|
|
|
STARTING AND OPERATING A BUSINESS IN MONTANA Copyright © 2004, Michael D. Jenkins
CONTENTS OF THIS SECTION:
I. INTRODUCTION I. INTRODUCTION Montana has a fairly typical tax and legal structure under which businesses must operate, not significantly unlike most other states. Like most states, Montana imposes an income tax, a license fee on corporations (like an income tax), various excise taxes, with property taxes imposed at the local level, but is one of only five states that does not impose any sales or use taxes. While Montana has had one of the highest individual income tax rates (11%) of any state in recent years, recent tax reform legislation has drastically reduced the top income tax rate, to 6.9%, beginning in 2005. The state has also adopted a limited liability company (LLC) law, and a limited liability partnership (LLP) law, so that businesses operating in Montana in LLC or LLP form may obtain the advantages of limited liability, without incorporating or becoming subject to corporate taxation, generally. At present, the state's economy is somewhat less than vibrant, in terms of the level of unemployment and other economic measures, but is improving. For example, in June, 2004, the state's unemployment rate was 4.8%, the same as a year earlier. This compares favorably to a national unemployment rate of 5.6% for June, 2004. Montana has a relatively low cost of living, compared to national averages. To view the latest federal Bureau of Labor Statistics unemployment rate data for Montana or any other state, visit the BLS website. II. LEGAL ENTITIES -- FILING FEES AND REPORTING REQUIREMENTS. (a) In General. A business that operates in Montana can do so as a sole proprietorship, a general or limited partnership, a corporation, or a limited liability company. In addition, like the federal tax law, the state income tax law also recognizes S corporations, for income tax purposes, and generally allows the income or losses of an S corporation to "flow through" and be taxed or deducted at the shareholder level, rather than taxing the corporation itself as an entity. Montana also provides for limited liability partnerships, in which no partner is liable for certain debts of the partnership, somewhat like a corporation or LLC, but with fewer legal formalities than are required for either a corporation or an LLC. Each of the above entities is discussed below, along with the basic requirements for forming such an entity and any general ongoing (non-tax) reporting requirements that are applicable to it. The tax treatment of each form of legal entity is discussed in Section IV below. (b) Sole Proprietorships. In general, sole proprietorships in Montana can be formed with no formalities. However, as discussed in Section IV(b), it will generally be necessary to obtain one or more local business licenses from cities or counties in which you operate and, in some cases, state licenses, as well. No separate tax form filing is required, generally, for
a sole proprietorship, under the Montana income tax law.
Instead, as with the Schedule C on your federal
Form 1040, you simply report the net income or loss from your
sole proprietorship on your state personal income tax return.
See Section IV(c) for information on the Montana
income tax and filing requirements for individuals.
(c) Partnerships. As a rule, general partnerships in Montana can be formed with no formalities, although it is highly advisable to have a written partnership agreement. However, as discussed in Section IV(b), it will generally be necessary to obtain one or more local business licenses from cities or counties in which you operate and, in some cases, state licenses, for any type of partnership, including general or limited partnerships, or limited liability partnerships. A limited partnership, in which there is at least one general partner (who is liable for partnership debts) and at least one limited partner (who is not liable for partnership debts), may also be formed under Montana law. Unlike a general partnership, a limited partnership must generally have a written partnership agreement, and must file a certificate of limited partnership with the secretary of state, together with a filing fee of $20. Foreign limited partnerships must also register before being allowed to do business in Montana, and must pay a registration fee of $20. For information on limited partnership filing requirements, see the contact information for the offices of the Montana Secretary of State, listed in Section VI(a). Limited liability partnerships (LLPs) are a new form of partnership permitted under the laws of Montana. Like an LLC, an LLP provides limited liability for its owners, while retaining the tax advantages of a partnership for federal and Montana state income tax purposes. However, unlike an LLC, an LLP typically operates like a regular partnership, and is not required to file articles of organization. To form an LLP in Montana, you must register and pay a filing fee of $20 to the secretary of state. Foreign LLPs, those created under the laws of another state, must also register with the secretary of state and pay a fee of $20. Note that the Montana LLP law appears to give somewhat less protection to partners in an LLP than state law grants to stockholders of a corporation, so you should not ordinarily consider an LLP as the complete equivalent of a corporation, with regard to limitation of your liability as an owner. However, an LLP will provide greater liability protection than a regular general partnership in many instances. Every LLP doing business in Montana, including both domestic and foreign LLPs, must renew its registration each year and pay the $20 registration fee. For more information on LLP registration and reporting requirements, see the contact information for the offices of the secretary of state, listed in Section VI(a). Note that one potential drawback of LLPs, if you will do business in other states besides Montana, is that you may not enjoy limited liability with regard to creditors of the LLP if you do business in some such states. Some states, like California and New York, only recognize certain types of professional partnerships as LLPs. Such other states may simply treat your LLP like an ordinary general partnership, with no limitation of liability. A partnership agreement, for any type of partnership, should spell out in considerable detail such matters as the following:
