Here’s an overview of the key steps you’ll need to take to start your own business in Montana.
The most common legal structures for a small business are:
There also are special versions of some of these structures, such as limited partnerships and S corporations. You’ll want to consider which business entity structure offers the type of liability protection you want and the best tax, financing, and financial benefits for you and your business. Check Choose Your Business Structure on Nolo’s website for more information on how to choose the best ownership structure for your business.
For LLCs and corporations, you will need to check that your name is distinguishable from the names of other business entities already on file with the Montana Secretary of State (SOS). You can check for available names by doing a business entity search on the SOS website. You can reserve an available name for up to 120 days by filing a Reservation of Name Application with the Montana SOS. Name reservations cannot be renewed to extend the reservation.
There are certain name requirements for LLCs and corporations (like including a word such as “LLC” for LLCs or “Company” for corporations). See How to Form an LLC in Montana and How to Form a Corporation in Montana for more information.
Sole proprietorships and partnerships in Montana should file an the Application for Registration of Assumed Business Name with the Montana SOS if they use a business name that is different from the names of the business owner (for a sole proprietorship) or individual partners (for a partnership).
If you plan on doing business online, you may want to register your business name as a domain name. See Choose and Register a Domain Name for more information. In addition, to avoid trademark infringement issues, you should do a federal and state trademark check to make sure the name you want to use is not the same as or too similar to a name already in use. See How to Do a Trademark Search for more information.
Tax Registration. If you will have employees in Montana, you must register with the Montana Department of Revenue (DOR) for an employer withholding tax number. You can register online using the DOR’s Taxpayer Access Point (TAP) or on paper using Form GenReg, Registration/Application for Permit.
EIN. If your business has employees or is taxed separately from you, you must obtain a federal Employer Identification Number (EIN) from the IRS. Even if you are not required to obtain an EIN, there are often business reasons for doing so. Banks often require an EIN to open an account in the business’s name and other companies you do business with may require an EIN to process payments. You can get an EIN by completing an online application on the IRS website. There is no filing fee.
Regulatory licenses and permits. These cover areas such as:
For regulatory licenses and permits issued by the state, check the Licenses section of the Montana.gov website. For information about local licenses and permits, check the websites for any cities or counties where you will do business.
Professional and occupational licenses. These cover people who work in various fields. The Licenses section of the Montana.gov website has links to the licensing requirements for most professions.
You’ll need to pick a location for your business and check local zoning regulations. That includes if you work from home. You may be able to find zoning regulations for your town or city by checking municode.com.
Montana taxes every kind of business. See Montana State Business Income Tax for more information on state business taxes in Montana.
Sole proprietorships. Pay state taxes on business income as part of their personal state income tax returns (Form 2).
Partnerships. Partners pay state taxes on partnership income on personal tax returns. In addition, most partnerships also must file Form PR-1, Montana Partnership Information and Composite Tax Return.
LLCs. Members pay state taxes on their share of LLC income on personal tax returns. In addition, the LLC itself must file an annual report with the Montana SOS. Montana LLC’s taxed as corporations for federal tax purposes must also file a state corporation tax return. See Montana LLC Annual Report and Tax Requirements for more information.
Corporations. Shareholders must pay states taxes on their dividends from the corporation. A shareholder-employee with a salary also must pay state income tax on his or her personal state tax return. Moreover, the corporation itself is subject to Montana’s corporation license tax. Finally, corporations must file an annual reportwith the Montana SOS.
If you have employees, you must also deal with state employer taxes.
And, apart from Montana taxes, there are always federal income and employer taxes. Check IRS Publications 334,Tax Guide for Small Business, and 583, Taxpayers Starting a Business, available at irs.gov.
Insurance is a good idea for most kinds of business. While insurance often is regulated at the state level, the types of business insurance available are usually similar across the fifty states. Check Obtaining Business Insurance for more information.