tax exemption.
New or Expanded Industries Property Tax Abatement: If your business begins operations, or makes a minimum investment of $125,000 in improvements or modernized processes, it could qualify for a partial property tax abatement that lasts up to 9 years and is based on the increased taxable value that results from the improvements. During the first five years when the construction begins, the improvements and modernizing processes are taxed at between 25%-50% of their taxable value. Each subsequent year after that, those percentages are increased until it reaches its full taxable value during the 10th year.
Pros and Cons of Establishing an LLC in Montana
There are benefits to starting an LLC in Montana.
There’s a relatively low cost of living in the state. In particular, housing is out-of-this-world reasonable. Meanwhile, wages still compete with bigger cities. They’re not quite as high as the national average, but it’s within a few thousand dollars.
Businesses aren’t made to collect, or to pay sales taxes. That’s a massive benefit for many businesses. Plus, because of the low cost of living, it’s not terribly expensive for businesses to purchase property or to expand.
But, there are some downsides, too.
There are certain business costs that are really expensive. Healthcare insurance is expensive, and there aren’t many options. And when it comes to supply chains for your business supplies, transportation costs will be expensive. After all, Montana is a big state, and it costs money to get machinery and supplies from one end of it to the other, or from another state into Montana.
It’s not close to many major markets, which has an impact on everything from supply chains to purchasing power and even the number of consumers your business reaches. This also makes airline travel expensive.
Procedure of Establishing an LLC in Montana
The first thing you need to learn is how to form an LLC in Montana. This section will give you instructions on each step, starting with which documents you need to have before you file.
Necessary Documentation for Filing an LLC in Montana
Here are seven important documents you need to have onhand before you file for a Limited Liability Company.
Articles of Organization: The very first document you need to gather up is your Articles of Organization. It’s the main form involved with filing for an LLC, and it provides the Secretary of State with a lot of information about your new business. It will likely ask for your business name, purpose and duration, address, a list of LLC members and contact information for each member, if your LLC is member or manager-managed, and your registered agent’s information.
Operating Agreement: Full disclosure: an operating agreement isn’t a legal requirement for your LLC, but it’s highly advisable that you create one. It will likely become a go-to document for your business during its first year or so because it lists detailed information about how everything should run, who should do what, and how everyone gets paid. It should start off with general information about your business like its name, address, registered agent information, duration, and its formation date, followed by information about LLC members starting with a list that includes each member, their role, and contact information, the contribution of each member and their ownership shares, how profits and losses will be distributed, and compensation plans. It should also include information about managers, their voting rights, details about meeting schedules. And one of the most crucial sections of any operating agreement is instructions for how to add or remove a member, and what to do if a member should die.
Name Reservation Application: Unfortunately, declaring that you’re using a business name isn’t enough to make it legal. Once you’ve selected an available business name that meets all of the legal requirements of the state, you’ll be required to reserve it so that other businesses can’t use it, which is done by filing a Reservation of Name application with the Montana Secretary of State.
Employer Identification Number: An Employer Identification Number (EIN) is used by government agencies like the IRS to identify your business. You can use your EIN on tax and other government documents, and it comes in handy because you won’t have to use your Social Security Number the way you would if you were a sole proprietor. There are also certain business activities that require you to have an EIN, like hiring employees or opening a business bank account. To get an EIN for your LLC, just head over to the IRS website and apply for free.
Business Licenses: To do business in the state of Montana, you’ll need various business licenses and permits, both from the state and local government. You may also need to purchase specific types of insurance to legally operate in the state. You’ll need to inquire with the county clerk to find out which local business licenses you need, and you can check for licenses with the state here.
Tax Registration: You’ll need to check in with the Department of Revenue to find out if you need to register. You won’t have to collect sales tax, but you may need to register for other reasons.
Initial Report: Every LLC in Montana is required to file an Annual Report, which is in large part a document to update your business’s information with the Secretary of State, and to ensure that the state government has the right addresses and information on file for your business. The first Annual Report you file is called the “Initial Report”, and you need to submit it along with your Articles of Organization.
Legal Requirements for Starting an LLC in Montana
Here’s a step-by-step guide on how to start a Limited Liability Company in Montana.
- Get Your Articles of Organization: The first step on your journey to LLC formation is getting an Articles of Organization form. You can pick one up from the Montana Secretary of State.