Partnerships, as entities, are not subject to state income tax in Montana. Instead, the income or losses of the partnership, as allocated among the partners, must be reported on the personal income tax returns of the individual partners (or on the corporate tax returns of any corporate partners). Partnerships are required to file an annual tax information return with the state. For details on Montana partnership tax return filing requirements, see Section IV(c). (d) Corporations. To form a corporation in Montana, you must file articles of incorporation with the Montana Secretary of State and pay a filing fee of $70. Formerly, before the secretary of state reduced and simplified corporate filing fees in 2003, a new corporation could pay more then $1,000 in fees, depending on a complex schedule based on the amount of capital stock issued. Now all new incorporations are subject to only a $70 fee. A foreign corporation (one formed under the laws of another state or a foreign country), must obtain a certificate of authority before it may legally conduct business in Montana, by filing an application for a certificate of authority and paying an entrance fee of $70. For more information on filing articles of incorporation or applying for a certificate of authority to do business in Montana, see the contact information for the offices of the secretary of state, listed in Section VI(a). In addition, once your corporation is formed, it will be required to file annual reports and a filing fee of $15 with the secretary of state each year. Failure to file this report on a timely basis could result in suspension or revocation of your corporation's charter. The fee is doubled, to $30, if the report is filed late, after April 15th for the preceding calendar year. In addition to paying federal income taxes on its income, a corporation that does business in Montana must also file corporate license (income) tax returns with the state. See Section IV(c) for a discussion of state corporate income tax rates and tax return filing requirements. For tax forms and more information on corporate income taxes in Montana, see the contact information for the offices of the Montana Department of Revenue, listed in Section VI(a). (e) S Corporations. An S corporation is simply a regular corporation that has elected, for federal or state income tax purposes, or for both, to be taxed somewhat like a partnership, with its income, losses and tax credits flowing through to its owners, who report such income, losses, or credits on their individual tax returns. Montana recognizes S corporations for income tax purposes, and treats them in a manner similar to the federal tax treatment. An S corporation should file a copy of its federal S corporation election with the Montana Department of Revenue. (f) Limited Liability Companies. Montana, like every other state in the U.S., has adopted a limited liability company (LLC) law. Thus, in addition to the traditional choices of a sole proprietorship, partnership, or corporation, a business that operates in Montana may also choose to operate in the form of an LLC. LLCs are very attractive entities for many small businesses, in that they offer the same protection as a corporation from creditors for debts of the business, while offering much of the flexibility plus the flow-through tax treatment of a partnership for federal tax purposes, and in most states. See Section IV(c) for a discussion of the income tax treatment of LLCs under Montana tax laws. To form an LLC under the laws of Montana, one or more persons must file articles of organization with the secretary of state, which must be accompanied by a filing fee as set by the secretary of state, currently $70. Montana state law was previously not entirely clear as to whether it permitted the formation of one-owner LLCs, but the LLC law has been amended, effective April 12, 1999, and now clearly permits one-owner LLCs. Single-owner LLCs are "disregarded entities" for federal and Montana tax purposes. However, unlike most states, Montana requires all disregarded entities, including single-owner LLCs and certain S corporation subsidiaries, to file an annual Disregarded Entity Information Return, Form DER-1. The only exception is for a single-member LLC, where the sole owner is an individual who was a full-year Montana resident during the applicable reporting period. Foreign LLCs, those formed under the laws of another state, must obtain a certificate of authority to do business in Montana, by filing an application for a certificate of authority with the secretary of state and paying an entrance fee of $70. In addition to initial filing fees, an LLC formed in Montana must subsequently file annual reports by April 15th with the secretary of state and pay an annual report filing fee of $15 with each such annual report. A foreign LLC is also required to file an annual report and pay the applicable filing fee of $15. Annual report filing fees are