There are dozens of good reasons to become a business owner in Montana. If you have a good idea and access to the right online resources, you can start one from scratch, even if you don’t have prior entrepreneurial experience. However, you’ll need to get a tax ID number and formally structure your business if you want to operate legally.
Accommodation and food service represent the biggest categories of Montana small businesses, and as you might expect, agriculture, forestry, fishing, hunting and trucking businessesare heavily represented. The state is mostly rural, so it’s ideal for small business owners looking to cater to small towns with small populations. That said, there are some urban areas in Montana as well, including areas around Billings and Missoula.
Steps to Obtain a Tax ID (EIN) Number and Registering a Montana Business
- Forming a Business in Montana
- Federal Tax ID (EIN) Number Obtainment
- Montana State Tax ID Number
- Localized Licenses and Permits in Montana
When you feel confident in your business idea, you can decide how to formally structure your business. There are four main types of business structures to choose from:
- Sole proprietorships. Sole proprietorships are the simplest type of business, which makes them appealing to new entrepreneurs looking to run a business by themselves. In a sole proprietorship, you’ll pay taxes as an individual, and you won’t have to worry about much initial paperwork or upkeep. However, you’ll be personally liable for everything the business does, exposing you to additional legal risks and financial burdens.
- Partnerships. Partnerships work almost identically to sole proprietorships, with the main difference being the number of people involved.
- Limited liability companies (LLCs). You could also create a limited liability company (LLC). These are a bit more complicated to start, but for good reason. As the name suggests, this business type can protect you and your partners from liability; LLCs are treated as separate legal entities, which means they can take on debts and be held legally responsible for actions. LLCs are considered pass-through entities for tax purposes. They don’t pay taxes on revenue they generate, but you’ll owe taxes on the money you take as profits or as salary from the company. LLCs are required to file an annual report in Montana, with a $20 filing fee.
- Corporations. Corporations are much more difficult to start and to manage. They’re subject to more rules and regulations because they have the power to issue public shares; this, in turn, allows them to expand more efficiently (and in some cases, further than their counterparts). Corporations are treated as separate legal entities, which means they provide you with significant liability protection. However, they’re responsible for two levels of taxes; you’ll pay taxes on corporate revenue, and you’ll pay taxes as an individual on money you make from the company. In Montana, the corporate tax rate is a flat 6.75 percent.
There isn’t a right or wrong business structure, but some will be more advantageous for you than others. Think carefully before you finalize your decision.
When you’ve created your business in Montana, you’ll probably need to get a federal tax ID number. Sometimes called an employer identification number (EIN), this is a 9-digit, unique identifier not unlike your social security number, but assigned to your business when you register it with the federal government.
You’ll need a federal tax ID number if your business has multiple members, or if you’re going to hire employees. You’ll also need one to open a business bank account, establish business credit, or take out a business loan. Most business license and permit applications also require you to provide a federal tax ID number. The fastest and easiest way to get a federal tax ID number is to make use of our federal tax ID number obtainment services. Simply fill out our online application, answering a few questions about your business, and you’ll get your tax ID via email in less than an hour.
You may also need a Montana state tax ID number. Your state tax ID number is a separate, unique identifying number, and one assigned to your business when you register with the state government of Montana. You’ll need one if you’re going to hire employees in Montana, if you’re going to sell taxable goods and services in Montana, or if you’ll owe excise taxes, which apply to certain regulated goods. To get a Montana state tax ID number, you’ll need a federal tax ID number. Once you have it, you can make use of our Montana state tax ID number obtainment services to get your tax ID as quickly as possible. Just answer a few questions about your business in our online application, and you’ll receive your state tax ID in 4 to 6 weeks.
There’s a good chance your business will also need a business license and/or permit to operate in Montana. However, Montana doesn’t have a single catch-all business license, nor is there a general, state-level agency to dictate which licenses are required. Instead, most licenses and permits are regulated and distributed at the local level, and there are literally thousands of possible requirements. Your best bet is to contact your local Chamber of Commerce and ask them directly whether your business needs any documents to begin operations. Keep in mind you’ll likely need a federal tax ID number to apply.
Montana is a welcoming state for entrepreneurs and small business owners, to the point where 99.3 percent of all Montana businesses are small businesses. They total more than 118,000, and together employ 244,668 people, or 65.2 percent of all Montana employees. These small businesses are one of the biggest contributors to the state’s economy, responsible for adding 6,519 net new jobs in 2018. Thanks in part to their growth and development, the economy of Montana has been growing at an annual rate of roughly 2 percent.
The sooner you start your business in Montana, the sooner you can start making money. Use our federal tax ID number and Montana state tax ID number obtainment services to get your necessary tax IDs faster and more conveniently.