How to start a Montana corporation

It might seem like a lot at first, but once you understand the steps, it’s very doable. This guide will walk you through everything you need to know to start your Montana corporation.

How to start a corporation in Montana

Incorporating means registering your business as a corporation so the law sees it as its own entity, separate from you. Each state has its own rules for how to do this, so the process can seem confusing. Let’s go through each step: 

1. Choose a name for your Montana corporation

Your corporation’s name should be unique and make a statement about your business. Make sure it complies with the following Montana requirements:

• Your name must include "Corporation," "Incorporated," "Company," "Limited," or an abbreviation of one of these words. Professional corporations must include the words "Professional Corporation" or an abbreviation.
• Your name must be distinguishable from all business names already registered or reserved with the state.
• Your name must not imply a business purpose other than that which is stated in its Articles or which is permitted under Montana law. For example, if your business sells office supplies, don't call it "Video Game World, Ltd."

Need help coming up with a business name for your corporation? Try the Rocket Copilot™ AI Business Name Generator, a free tool to help you brainstorm business names and get started registering your corporation.

2. Decide between a Montana S-Corp and C-Corp tax designation

There are similarities between a Montana S-Corp and a C-Corp regarding personal liability, management, structure, and compliance. The differences, however, come down to the following:

• Ownership Rules: A C-Corp has no limits on the number of share classes or shareholders it may have. An S-Corp is limited to one share class and not more than 100 shareholders. Also, all shareholders in an S-Corp must be United States citizens or legal residents.
• Taxes: A C-Corp is taxed as its own entity. It pays corporate taxes on money earned. Individual shareholders may also pay taxes on dividends they receive. An S-Corp does not pay corporate taxes on earnings. It's a "pass-through" entity. Earnings pass through to the owners, who then pay taxes on them on their individual returns.
• Documents: When you file as a corporation, you're automatically a C-Corp. To become an S-Corp instead, you must file IRS Form 2553, Election by a Small Business Corporation.

3. Appoint directors and shareholders for your Montana corporation

Each state has its own personnel requirements for incorporating. In Montana, your corporation must have at least one director. Montana does not have any age limits on directors or incorporators, and it does not require that directors live in the state.

State the number of your corporation's directors in either your Bylaws or your business's Articles of Incorporation. 

4. Choose a Registered Agent

A Registered Agent is the person or business responsible for receiving tax, legal, and government documents during regular business hours. It's important that every business has one. You can either serve as your own registered agent (if you have a Montana address) or choose one to do that service for you (if you are not located in Montana or would like an extra layer of privacy).

5. File your Articles of Incorporation with the state of Montana

Once you have a business name and registered agent, you can register your business as a Montana corporation with the state by filing your Articles of Incorporation. This document may be referred to informally as a corporation's "Articles," or in other states, it may be called a "Certificate of Organization," "Certificate of Filing," or "Certificate of Formation."

6. Get an Employer Identification Number (EIN)

Before opening your doors for business, apply to the IRS for an employer identification number, or EIN. All corporations with employees in Montana must have an EIN. An EIN is similar to your Social Security number, but it's for businesses. You'll also need an EIN to open your corporate bank account.

Congratulations! After you have completed all these steps, you have formed your Montana corporation.

What to do after incorporating in Montana

Montana requires that you create and maintain certain corporate records to maintain your corporate status:

• Bylaws: A corporation's Bylaws formalize its management, structure, operating procedures and other important considerations. All provisions in the Bylaws must be consistent with law and with your corporation's Articles of Incorporation.
• Meeting Minutes: All decisions and actions taken during shareholder and director meetings must be recorded as Corporate Minutes. These minutes must be maintained as permanent records. Three years of minutes must be kept at your business's principal office.

Neither document must be filed with the state, but should be stored with the rest of your important corporate documents. We have more detailed information about Montana's requirements for Bylaws and Corporate Meeting Minutes.

Still have questions? Learn more about how to start your own business with Rocket Lawyer and get started today!
 

Key takeaways Starting a corporation in Montana means following state rules, like choosing a unique name, filling out paperwork, and paying fees to make it official. One important choice is deciding how your corporation will be taxed in Montana, either as an S-Corp or a C-Corp. This affects how the business and owners pay taxes, and the differences between the two change from state to state. After forming the corporation, you are required to keep records like bylaws and meeting notes to stay in good standing with the state and prove your business is real and operating correctly.

Additional resources

Learning how to enforce a contract is just one step. Explore these additional topics to learn more and take the next steps.

• What is a corporation?
• What is an S-corporation?
• How are corporations taxed?
• How to start a corporation
• How to register a corporation by state