doubled, to $30, if filed after April 15th. For more information on filing articles of organization for an LLC, see the contact information for the offices of the secretary of state, listed in Section VI(a). III. BUSINESS ACQUISITIONS (a) In General. When acquiring an existing business, there are a number of state legal and tax issues you or, preferably, your business attorney, should attend to before closing the purchase. These include matters such as doing a title search for any real property that is being acquired, checking for any recorded security interests on personal property items, and thoroughly researching county, state, and federal records for any judgment liens, tax liens, or other liens, before property is acquired. You will also benefit from consulting a tax advisor before the agreement of sale is negotiated, in order to seek a structuring of the agreement so that the purchase price is allocated among the assets in a way that favors you. You may be able to obtain considerable tax savings if the purchase price is allocated in a way that gives you the best possible tax results under federal and state income tax laws, and other state tax laws, such as sales/use tax or property tax laws. Depending upon the state (or states) in which the seller's assets are located, you may also have to comply with state bulk sale or bulk transfer laws. You should also obtain tax releases from various state taxing agencies, as discussed below. (b) Bulk Sale Laws. Typical bulk sale laws require either publication of legal notices to all creditors in advance of the sale and recording of such notices in some cases, or maintenance of detailed lists of the property to be transferred, for inspection by the public. Montana is one of the business-friendly states that has repealed its bulk sale laws, so you no longer have to be concerned with this requirement when buying a business in Montana. (c) Tax Releases. When you acquire an existing business, you will want to make sure that you do not unwittingly become liable for any unpaid taxes owed by the seller. Typically, to protect yourself, you will need to receive a tax release or releases from various state taxing agencies, for such taxes as sales and use tax, income tax withholding, and state unemployment taxes, in each state in which the seller does business. If you fail to obtain such a release or written statement from the tax agency that the seller is not delinquent on any tax payments, you will be held responsible for such tax if it is not withheld from the purchase price proceeds and paid to the state at the time the sale of the business transpires. In Montana, you should obtain a tax release for state unemployment tax from the Unemployment Insurance Division of the Montana Department of Labor and Industry. Unlike most other states, where a sales and use tax release may be required, there is no sales or use tax in Montana. (d) Unemployment Tax Rating of Seller. In addition to obtaining tax releases, you may find it advantageous to succeed to the seller's unemployment tax experience rating, if the seller has a tax rate lower than you would otherwise obtain as a new business. To obtain the seller's favorable experience rating as a successor employer, you will need to apply on a timely basis to the Unemployment Insurance Division of the Montana Department of Labor and Industry, requesting that you be treated as a successor employer. If you acquire a business of a subject employer, you can apply to have the experience rating record of the previous employer transferred to you. You and the previous employer must apply jointly within 90 days of the date you acquire the business. It is also possible to become a successor employer if you acquire a segment of an existing business, rather than the entire business. Contact the UI Contributions Bureau to find out if it would be beneficial for you to have the experience rating record transferred. If the previous owner and your firm have not filed all the required wage reports or paid all assessments due, all the delinquencies must be satisfied before Montana will assign you a rate based on the previous owner's experience. If the new ownership and/or management of the business is substantially the same as the prior ownership and/or management, you will assume the prior owner's contribution rate. IV. MONTANA TAXES AND OTHER GENERAL REQUIREMENTS. (b) State and Local Licensing. Nearly any business, operated anywhere in the United States, will have to have at least one government license of some kind. In most cases, this will be a local license, issued by your city or county. Before you open your business, contact your local city or county hall and find out if your particular business needs one or more local licenses. Most kinds of local business licenses are granted upon payment of a fee, with no further requirements, except possibly for annual or other periodic renewal fees. However, if you are engaging in any kind of food business, you will usually need to also obtain a health department permit and show that you are in compliance with health department food-handling requirements. In addition, be sure to check with an attorney or local government zoning or planning department officials to determine if your business will be in compliance with all local zoning and planning restrictions. If you own or rent any type of facility, you will generally need fire department permits, showing that you meet fire safety codes and any construction or improvements to an existing structure will usually require a building permit. If you intend to simply operate your business from your home, you may be in violation of local zoning requirements, but this is less