How to Start an S-Corp in Montana


Steve Goldstein
Steve Goldstein
Business Formation Expert
Steve Goldstein runs LLCBuddy, helping entrepreneurs set up their LLCs easily. He offers clear guides, articles, and FAQs to simplify the process. His team keeps everything accurate and current, focusing on state rules, registered agents, and compliance. Steve’s passion for helping businesses grow makes LLCBuddy a go-to resource for starting and managing an LLC.

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Start an S-corporation in Montana

Montana, popularly known as The Treasure State, offers a bunch of benefits for business owners, especially the state capital Helena has a lot to offer to the rising entrepreneurs in the state. If you want to start a business in Montana, you must choose an appropriate corporate structure. You can have a corporation or a sole proprietorship or set up an LLC in Montana. There are a few guidelines that you should be aware of when it comes to starting an S-Corporation. In Montana, S-Corporation is businesses’ most common corporate structure, especially start-ups. It was developed in order to give companies limited liability protection while preserving the advantages of being a distinct legal organization.

In this article, you will learn about how to start an s-corporation in Montana. You will also learn whether an s-corporate business structure suits your business. Please read all the points carefully before starting your business in Montana.

What is an S-Corp in Montana?

An S corporation (S-corp) is not a type of corporate entity, unlike a limited liability company (LLC) or other business structures. It’s a tax classification that might result in significant financial savings for both corporations and LLCs but in different ways. S-corp is similar to LLC, except that the IRS treats it as a corporation for tax purposes.

If you want an S corp status for your business, you can always form an LLC to protect your personal assets from business debts. It takes some basic steps to have a successful s-corporation in Montana. S-Corps do pay corporate income taxes, but they are still treated as disregarded companies for federal tax purposes.

S-corps pay corporate taxes that LLCs do not have to pay. If you want to have an S-corp status, then we would recommend you have an LLC instead. This will protect your personal assets from your business liabilities and you don’t have to pay any corporate taxes.

–LLCBuddy Editorial Team

Limitation and Requirements of S-Corp in Montana

As you have decided to have an S-Corp structure for your business, you must know the limitations and requirements to qualify for S-Corp status. We have listed some important points to consider following for your reference-

  • Be a domestic corporation.
  • Not be an ineligible corporation, such as specific financial institutions, insurance providers, or domestic corporations engaged in overseas sales.
  • Have just one type of stock.
  • Have a maximum of 100 shareholders or members.
  • Have only permitted individuals, certain trusts, and estates as stockholders or members.

If you are qualified for the limitations and requirements, you can apply for an S-Corp in Montana.

How to Start an S-Corporation in Montana?

To create S-Corp in Montana, you must follow the below guidelines that include forming a business name, hiring a Registered Agent, filing your Articles of Organization, creating an operating agreement in Montana, requesting an EIN, filing a form 2553.

Step 1: Register a Business Name in Montana

After you have decided on the idea to start an S-Corp in Montana, deciding the name for your corporation is significant. Legal procedures should be taken into account when choosing your partnership name. Choose a business name that will enable you to develop a strong brand identity.

If you want to set up an LLC, there is a complete guide on Montana LLC name guidelines for a proper LLC name. Here are some guidelines you must follow while naming your S-corp.

  • Avoid profanities
  • The name should be available, and no other entity should have the same name in Montana.
  • Limit of restricted words that need a license in Montana, for example, doctors, attorneys, etc.
  • Do not use a business name that sounds like a government agency or entity (like “police,” “county,” and “state”)

Step 2: Hiring the Montana Registered Agent

The next step in starting an S-corp in Montana is hiring a Montana Registered Agent, a person that accepts legal paperwork on behalf of your business. This person or business will receive important tax forms, legal documents (such as subpoenas), all notices of lawsuits, and other official government correspondence in Montana. Forming an LLC and an S-corp will be easier if you have Registered Agent in Montana.

Step 3: File Your Montana Articles of Organization

The Articles of Organization is an important document to start your limited liability company (LLC). Montana Articles of Organization is a simple document that contains the business name and address as well as the name and address of the person who received lawsuits on behalf of the organization. In order for the “Articles of Organization” to be filed, you need to pay a filing fee to the state. In Montana, the filing fee is $70.

In California, along with the Articles of Organization, you must send the Statement of Information to file your company. The statement of information is a mandatory document in California, but other states do not have this document.

