Start Your Own Business in Montana: Seven Steps You Need to Take

From licenses and permits to taxes and insurance, learn what you need to do to start a business in Montana.



Here’s an overview of the key steps you’ll need to take to start your own business in Montana.

Step 1. Decide on a Legal Structure

The most common legal structures for a small business are:

  • sole proprietorship
  • partnership
  • limited liability company (LLC), and
  • corporation.

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.

Step 2. Choose a Name

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.

Step 3. Create Your Business Entity

  • Sole proprietorship:  To establish a sole proprietorship in Montana, you don’t need to file any organizational documents. For more information, see  How to Establish a Sole Proprietorship in Montana.
  • Partnership:  To create a general partnership in Montana, you don’t need to file any organizational documents with the state. Although not legally required, all partnerships should have a written partnership agreement. The partnership agreement can be very helpful if there is ever a dispute among the partners. For more information, see  How to Form a Partnership in Montana.  To form a  limited liability partnership(often used by professionals), you must file a Registration form with the Montana SOS. For more information, see  How to Form a Limited Liability Partnership in Montana.
  • LLCs:  To create an LLC in Montana, you must file  articles of organization  with the Montana SOS. You will also need to appoint a  registered agent  in Montana for service of process. In addition, while not required by law, you also should prepare an  operating agreement  to establish the basic rules about how your LLC will operate. The operating agreement is not filed with the state. For more information, see  How to Form an LLC in Montana  and  How to Form a Professional LLC in Montana  (for professionals).
  • Corporations:  To create a corporation in Montana, you must file  articles of incorporation  with the Montana SOS. You will also need to appoint a  registered agent  in Montana for service of process. Although not legally required, you also should prepare  bylaws  to establish your corporation’s internal operating rules. Bylaws are not filed with the state.  S Corporations  must also file IRS Form 2553,  Election by a Small Business Corporation,  with the IRS. For more information, see  How to Form a Corporation in Montana.

Step 4. Licenses and Permits

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:

  • health and safety
  • the environment
  • building and construction; and
  • specific industries or services.

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.

Step 5. Business Location and Zoning

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.

Step 6. Taxes and Reporting

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.

Step 7. Insurance

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.

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