likely to be a concern if you don't have clients, customers, suppliers, or employees coming to your house on business, on a regular basis. State governments also traditionally require special licenses for many kinds of professionals, such as physicians, dentists, lawyers, and accountants. To further protect consumers, Montana has expanded the list of occupations that must be licensed by the state to include many other occupations. Most state licenses not only require payment of fees, but are only issued for a given profession or occupation upon showing that you have completed certain educational or experience requirements, or passed certain tests, or some combination of the foregoing. For information on state licensing and business registration requirements in Montana, see the contact information for the offices of the Montana Department of Labor and Industry, Bureau of Professional and Occupational Licensing, and the One-Stop Licensing Office of the Montana Department of Revenue, both of which are listed in Section VI(a). (c) Income and Franchise Taxes. Montana has both an individual income tax and a corporate income tax (called the corporation license fee), but has no franchise tax on corporations. The Montana individual income tax is imposed at a maximum tax rate of 11% in 2004, but tax reform legislation enacted in 2003 will reduce the top tax rate bracket to 6.9%, starting in 2005, on income in excess of $13,900 (or in excess of $14,300 in 2006). However, under the new tax reforms, an individual will only be able to deduct, as an itemized deduction on his or her Montana income tax return, the first $5,000 of federal income tax liability ($10,000 for married couples filing joint returns). Individual taxpayers generally must pay state income tax on their business earnings from a sole proprietorship, or on their share of the earnings of a pass-through entity, such as a partnership, S corporation, or LLC. The Montana personal income tax return is Form 2, which must be filed with the Department of Revenue by April 15th each year, for the preceding calendar year. Partnerships, or entities taxable as partnerships, such as LLCs, are not subject to state income taxation in Montana, but must file an information return with the Department of Revenue each year, showing each partner's share of taxable income, losses, and credits. Individual taxpayers doing business as sole proprietors, or who are partners in partnerships, or members of LLCs, are required to make payments of estimated Montana individual income taxes, if their net tax liability (not covered by withholding) is $500 or more. Estimated tax payments are due in four installments, on the 15th day of the 4th, 6th, and 9th months of the taxable year, and the 15th day of the first month of the following year. To avoid penalties for underpayment of estimated tax, you must either pay in 90% of the current year's tax, or 100% of the previous year's tax. The Montana corporate income tax rate, on corporations other than S corporations, is 6.75%, or 7% on unitary groups of corporations making a "water's edge" election. The state corporation income tax return is Form CLT-4, which must be filed with the Department of Revenue by the 15th day of the fifth month following the end of the taxable year, or by May 15th in the case of a corporation whose taxable year is the calendar year. There is a minimum annual tax of $50. Corporations are required to make estimated tax payments of their state corporate income tax in advance, if their tax liability for the year equals or exceeds $5,000. Estimated tax payments are due in advance, in four equal installments, on the 15th day of the 4th, 6th, 9th, and 12th months of the taxable year. The total estimated tax that must be paid in is usually equal to 80% of the actual tax liability for the year. However, if the preceding year was a full year of 12 months, the current year payments need only be equal to 100% of the prior year's tax liability, if less. Penalties will be imposed for failure to make the required estimated tax payments on a timely basis. In Montana, a limited liability company (LLC) will generally be taxed in the same manner as a partnership or a sole proprietorship, thus avoiding the possible double taxation of income that can occur with a corporation. The Montana LLC law was amended in 1999 to permit the formation of one-member LLCs. Under IRS regulations, effective since 1997, an LLC may elect to be treated as a partnership if it has more than one owner, or as a sole proprietorship if it does not, for federal income tax purposes. Note that it is not always entirely clear whether an LLC is a "single-member LLC" LLC or not, where the "single owner" is a married couple who hold the entire ownership of the LLC in some form of co-tenancy, such as joint tenants with right of survivorship, tenants by the entirety, or as tenants in common. The federal Internal Revenue Service (IRS) has taken a very lenient position in Rev. Proc. 2002-69, where a couple hold the LLC interest as community property, ruling that the IRS will accept whatever choice the couple make, either to disregard the LLC as an entity (treating it as a "single-member LLC") or to treat it as a partnership between the husband and wife. However, Montana is not a community property state, so where the LLC is owned by a husband and wife in some form of co-tenancy, it is unclear whether the IRS treatment would be as lenient as for community property owners, since the IRS has not issued any published rulings on whether an LLC can be a disregarded entity if held in one of the various forms of co-tenancy by a married couple, rather than being held as community property. Thus, it