How Much Does It Cost to Maintain an LLC in Montana?

This article is part of a series of articles focusing on the Montana LLC registration process. Check out the whole series here!

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So, you’ve made the wise decision to register your vehicle in Montana with an LLC as proof of residency. Congratulations! You have made a wise choice. Registering your vehicle under a Montana LLC is the best surefire way to guard yourself against insane tax bills, which is becoming ever more important with the breakneck rise in vehicle prices. Remember, as vehicles rise in price (not inherent value, but price), the tax burden rises proportionally. 

Since Montana has no state income tax, there is no proportionate rise in tax burden. At the present, the price of a new car is nearing fifty grand, taking tax bills in some states north of five grand for the average car. That’s gonna be a no from me, dawg. 

Dirt Legal is your one-stop shop for out-of-state title and registration needs for whatever you drive, be it a dirt bike, motorcycle, UTV or ATV, car, truck, RV, or even a military Humvee! Our marquee service is the Montana LLC Program that lets you register your vehicle in Montana under an LLC, which eliminates your sales tax bill!

To keep your residency in Montana (a requirement for the program), you must maintain an active LLC. Let’s find out how much that is going to cost to keep your Montana LLC open and your savings on point!

How Much Does It Cost to Start an LLC?

So, let’s start with the basics: you already know that you need to have a Montana LLC to register your vehicle there if you do not maintain your domicile in Montana. 

But wait, what is a domicile? And does it matter? Yes, for a Montana vehicle registration it matters a lot. 

If you’ll recall from our Montana series of articles, there is a marked difference between domicile and residence. You can have as many residences as you want and can afford them; you will only have one domicile. This is your home base. 

If your domicile is not Montana, you have to provide proof of residence in the State of Montana, which is where the LLC comes in. As long as you have a business venture in the state, you are golden.

But you don’t have the entrepreneurial spirit, you say. That’s ok, and understandable. But you don’t have to be a mogul to own a business. In fact, you really don’t have to own a business in the traditional sense at all. What you will be owning in Montana is actually a holdings company, or an asset holding LLC. The sole purpose of an asset holding LLC is just that: to keep assets, like vehicles, in.

The fee to start an LLC varies based on your situation, the construction of the LLC, and the state rates and fees at the time of registration, so unfortunately there is no concrete answer that will stand the test of time; these things tend to change in a fluid environment. For a good ballpark, consider the current price of our Montana LLC Program, a service designed to make the process of forming an LLC as easy for you as possible.

What we can say for sure is that the cost of maintaining an LLC in Montana pales in comparison to doling out thousands in sales tax burdens, along with any other miscellaneous taxes. 

How to Form an LLC in Montana

The first thing you need to know in this process is how to establish an LLC. Everything else is null without the formation of a Montana LLC. 

By far the easiest way to establish an LLC in Montana is to allow us to do the legwork for you; it gets overwhelming to try this on your own. But if you want to try it on your own, there are a few basic steps in the process:

1. Name your LLC

2. Find and select a registered agent

3. File Articles of Organization

4. Create an operating agreement

5. Get an EIN

Step 1: Name Your LLC

The process of naming your LLC is straightforward, although there are some parameters that must be followed. 

First, it is a company, regardless of whether or not it ever earns a dime. Accordingly, the phrase ‘limited liability company’ or one of the acceptable abbreviations must be in the name. 

Also, it cannot include anything that can be construed as confusing with a government agency. In other words, “IRS Sucks, LLC” is not going to pass muster, although it is kind of funny. 

Montana LLC Is Tax Free!

Montana LLC Is Tax Free!

There are a few restricted terms that need additional paperwork to include in the phraseology, which generally includes ‘Attorney,’ University,’ or ‘Bank.’ 

Also, one word of warning: if you happen to drive an easily identifiable vehicle with a Montana plate (Ferrari for instance), you should probably make sure the LLC name is not anything that will easily identify you as the owner. You might refrain from ‘John Cramer’s Red Hot Ferrari, LLC,’ especially if you drive a red Ferrari. We know that there have been a few states that have taken a rather dim view of the Montana LLC registration process. Again, there is nothing illegal about forming a Montana LLC, but that won’t stop people from taking interest.

Step 2: Find and Select a Registered Agent

You will need to find a registered agent to represent your business. In some states, this must be an attorney, but that is not the case in Montana. 

One hard and fast rule is that your registered agent must maintain a physical address in Montana; a postal box will not suffice. 

Basically, the registered agent is the designated entity that will handle your business affairs as they stand in your absence. Of course, this is particularly important since the whole premise of this is that you are out-of-state to begin with.

Part of the comprehensive Dirt Legal Montana LLC Program is to provide you with a registered agent so that you don’t have to worry about this step.

Step 3: File Articles of Organization

The Articles of Organization provide the legal framework of the business. It includes the LLC owner’s contact information, as well as the registered agent’s information.

Again, a main purpose of the LLC is to separate the ownership of the company legally from the individual, even though they are often one and the same. The articles of organization are what do this; it defines the company, the registered agent, and the owner of said company. 

Step 4: Create an Operating Agreement

This step may not be required for all companies, particularly not a holding company, since it has no operational best practices or procedures to speak of. However, this legal agreement details who the officers are, what the ownership agreement is, and other pertinent details. Again, this isn’t totally necessary for an LLC used for registering a vehicle, but it is still good to state the anatomy of the LLC. 

Step 5: Get an Employee Identification Number

This step may be necessary if you need to open a bank account for your Montana LLC, but it is absolutely required by the IRS if the LLC consists of more than one person. However, if these two criteria don’t apply, then the EIN can be skipped. 

Of course, our process takes the hassle out of this for you. There is no need for you to learn all of this information and go through the appropriate channels when all you need it for is vehicle registration. An asset holding company isn’t intended for hiring any employees, so you can leave its formation to us.

What Is the Cost to Keep Your LLC Active?

Ok, so now that your LLC is up and running, the State of Montana stipulates that you must provide proof of residence for initial registration and registration renewal. In other words, you have to keep your Montana LLC active and open as long as you plan to register your vehicles there.

The exact number will vary based on your situation and the construction of your LLC. For a ballpark, consider the current price of our Montana LLC Renewal Service, a service we offer to make the entire process of owning and maintaining a Montana LLC as easy for you as possible.

The annual cost of maintaining an LLC is negligible, especially when you take into consideration the raw savings of not paying state sales taxes on the vehicles involved, considering a number of states are in the ten percent range once state and local taxes are combined. 

Seventy-five thousand dollar vehicles? You’re saving somewhere in the ballpark of $7,500 in sales tax alone, though of course, you still have to pay annual registration fees. It would take a long time for the annual LLC fees to come close to the tax savings you’ll see.  

Your Montana LLC is the best hedge against inflating sales taxes. What do I mean? Well, as the prices of vehicles continue to rise at unbridled rates, the sales tax bills will rise with them even though the percent rate from most states have not changed. If you take a vehicle that was $30,000 in 2019 which is $45,000 now, the sales tax could hypothetically go from $3,000 to $4,500. The state benefits, you lose, end of discussion. With our Montana LLC Program, you can save that sales tax and put it all back in your pocket where it belongs.

The process of establishing your LLC can be confusing, so we take all of the guesswork out of it for you. All you need to worry about is filling out the paperwork and any other information we need, and we handle the rest. So stop getting hosed by your state revenue department; start your Montana LLC registration process today and cut out those taxes!