Articles of Organization

Getting your Montana LLC up and running means that you must file articles of organization with the Montana Secretary of State, along with the $70 filing fee. The articles of organization and a copy for the new LLC must be executed (signed) by at least two organizers. The articles must include:

• The LLC's name
• Each organizer's name and address
• The purpose(s) for which the LLC is organized, which may be "any or all lawful business for an LLC"
• The period of the LLC's duration, which may be "perpetual" or for a set period
• If not perpetual, the events that would trigger a dissolution of the LLC
• The address and county of the LLC's initial registered office
• The name of the LLC's initial registered agent there
• Whether the company will be manager-managed or member-managed

The articles can also contain other items that the members desire to include (so long as they don't conflict with state law), even if they are also included in the operating agreement.

Your LLC has achieved officially "organized" status once an original and one copy of the articles of organization are received by the Montana Secretary of State's office with the filing fee. The articles are effective as of the date and time filed, unless some other effective date is specified.

Registered Agent and Office

Montana LLCs are required to have a registered in-state agent who is designated to receive official administrative and legal correspondence from the state. The registered agent can be an individual Montana resident whose business office is the same as the registered office, or it can be a business entity authorized to do business in the state.

The registered office may be (but doesn't have to be) the LLC's place of business.

Operating Agreement

Almost as critical for the new Montana LLC as the articles of organization is the operating agreement. The state doesn't officially require your LC to have this-but it's a critical internal document that officially documents how your LLC will operate on both a day-to-day and a strategic basis.

The operating agreement should name the members, specify how much each member has invested, explain how profits will be divided, and state how much proportional "weight" each member has when issues are voted upon. If there is more than one member, the operating agreement must initially be approved unanimously in writing by the members. The agreement can be amended in the manner specified by the agreement itself, or in a manner permitted by state law.

The operating agreement may also set forth meeting requirements such as the amount of required notice, what constitutes a quorum, voting rules, and so on, but it doesn't have to. Frequently, however, the operating agreement includes requirements for the LLC already listed in state law and regulations. It can also include such items as restrictions or constraints on the power of the members to adopt, amend, or repeal the operating agreement.

Membership in the LLC

An LLC is required to have one or more members; each member must be either a natural person (not a business entity). Members may become a member of or acquire an interest in the LLC when it is first started (by signing the initial operating agreement), or upon the unanimous approval of the LLC's voting members.

To join the LLC, the prospective member usually needs to make a contribution of some kind-for instance, pay cash or transfer property to the LLC-or take a binding obligation to do so. However, a member may be admitted to the LLC without acquiring a membership interest if the articles of organization and/or operating agreement permit it, or if the members vote to do so and the admission is documented in the LLC's records.

An LLC member can only resign in accordance with applicable provisions in the articles of organization and/or the operating agreement. One or both of these documents will also usually state the minimum amount of time a member can maintain membership before being allowed to resign. LLCs can pursue remedies for damages suffered by the organization that result from a member's resignation.

Unless otherwise specified in the articles of organization or operating agreement, managers are elected for an indefinite term, and are removed and replaced by the consent of more than one-half the members.

Ongoing Requirements

Each Montana LLC must file a report annually with the Secretary of State that includes the following:

• The LLC's name and the state or country where it was organized
• The street address (and mailing address if different) and county of the LLC's registered office in Montana
• The name of its registered agent there
• A statement of any change of the registered office or registered agent, or both
• The address and telephone number of the LLC's principal office
• The names and addresses of the LLC's managers or, if the LLC had no members, its organizers
• A brief description of the nature of the LLC's business

If the information contained in the most recently filed annual report has not changed, a certification to that effect may be made instead of detailing the information required in the annual report.

Additionally, each LLC must keep these kinds of records available at its office for review or inspection:

• A list of the full name and address of each member, each governor, and the president
• A list of the names and addresses of each assignee of financial rights other than a secured party and a description of the rights assigned
• A copy of the articles of organization and any amendments
• Copies of any currently-effective written bylaws
• Copies of the LLC's federal, state, and local income tax returns and reports, if any, for the past three years
• Financial statements required by state law
• Records of all members' proceedings for the last three years
• Records of all board proceedings for the last three years
• Reports made to the general membership within the last three years
• A statement of all member contributions and explanations of any restatements 
• Any written consents obtained from members 
• A copy of agreements, contracts, or other arrangements

Dissolution

An LLC is dissolved when any one of the following events occurs:

• Event(s) or a time specified in the articles of organization or operating agreement
• The written consent of all members
• Event that makes it illegal for the LLC to continue
• The last member leaves the LLC, unless the assignees vote within 90 days to admit one or more members
• A court order ordering dissolution

Taxes

An LLC by its nature offers some tax advantages over the structure of a corporation, including the availability of more deductions. The biggest advantage is that an LLC is not required to be a separate tax entity like a corporation. Instead, it can be a "pass-through" entity for tax purposes, so that LLC owners (members) report business losses or profits on their personal tax returns, in the same way that a partnership does.