is also unclear, where an LLC is owned by a husband and wife as co-tenants, whether Montana would treat the LLC as a single-member LLC or as a partnership. Effective since 2002, Montana allows pass-through entities (S corporations, partnerships and LLCs) and disregarded entities (one-member LLCs) to file composite returns and pay the Montana income tax on behalf of the shareholders, partners, or members, if all such owners agree to the filing of a composite return. In addition, where a pass-through entity has one or more nonresident owners, the entity must either file a composite return with respect to the nonresident owner, or the nonresident owner must file an agreement to file a Montana income tax return, pay taxes imposed with respect to income of the pass-through entity, and be subject to the personal jurisdiction of the state of Montana for the collection of income taxes. (d) Sales and Use Tax. There is no general sales or use tax in Montana. However, there is a 4% lodging accommodations tax that applies to gross revenues of hotels, motels and other providers of transient accommodations. In addition, to the 2003 tax reform legislation has imposed an additional "limited sales tax" of 3% on such accommodations, as well as campgrounds, and a 4% tax on vehicle rentals, beginning June 1, 2003 for accommodations tax and July 1, 2003 for vehicle rentals tax. Vendors collecting the new accommodations and vehicle rental sales taxes are allowed to retain 5% of such collections, as a vendor allowance -- limited to $1,000 per quarter. For more information on Montana Accommodations Tax and the limited sales tax registration and compliance, see contact information for the offices of the Montana Department of Revenue in Section VI(a). (e) Real and Personal Property Taxes. In Montana, as in every other state, any business real estate you own will be subject to real property taxes. In general, there is little that you must do, unless you wish to challenge your assessed valuation, since the assessor will bill you for each year's property taxes as they come due. Montana also imposes personal property taxes on tangible personal property. However, certain business personal property, such as business inventories, are exempt from personal property tax in Montana. Montana also imposes a personal property tax on certain types of intangible personal property. Contact your local county tax assessor for information on property taxes in your area. (f) Other Business Taxes. Montana imposes a number of other taxes on businesses, some of which may affect you. These include:
Unlike most states, Montana does not impose any conveyance or transfer taxes on real estate conveyances. (g) Trade Names. A trade name, also known as a fictitious or assumed name, is any name used in the course of business that does not include the actual legal names of all the owners of the business. Thus, if your business goes by any name other than your own real name, it is operating under a trade name. The same is true of a corporation, if it operates under a name other than its legal name. A trade name might also be one that suggests the existence of additional owners, by using such words as "company," "associates," or "group." In most states where you do business, it will be necessary to register a trade, fictitious, or assumed name, so that people who do business with you can find out who the actual owners of your business are. You may also want to register any such trade name, as a means of protecting against other companies usurping that particular trade name. To register an assumed name in Montana, you must file Form ABN-1, Application for Registration of Assumed Business Name, with the secretary of state, and must pay a $20 registration fee. V. EMPLOYER REQUIREMENTS IF YOU HAVE EMPLOYEES (a) Employer Registration and Withholding. If you have any employees, you will already be withholding federal income tax and FICA taxes from their wages. Since Montana imposes a state income tax on the income of individuals, you will need to also withhold Montana income tax from the wages of your employees. Before you begin to pay wages, you must register as an employer with the Department of Revenue. For more information on Montana income tax withholding and registration requirements for employers, see the contact information for the offices of the Department of Revenue, listed in Section VI(a). (b) Unemployment and Other State Payroll Taxes. If your business has one or more employees, you, as an employer will be required to pay state unemployment tax based on the amount of such wages paid. Employers subject to the Montana unemployment tax are required to register with the Unemployment Insurance Division of the Department of Labor and Industry and to obtain an employer identification number for state unemployment tax purposes by registering with the Department of Revenue. An employer must post a Proof of Unemployment Insurance Coverage notice in the workplace. New employers are required to pay tax at a rates that vary by industry on the first $20,300 (for 2004) of wages paid to each employee. After you have had employees for a while, you will develop an unemployment tax experience rating. This rating is based on the number of employees you terminate who then claim unemployment benefits and the amount of such benefits paid to those former employees, under complex formulas. The state will inform you when they have assigned you an individual tax rate based on your firm's experience rating. That rate may be higher, or, if you have had relatively few benefit claims charged to your account, lower than the standard new employer tax rate you initially were paying. Beginning July 1, 