How to set up an LLC for your rental property in Montana

If you’re a landlord or real estate investor in Montana, you’ve probably heard that forming an LLC (limited liability company) can be a smart move to help protect your rental property and simplify management. But how do you actually set up an LLC for a rental property in Montana? What does the process involve? And is it really worth the effort?

In this guide, we’ll walk through everything you need to know about forming an LLC in Montana for your rental property, including the state-specific steps, costs, timelines, and ongoing requirements. Plus, we’ll touch on how LLCs compare to other options like S corps or umbrella insurance, so you can make the best choice for your situation.

Why Montana landlords consider an LLC for rental property

Montana is a growing real estate market, and many landlords want to protect their personal assets from rental property risks. An LLC may provide a layer of liability protection, helping separate your personal finances from your rental business. This can be especially important in Montana’s diverse rental markets, from Missoula to Bozeman to Billings.

But an LLC is more than just protection. It can also create a professional image, make it easier to manage multiple properties, and sometimes provide tax flexibility. However, it’s crucial to understand what an LLC does and doesn’t protect you from, as well as the specific steps Montana requires to get your LLC up and running.

What an LLC is and what it can protect you from as a landlord

An LLC is a legal business structure that blends features of corporations and partnerships. For landlords, it mainly offers liability protection — meaning your personal assets like your home, car, and savings are generally shielded if your rental property faces lawsuits or debts.

However, an LLC doesn’t make you immune to everything. For example, if you personally guarantee a loan or are negligent in property maintenance, you could still be held responsible. Also, an LLC won’t protect against routine landlord-tenant disputes unless they escalate to major legal claims.

If you want a detailed dive on the protections an LLC offers landlords, check out our guide on should landlords use an LLC.

Step-by-step: how to set up an LLC for a rental property in Montana

Generally, the process involves steps such as:

1. Choose a name for your LLC: Your name must be unique and include “Limited Liability Company” or an abbreviation like “LLC.” You can check name availability on the Montana Secretary of State website.
2. Designate a registered agent: This is a person or business with a physical address in Montana authorized to receive legal documents on behalf of your LLC.
3. File articles of organization: These are official documents that create your LLC. You’ll file them with the Montana Secretary of State, either online or by mail.
4. Create an operating agreement: While not required by Montana law, an operating agreement sets out how your LLC will be run and helps avoid disputes.
5. Obtain an EIN: Your LLC will need an Employer Identification Number from the IRS for tax and banking purposes.
6. Register for state taxes (if applicable): Montana doesn’t have a sales tax, but depending on your rental activities, you might need to register for other taxes.
7. Comply with ongoing requirements: Montana requires LLCs to file annual reports and pay associated fees.

You can find official instructions straight from the Montana Secretary of State.

How much does it cost to set up an LLC in Montana?

One of the first questions landlords ask is, “how much does it cost to set up an LLC?” In Montana, the main costs include:

• LLC filing fee: According to LLC University, the state filing fee is $35 to the Secretary of State to get the LLC activated.‍
• Annual report fee: Every year, Montana LLCs must file an annual report with a $20 filing fee.‍
• Registered agent fees: If you use a professional registered agent service, expect to pay $100–$300 per year.‍
• Miscellaneous costs: You might have minor expenses for copies, certifications, or creating an operating agreement if you hire help.

All told, the initial cost to form an LLC in Montana is relatively affordable compared to other states, especially if you handle the process yourself.

How long does it take to set up an LLC in Montana?

Timing is another important factor. So, how long does it take to set up an LLC in Montana? 

If you file online, the Montana Secretary of State typically processes LLC formation within 3 to 5 business days. Paper filings take longer—usually around 7 to 10 business days.

Keep in mind that after your LLC is approved, you’ll still need to get an EIN from the IRS, which can be done immediately online, and complete any other registrations.