Step 4: Creating an Operating Agreement in Montana

After you have filed your Articles of Organization in Montana, the next step is to create an LLC operating agreement in Montana. The Montana LLC operating agreement is essential and necessary since it will cover your corporation’s important documentation and rules. The operating agreements usually include the following-

  • Article I: Organization
  • Article II: Management and Voting
  • Article III: Capital Contributions
  • Article IV: Distributions
  • Article V: Membership Changes
  • Article VI: Dissolution

After creating the LLC operating agreement, you can benefit in several ways since it will discuss how decisions for the business will be made, including management and member voting structure. For more details about how an operating agreement works, please check Operating Agreement.

Step 5: Request for EIN in Montana

After documenting the operating agreement, you should get or request an Employer Identification Number (EIN). An EIN will serve as the tax ID for your general partnership. EIN can be obtained from the Internal Revenue Service (IRS). It is a 9-digit number similar to Social Security Number. EIN, however, is distinct from SSN. It is only used for business-related activities, particularly for submitting general taxes. The form must be completed and uploaded to the IRS website.

The application of an EIN in Montana can be through the following:

  • Apply Online- You can apply for EIN online, the most desirable and fastest method for users.
  • Apply by Fax- Another method of obtaining EIN is to fax Form SS-4 (PDF) after entering all the correct information to (855) 641-6935.
  • Apply by Mail- The EIN application Form SS-4 can be filed via mail. The processing time frame to receive the mail is 4 weeks.
  • Apply by Telephone-International Applicants – International applicants may call 267-941-1099 (not a toll-free number) from 6 a.m. to 11 p.m. (Eastern Time) Monday through Friday to obtain their EIN.

If you would like to be assisted in getting an EIN in the Internal Revenue Service, we can get your EIN for you. Our EIN service is quick and hassle-free. For more details about EIN for your business, check why you need EIN.

Step 6: File Form 2553 for Your S-Corp Business in Montana

Once you have obtained your EIN and Articles of Organization to form an S-Corp, you must file Form 2553, Election by a Small Business Corporation, to apply for S-corp status. Filing a form 2553 should be done 75 days after the formation of your S-Corp, or not more than 75 days after the beginning of the tax year in which the election is to take effect.

If your LLS-Corp has passed the deadline of 75 days, you must also file Form 8832, Entity Classification Election, in order to opt to be taxed as a corporation. Then you would send Form 2553 and Form 8832 jointly by certified mail from the USPS. In Montana, you can send your form 2553 to the Department of the Treasury Internal Revenue Service Center – Ogden, UT 84201 Fax: 855-214-7520 .

Advantages of Starting an S-Corporation in Montana

Filing an S-Corp in Montana has numerous benefits and advantages.

  • Writing Off Losses: With S-corp, owners can deduct business losses from their individual income statements. If the company loses money in the first few years, it may balance its other sources of revenue. Even so, understand the shareholder loss limitations set by the IRS.
  • Pass-Through Taxation: Starting an S-Corp is the widely known advantage in forming this kind of business structure since an s-corp uses a pass-through taxation structure. The company does not pay twice the tax in this kind of taxation. Because of this structure, most start-ups and entrepreneurs in Montana apply for an S-Corp LLC.
  • Qualified Business Income Deduction: A qualified business income, or QBI, is the total of all qualified items of income, gain, deduction, and loss from any qualified trade or business, including S-Corp. With this, S corp owners may deduct up to 20% of their eligible earnings under the Tax Cuts and Jobs Act.

