If you want to start and run a Montana limited liability company (LLC), you'll need to prepare and file various documents with the state. This article covers the most important ongoing reporting and state tax filing requirements for Montana LLCs.
The State of Montana requires you to file an annual report for your LLC. The due date for the annual report is April 15. The annual report fee is $15 if filed by the due date. (The fee for reports filed after April 15 is $30.)
You can file the annual report online or request a paper report form. You can access the online form using either your business name or your LLC's state-issued folder ID number. Only a few pieces of information, such as a current list of your LLC's managers or members, the LLC's principal office address, and the name and address of the LLC's registered agent or registered office, are required to complete the statement.
When it comes to income taxes, most LLCs are so-called pass-through tax entities. In other words, the responsibility for paying federal income taxes passes through the LLC itself and falls on the individual LLC members. By default, LLCs themselves do not pay income taxes, only their members do. Some states impose a separate tax or fee on LLCs for the privilege of doing business in the state. Montana, though, is not one of those states.
However, in some cases, the owners of an LLC choose to have their business treated like a corporation for tax purposes. This choice is made by filing IRS Form 2553 with the IRS. (See the IRS website for the form.) Unlike the default pass-through tax situation, when an LLC elects to be taxed as a corporation, the company itself must file a separate tax return. The State of Montana, like almost every other state, has a corporate income tax. In Montana, the corporate tax generally is calculated at a flat 6.75% of net income earned in Montana (there are also other ways of calculating the tax). If your LLC is taxed as a corporation you'll need to pay this tax. The state's corporate income tax return (Form CLT-4) is filed with the Montana Department of Revenue (DOR). For more details, check Nolo’s article, 50-State Guide to Business Income Tax, or the DOR website.
Does your LLC have employees? If so, you'll need to pay employer taxes. Some of these taxes are paid to the federal government (the IRS) and are not covered here. (But note that federal employer tax obligations start with obtaining a federal employer identification number (EIN).) However, Montana employers also must pay taxes to the state.
First, you'll need to withhold and pay employee income taxes to the DOR. Begin by registering yoru business with the DOR on paper (Form GenReg) or online through Montana's Taxpayer Access Point (TAP). Once you've registered, you'll need to file withholding taxes on a periodic basis . You'll also need to use Form MW-3 each year to reconcile your LLC's tax withholding. For more information, check the DOR website.
In addition, you'll probably need to register to pay state unemployment insurance (UI) taxes. These taxes are handled through the Montana Department of Labor & Industry (DLI). You can register online or on paper (Form UI-1). Then you'll need to file quarterly reports using Form UI-5. For more information about how to pay these taxes, check the DLI website.
Montana currently is one of just five states that does not charge sales tax. Consequently, unlike LLCs that sell goods in most other states, if your LLC sells goods in Montana you don't need to worry about paying sales tax to the state.
If you will be doing business in states other than Montana, you may need to register your LLC in some or all of those states. Whether you're required to register will depend on the specific states involved: each state has its own rules for what constitutes doing business and whether registration is necessary. Often activities such as having a physical presence (a business location) in a state, hiring employees in a state, or soliciting business in a state (such as by telephone, print ads, mail, or the Internet) will be considered doing business for registration purposes. Registration usually involves obtaining a certificate of authority or similar document.
For more information on the requirements for forming and operating an LLC in Montana, see Nolo’s article, 50-State Guide to Forming an LLC, and other articles on LLCs in the LLC section of the Nolo website.