Montana LLC Taxes

An Montana LLC is taxed at three levels: federal income tax on the profits, Montana state rules, and payroll or sales taxes that depend on what the business does. Montana taxes personal income, so LLC owners report their share of profit on a Montana return in addition to the federal one. Montana does not charge a separate franchise or privilege tax on LLCs.

Federal tax treatment

By default the IRS treats a single-member LLC as a disregarded entity, so profit is reported on Schedule C of the owner's personal return. A multi-member LLC is taxed as a partnership and files Form 1065, with each member receiving a Schedule K-1. Either can elect to be taxed as an S corporation (Form 2553) or a C corporation (Form 8832). See the IRS page on LLCs.

Self-employment tax

Members who work in the business generally pay self-employment tax of 15.3% on net earnings: 12.4% for Social Security up to the annual wage base set by the SSA, and 2.9% for Medicare with no cap, plus an additional 0.9% Medicare tax at higher incomes. An S corporation election can reduce this for profitable businesses, but it requires running payroll and paying yourself a reasonable salary. Our LLC vs S-Corp comparison walks through the trade-off.

Montana state taxes

Sales tax, payroll tax, and local business taxes sit on top of these. If you sell taxable goods or services, register with the Montana tax agency for a sales tax permit. If you hire, you will register for state unemployment insurance and withholding.

Estimated tax payments

LLC owners usually have no employer withholding, so they pay federal estimated tax each quarter, and Montana estimated tax as well. Missing estimates can trigger underpayment penalties, so many owners set aside a percentage of every payment they receive.

Montana specific notes

Montana has one of the lowest LLC formation fees at $35 with a $20 annual report due April 15. No statewide sales tax.

Montana LLC at a glance

Tax rules and thresholds change, and this page is general information. Confirm details with the Montana tax agency and a licensed CPA before you file.