Montana's personal income tax system consists of seven separate brackets with a top rate of 6.9 percent, kicking in at an income level of $14,899. That rate ranks Montana 15th highest among states with an individual income tax.

Articles of Incorporation

Actually getting your new corporation authorized to conduct business in Montana requires filing articles of incorporation with the Corporation Bureau of the Montana Secretary of State's office, along with a $70 filing fee. The articles must be delivered to the state by one or more incorporators, who may be either any natural person of legal age or a business entity. The articles must include:

• The name(s) and address(es) of each incorporator
• The number of shares that the corporation is authorized to issue
• The street address of the corporation's initial registered office (and mailing address if different)
• The name of the corporation's initial registered agent at that office

Some other items that aren't required-but which may be included in the articles of incorporation-are:

• The names and addresses of all directors
• Eligibility requirements to be a director
• The corporate purpose(s)
• Par value for authorized shares or classes of shares
• Personal shareholder liability for corporate debts in certain situations
• Other provisions for managing the business and regulating the affairs of the corporation

Registered Agent and Office

Montana corporations must have a registered in-state agent-either a natural person who is a resident of Montana or a corporation authorized to conduct business in the Big Sky State. The registered agent is responsible for receiving official state administrative and legal correspondence on behalf of the corporation.

The registered agent must have a business office that is the same as the registered office.

Bylaws

A corporation is required to keep its bylaws available at its primary executive office, but it is not required to file them with the state. The incorporators or board of directors should adopt the corporation's bylaws at their first meeting, insuring that there is no conflict with the corporation's articles of incorporation or state law. They should also keep them updated as time goes on. Bylaws set forth the corporation's basic operating principles from both the managerial and legal perspectives, and should include (as a minimum):

• What authority directors have, how many there are, and how long they serve
• Duties and responsibilities of officers and how long they serve
• How consensus on major decisions is reached, both with and without meetings
• How, when, and where shareholders' and directors' meetings are held
• How the corporation's stock is issued
• Requirements for publishing annual financial information to shareholders

Directors and Officers

The board of directors has the responsibility of making the corporation's major decisions. The board of directors consists of one or more individuals as specified in the articles of incorporation or bylaws. If the board has the power to establish or change the number of directors, the board may only increase or decrease by 30 percent or less the number of directors last approved by the shareholders. Only the shareholders may increase or decrease by more than 30 percent the number of directors last approved by the shareholders.

Officers of the company must be either listed in the bylaws or elected by the board. A duly appointed officer may appoint one or more officers or assistant officers if authorized by the bylaws or the board of directors. At least one officer must authenticate the corporation's records, as well as prepare the minutes of directors' and shareholders meetings. Any officer may hold more than one office in the corporation, unless otherwise prohibited by law or the corporation's articles of incorporation or bylaws.

Required Reports

Montana corporations must file a report with the Montana Secretary of State each year between January 1 and April 15, except for the first calendar year of incorporation. The report must contain:

• The corporation's name and its state of original incorporation
• The mailing address (and street address, if different) of its registered office
• The name of its registered agent there
• The address of the corporation's principal office
• The names and business addresses of the directors and principal officers
• A brief description of the nature of the corporation's business
• The total number of authorized, issued, and outstanding shares, itemized by class and series

Additionally, the corporation must send its most recent financial statements to any shareholder who requests them in writing. These statements must show in reasonable detail the corporation's assets and liabilities, as well as the results of its operations.

Taxes

Montana imposes an annual corporation license tax, for which the minimum payment is $50.

Additionally, "S corporation" status is recognized by the State of Montana. A "subchapter S" corporation (frequently referred to as an "S corp") is treated as a pass-through entity for tax purposes in the same way as a sole proprietorship or partnership. The S corp does not file a tax return on its own behalf; instead, all tax-related data for the S corp is filed as part of the owner's individual income tax.