FAQs

What are the requirements to start an S-Corp in Montana?
To form an S-Corp in Montana, you must first choose a name that is distinguishable from any other entity registered with the Montana Secretary of State. Additionally, you must register with the Montana Department of Revenue and obtain an employer identification number (EIN). You must also appoint a registered agent in Montana and file the Articles of Incorporation with the Secretary of State.
How long does it take to form an S-Corp in Montana?
It usually takes about one to two weeks for the Montana Secretary of State to process the Articles of Incorporation and issue the Certificate of Incorporation.
What documents do I need to form an S-Corp in Montana?
You will need to file Articles of Incorporation with the Montana Secretary of State, register with the Montana Department of Revenue, and obtain an employer identification number (EIN).
How much does it cost to start an S-Corp in Montana?
The filing fee to form an S-Corp in Montana is $70. Additionally, you may need to pay a fee to the Montana Department of Revenue and to the IRS to obtain an EIN.
Are there any annual reporting requirements for a Montana S-Corp?
Yes, Montana S-Corps must file an annual report with the Montana Secretary of State by April 15th each year.
Can I form an S-Corp in Montana without hiring a lawyer?
Yes, you can form an S-Corp in Montana without hiring a lawyer. However, it is strongly recommended that you consult with a qualified attorney to ensure that you meet all of the necessary requirements and understand your obligations as an S-Corp owner.
Does an S-Corp in Montana need to have an operating agreement?
Yes, an S-Corp in Montana must have an operating agreement in place. The operating agreement should outline the ownership, management, and operations of the company, and it should be signed by all owners.
Do I need to pay taxes in Montana as an S-Corp owner?
Yes, S-Corp owners in Montana are responsible for paying state and federal income taxes on their profits. Additionally, the S-Corp itself may need to file a Montana state corporate income tax return.
What is an S-Corp in Montana?
An S-Corp in Montana is a type of business entity that combines the benefits of a limited liability corporation and a partnership. It provides limited liability to its owners and offers the potential for tax savings through pass-through taxation.
How do I form an S-Corp in Montana?
To form an S-Corp in Montana, you must file Articles of Incorporation with the Montana Secretary of State, appoint a registered agent to receive legal documents, hold an initial meeting of the directors, create corporate bylaws, issue stock certificates and obtain an Employer Identification Number from the IRS.
How much does it cost to form an S-Corp in Montana?
The cost to form an S-Corp in Montana is $70, which is the fee to file Articles of Incorporation with the Montana Secretary of State.
What are the benefits of forming an S-Corp in Montana?
The benefits of forming an S-Corp in Montana include limited liability protection for its owners, potential tax savings through pass-through taxation, and the ability to attract investors and raise capital.
What types of businesses can form an S-Corp in Montana?
Any type of for-profit business, including corporations, LLCs, and partnerships, can form an S-Corp in Montana.
Do I need a lawyer to form an S-Corp in Montana?
You do not need to hire a lawyer to form an S-Corp in Montana, but it is highly recommended to consult with a lawyer or tax professional to ensure that you are in compliance with applicable laws and regulations.
What is the legal process for forming an S-Corp in Montana?
The legal process for forming an S-Corp in Montana includes filing Articles of Incorporation with the Montana Secretary of State, appointing a registered agent to receive legal documents, holding an initial meeting of the directors, creating corporate bylaws, issuing stock certificates and obtaining an Employer Identification Number from the IRS.
What are the requirements for an S-Corp in Montana?
The requirements for an S-Corp in Montana include filing Articles of Incorporation with the Montana Secretary of State, appointing a registered agent to receive legal documents, holding an initial meeting of the directors, creating corporate bylaws, issuing stock certificates and obtaining an Employer Identification Number from the IRS.
What are the filing requirements for an S-Corp in Montana?
The filing requirements for an S-Corp in Montana include filing Articles of Incorporation with the Montana Secretary of State, appointing a registered agent to receive legal documents, holding an initial meeting of the directors, creating corporate bylaws, issuing stock certificates and obtaining an Employer Identification Number from the IRS.
Is an S-Corp in Montana subject to state taxes?
Yes, an S-Corp in Montana is subject to state taxes. An S-Corp must file a Montana corporate income tax return and pay taxes on any income it earns in the state.
Are there any other taxes that an S-Corp in Montana must pay?
Yes, an S-Corp in Montana may be subject to business license taxes, excise taxes, and sales taxes.
Do I need a business license to form an S-Corp in Montana?
Yes, you need a business license to form an S-Corp in Montana. You should contact your local county or city government to obtain the necessary license.
How long does an S-Corp in Montana remain in good standing?
An S-Corp in Montana remains in good standing as long as it continues to comply with all applicable state laws and regulations.
What happens if an S-Corp in Montana does not comply with state laws and regulations?
If an S-Corp in Montana does not comply with state laws and regulations, it may be subject to fines, penalties, or even dissolution.
Is an S-Corp in Montana required to hold annual meetings?
Yes, an S-Corp in Montana is required to hold annual meetings. At these meetings, the directors must review the company’s financial statements, approve the minutes of previous meetings, and discuss other topics as necessary.
What records must an S-Corp in Montana keep?
An S-Corp in Montana must keep records such as minutes of all meetings, financial statements, and stock certificates.
What is the process for dissolving an S-Corp in Montana?
The process for dissolving an S-Corp in Montana includes filing a Certificate of Dissolution with the Montana Secretary of State, notifying creditors and settling debts, and distributing assets to shareholders.
Does an S-Corp in Montana need to file annual reports?
Yes, an S-Corp in Montana is required to file an annual report with the Montana Secretary of State.
Do I need to pay an annual fee to maintain an S-Corp in Montana?
Yes, an S-Corp in Montana must pay an annual fee of $20 to the Montana Secretary of State to remain in good standing.
Are there any restrictions on the types of activities an S-Corp in Montana can engage in?
Yes, an S-Corp in Montana is subject to certain restrictions on its activities, such as the inability to issue stock, pay dividends, or conduct certain types of business activities.
What happens if an S-Corp in Montana fails to pay taxes or fees?
If an S-Corp in Montana fails to pay taxes or fees, it may be subject to fines, penalties, or even dissolution.
Are there any zoning or land use restrictions on an S-Corp in Montana?
Yes, an S-Corp in Montana may be subject to zoning and land use restrictions depending on its location.
Can I change the name of an S-Corp in Montana?
Yes, you can change the name of an S-Corp in Montana by filing an amendment to the Articles of Incorporation with the Montana Secretary of State.
What happens if I want to move my S-Corp in Montana to a different state?
If you want to move your S-Corp in Montana to a different state, you will need to file Articles of Domestication with the new state and officially dissolve the S-Corp in Montana.
Are there any other special considerations for an S-Corp in Montana?
Yes, an S-Corp in Montana must comply with a variety of other laws and regulations, such as employment laws, environmental laws, and intellectual property laws.

