This article is part of a series of articles focusing on the Montana LLC registration process. Check out the whole series here!
You’ve probably heard about using a Montana LLC to register cars. It might have been from an article about sports cars being registered in Montana where sales tax is nonexistent. Or maybe it was about high-end RVs for the same reason; not getting taxed into oblivion. However you heard about it, it is true.
Start Your Montana LLC and Register Your Vehicles Today!
Start Your Montana LLC and Register Your Vehicles Today!
Montana has no state sales tax and the registration process is cheap, especially for expensive vehicles (aren’t they all expensive vehicles now?). Not so fast, though, bud. It isn’t just as easy as walking into a Montana DMV extension and walking out with a clean registration and title. In Montana, you must establish residence first. We’ll walk you through how to do that legally, even if you don’t live in Montana.
We’ll start with the absolute basics before getting into advanced topics and how to form a Montana LLC to establish residency in Montana.
What Is An LLC?
This is a fundamental question; most people generally understand that a limited liability company is a form of business. It is one of the legal building blocks of establishing a company, if not the primary building block.
An LLC is entirely different from a sole proprietorship, an enterprise run by the individual with no legal distinction between themselves, the proprietor, and their enterprise. In other words, their business assets and their personal assets are the same. If a mechanic owns a shop and operates it as a sole proprietor, all of his tools, real property, and other assets are tied to his finances. If something goes legally south and he is sued, the sole proprietor can be bankrupted quickly.
With that being said, not all LLCs are used exclusively to conduct business. Asset holding companies are a common way for large companies to break themselves up into multiple smaller companies that work to reduce overall tax burdens.
The added benefit of an asset-holding company is that it does not need to be located in the same state as the owner. LLCs are routinely established in states outside of the company’s physical location for tax purposes.
In the case of Montana, in order to register a car there, a person can use an LLC to prove residence in Montana. Does everyone in the state know what they are used for? Probably. But it is entirely legal, so go with it! However, be aware that Departments of Revenue in other states take a relatively dim view of these programs.
How Does An LLC Establish Residence?
When you are forming a corporation, you are not limited to the state of your physical residence for the corporation's domicile. You can choose whichever state you want, and several states actively recruit the formation of new businesses from abroad.
For example, Delaware Corporations have long been known as havens for registering businesses (and assets), especially in the flying community, for many years. New Mexico is also making a name for itself by undercutting the costs of other states. There are benefits for the states to attract businesses from elsewhere; it is not a case of benevolence. They get the filing fees, they get to tax the company's revenue, etc., and the states do nothing more than showing up. It’s a pretty sharp racket, to be honest.
Domicile Versus Residence
Before moving any further, let’s talk domicile versus residence. The goal of the Montana LLC is to establish residence in Montana to establish asset protection. Residency is where a person chooses to live, but the domicile is their permanent dwelling.
Your legal domicile remains wherever you live or wherever you move to. Just make sure to understand that there is a distinction between the two things, and we only help facilitate the aspect of the residence. Also, remember that Montana can do anything it wants to do, but your domicile location may disagree. However, nobody may even notice your plates (they probably won’t).
The whole Montana LLC program has garnered negative attention because idiots have occasionally abused it. There, I said it. You will draw attention if you live in Atlanta, drive a McLaren, and blow up your Insta feed with pics of a Montana plate.
However, nobody will care if you are a small business owner who uses a fleet of white F-150s for your electrical contractor business. Or if you are choosing to tag your family SUV to save some green, again, nobody is looking. Flamboyant playboys are honestly what has given this process a bad name. People don’t sympathize with most folks who can afford a supercar but don’t want to pay the exorbitant tax fees. Of course, those same folks might not comprehend that a $50,000 tax bill might just push that same car out of the realm of affordability for prospective owners. It’s true.
Is A Montana LLC Legal?
In a word, yes. The Montana LLC is entirely legal for anyone to purchase, anywhere. Establishing a corporation is just that: establishing a corporation or business. It is legal if the state allows an individual with an out-of-state domicile to file an LLC. Montana has no restrictions on people from out-of-state filing an LLC in Montana, so it is entirely legal.
Remember, the LLC itself is a business license. Its purpose is to separate assets and business expenses and activity away from the individual.
How Does This Look in Real Life?
In the real world, an out-of-state LLC is a common practice selected by entrepreneurs to establish a business, and they select a residence location based on a number of factors.
For Montana, it may be because the breaks are good or because there are physical assets in the state, so establishing or maintaining a legal corporation there makes sense. For example, Montana has roughly 2.2 million beef cows. Mega ranches with holdings in multiple states may want to establish separate companies for tax purposes. The same with oil and gas, another industry in which Montana has a lot of activity.
In the ‘real world,’ companies occasionally split up into smaller corporations, which are not limited to a single state; a company can be broken down into sub-corporations in several states. It sometimes makes sense to do just that; it is perfectly reasonable for individuals to have part of their enterprise in Montana.
