Forming a Limited Liability Company (LLC) in Montana helps you save money on business purchases, compared with most other states. Part of the savings is due to the fact that Montana is one of five American states that has no sales tax, along with Oregon, Alaska, Delaware and New Hampshire.
The Great Depression led to most states adopting sales taxes, which can sometimes be cost-prohibitive. Here are more key reasons to launch a Montana LLC.
- Avoid Extra Costs
Paying no sales tax in Montana can equate to tens of thousands of dollars in savings on vehicles that cost six figures. Sales taxes are as high as 8% in some states, which can be a fortune that might be better used as startup capital for a business. The huge savings from not paying sales tax will allow you to make your own money go further toward your business and personal goals. You will need to pay minor business and vehicle registration fees but the process is quick and easy.
Before applying for a Montana LLC, you should investigate the "use tax laws" in the state where you already reside. Most states require consumers to pay use taxes when they make a purchase that allows them to avoid sales tax in another state. Use tax rates vary from state to state. Montana does not have a use tax but if you live in another state with a use tax, you may still have to report the transaction and pay the use tax to your state. A typical use tax essentially takes the place of a sales tax.
- Luxury Vehicle Savings
Sales taxes will be avoided on boats, airplanes or any other vehicles that you want to purchase for your Montana LLC. If you've always wanted a luxury car, you're allowed to claim it as part of your business. You don't even have to move to Montana to operate your business, as it can be run from anywhere in the world. It doesn't matter what type of business you want to own. In other words, the business doesn't have to be based on transportation.
While it would make sense to buy a premium vehicle like a Lexus or a sporty Ferrari for a high-end business, luxury vehicles can be used for any type of company. Purchasing a Tesla Model S, for example, sends out a message to society that you're an early adopter of this century's new wave of electric vehicles and that you care about protecting the environment. Renewable energy has a clean image and helps reduce your carbon footprint.
- Lifetime License Plates
Another advantage of buying vehicles in Montana is that, if your vehicle is over 10 years old, you will have lifetime license plates. The only requirement for a license plate is that you register the car, truck, van, SUV, or RV. Montana allows you to keep your existing license plate and transfer it to your next vehicle. In fact, your plate cannot be transferred to a buyer.
The plate needs to be issued by the Montana Vehicle Division (MVD) and placed on the back of the vehicle. You can purchase customized plates as well. All plates must display a valid registration decal in the upper right corner. The only real change to plates over time is that the state changes the design every five years.
- No Inspection
You will also get to bypass the inspection process that is required in many states, e.g., California. Montana does not require smog or emission checks, regardless of the year, make and model. These checks can end up costing thousands of dollars in other states if the vehicle doesn't pass a smog check, while Montana's no inspection policy means further savings. The average cost of a catalytic converter replacement for a Mercedes-Benz E320, for example, is up to $5,000 when you factor in labor costs.
- Smart Business Move
If you care more about making money than spending money, then starting a business that pays for items you want such as new or classic cars can be both professionally and personally rewarding. A Montana LLC is easy to set up and doesn't require much paperwork. The advantage of an LLC is that you can run the company however you want. If you have business partners then you just need to agree on decisions as a group, which is still much more independent than a corporation.
Your business will have plenty of freedom to operate under whatever structure you decide. Unlike a large corporation that must consistently try to raise profits for shareholders, an LLC doesn't have to worry about such financial pressures. You can make the company as simple or complex as you want. While you'll need to submit an annual earnings report to the state, you won't have to otherwise deal with regulators.
One way to maximize your purchases on high-end vehicles is to start a Montana LLC and then register the vehicles in your company's name. Since Montana has no state sales tax, you can save tens of thousands of dollars on purchases of luxury vehicles. You'll also be spared the red tape found in most other states. So consider your dream car as part of the grand prize that you've always worked toward, along with a new business that helps pay for even more vehicles and other purchases down the road.