Why Form a Limited Liability Company (LLC)?


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The Business Taxes Payable by Your Montana LLC

Business taxes are a fact of life, and your MT LLC will need to pay a variety of taxes to both the federal and Montana governments. We’ll cover all the main taxes in Montana, including self-employment, payroll, federal and Montana state tax on interest and dividends.

If you want help with your taxes, Incfile provides a complete Business Tax Filing service.

How Your Montana LLC Will Be Taxed

The profits of a Montana LLC are not taxed at the business level like those of C Corporations. Instead, taxes for a Montana LLC work as follows:

  • Montana LLC owners pay self-employment tax on business profits.
  • Montana LLC owners pay state tax on dividends and interest.
  • All LLC owners pay federal income tax on any profits less federal allowances or deductions.
  • Employers pay payroll tax on any salaries they pay to employees.
  • Employees pay federal, state and payroll tax on their earnings.

Items 1, 2 and 3 are taxed as “pass-through” income for any LLC owners, managers or members who receive profits from the business. Any profits are reported on federal and Montana personal tax returns, and that’s where you will pay those taxes.

State Taxes in Montana

As a Montana business owner, you will need to pay state tax on any money you pay to yourself. These earnings flow through to your personal tax return, which is where you will pay income tax. You will be taxed at the standard rates for Montana state taxes, and you will also get to apply regular allowances and deductions.

Any salaried employees will also need to pay personal state taxes.

The Montana state tax rates are between 1 and 6.9 percent, depending on earnings.

Get details on the Montana state tax here.

Federal Self-Employment and Income Taxes for Your Montana LLC

There are a couple different federal taxes that every LLC will need to pay, including Montana LLCs. These are self-employment tax and federal income tax, which are taxed as “pass-through” income via your tax return forms.

Federal Self-Employment Tax

All Montana LLC business members or managers who take profits out of the LLC will need to pay self-employment tax. This tax is also known as FICA, Social Security or Medicare tax. It applies to all the earnings you withdraw from your Montana business. The current self-employment tax rate is 15.3 percent.

You will be able to deduct your business expenses from your income when working out how much self-employment tax you owe. Here are some examples of how much self-employment tax you may need to pay, depending on your earnings:

  • On profits of $30,000, you would pay self-employment tax of $4,590.
  • On profits of $50,000, you would pay self-employment tax of $7,650.
  • On profits of $80,000, you would pay self-employment tax of $12,240.
  • On profits of $100,000, you would pay self-employment tax of $15,300.

Pay Less Self-Employment Tax by Treating Your Montana LLC as an S Corporation

The Internal Revenue Service allows LLCs to ask to be treated as an S Corporation for tax purposes. This can help you reduce the amount of self-employment tax that you pay by declaring some of your income as salary and other income as distributions or withdrawals.

You can do this by making an “S Corporation Tax Election” with the IRS using a form known as Form 2553. We can file your Form 2553 with the IRS on your behalf.

Incfile Form 2553 S Corporation Tax Election for an LLC service

Speak to your accountant for more information on reducing your Montana LLC self-employment tax through an S Corporation tax election.

Federal Income Tax

You must also pay regular federal income tax on any earnings you take out of your Montana LLC. The amount of income tax you pay depends on your earnings, current income tax brackets, deductions and how you file.

You only pay federal income tax on your LLC profits that you take out of the business, less certain deductions and allowances. This includes your tax-free amount, plus LLC business expenses and other deductions for areas such as healthcare and some retirement plans. Speak to your accountant for more information.

Employee and Employer Taxes for Your Montana LLC

If you pay employees, there are some slightly different tax implications. Speak to your accountant to get clear guidance for your own unique situation.

Employer Payroll Tax Withholding

All employers must collect and withhold payroll tax from their employees when they receive their salaries. You would normally withhold 7.65 percent of the taxable salary that you pay to your employees.

Employer Federal Tax Withholding

You may also choose to withhold federal income tax on the wages you pay to employees. Speak to your accountant for more information.

Employees May Need to File Tax Returns

Regardless of whether you withhold federal tax, your employees may need to file their own tax returns.

Employee Insurance and Other Requirements

You may also need to pay insurance for any employees, like employee compensation insurance or unemployment tax. There will also be other requirements you have for employees.

Get more requirements from Montana Department of Labor & Industry website

Other Taxes and Duties for Your Montana LLC

Depending on the industry you are in, your Montana LLC may be liable for certain other taxes and duties. For example, if you sell gasoline you may need to pay a tax on any fuel you sell. Likewise, if you import or export goods you may need to pay certain duties. Speak to your accountant about any other taxes you may need to withhold or pay.

Estimated Taxes for Your Montana LLC

Most Montana LLCs will need to pay estimated taxes throughout the year, depending on the amount of income and profit you expect to make. The most common types of estimated tax are:

  • Federal income tax
  • Federal self-employment tax
  • Montana state tax

Most Montana LLCs will pay estimated taxes four times a year. Speak to your accountant for more information.

FAQs on Montana LLC Business Taxes

Does Montana Have Sales Tax?

No. Montana does not have a statewide sales tax.

Does Montana Have a State Tax?

Yes. Montana does have a general state income tax. You can find more information above.

Do I Need to Pay Estimated Taxes?

Yes. In most cases you must pay estimated taxes on your Montana tax, federal income tax and self-employment tax. Speak to your accountant for more information.

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What are the fees and requirements to form a business in Montana?

Filing Time and Price

The state charges this amount to file a new business entity. This fee goes directly to the Secretary of State.

State Fee State Filing Time Expedited Filing Time
$70 8 Business Days 1 Business Day

Compliance Requirements

This report is mandatory and must be filed within the specified time frame in order for the entity to remain in good standing with the state. Failure to file this report can lead to the company being revoked or administratively dissolved.

Annual Report

Frequency: Annually

Due Date: April 15th

Filing Fee: $20

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