2004, administration of the Montana unemployment tax system was shifted from the Department of Revenue to the Department of Labor and Industry. All state unemployment taxes are imposed upon you as the employer, and, under Montana law, cannot be charged to your employees or withheld from their wages. For more information on your Montana unemployment tax obligations as an employer, see the contact information for the offices of the Unemployment Insurance Division of the Montana Department of Labor and Industry, listed in Section VI(a). (c) Workers' Compensation. Workers' compensation insurance is a state-mandated insurance requirement for most employers, in almost every state. In Montana, virtually all businesses with one or more employees are required by law to have workers' compensation insurance, except those able to self-insure. Note, however, that a sole proprietor, a partner in a partnership, a member of an LLC, or a corporate officer who owns 20% or more of the stock of the corporation or interests in the LLC, is generally not considered an employee, although any such person may elect to be covered. Workers' compensation provides wage loss and medical benefits to employees injured on the job and it protects you, as an employer, from legal action for damages for injuries or job-related illnesses suffered by your employees. In effect, it is a "no-fault" insurance system for work-related injuries or illnesses. Thus, if you fail to obtain required workers' compensation insurance, and an employee is injured on the job, you will have opened yourself to unlimited liability and severe legal consequences, so it is very important to obtain workers' compensation insurance for your employees. Be aware that neither general liability nor health and accident insurance can properly substitute for workers' compensation insurance. As an employer, you must notify injured employees of their benefits, if they report an injury to you within 30 days of its occurrence, and must also post a Proof of Workers' Compensation Insurance Coverage on your employee bulletin board. For more detailed information regarding your obligations as an employer under the Montana workers' compensation laws, contact your insurance carrier or see the contact information for the offices of the Employment Relations Division of the Montana Department of Labor and Industry, listed in Section VI(a). (d) State Wage and Hour Laws. Some employees of certain small firms not engaged in interstate commerce are not covered by the federal minimum wage and overtime laws. However, even if few or none of your employees are covered by the federal wage-hour laws, if, for example, because your firm does less than $500,000 a year in gross sales and the employees in question are not deemed to "...engage in (interstate) commerce...," they will still generally be subject to the Montana wage-hour laws, which provide for a state minimum hourly wage that is the same as the federal minimum, $5.15 per hour, or $4.00 per hour for small employers with under $110,000 a year in gross sales. Montana law, like federal, also requires payment of overtime pay at time-and-a-half, for hours worked in excess of 40 hours a week, generally, with certain exceptions, such as for farm workers. Note that, as under federal wage-hour laws, certain classes of executive, administrative, and professional employees are exempted from the Montana wage-hour rules. Unlike most states, Montana does not require an employer to post a state wage-hour poster in the workplace. However, an employer is required by law to notify employees, if requested, of wage rates, hours, and the date of paydays, either by providing such notice in writing to the employee or by posting of a notice in a conspicuous place. In addition to wage-hour laws, most businesses are subject to federal child labor laws, which put numerous restrictions on the working hours and kinds of work in which minors under the age of 18 may engage. Your business must also be cognizant of similar state child labor laws, in Montana. (e) State Occupational Safety and Health Laws. Employers in Montana must comply with federal job safety laws designed to prevent injuries resulting from unsafe or unhealthy conditions in the workplace. The state of Montana, like a majority of states, does not have a federal Occupational Safety and Health Administration (OSHA) approved enforcement agency, so the federal OSHA agency is responsible for enforcing health and safety standards issued in Montana. Note that while you may obtain a free safety consultation from federal OSHA experts, they must and will cite you for any violations they discover at your workplace. This is not the case with state safety inspections. If you request a safety consultation from the Safety Bureau of the Montana Department of Labor and Industry and they detect violations, they will not cite you if you promptly correct the unsafe conditions. For information on your job safety and health obligations as an employer, required federal posters, and possible on-site safety consultations, see the contact information for the Helena offices of the Safety Bureau, listed in Section VI(a). (f) Other Miscellaneous State Labor Laws. Other Montana labor laws you need to be aware of, as an employer, include the following: (1) Wage payments to terminated employees. State law in Montana requires an employer to pay wages within ten days after they become due and payable. An employee who is separated from service between paydays must be paid final wages by the next regular payday, or within 15 days of his or separation, whichever is earlier. However, if an employee is terminated for cause or laid off, final wages must be paid immediately, unless the employer has a written personnel policy that states that final wages will be paid in such instances on the next regular payday, or within 15 days, whichever is the earlier. When an employee is discharged by reason of an allegation of theft of property or funds connected to the employee's work, the employer may withhold from the employee's final paycheck an amount sufficient to cover the value of the theft if:
