How to start a business in Montana: Your legal checklist
So you have a great idea for a Montana business, now what? When starting a business, you should take some important preliminary steps to set yourself up for success. These steps will help in your success by ensuring your business will be legally protected from the beginning.
Below are several important things to consider prior to setting up your Montana business and forming an entity for that business.
Draft your business plan
Start by drafting a business plan when your business idea is ready to launch. Write out what your business will entail, the goals of your business, and what you will need to achieve your goals. A business plan is also very useful if you are going to be looking for investors for your new business venture or partners to join you. It will also help a business attorney decide what would be the best entity for your business, which is extremely important.
Next, there are important things to consider when starting a business in Montana.
Answer these basic business questions:
Where will you do business in Montana? Across the state, in a particular location or city, or are you starting an online business?
How will you finance your business venture? This will largely depend on the upfront costs of starting your business.
How important is it to you to limit your personal liability?
Will you need a brick and mortar location?
What do you want your management structure to look like?
Will you need to hire employees right away or do you foresee needing to hire employees down the line?
Do you want a business partner?
Connect with Montana business resources
Montana is full of great resources to help you start your business. The first thing I recommend my clients do is contact Prospera Business Network, a non-profit organization that helps people start and grow their businesses in Montana.
Prospera Business Network is also home to the Montana Women’s Business Center, which is a program of the U.S. Small Business Association. The Montana Women’s Business Center offers grants, mentoring and confidential business support to women business owners all across Montana. We are lucky to have so many great resources in Montana to help start and grow businesses.
Create your business team
It’s important to start your business off on the right foot by setting up a team of professionals.
Your business team will help:
ensure you are legally protected;
set up the right business entity;
with compliance with employment laws;
minimize your liability;
make certain you are being taxed in the most advantageous manner and ou are filing correctly; and
verify you have the appropriate amount and type of insurance if something were to go wrong.
Your business team should include:
An insurance agent;
An accountant;
A trusts and estates attorney; and
A financial planner who can help with not only your finances, but your retirement options.
Create a separate legal entity in Montana
Once you and your business attorney have discussed the best legal entity for your business venture, you or your attorney will want to register the entity with the Montana Secretary of State. You may also need to establish an assumed business name and/or file for trademark protection for your service mark or trademark in Montana.
To register a business entity in Montana, you must:
Know the entity type you are seeking to create.
Determine how fast you will require the Montana Secretary of State to process and approve your entity formation. If you do not need the entity formed immediately, you should choose standard processing. If you pay a premium, the State of Montana will process your application as soon as 1 hour or within 24 hours..
Choose your unique entity name (make sure the name is not already in use in Montana or anywhere else to avoid trademark infringement issues).
Indicate the term of your business.
Include the principal business mailing address (you are required to have a mailing address in Montana, but not a physical principal place of business address since you may decide to work from home, remotely from outside of Montana, or have an online business).
Add a registered agent, who must have a physical address (this address cannot be a U.S. Post Office address). Many times your attorney will agree to act as your registered agent if you are not physically located in Montana or you do not want your personal address listed in the public domain.
Provide the names of the board members, members, and/or managers (depending on the entity you are forming).
Sign the application.
Once your entity has been approved, you will receive an email from the Montana Secretary of State that includes a Certificate of Existence. Keep this document for your records.
Draft your business formation documents
For any entity you form, you will need to have formation documents drafted to ensure that you will be legally protected. Your business attorney is able to draft these documents for you. The type documents that will need to be drafted and their complexity will depend on the structure of your business.
In addition, your business may require other agreements be drafted, which could include:
Employee offer letters,
Independent contractor agreements,
Service agreements, or;
Advisory board agreements.
Additionally, you may need your attorney to review a commercial lease or other vendor agreements.
Protect your business from personal liability
Most importantly, remember that simply registering your entity does not in and of itself offer your business the protection from personal liability. You must make certain that you do not pierce the corporate veil.
Read more here: What is piercing the corporate veil?
Set your Montana business up for success
Montana has great resources if you are looking to start a business here. While it is not complicated to register a business entity in Montana, you will want to make sure you are setting up the right entity and that you have the right formation documents in place to be legally protected.
Need help starting your Montana business?
KLH Advisors has an office in Bozeman, Montana but also helps business owners through the State of Montana. If you are looking for legal assistance to start or grow your business, contact KLH Advisors. Make sure to ask about the start-up package KLH Advisors offers clients who establish a single-member LLC.
