Are you starting a new business? First off - congratulations! Starting a new business is exciting, and doing it in Montana makes it even better.

Despite all the good stuff, the line between success and failure as a new business is narrow, and it’s essential to understand how to set yourself up for success.

In this blog, we’ll outline the biggest things you need to know before starting a new business and how you can get your venture off on the right foot.

Let’s dive in.

First Things First: Why Start a Business in Montana?

When it comes to launching a business, Montana is a great state to do it. 

In 2020, Montana ranked 5th on Tax Foundation’s 2020 State Business Tax Climate Index, thanks to low property taxes and lack of statewide sales tax. 

This is excellent news for new business owners: when you pay less tax, you’ll have more cash available to grow your business. 

Here are a few additional Montana business stats to keep in mind:

• Montana has about 118,315 small businesses, representing 99.3% of the state’s total businesses. 
• Small businesses employ 62.5% of Montana’s workforce.
• During their first year of business, Montana startups each create an average of 4.68 new jobs. 
• A whopping 79.54% of Montana startups survive their first year of business. 

6 Steps to Start a Business in Montana 

You know Montana is a great place to start a business, so let’s talk about how to do it. Here are five steps to get you on your way to business ownership:

1. Come up with a business plan

You’ve got an idea, you’ve done some research, and now it’s time to develop a business plan. Think of a business plan like a roadmap: it tells you where you’re going and when you can expect to get there. 
A good business plan should include the following sections:

• A business summary and description. A comprehensive overview of your business, what differentiates it from other local companies, and what will make it successful. You should also include a description of your business, including the advantages of your new company, what problems it will solve for people, and a detailed (we mean detailed) description of your product or service.
  
  
• Market research. Include research on your industry, target market, local and national competitors, and anything else that’s relevant to your field. 
  
  
• Organization. Detail how your business will be structured and who will run it.
  
  
• Marketing plan. A marketing plan explains your strategy for driving awareness and attracting customers to your new business. 
  
  
• Financial forecasts. Last but not least, you should include data and balance sheets that provide an overview of your funding sources (private funds, VCs - venture capital, or angel investors) and an accurate financial forecast for the first few years of your business.
  
  

Never written a business plan before? No problem. The US Chamber of Commerce has a great guide here. 

2. Organize and register your business

Next, you’ll need to determine your formal business entity and register your company with the state. 

This is undoubtedly one of the toughest parts of forming a business - mainly because it has so many tax and financial implications.

When it comes to business entity formation, there are a few main options to choose from:

• Sole proprietorship. This is the legal name for any business you run on your own. Legally, it means that you and your business are one in the same and that your business does not have its own separate legal entity. From a legal perspective, operating as a sole proprietorship leaves you vulnerable: you don’t have any liability protection if something goes wrong, financing can be harder to secure, and tracking expenses can be challenging or impossible.
  
  
• Partnership. A partnership is legally identical to a sole proprietorship, except that it involves two or more people.
  
  
• Corporation. A corporation is a formation that designates a business as a separate legal entity from its owners and names directors, officers, and shareholders. The IRS splits corporations into two distinct classifications: C Corporations and S Corporations. C Corps are the default designation for corporations. They are taxed twice at both corporate and personal income levels. S Corps, on the other hand, are “pass-through entities.” This means that profits flow through to owners and members and are taxed under individual income tax. 
  
  
• LLC. LLC stands for “Limited Liability Company.” LLCs are a hybrid entity - a cross between a corporation and a sole proprietorship - and they offer some of the benefits of both. While LLCs provide some liability protection (like a corporation), they aren’t subject to double taxation (like a sole proprietorship). 

Clear as mud? Don’t worry - you’re not alone. Deciding on the correct entity for your business can be tricky. 

Because the tax implications are complex and long-standing, we highly recommend consulting a business accountant before you put anything in writing. An accountant will help you understand the pros and cons of the different entities and choose the one that best suits you and your goals. 
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Once you’ve decided on a business entity, you’ll need to register your business with the state of Montana. You can do this through the Montana Secretary of State’s Online Business Portal. 

