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Montana’s low cost of living, expanding industries, and friendly business tax climate—ranked fifth nationwide in 2022 by the Tax Foundation—have drawn notable in-migration over the past decade. While there are no major cities or airports in Montana—there’s also no sales tax, making it one of the most attractive places in the country to start a business. Whether you’re looking to launch a sole proprietorship, LLC, or corporation, the Treasure State deserves a close look.
Start a business in Montana
1. Choose a business idea
Successful businesses start with solid concepts. You might want to create an entirely new product or service or improve something that already exists. Doing market research during the business planning stage can steer you in the right direction before formally organizing your new company. As you brainstorm Montana business ideas, think about:
- Your potential customers. Consider how current market offerings aren’t fully serving customers. You may find value in conducting a market analysis—surveying prospective customers, and researching existing companies and industry trends.
- Your projected profitability. Your business’s survival depends on its ability to yield gains. It isn’t enough to make money—you need to earn more than you spend in the long run. Make sure your idea is feasible. Ask yourself: How many products or services do I need to sell to cover my costs and turn a profit? How long will it take?
2. Name your Montana business
Naming your business might be the most crucial decision you make as an entrepreneur. Your business’s name sends a message to potential customers. It offers hints about your product offerings, prices, and quality. Here are a few considerations when choosing a Montana business name:
- Consider an unconventional name. Rhyming, alliteration, and pop culture references can help you break through the din. Shopify’s business name guidelines can also assist you.
- Register an original name. Before registering a business name in Montana, be sure another business hasn’t already claimed it. You can look up existing names using the business entity search tool on the Montana Secretary of State website. Once you confirm your name is unique, fill out a Reservation of Name application for a filing fee of $10. Depending on your type of business, you may need to include a suffix. For example, LLCs in Montana must contain the phrase “limited liability company” or its abbreviations (“LLC” or “L.L.C.”). A Montana professional corporation’s name must include the words “Professional Corporation” or the abbreviation “P.C.” A Montana business corporation’s name must contain the word “Corporation,” “Company,” “Incorporated,” “Limited” or an abbreviation of those words.
- Register a DBA. DBA stands for “doing business as.” You can organize your business under one legal name but interface with customers under a DBA (an assumed business name). For instance, Danzler Medical and Dental Holdings LLC might operate as Kidz Cavity Clinics. Shopify breaks down the DBA process. To adopt a DBA in Montana, file the state’s Registration of Assumed Business Name (ABN/DBA) form for $20
- Reserve your name online. To make it easier for customers to find you, claim a domain name and social media handles that align with your business name or DBA. Try using a domain name generator to find the right URL for your business website, and check preferred social media platforms for available handles.
3. Create a business plan
A well-written business plan charts organizational objectives, projects growth, establishes metrics for success, and lays out financial plans that balance business income with business expenses. If you’re not sure where to start, browse through business plan templates and hypothetical business plan examples. Comprehensive business plans include:
- An executive summary
- A detailed company description
- An outline of the organizational and managerial structure
- Logistics and operations plans
- A list of products or services
- A market analysis
- Marketing plans
- A customer segmentation report
4. Choose a business structure
Your new business entity can take one of several forms. Entrepreneurs typically gravitate toward three types of legal entities: a sole proprietorship, limited liability company (LLC), or corporation. Each of these legal structures has benefits, operational requirements, filing requirements, and tax exposure. Here’s how they differ:
- Sole proprietorship. Sole proprietorships suit businesses owned and operated by a single person. There’s no legal distinction between business finances and the owner’s personal finances, meaning they can be personally liable for lawsuit judgments and debts related to their business. The upside is that sole proprietors have no legal paperwork requirements and keep all their business profits. Montana sole proprietorships traditionally appeal to small business owners who operate locally, have no employees, and are in low-risk industries.
- Limited liability company (LLC). A limited liability company is a legal business entity owned by LLC members. These members control company operations without the oversight of a corporate board of directors. The Internal Revenue Service (IRS) treats LLCs as pass-through organizations, meaning company profits pass through to members, who report them on their personal tax returns. Consider the LLC business structure as a way to obtain personal asset protection while avoiding the double taxation of a corporation. You can also form a limited liability partnership (LLP), which has a similar legal structure but applies to individuals sharing a joint professional practice, like a group of doctors or architects.
- Corporation. A corporation—or C corp—is a legal business entity owned by shareholders. Corporations don’t mingle company assets with owners’ personal assets, providing similar liability protections to LLCs. The corporate business structure makes it easier to raise capital for business expenses, welcome new shareholders, or sell the business to new owners. Corporations are taxed at a special corporate rate (6.75% in Montana) rather than the personal income tax rate and have a more complex legal structure with more formalized accounting systems and organizational governance. For example, Montana corporations must maintain corporate boards of directors, name corporate officers, and hold periodic meetings with official minute-keeping.
