Montana at a glance
Partnership law
RUPA (revised)
LLC default split
Proportional to capital
Operating agreement
Not required
Community property
No
Formation cost
$35
Annual cost
$20 annual report fee
Montana has one of the lowest LLC formation fees in the country at just $35. The state follows RUPA for partnerships and traditional capital-contribution-based defaults for LLCs. Montana also has no sales tax, which can benefit certain businesses.
Default partnership rules in Montana
Montana adopted RUPA, treating partnerships as separate entities. Profits and losses are shared equally by default. Partners have equal management rights and owe fiduciary duties.
The most important takeaway: profits are split equally by default in Montana, regardless of capital contributions. If you and a partner start a business and one of you invests $100,000 while the other invests $5,000, you still split profits 50/50 without a written agreement. This is true in every US state, including Montana.
LLC defaults in Montana
Montana allocates LLC profits and losses in proportion to capital contributions by default. An operating agreement is not required. Montana has low annual fees of $20 and no sales tax, though it does impose an income tax on business income.
Montana defaults to proportional distributions based on capital contributions, which aligns better with many founders' expectations than equal-split states. However, capital contributions alone rarely tell the full story. A founder contributing time and expertise may receive nothing if they didn't invest cash. An operating agreement can account for all types of contributions. Our equity calculator can help you determine a fair arrangement.
What happens when a partner leaves in Montana
Under Montana's RUPA, a partner's departure does not dissolve the partnership. The partnership continues, and the departing partner is entitled to a buyout at fair value.
A written partnership agreement should still address departure terms specifically, including how the buyout value is calculated, the payment timeline, and any non-compete provisions. While RUPA provides a default framework, the details of a buyout can still lead to disputes if not spelled out in advance. Understanding the concept of dead equity is important for managing these situations. Learn more about how dead equity affects businesses.
Marriage and business equity in Montana
Montana is an equitable distribution state. Business interests acquired during marriage are marital property. The court considers the duration of the marriage, the age and health of the parties, and the economic circumstances in dividing property.
Even though Montana is not a community property state, marriage can still affect your business equity. In equitable distribution states, courts divide marital property based on what is fair, which may include business interests acquired or grown during the marriage. A clear equity agreement and proper documentation of ownership can help protect your business in the event of a divorce.
Formation and cost considerations in Montana
| Formation cost | $35 |
| Annual/recurring cost | $20 annual report fee |
| State income tax | Yes |
| Partnership law | RUPA (revised) — partnership continues after departure |
| LLC default distributions | Proportional to capital contribution |
| Operating agreement | Not required (strongly recommended) |
Frequently asked questions
How much does a Montana LLC cost?
Montana LLC formation costs $35, and the annual report fee is $20. First-year costs are just $55 before legal fees, making Montana one of the cheapest states in the country.
Does Montana have a sales tax?
No, Montana is one of the few states with no sales tax. This can benefit businesses selling goods, though the state does impose an income tax on business profits.
What is the default profit split for a Montana LLC?
Montana defaults to proportional allocation based on capital contributions. An operating agreement can change this to any arrangement the members choose.
How do Montana partnerships handle a partner's departure?
Under RUPA, the partnership continues when a partner leaves. The departing partner is bought out at fair value, and the remaining partners can continue operating.
Related resources
- Equity calculator: find a fair split for your business
- Does your small business need an equity agreement?
- Equity for small businesses: the complete guide
- Dead equity calculator: how much is yours costing you?
- Slicing Pie calculator
- What is an operating agreement?
- All 50 states: partnership and LLC default rules
Partnership laws in neighboring states
Disclaimer: This page provides general information about Montana partnership and LLC default rules and is not legal advice. Laws change, and the information here may not reflect the most recent amendments. The formation costs and annual fees listed are approximate and may vary. Consult a qualified attorney licensed in Montana for advice specific to your situation. Equity Matrix is a software tool for tracking contributions and calculating equity; it does not provide legal services.
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