3. Get your federal and state tax ID

Next, you’ll need to obtain a Federal Employer Identification Number (EIN). An EIN is similar to a social security number, but for businesses. It allows you to open business bank accounts, initiate payroll, and file your taxes. You can apply for an EIN online via the IRS website.
 
4. Open business banking and credit accounts

Once you receive your EIN, you’ll need to open a bank and credit card account for your business. 
This is a critical step even if you choose to operate as a sole proprietorship. Having designated business accounts allows you to track and manage expenses and navigate payroll and taxes easily. 

5. Get all needed licenses and permits 

​The next important step is to obtain all the licenses and permits needed to operate in your area. 
Restaurants, for example, will need a liquor license, while businesses like pawn shops will need reseller’s licenses. 
If you’re unsure what licenses or permits you need, check out the MT Department of Commerce’s Business Checklist Tool.

6. Hire an accountant

Last, but certainly not least, you’ll need to hire an accountant to handle your business’s finances. 

Business finances can get complicated and stressful in a hot minute, and it’s critical to get it right from the start. 

Nobody wants to find themselves in the midst of an audit, scrambling to produce receipts (or else!), or lagging on profits simply because of money mismanagement.

Hiring an accountant can help you avoid all that nonsense from the beginning and take full advantage of the financial guidance and support you need to grow a thriving business. 

Elevated Advisory and Accounting: Here to Help you Get Down to Business

Starting a new business in Montana is a major step, and our team is here to help. 

We offer accounting and advisory services for companies throughout Montana’s Flathead Valley, with offices located in Whitefish and Kalispell. Our team will help you navigate all the financials - from payroll to profits and beyond!

Give us a call today to learn more.

I met face-to-face with a client last week. We were still 6 feet apart, but I actually saw her face! During our meeting, she admitted she was stepping out of her business. The exhaustion of starting a business and then immediately having to pivot and homeschool children at the same time was too much. We shared stories of hitting “survival mode” during times of stress this past year — it’s insane trying to keep life together in uncertainty. It’s even harder when you don’t know if your business will make it…or what help is available to help you through.

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What really struck me was her honesty. So many people are “fine”, but are we really? She was open enough to admit that she survived through the hardest times by sticking her nose in the sand and focusing on just getting it done. When she finally lifted her head up to take stock, she was amazed at the toll it took on her.

This hit home.

My partner and I both own businesses. Thankfully, they support two kids, three dogs, and two guinea pigs named Captain Picard and William Reiker (ha!). In reality, our businesses not only support our households, but our valued employees, and clients. 

We’re grateful for the opportunity to help others, but sometimes during the darkest times in the last few months, even that just felt heavy. Phrases I often heard from clients echoed in my own mind over and over: “Just keep going” “It’ll get better soon” “You’re strong” “You’ve got this”. 

Somehow these mantras worked, and here I am.

My partner and I got through the worst of it by adjusting school schedules and communicating actual expectations for the kids. We saw grace (and even humor!) when there were interruptions in Zoom meetings. There were some sunny patches with solo walks in the woods or a wave and a smile from a neighbor. Elevated Accounting’s team even had a few Zoom happy hours filled with encouragement and laughter. And although it sounds so mundane, this was a big deal to us here at the office: We FINALLY received actual direction for the PPP Loans, UI filings, and SBA Grants. 

So, as you lift up your head and look around in the next few weeks, what do you see? Although I’m still asking myself what the heck happened this year with an air of disbelief, these last blurry six months have so many bright spots of deep breathing and true connection. We are still walking on slightly unstable ground, but to me, it feels supported with more community and mindfulness.

If you find yourself without that support in your life and in your business, reach out. Here at Elevated, it’s our goal to help our clients’ dreams come true through total custom packages suited to your individual needs. On top of that? We do it all without judgement. You deserve a partner, not someone who does the least. We’re ready for you!

Sending lots of love,

Sarah