Are you looking to start a nonprofit corporation in Montana, but you’re not entirely familiar with how the formation process works?
Forming a nonprofit organization can have some tricky compliance requirements, and you don’t want to risk making any mistakes during this process. In this guide, we’ll discuss all the relevant details of forming a nonprofit corporation in Montana.
To get started, please reference our 11-step guide below or hire a professional online incorporation service to get started.
Rocket Tip: To see how some of the top online nonprofit incorporation services stack up, here are two of our most popular comparisons - Incfile vs LegalZoom & Northwest Registered Agent vs LegalZoom.
How to Form a Montana Nonprofit Corporation (in 11 Steps)
1) Name Your Nonprofit
The first step for forming a nonprofit organization in any state is to come up with a strong name for it. Remember that the name of your nonprofit is often your best opportunity to make a good first impression with people, and you should clearly describe your organization’s mission in your name.
Before you become too attached to one name idea, you should run a Business Name Search on the Montana Secretary of State website. This will tell you if someone else is already using your desired name, or if it’s available for your nonprofit to use.
Get Your Nonprofit URL
To solidify your brand and to fully lean into your nonprofit name, register the URL. Through GoDaddy you can easily register it and build a professional website so that nobody else can use or claim it.
2) Designate an Incorporator and an Initial Board of Directors
The incorporator is the person who is responsible for preparing, signing, and filing your nonprofit’s Articles of Incorporation. This document is the form that officially creates your organization with the state of Montana.
At this time, you should also choose your initial board of directors.
In Montana, you are required to have at least three people on your initial board.
3) Designate a Registered Agent
Montana nonprofit corporations must designate a person or business to receive legal notices on behalf of the company. This important point of contact is known as the registered agent. You will be required to list the registered agent’s name and address when filing the Articles of Incorporation.
Who Can Be My Registered Agent? A registered agent must have a physical address within the state of Montana where mail and legal notices can be served during regular business hours. You can hire a service to act as your registered agent, serve as your own registered agent, or even use an accountant or other business professional’s address – with their consent, of course.
The Montana Secretary of State says that,
A registered agent’s primary purpose is to accept service of process on behalf of the entities it represents. Over time, it has become common for business entities to use as their registered agents businesses whose principal activity is the provision of registered agent services.”
Our Recommendation
We recommend hiring a professional registered agent service to act as your registered agent. Doing so will help eliminate junk mail and more importantly, keep your personal and/or corporate or personal address off the public record.
Rocket Tip: You can get a free registered agent service when hiring an incorporation service to form a nonprofit corporation. See our review of Incfile and review of Northwest Registered Agent to learn more.
4) File the Articles of Incorporation
The official document required to form your nonprofit corporation with the state of Montana is the Articles of Incorporation.
This online document includes all of the vital information describing the organizational structure of your nonprofit, including much of the following information:
- Name of your nonprofit corporation
- Whether or not your corporation will have members
- Your business address
- Activities of your nonprofit
- Name and address of your registered agent
- Names and addresses of your incorporators
- Signatures of incorporators
Montana prefers online filings for most formation documents, so you’ll want to have a credit or debit card on hand to pay the $20 filing fee once you’ve finished the form.
The Montana Secretary of State typically processes nonprofit corporation formations within approximately 5 business days of receiving your articles. This processing time assumes that all of your information has been filed correctly.
5) Acquire an EIN
According to the IRS, every nonprofit corporation should obtain a federal tax ID number, otherwise known as an employer identification number (EIN).
The EIN enables your nonprofit to hire employees, open business bank accounts, and file for 501(c)(3) tax exempt status. The process to acquire an EIN is quite simple, and includes the preparation and filing of one simple form. Obtaining an EIN is also free.
6) Establish Bylaws and a Conflict of Interest Policy
Think of the bylaws as a governing document for how your nonprofit corporation will be operated. Bylaws outline procedures for things like holding meetings, outlining your membership structure, defining your corporate purpose, describing the responsibilities of your board of directors, and other important details.
