Are you looking to form a professional limited liability company (PLLC) in Montana, but you’re not sure how the formation process works? There are several important steps when it comes to creating a Montana PLLC that is compliant and able to do business in the state.
What is a Montana Professional LLC?
The professional limited liability company (PLLC) is a specialized type of LLC that is intended for licensed professionals to offer their unique services. A PLLC in Montana is an LLC formed for the purpose of rendering any service that may only be lawfully rendered by persons licensed under Montana law, such as attorneys, physicians, and architects.
The Montana PLLC is typically more popular than a professional corporation (PC) because it’s a more flexible business type, but it still includes the personal asset protection and professional qualifications that make the PSC valuable.
PLLCs in Montana have relatively simple formation and maintenance requirements, several options for how they want to be taxed, and flexible management. From one-person businesses to multi-member PLLCs with several owners, the PLLC is a popular choice for a reason.
An important detail of the PLLC that differs from a traditional LLC is that liability protection is not shared across all members of the company. For example, if you operate a PLLC for physicians, your business structure does not shield each individual member from malpractice suits. Instead, each member is liable for their own malpractice insurance, and no member is liable for another member’s malpractice.
Forming a PLLC in Montana (in 6 Steps)
Step One) Choose a PLLC Name
Your PLLC’s name is often the first impression you get to make on potential customers, and therefore it goes without saying that this is an important step. There are a few different aspects to take into consideration when selecting a name for your business:
The name of a Montana professional limited liability company must contain the words "professional limited liability company," "professional limited company," "professional l.l.c.," "professional llc," "p.l.l.c.," or "pllc.” The name must also conform to any rules of the licensing authority with jurisdiction over the professional service described in the company’s Articles of Organization.
Another aspect to consider is including language that explains what your business does. For example, if you’re a doctor, put the word “physician” or the initials “MD” in your PLLC name. Additionally, if your business has strong values like being environmentally friendly, you can indicate that by including the word “green.”
Do You Like It?
At the end of the day, this is your business, and you should choose a name that makes you proud. You should also make sure your PLLC name both sounds good when spoken out loud, and looks good when written down.
The most important consideration for naming a PLLC is to not get too attached to any one business name until you know that it is available for use. You can check if a business name is available by using the Business Search tool on the Montana Secretary of State’s website. Once you’ve chosen a name and confirmed it’s available, you can reserve the name for a non-renewable period of 120 days for $10. The name reservation must be completed online through the ePass Montana website.
Get Your Business Domain
To fully embrace the business name, register your URL. With GoDaddy you’ll be able to quickly build a company website so that nobody else can use or take it.
Step Two) Designate a Registered Agent
Every PLLC in Montana is required to designate a registered agent, which is the individual or business entity that receives government correspondence on behalf of your business, then forwards those documents to you.
Your Montana PLLC can appoint either (i) a commercial registered agent, which is a registered agent registered with the state of Montana as being in the business of serving as a commercial registered agent, or (ii) a noncommercial agent, which can be an individual, a Montana entity, or a foreign entity, so long as such individual or entity has a physical address in the state of Montana.
Without a registered agent, you could lose your good standing with the state of Montana, and the state also has the right to dissolve your PLLC if they decide to. In a worst-case scenario, the state could fail to alert you regarding a lawsuit against your company, which could even lead to a judgment against your business because you didn’t defend yourself.
At the end of the day, we recommend hiring a dedicated registered agent service to handle these requirements. Doing so will help eliminate junk mail and more importantly, keep your personal and/or business address off public record.
Step Three) File Formation Documents with the State
Once you are ready to form your Montana professional limited liability company, you will fill out the Articles of Organization.
This is THE document that will register your PLLC with the state. You’ll want to ensure all of the following information is correct on the form:
- Name of the PLLC
- Whether the PLLC is a term company, and if so, the term
- Mailing address of the PLLC’s principal office
- Name of the PLLC’s commercial registered agent or name and address of the PLLC’s noncommercial registered agent, as applicable
- Statement of whether the PLLC will be member-managed or manager-managed and the name(s) and mailing address(es) of the initial members or managers, as applicable
- Whether one or more members of the PLLC are to be liable for the PLLC’s debts and obligations
- A statement that the company is a PLLC and a statement of the professional service or services it will render
- Any other provisions, not inconsistent with law, that the members decide to include
The Articles of Organization must be filed online through the ePass Montana website.
Cost to Form a PLLC
The filing fee for the Articles of Organization in Montana is $70.
Business filings in Montana are all completed online and are generally processed the same day.
