How to Form an S Corporation in Montana

Introduction

If you own a business and plan to hire employees or sell shares of the company, you’ll want to form an S corporation in Montana. An S corporation provides the same liability protection as a traditional corporation, but it also allows owners to pass corporate income tax through to their personal tax returns. It’s significantly easier to set up than other types of corporations because it doesn’t require shareholders’ meetings or formal bylaws. However, forming an S corporation is still complicated and requires you to follow several steps outlined below:

Choose a Name for Your Corporation

Your corporation’s name must be distinguishable from the names of other businesses in Montana. You can do this by choosing a unique name, or by adding a descriptive word or phrase to your business’s name. For example, if you plan to form an S Corporation called “Famous Foods,” then you should consider adding a phrase like “Missoula” or “Montana” in order to differentiate yourself from other businesses that may have the same generic name (“Famous Foods”).

If you think it will help to ensure that your business’ distinctive identity is recognized as soon as possible after its formation, consider purchasing domain names for every location where your company has offices or stores. For example, Famous Foods could buy missoulafoodsinc.com and montanafoodsinc.com for use as website addresses for each store location.

File Articles of Incorporation

Articles of incorporation are the documents you will use to create your S corporation. Include the following information:

• Name and address of your business
• Description of what type of business it is (for example, “marketing consulting firm”)
• Purpose or mission statement for your company
• Number of shares you expect to issue

Pay the Filing Fee

Your filing fee is $50, and it can be paid by check or money order. You can pay the fee at any county treasurer’s office in Montana. If you live outside of Montana, you may pay your fee by mail to the Montana Secretary of State in Helena, MT. The Secretary of State does not accept credit cards for fees over $50; however, they do accept checks with a valid driver’s license number on them (they will use this information to confirm identity).

The filing fee is non-refundable once it has been processed.

Appoint a Registered Agent

A registered agent is a person or company appointed to receive legal documents on behalf of the corporation. This includes:

• Notices of lawsuits against your company
• Notices of tax levies by the IRS (Internal Revenue Service)
• Summonses and subpoenas in civil cases involving your company

If you don’t have a registered agent, then any legal action against your business will be served on one of its officers. If there is no officer available, then it will be served on an employee at the place where you do business.

Create Corporate Bylaws

Corporate bylaws define the responsibilities and duties of a corporation’s officers, directors and shareholders. They establish procedures for conducting business, including:

• The number of directors, their terms and how they’re elected
• How often and where shareholder meetings will be held
• What powers are given to the board of directors to manage the company’s affairs
• How much notice is required prior to calling a meeting of shareholders

Hold an Initial Shareholder Meeting

You should hold an initial shareholder meeting. This meeting should be held in person and must be held at least once a year. Shareholders must receive notice of the meeting at least 21 days before the date of the first annual shareholders’ meeting. The notice can be given by mail or published in a newspaper with circulation in your state and county if you choose not to hold it electronically or personally.

Shareholders may hold special meetings as needed under Montana law if they receive written notice of such special meetings at least 10 days prior to their date.

Issue Shares of Stock

You must first issue share certificates to each shareholder. The certificate is proof of ownership and will be used to record transfers, dividends, and voting rights. Each shareholder should receive an equal number of shares issued at par value, which is the value listed on the certificate. This can be any amount that you want—but it must be consistent across all shareholders’ certificates. After making sure that everyone has their own certificate, sign each one so that it is official before doing business with this new entity!

Apply for an EIN

The first step to forming an S corporation is to apply for an EIN. An EIN, or employer identification number, is a unique nine-digit number assigned by the IRS to identify business entities. The EIN is used for tax purposes and it’s required for all businesses that have one or more employees. It’s also needed for a variety of other applications like applying for a loan or credit card, renting property and filing any sort of legal paperwork with the state government such as incorporating your business.

Conclusion

While the process of registering your business as an S corporation is somewhat complex, it’s worth the effort. By forming an S corporation and taking advantage of its tax and liability benefits, you can be sure that your business will be set up for success.