A conflict of interest arises when a contributor to your nonprofit has personal interests that compete with those of your corporation.
The conflict of interest policy protects your nonprofit in these situations. It includes a duty to disclose clause that says anyone involved with your nonprofit must disclose any financial interests and material facts to your directors. It also outlines procedures for addressing conflicts of interest if they ever arise.
7) Hold an Initial Meeting and Establish Your Corporate Record
At this point, you’re ready to hold an initial organizational meeting with your board of directors. At this important meeting, you need to elect directors and officers, approve the bylaws and conflict of interest policy, and adopt resolutions.
As with any meeting of your nonprofit corporation, you should take detailed notes of everything that takes place. This documentation can then become part of your corporate record, which is a permanent written record of all important organizational decisions.
8) File for Montana Tax Exemption
Most nonprofit entities in Montana can apply for an exemption from both the state income taxes and property taxes. To get this exemption, you’ll need to obtain tax exempt status from the IRS. Once you have it, you’ll need to submit a Tax-Exempt Status Request Form for Income Taxes. This will excuse your nonprofit from the corporate income tax of 6.75%.
Then, if you want an exemption from property taxes (not applicable to all nonprofits), you can fill out a Real Property Tax Exemption. And in Montana, you won’t need to apply for a sales and use tax exemption, since the state does not levy this tax. For more information on this important step, the Montana Department of Revenue can help.
9) Register for Charitable Fundraising
Most states require that charitable organizations register with the government prior to soliciting funds for their cause. However, in Montana, this requirement is not statewide. That said, your city or county might require you to register for fundraising. You’ll want to double-check with your municipality to ensure that you haven’t overlooked anything. Then you’ll be ready to raise funds for your cause.
10) Obtain Business Licenses and Permits
While Montana does not have a general business license that applies to all companies operating in the state, there are hundreds of industry-specific permits and licenses that you may need to acquire for your organization.
For one, Montana upholds the licensing requirements of any federally-regulated industries. Check here to determine if your business must be licensed by a federal agency.
You’ll also want to take a look at the state’s list of licenses to determine if any of them will apply to your nonprofit corporation.
Your city or county may also require general business licenses. Here some of the largest cities in Montana which require local licenses:
11) Acquire Insurance
Every business with employees located in the state of Montana is required by law to obtain two different kinds of insurance policies: workers’ compensation and unemployment insurance.
You can learn more about these insurance types and how they apply to Montana businesses by visiting the Montana Department of Labor and Industry and Montana State Fund websites. No matter what line of business your nonprofit is in, you need these policies.
In addition, you should also pursue general liability insurance and other more industry-specific types of insurance, but these are not legally required.
Where Can I Find Help for My Montana Nonprofit?
The process of forming and maintaining nonprofit corporations can be tricky, no matter which state you’re located. Fortunately, there are great resources in Montana to help you out in case you get stuck.
As for the state of Montana, if you require assistance, you can always turn to the Montana Nonprofit Association. In their own words, the MNA exists to “to provide leadership for Montana’s nonprofit sector and partner with charitable nonprofits to promote a sustainable, networked, and influential sector.” The MNA does require membership, but joining grants you several advantages, including access to unique publications, technology resources, fundraising, and more, so joining will be worth your while.
In addition, if you would rather hire a service to incorporate your nonprofit for you, that’s an option as well. There are plenty of services that can handle much of the formation process, leaving you more time to focus on the actual operation of your nonprofit corporation.
These service providers (like Northwest Registered Agent) also offer valuable and convenient bonus features, like the inclusion of a full year of registered agent service with the purchase of a nonprofit formation package. They can save you a considerable amount of hassle, and all without costing an arm and a leg.
Conclusion
As you can see, there are quite a few crucial steps that you’ll need to take if you want to form a compliant nonprofit corporation in the state of Montana. However, it’s important to remember that if you need help at any time, it is available to you ― you don’t need to DIY the entire process.
We hope this guide helped you understand the details of the Montana nonprofit corporation process, and we wish you the best of luck with your new charitable organization!