(2) Right-to-work laws. About half the states have enacted "right-to-work" laws, which guarantee that no person may be denied employment for refusing to join a union or for not paying union dues, thus banning either "union shop" or "agency shop" agreements, or both. In a union shop, an employee not belonging to a union may be hired but then must join the union, usually within 30 days. In an agency shop, an employee need not join the union but, to remain employed, must pay union dues. Montana does not have such a right-to-work law and allows union shop or agency shop contracts between an employer and a union. (3) State anti-discrimination laws. In addition to their compliance with federal anti-discrimination laws, employers must also be aware of and comply with state civil rights laws in Montana. Montana law prohibits discrimination in employment on the basis of race, creed, religion, color, sex, physical or mental disability, age, or national origin. For more information on your obligations as an employer under Montana's civil rights laws, contact the Montana Human Rights Commission, at the address listed in Section VI(a). (4) Reporting new hires. Under new federal welfare reform laws, employers in all states now must report their newly-hired (or rehired) employees to an appropriate state agency (the Montana New Hire Reporting Program for Montana employers) within 20 days after the date of hire. See the contact information for the New Hire Reporting Program in Section VI(a). (5) Lie Detector Tests Prohibited. Montana law prohibits an employer from requiring any person to take a polygraph or other mechanical lie detector test as a condition of employment or continuation of employment. VI. STATE SOURCES OF HELP AND INFORMATION (a) Key State Agencies Contact Information. Montana, as many states have done in recent years, has set up a "one-stop" licensing center to help your new or existing businesses to obtain all necessary state licenses and permits from a single office, without your having to go from agency to agency to meet all the legal and regulatory licensing requirements. You can register your business with the state for Montana income tax, the Accommodations Tax, and other licenses with the One Stop Licensing office of the Montana Department of Revenue, registering on a Form MA, Master Application form. A One-Stop Licensing Guide is available on the Department of Revenue website, in .pdf format. (You will need Adobe Acrobat, which can be downloaded free on the Internet, to view or print out the .pdf file.) To obtain business registration forms and information on starting or relocating your business in Montana, contact the Department of Revenue, One Stop Licensing, at the following address:
SECRETARY OF STATE. Contact the office of the secretary of state for information on:
STATE UNEMPLOYMENT TAX. Contact the Department of Revenue, or the Department of Labor and Industry, at the addresses listed above, to determine whether you are an employer subject to payment of state unemployment taxes, and for registration as an employer if you are subject. NEW HIRES REPORTING. Employers in Montana must report all newly hired or rehired employees within 20 days of hiring to the following agency, either by telephone, fax, mail or by various electronic means.
STATE OSHA PROGRAM. There is no state OSHA program in Montana. The federal government provides federal OSHA enforcement instead. For information on OSHA safety consultations by the state for your workplace, contact:
(b) Small Business Development Centers. A number of Small Business Development Centers (SBDCs) are located throughout Montana to assist you. These centers, usually located on college campuses, provide a wealth of start-up information and sponsor frequent business-oriented seminars. Contact the lead office below for information, or for the location of other SBDCs nearer to you.
(c) Internet Sites. If you have access to the Internet, there is a wealth of state and even local business information provided by state and local governments. All states now have a state government Web page, and most major state agencies also have sites on the Internet where you can obtain useful small business information on matters such as state taxes, financing sources, or the addresses and phone numbers (or e-mail addresses) of various state and federal agencies' offices in Montana. Since new sites are appearing constantly, you might also want to search for other Montana government Web sites by using one of the popular Internet search engines, such as Infoseek or Yahoo. To start your Internet search for Montana government information, you may want to begin with the following Internet sites: State of Montana home page: State of Montana list of government agencies: Montana Department of Revenue (tax forms, business registration, tax information): Secretary of State (corporate, limited partnership, LLC and LLP filings): Montana New Hires Reporting Program (filing instructions and addresses for reporting new hires):(d) Financing Sources. For information and help on locating financing for your small business, contact the nearest U.S. Small Business Administration office in Montana, or contact the following state agency:
|
Copyright © 2004 Michael D. Jenkins
|