Incorporating in Montana
Montana requires new corporations to:
- File Articles of Incorporation. If your corporation or LLC is based in Montana, file Articles of Incorporation for Domestic Profit Corporation through the Montana Secretary of State’s online portal. The filing fee is $35. If your corporation is based outside Montana but wants to expand into the state, file Foreign Registration Statement for Foreign Profit Corporation through the same portal for $70.
- Designate a registered agent. Registered agents receive legal and tax correspondence on behalf of companies. They must have a physical address in Montana. The agent can be an owner or a designated registered agent service.
Obtaining a federal employer identification number (EIN)
Whether you operate as a sole proprietorship, LLC, or corporation, if your Montana business plans to hire employees, you must apply for a federal employer identification number (EIN) with the IRS for tax purposes. This nine-digit number is your business’s federal tax number and works much like a personal Social Security number (SSN). It also lets you set up a business bank account and secure lines of credit and business credit cards.
5. Obtain business licenses and permits
The Montana state government oversees professional licenses, i.e., a license to practice law, while counties and cities issue business licenses. Some businesses only require a general business license, while others, like mining or liquor operations, require a specialized license to do business legally. Montana’s Small Business Development Center (SBDC) provides an online licensing portal to connect you to the documents you need. Once you know the requirements, head to the Montana Department of Revenue’s one-stop licensing platform to acquire your licenses.
6. Examine business insurance options in Montana
Companies with built-in liability protection, like LLCs and corporations, can still benefit from insurance coverage. The Montana Commissioner of Securities and Insurance oversees the state’s insurance market. The Commissioner’s website offers resources for business owners seeking insurance coverage. All Montana businesses must purchase workers’ compensation insurance, regardless of their business structure. Small business owners are also strongly advised to carry other policies, including:
- Workers’ compensation insurance. You must obtain workers’ compensation insurance if your Montana business has employees. This insurance covers medical expenses and provides financial compensation for an injured employee. Workers’ compensation policies do not cover independent contractors.
- Commercial general liability insurance. Commercial general liability insurance (CGL) is a type of business insurance that protects your assets against claims of property damage, bodily injury, slander, libel, or misleading advertising.
- Professional liability insurance. Professional liability insurance protects your business against claims that your advice or services cause financial harm to a customer, patient, or client.
- Commercial automobile insurance. You must ensure vehicles in Montana. Whether you use your vehicle strictly for commercial purposes or use your personal vehicle on the job, you must purchase auto insurance.
- Unemployment insurance. Montana employers pay unemployment insurance tax, contributing to the state’s unemployment insurance fund for laid-off workers.
7. Understand financial considerations
Your Montana business needs a business bank account with a bank or credit union to obtain cash, issue and deposit checks, and receive payments. You can also apply for a business credit card, which extends your borrowing power. If your company has subsidiaries, each its separate legal entity, you can get bank accounts and credit cards for each subsidiary.
The Montana Department of Commerce offers resources about funding, grants, and special tax benefits to get your new business off the ground. For small business loan opportunities, contact the US Small Business Administration, which has two offices in Montana: the main office in Helena and another in Billings. Some entrepreneurs find value in merchant support services like Shopify Capital, which connect business owners with lenders and investors. Capital lending can help offset the many startup costs of setting up a company from scratch.
8. Market your business
The marketing process starts with building a brand and identifying what makes it unique. You can make your company stand out by using distinct color schemes, fonts, logos, slogans, or taglines. Once you’ve established your identity, explore ways to showcase your business online and in person, including:
- Awareness content (articles, blog posts, videos, newsletters)
- Pay-per-click web ads
- Social media accounts
- Influencer campaigns
- Store displays
- Traditional TV and radio ads
Starting a business in Montana FAQ
How much does it cost to register a business in Montana
It costs $35 to register a Montana-based LLC or corporation on the Montana Secretary of State’s online portal. If your business already exists in another state, use the same portal to register it as a foreign LLC or corporation and pay the $70 filing fee.
How much does it cost to register a business name in Montana?
Registering a business is one of the most affordable business costs. It costs $10 to fill out a Reservation of Name application on the Montana Secretary of State’s website.
Is Montana a good state to start a business?
The Tax Foundation claims Montana has the fifth-best tax climate in the nation, thanks partly to the lack of a state sales tax, which removes an obstacle to retail sales. Montana has also seen significant population growth in the past decade, expanding your potential customer base. Still, Montana remains sparsely populated and has no major cities or metropolitan areas. It might be a great place to launch your new business if you value space, affordability, and low taxes.