For businesses seeking identification as separate legal entities, Montana law allows them to undergo the process of incorporation. This means that the business can buy or sell property, offer and accept contracts and exercise legal rights in its own name. A business looking to incorporate in Montana must file with the Secretary of State in accordance with established guidelines.

Benefits of Incorporation in Montana

A corporation enjoys advantages that unincorporated companies do not. Primarily, it cannot be held accountable for an amount of debt greater than the value of the assets that the owners have invested in it. Had the business instead remained a collection of the owners' personal assets, the personal property of the stakeholders could be liquidated to pay the liabilities of the business, if it runs into financial issues. Also, creditors in the Sidney area usually prefer to deal with corporations, since a loan is an investment more easily evaluated when the credit-worthiness of various owners is not an issue. Lastly, ownership of a corporation is divided into equal portions or "shares" of stock, which may be bought and sold much more easily than the ownership of an unincorporated business.

Costs of Incorporation

Incorporation comes at a price. First, Montana might charge a filing fee to process applications for incorporation. Also, the corporation will pay taxes as its own entity. The individual incomes of owners who are paid disbursements from the corporation's earnings are still taxed as well. This is called double taxation, but it may be avoided with proper planning and assistance from a local Sidney lawyer.