What are articles of organization and how to file them in Montana

“Articles of organization” is the official name for the document that legally creates your LLC. It includes basic info like:

• Your LLC’s name
• The registered agent’s name and address
• The address of your principal office
• The duration of your LLC (usually perpetual)
• The type of management (member-managed or manager-managed)

To file articles of organization in Montana, you can:

• File online through the Montana Business Portal
• Download the form and mail it with your payment to the Secretary of State

Filing online is faster and more convenient. Once accepted, your LLC officially exists under Montana law.

Do I need a lawyer to start an LLC in Montana?

A common question for landlords is, “do I need a lawyer to start an LLC?” While many landlords handle LLC formation themselves, consulting a lawyer can be beneficial in complex cases. The state’s filing process is designed to be DIY-friendly, and many landlords successfully set up LLCs without legal assistance.

That said, consulting a lawyer or accountant can help with:

• Drafting a thorough operating agreement
• Structuring ownership and management
• Understanding tax implications
• Navigating complex situations

If your rental business is simple, you can likely handle the setup yourself using state resources and guides.

How to get an EIN for an LLC that owns rental property

An EIN (Employer Identification Number) is like a Social Security number for your business. It’s required if your LLC has employees (even if it’s just yourself as an owner) or if you want to open a bank account in the LLC’s name.

Getting an EIN is easy and free. You can apply online through the IRS EIN application portal and receive your number immediately.

Obtaining an EIN can help you keep your rental property finances separate from your personal ones, which may be important for liability protection.

Do LLCs need annual reports and other ongoing compliance in Montana?

Yes, Montana LLCs are generally required to file an annual report with the Secretary of State. Here’s what you need to know:

• Annual reports are due on April 15 each year.
• The filing fee is $20.
• The report updates the state on your LLC’s address, registered agent, and members/managers.

Failing to file may result in penalties or administrative dissolution of your LLC.

Besides the annual report, you should keep good records, maintain your registered agent, and follow Montana’s business laws to stay compliant.

S corp vs LLC for Montana landlords: a quick comparison

Many landlords wonder about the difference between an S corp and an LLC. Here’s a quick overview:

• LLC: Provides liability protection, flexible management, and simpler compliance. Profits and losses typically pass through to your personal tax return.
• S corp: Offers liability protection but involves stricter operational requirements, like holding shareholder meetings. Some landlords may opt for an LLC taxed as an S corp to potentially save on self-employment taxes.

Choosing between them may depend on your specific financial and business goals. For more detailed tax or legal advice, it’s best to talk with a professional.

LLC vs umbrella insurance for rental property risk management

While an LLC may protect your personal assets by legally separating your rental business, it doesn’t replace insurance. Umbrella insurance provides extra liability coverage beyond your landlord insurance policies.

Many landlords in Montana combine both strategies—setting up an LLC for legal protection and buying landlord insurance in Montana plus umbrella coverage for broader risk management.

To learn more about the differences and benefits, see our article on LLC vs umbrella insurance.

When does forming an LLC make sense for Montana landlords?

An LLC can be a smart choice if you:

• Own multiple rental properties
• Want to help protect your personal assets from rental risks
• Desire a professional structure to manage your rentals
• Plan to bring in partners or investors

On the other hand, some landlords with a single property may find the costs and paperwork of an LLC less beneficial.

Every landlord’s situation is unique, so weigh the benefits and drawbacks carefully.

Next steps: review your insurance and consider forming an LLC

If you’re considering how to set up an LLC for a rental property in Montana, now is a great time to review your overall risk management strategy. That includes not only forming a legal entity but also ensuring you have the right landlord insurance coverage.

For more on whether an LLC is right for you, see should landlords use an LLC. And don’t forget to explore the pros and cons of LLC vs umbrella insurance.

If you’re ready to protect your Montana rental properties with landlord insurance, check out our options for landlord insurance in Montana.

Forming an LLC for your Montana rental property isn’t complicated, but it does require some planning and paperwork. By considering the steps above and keeping up with state requirements, you can work toward the benefits of liability protection and a professional business setup for your rental investments. Remember to consult qualified professionals for advice tailored to your specific situation.