- Choose Your Business Name: There are laws about business names, like you can’t use a name that another business is already using. To find out if someone is already using the name you want to use, run a search on the business directory on the Montana Secretary of State’s website. Once you’ve found a business name that’s available, that’s when you fill out your Reservation of Name form.
- Choose a Registered Agent: Every LLC in the state is required to have a registered agent, which is a legal term for someone who is your business’s official point of contact and therefore receives legal notices, service of process and mail from government agencies for your business. You’re allowed to choose someone you know to fill this role, like an employee or family member, but they have to meet the legal requirements like having a physical address. But for added security, you can hire a professional registered agent service instead.
- Choose Your Business Address: Your business address should be a decision that’s made carefully. It will be listed as public information so that the state government, law firms, other businesses, and customers can contact your business. That’s not good news if you intend to use your home address as your business address because you don’t want everyone in the state (and on the internet) to be able to find your home. If your business doesn’t have a physical address, you look into a virtual address or virtual office, or request to use your registered agent’s address.
- Sign and File Your Articles of Organization: After you check all of the information on the form for accuracy and make sure you have the correct number of copies, it’s time to sign and submit it to the Secretary of State. Signing the document yourself will list your information as the LLC Organizer for your company. If you’d like to keep your privacy, you can use an LLC formation service.
Time Frame for Establishing an LLC in Montana
This section of the guide will tell you everything you need to know to answer the question “How long does it take to get an LLC in Montana?”.
How Long Does the Initial Paperwork Take in the State of Montana?
It can take between 5-6 business days to get an LLC in Montana.
Processing Times in the State of Montana
There isn’t an option to file by mail in Montana. Processing times for online filing in Montana are between 5-6 business days.
Common Delays in the LLC Formation Process in Montana
Here are some of the most common delays in the formation process.
Processing Errors: If the website or network is down, that will cause some processing time delays. You’ll have no other option but to wait until the system is back up.
Issues with your Documents: The Secretary of State will reject applications with inaccurate or incomplete information. If that happens, you’ll have no choice but to go back and correct the errors and then re-submit them. This is why some LLC Formation services have a “100% Accuracy Guarantee”.
Timing: Since the Secretary of State only processes filings on business days, you don’t want to file on a weekend or holiday because you’ll experience a delay.
Expedited Processing for the LLC Formation in Montana
Any business owner who wants to have their LLC approved quickly should look into expedited LLC processing. Here’s what you need to know about expedited processing in Montana.
What Are the Expedited Options Available?
There are two expedited processing, but they’re only available if you file online. There’s a 24 hour “Priority” option, as well as a 1 hour “Expedited” option.
Additional Costs for Expedited Services in Montana
You’ve got to pay an extra fee for expedited services in addition to the state’s filing fee. For the 24 hour “Priority” processing it’s $20 extra, and for the 1 hour “Expedited” processing it’s $100 extra.
Comparing LLC Formation Time Frame in Montana with Other States
Here’s a look at the processing times in other states so you can understand how fast or slow Montana is.
Brief Comparison with Key States
Just as a refresher: Montana doesn’t have a mail filing option, processing time if you file online is 5-6 business days, and there’s both 24 hour and 1 hour expedited processing options.
You won’t get faster expedited processing options. But when it comes to online filing, Alabama, Alaska, Colorado, Kansas, Kentucky, Minnesota, Montana, New York, South Dakota, Tennessee, Wisconsin and Wyoming all have immediate processing. There are even fast options for mail filing, like Kentucky and Ohio which both have 1 day processing for mail filings.
We’re not going to compare other slow states for mail processing because Montana doesn’t offer it. But there are other states that have slow expedited processing, like Maryland where it takes 7 days, and Arizona where it takes 5 days. Alaska, Arkansas, Idaho, Indiana, Kansas, Kentucky, Mississippi, Missouri, Nebraska, New Mexico, Oregon, Rhode Island, Tennessee, Vermont and Wyoming all lack expedited processing options. And when it comes to online processing, Arizona’s processing takes 14-16 days, Texas takes 13-15 days, and Maryland takes 2 weeks.
Why is Montana a Favorable Place for Forming an LLC?
Montana is a good place to form an LLC because of its low taxes, low cost of living, and beautiful natural environment. Many business owners choose the state simply because they can get out and experience the outdoors through things like fishing and hiking through scenic locations during their downtime. On top of that, there’s a lot of support for small businesses in Montana. You’ll find that the low cost of living and low real estate costs will help your business survive its first few years, and might help you beat the odds to survive well beyond its first decade.