The Steps to Starting a Montana LLC
The steps to forming an LLC in Montana are not all that difficult. In short, you need a name for it, a registered agent, and a Montana Certificate of Formation. Of course, if you are strictly interested in a holding company, i.e., a place to park your assets, you will do well to check out our Montana LLC Program. It is the best option for registering your car, truck, RV, or motorcycle tax-free without the headache of figuring out the ins and outs of the Montana car registration process; you purchase the program, fill out the forms, and we take care of the rest.
Naming Your Company
Whatever your purpose is for your corporation, it has to have a name. Whatever you want to name it is your business, but consider that you may have people (i.e. state employees) looking at it from time to time. Registering your car to a Montana LLC is legal, but it won’t necessarily stop your domicile state from feeling any certain way about it.
In that video about Georgia earlier, the Department of Revenue agents were specifically hunting out Montana LLCs with the name of the owner as a part of the name (if the car with sold to Tony Soprano in Atlanta and there happens to be a Tony Soprano LLC in Montana with a Ferrari as the asset, for instance), or any LLCs referencing Georgia icons (sports teams, mascots, and schools).
Don’t make yourself an easy mark. The guys they went after were what they called “Instagram Bros,” guys buying expensive cars and posting them all over Insta. While also definitely legal, their new toys with shiny Montana plates were all over the interwebs. The Georgia Department of Revenue was all over them with accusations of defrauding the government, but it’s worth noting that is a rare situation brought on by a large amount of flamboyance.
So, name it anything you want, but be aware that someone might be scrutinizing your tags and your car.
Servicing Agent
The crazy thing about Montana LLCs is that the servicing agent does not need to be an attorney! It can be any individual who understands the corporation formation process.
Dirt Legal has partnered with servicing agents who understand the process and know the legal framework for forming a holding company in Montana for vehicle registrations.
Montana Certificate of Formation
The third step is submitting a certificate of formation through the state. The cert of formation is the bureaucratic component of the LLC, where the state formally recognizes the formation of your holding company. You must then coordinate this paperwork with your agent, figure out what fees you need to pay, and establish the LLC, then register the vehicles, then figure out renewals. It starts getting complicated at that point, but hey, there is a better way.
The Dirt Legal Process
Dirt Legal is your one-stop shop to register your vehicle (or vehicles) under a Montana LLC. The most obvious benefit is that it is your only way to register a vehicle tax-free. That’s right, no tax at all.
While this has high-dollar implications for exotic car owners, the average new car price is starting to make all car purchases feel like an exotic car. With an average new car price exceeding $47,000, it’s not too far off. But seriously, if you are paying six percent in sales tax upon registering your car, you are looking at $2,820 in sales tax. And the states charging high taxes don’t just start with the word ‘California’; in my beloved Kansas, we are locked in at a ridiculous 7.3 to 8.775 percent, with local taxes up to an additional one percent (which is what I get stuck with). So, we get hammered at 9.775 percent, generating gruesome sales tax bills of $4,594.25 for an average-priced car. Well, at least we have excellent roads here.
Courtesy of Consumer Report
When you choose Dirt Legal for your Montana LLC car registration, you have the peace of mind of having years of experience and our professional support available when you need it. However, our system is so intuitive and straightforward that we doubt you’ll need to call!
To process your request and get you registered, we only need a few things:
Proof of ownership: You need to have a title or a Manufacturer’s Certificate of Origin to prove it’s your vehicle.
Vehicle info: Once you checkout, you will fill out a vehicle information form. You are good to go if you have proof of ownership and a VIN.
Documents: We will send you a checklist of the required documents that we need to process your Montana LLC and vehicle registration.
Remember, this is a two-part process that we are offering. The first step is establishing your LLC, and the second step is registering your vehicle to the LLC. This is why we believe that our program offers the best value in the business: all you have to do is checkout and fill out the information we provide you, and that’s it. We take care of the rest, and at the end, you will have an LLC with your vehicle or vehicles registered to it. Cars, trucks, UTVs, RVs, motorcycles, dirt bikes, you name it, it’s on there.
Starting an LLC in Montana is a great way to hedge against the rapidly rising cost of vehicle ownership, and we could use all the help we can get right now. Also, Montana has no smog or inspection requirements. If you are tired of getting reamed for sales taxes and put on notice for smog checks, check out our Montana LLC Registration Program. We believe you will see that it is a great choice, and we will back you every step of the way!
John McCoy is a lifelong car and truck enthusiast and has a strong mechanical background off the road. He spent over 13 years in the U.S. Air Force as a crew chief, assigned to the B-1B Lancer, affectionately known as the Bone to those in the community, and the KC-135R Stratotanker. He resides on a small farm in Eastern Kansas where he (sometimes) enjoys fixing ancient farm equipment.