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An LLC (limited liability company) is a business structure that helps new entrepreneurs start a company. By operating through an LLC, you can efficiently manage your assets just for some minuscule fees.
Setting up your LLC in Montana can have various advantages. Firstly, it can help you avoid double taxation. Moreover, the owner of an LLC gets the protection known as the corporate veil to prevent their assets from being liable in case of company debt.
Before you jump into forming an LLC, you must understand the concept properly and know the legal protocols. This article will explain the concept and the benefits of a Montana LLC. Moreover, it will walk you through the process of opening your very first LLC.
Limited liability is a legal structure in which the organization is protected by law. In the event of a debt organization, the partners or the owner are only responsible for bearing a loss of the amount invested in the firm.
Generally, limited liability is granted to the shareholders of a public business entity in the case of partnership. Most participants can have limited liability as long as one person assumes the unlimited liability.
In the case of a personally run business, the business has to be registered as a separate legal entity from its owner to benefit from limited liability. Moreover, this separates the owner’s personal assets into corporate assets, and this separation of the personal and business entity is the corporate veil.
Businesses operating under the corporate veil are called LLCs or limited liability companies.
You should have a decent idea of what an LLC is by now. So now, we will look at the various types of LLCs.
Just as the name implies, a single-member LLC has a single owner. This structure is comparable to a sole proprietorship because the owner is directly liable for:
A general partnership is an appropriate structure for a multi-member LLC. In this structure, all of the company’s transactions, responsibilities, and taxes are personally accountable to all owners.
Moreover, each member can determine when assets are sold and are accountable for paying taxes on their share of the business revenue.
A family limited partnership structure is similar to a limited partnership, except that family members hold it. Families typically create an LLC as a limited or general partnership and invest their property in it.
A restricted LLC is a limited liability corporation that you can currently form exclusively in Nevada. Due to the restrictive nature of the Articles of Organization for this sort of LLC, there is a 10-year waiting period before LLC members can earn company profits after establishment.
L3C organizations are for-profit businesses that have a philanthropic aim. Moreover, these companies have many of the same tax benefits as a limited liability company while also providing the prestige of a non-profit organization and the marketing strategies associated with a social business.
Anonymous LLCs are companies whose ownership information is not publicly known. Only New Mexico now allows the formation of a completely anonymous LLC.
Most people lack a long-term vision when starting a new business. Uncertainty creates a risk that you cannot accurately assess at the very beginning.
A Montana LLC can help you minimize that future risk by limiting the amount of asset investment. At the same time, it limits your liabilities to the corporate entity instead of your personal assets.
Owning an LLC in Montana provides you with some key advantages.
Setting up a Montana LLC is an easy five-step process. Let’s see how to go through the steps.
Due to trademark and licensing, two companies can’t have the same name. So you’ll need to search the Montana Business Database to ensure that your business name is unique.
In the case of a Montana LLC, there are some guidelines you must follow. Let’s take a look at them.
If you find the naming convention hard to follow, you can easily use online applications such as LLC Name Generator to find the name that best suits your business.
To run a business in Montana, you need to have a registered agent. The agent is an individual or business entity that will do legal processing and accept state-mandated documents on behalf of your company.
The registered agent you will pick for your LLC must be a resident citizen of Montana or work under a business entity legally authorized to offer this kind of service in the state.
As a result, selecting a registered agent can often sound very cumbersome and expensive. But for Montana LLCs, you can hire a registered agent for less than 50$ a year.
When you officially register your Montana LLC, you must fill up and submit the Articles of Organization to the Secretary of State. You can also submit the files online.
To file the documents, you will need to make a one-time non-refundable payment of $70 to the Secretary of State. You should also look at these pieces of information carefully as you complete the legal paperwork:
An operating agreement refers to a legal document that outlines the LLC’s ownership and explains the management structure.
Despite not being a legal requirement, having an Operating agreement can give you advantages in running the operation. It will give your organization operational transparency. Moreover, this greatly reduces any chance of internal conflict among the business partners and other members.
As it is not a necessary legal agreement, you don’t need to file the documentation to any regulatory bodies. This is only an internal document kept for reference in case of an internal dispute.
Employee Identification Number (EIN) is a 9-digit number provided by the Internal Revenue Service (IRS) that allows them to identify your firm for tax and other legal purposes.
Getting an EIN is a relatively straightforward process as the IRS provides it free of charge. So all you have to do is apply.
Visit this website to apply online for the EIN. You can also apply for your EIN through fax or snail mail.
If you are opening a Montana LLC for the first time, you might face a few questions. Here are the answers to some common questions new entrepreneurs have.
The Montana Articles of Organization are $70 to file and will take 7-10 business days to process unless you pay an extra $20 (24 hours) or $100 (1 hour) for expedited processing.
Before filling out the legal forms, decide whether members or a manager will govern your LLC. The former is practical if your LLC has a modest number of members. In contrast, the latter works better in a large LLC with many members.
A member-managed LLC is one in which the administrative functions are distributed among the members. Members are willing to put in the effort and participate actively in daily decision-making.
Manager-managed LLCs delegate decision-making authority to a limited group of managers. This structure facilitates more centralized management.
Yes. Individuals or other businesses can be members of a Montana LLC. You have complete control.
Yes! Your Montana LLC will have the same rights and advantages as a resident of Montana and will not have to pay sales tax.
A lawyer is not required to form a Montana LLC. Registered agents and agencies can assist you with the legal aspects of your LLC registration. As a result, you won’t need to hire a lawyer.
The Secretary of State will process your papers and issue you your EIN within 7-10 business days. You can also pay an extra $20 for 24-hour processing or $100 for 1-hour processing to speed up the procedure.
You don’t need a general business license in Montana. However, some enterprises will be required to seek a license. If you want to work as an independent contractor, it will cost $125 for a Montana Independent Contractor License.
Terms such as limited liability might confuse you when you start your first business, and you may think it is a very daunting and complicated process. But once you get to know the process, you realize how straightforward it can be.
If you are still facing some problems, feel free to ask for help from any approved agencies. Agencies take care of most legal procedures, minimize paperwork, and save you a considerable amount of time when starting a new business.