Step Four) Create an Operating Agreement
After you register a PLLC in Montana, create a detailed outline that explains how you will run and manage your new business. Even though it doesn’t need to be filed with the state, put one together and keep it for your records.
When you open a bank account, you may be asked for a copy of this document. You’ll also want to keep in mind that any future business partners or managing members may also be interested in seeing your operating agreement before joining your company. After all, this document essentially serves as your overall plan for success.
An attorney can help you outline your operating agreement, or you can create one from a free template online. You can read more about operating agreements here, but some of the basic information you’ll want to have includes:
- Individual members' ownership percentages
- Rights and responsibilities
- Voting powers and meeting guidelines
- Allocation of profits and losses
- Management rules for the PLLC
- Provisions for buying a member owner out, or transferring their shares in the case of illness or death
Step Five) Handle Taxation Requirements
The vast majority of PLLCs require a federal tax ID number, or EIN. An EIN is basically the business version of a social security number, and it’s used for a variety of important PLLC functions.
For instance, you’ll need an EIN if you want to hire any employees, and many banks require them to open business bank accounts as well. You’ll also need one for tax purposes, hence the name federal tax ID number. Get an EIN for your LLC for free through the IRS.
Most LLCs are treated as pass-through entities, meaning that the owners pay income tax instead of the entity. Which Montana taxes will apply to your business will depend, however, on how you elect to treat your PLLC for tax purposes. For information on business taxes in Montana, see the Montana Department of Revenue’s website. The Department of Revenue also offers a number of online services for taxpayers, including the option to pay certain business taxes through the Business Tax Express website.
Depending on where in Montana your business is located, you may also need to pay some local taxes. You should check with the municipality in which your business in located to confirm local tax requirements. Contact information and business resources for the four largest cities in Montana are available on their websites: Billings, Missoula, Great Falls, and Bozeman.
Step Six) Obtain Business Licenses and Permits
The state of Montana doesn’t issue general business licenses. However, you may still need to obtain a local business license or permit. You should contact your city and county offices to confirm whether any local licensing requirements apply to your PLLC. In addition, the Montana Department of Revenue oversees professional licensing in the state. You should visit their website for a list of professional licenses and confirm whether any apply to your business. Given the nature of a your PLLC, you will likely need to obtain at least one of these licenses.
Would You Prefer a Professional Form Your PLLC?
If you would prefer to have a professional handle the paperwork for you, consider hiring an online business formation service.
Because of the often-complex nature of professional limited liability companies, some of our favorite service providers don’t offer PLLC formations, but there are still plenty of quality companies that do provide this service. A couple of our favorites for PLLC formation are LegalZoom and MyCorporation.
Another option would be to hire a business attorney to handle your PLLC formation. While this is certainly a more expensive route than using an online formation service, a lawyer’s expertise could come in handy when you’re forming a specialized business structure like this.
Next Steps: What to Do After Creating a PLLC in Montana
Open a business bank account
We highly recommend that you establish a separate business banking account so that your business and personal finances are maintained completely separate. This is important because it helps protect your personal assets and also makes filing taxes much easier. Once you receive your EIN from the IRS, you’ll be able to use it to establish an account at the bank or credit union of your choice.
If you intend to hire employees for your PLLC, keep in mind that all businesses with employees in Montana are generally required to obtain workers’ compensation insurance. For more information on workers’ compensation in Montana, you should visit the Montana Department of Labor & Industry’s website. Though not required, it’s probably also a good idea to pursue general liability insurance, as well as some industry-specific policies pertaining to the profession practiced by your PLLC.
Understand income reporting
Income reporting is just what it sounds like – reporting the income you made from your business. It’s important to note that you must file this form whether you made or lost money over the course of the year.
Income is reported on a tax return form, though which specific tax return form you use depends on the tax treatment of your PLLC. You can find all forms for Montana income tax on the Montana Department of Revenue’s website.
Understand annual reporting
All LLCs and corporations in Montana are required to file an annual report with the Secretary of State. These reports are due before April 15 of each year and help keep your business information on file with the Secretary of the State up-to-date. Your annual report must be filed online through the ePass Montana website.
Find an accountant
We don’t recommend that you attempt to manage your business finances without the help of a professional. There is too much room for error, and a professional can ultimately save you time and money by guiding you on how to best manage your business finances. At a minimum, enlist professional help to set you up with software and the steps for keeping up with your finances on a regular basis. Then, consult back with your accountant at least a couple of times per year – and especially at tax time – to ensure you’re keeping track of everything correctly.