If you own a business that was created in a state other than Montana, you will need to qualify or register that business in Montana if you want to do business there. Here is an overview of the rules on how to qualify your foreign (non-Montana) limited liability company (LLC) to do business in Montana.
For Montana purposes, if your LLC is formed in another state, then it is known as a foreign LLC in Montana. In other words, foreign doesn’t mean from another country. Instead, it means your business was organized under the laws of another state. A domestic LLC, on the other hand, is one that is formed in the state where it is doing business. This is common usage throughout the United States. For example, an LLC formed in Tennessee is a foreign LLC in Kentucky.
According to Montana’s LLC Act, you are required to register your foreign company with the state of Montana if you are “transacting business” in Montana. What does this mean? Well, like most states, Montana’s LLC Act does not specifically define what the phrase “transacting business” means in relation to foreign registrations.
However, state laws governing when foreign companies must collect state sales tax in their state provide some guidance on the issue. Under these laws, a business must have a physical presence in—or nexus with—the state in order to be required to collect state sales tax on sales to that state’s residents. Generally speaking, physical presence and nexus are synonymous, and mean having:
Certain exceptions may apply and the rules get more complicated with things like Internet sales. Nevertheless, in general, if you have an office, a store, a warehouse, or employees in another state, you will need to qualify your LLC as a foreign company in that state. For more details, including some possible distinctions between physical presence and nexus, check Nolo’s articles on Internet Sales Tax: A 50-State Guide to State Laws.
Like most states, Montana’s LLC Act specifies certain activities that do not constitute transacting business in the state. The items listed include:
The Act also states that the foregoing list is not exhaustive. For the actual legal description of each of the listed items, check Section 35-8-1001 of the Montana Code Annotated. If your LLC’s only activity in Montana is one or more of the listed items, you should not need to register with the state.
To register your foreign business in Montana, you must file a Certificate of Authority of Foreign Limited Liability Company Application. You can download a copy of the required form from the Montana Secretary of State website.
To complete the form, you must provide more or less the same information that you need to create an LLC in your home state. However, since every state is a little different, there may be items that Montana asks for that you did not need to provide when you first organized your LLC.
For a Montana Certificate of Authority, you need to provide:
The basic filing fee is $70.
If your LLC transacts business in Montana without a Certificate of Authority, it cannot bring a lawsuit in the state. Moreover, your LLC will be liable for a penalty of $5 per day, up to a maximum of $1,000 per year, for each day that it transacts business without a certificate of authority. However, not having a Certificate of Authority does not invalidate any of your LLC’s contracts or stop your LLC from defending a lawsuit in Montana.
If your business is organized as a corporation rather than an LLC, the rules and requirements for foreign qualification in Montana are similar. You will, however, have to use a different application form, Application For Certificate of Authority. See the Montana Secretary of State website for forms, information, and filing instructions.