Also Read

Why Montana S Corporation is So Important

One of the primary reasons why Montana S Corporation is so important is its taxation benefits. Unlike C Corporations, S Corporations are not subject to double taxation, where the corporation’s profits are taxed at the corporate level and then again when shareholders receive dividends. Instead, S Corporations are considered pass-through entities, meaning that profits and losses are passed through to the shareholders and reported on their individual tax returns. This can result in significant tax savings for small business owners, as they only pay taxes at the individual level.

Furthermore, S Corporations enjoy limited liability protection, similar to C Corporations. This means that shareholders are not personally liable for the corporation’s debts and legal obligations. In the event of a lawsuit or bankruptcy, the personal assets of the shareholders are typically protected. This protection can provide peace of mind for business owners and encourage them to take calculated risks to grow their business.

Another advantage of Montana S Corporations is the ability to easily transfer ownership. Since ownership interests in S Corporations are divided into shares of stock, it is relatively straightforward to sell or transfer shares to new investors or family members. This flexibility can help attract investors and facilitate the transfer of ownership as the business grows and evolves.

Additionally, S Corporations have fewer restrictions on who can be a shareholder compared to other types of corporations. For example, S Corporations can have up to 100 shareholders, and shareholders can be individuals, certain trusts, estates, and certain tax-exempt organizations. This flexibility allows small businesses to raise capital and bring in new partners without sacrificing the numerous benefits of an S Corporation structure.

Furthermore, S Corporations are not required to hold annual meetings or keep detailed minutes like C Corporations, reducing administrative burdens and costs for small businesses. This simple and straightforward administrative process can free up valuable time and resources for business owners to focus on running and growing their businesses.

In conclusion, the Montana S Corporation is an attractive option for small business owners looking to take advantage of tax benefits, limited liability protection, easy ownership transfer, flexibility in shareholders, and minimal administrative requirements. By choosing the right legal structure for their business, business owners can set themselves up for long-term success and growth.

Conclusion

In conclusion, starting an S-corp in Montana is a strategic choice for entrepreneurs seeking the benefits of limited liability and favorable tax treatment. One can successfully establish an S-corp by following the outlined steps, including selecting a unique name, filing the Articles of Incorporation, obtaining necessary licenses, and adhering to state-specific regulations. Ultimately, this corporate structure offers a strong foundation for business growth and protection, making it a worthwhile consideration for those looking to launch a venture in Montana.

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