How to Register Your Car In Montana From the Comfort of Your Out-of-State Home
During this time of record inflation, it is more important than ever to save money in whatever ways you can. The housing and car markets are especially unpredictable. Whether buying new or used, it is harder than ever to find a fairly priced vehicle. Car maintenance is another expense to add on. A used vehicle, in particular could bring on extra expenses sooner rather than later.
There is not only the price of the car itself and the cost of its care to contend with but also the fees that come along with it. Title and registration fees are high, but sales tax can be extremely expensive, esp. in some states.
There is, however, a solution. There is a way to save money on registering your car and lowering the costs for inspection and maintenance. Thousands of vehicle owners have already done this. The best part is that this method includes freedom from the burden of sales tax.
This method may sound impossible or untrue, but it simply involves registering your vehicle under a private Limited Liability Company (LLC) in Montana, a state that does not charge sales tax. Here are a few things you should know about how to register your car in Montana and save on taxes and fees.
What Is a Limited Liability Company?
Thousands of car owners have jumped on the bandwagon of registering their cars in Montana, even if they live out-of-state. It is a fairly easy process, so if you are looking to do it too, here are a few key points about LLCs to consider.
First of all, it is important to get advice from your legal advisor before taking these measures. Using LLCs as an individual is completely legitimate, but in order to avoid fraud and ensure smooth sailing in tricky legal waters, ask a legal expert for advice before setting up your own.
LLC regulations are different, depending on which state you live in. It is a business structure which can be owned by either individuals or groups. The notable characteristic abut LLC’s is that they keep the owners (called members) safe from responsibility in case of debt or liability on the business’s part. Its purpose is to protect the business owners.
The structure usually (depending on the state) acts as a combination of a corporation, partnership, and a sole proprietorship. This allows it to be more flexible than a corporation but has more protection and tax benefits than a sole proprietorship and partnership.
Depending on the state, most LLCs allow individual citizens, corporations, and even foreign entities to become members. The rules governing LLCs tend to be relatively relaxed, allowing almost anyone to become a member.
In order to open your own LLC, you must first file articles of organization. These are used to establish your LLC at the state level. Rights, duties, powers, and liabilities, as well as other obligations and regulations, are established between members of the LLC and between the members and LLC itself with these materials.
After you file the articles of organization, you must pay a fee to the state. After your fee is paid, you will receive an employer identification number (EIN) from the federal government. Assuming you are only starting an LLC in order to register an out-of-state car in Montana, you are starting a “shell company.”
This means you are just an individual, not a real business, in ownership of the LLC. Your shell company acts as and is, in fact, an LLC. The only difference is that you will not use it to conduct business. What you will be using it for is purchasing and registering assets.
The LLC, or shell company, provides protection for your assets (in this case your car or vehicle) and will allow you to get around having to pay high taxes in your home state.
Obtaining a Montana License Plate
Once you have established a Montana LLC, here are a few more steps on how to register your car in Montana. In order to register the car under your LLC, you need to make sure you have the certificate of origin from the original manufacturer or the title from the private dealer where it was sold. When filling out paperwork, the buyer of the car is technically your LLC …
Therefore, it is imperative that its exact name is put down.
If you have already purchased the car, before establishing an LLC, it gets a little more complicated, but you can still register the car under your LLC. You will have to transfer the ownership of the car from yourself to the name of your LLC by establishing a chain of ownership.
Next, you will have to complete a bill of sales. Once you have it notarized, you should fill out the buyer section like a title application. As the manager of your LLC, you will sign your own name.
To finally obtain your Montana license plate, you will have to submit a car registration packet to the DMV. This packet should include the chain of ownership paperwork, Montana LLC registration paper, method of payment, and your title application. Once your application is approved, your car will be officially registered in Montana.
Why Montana Car Registration?
As discussed, buying a car is no cheap venture. Even if it seems like you have scored an excellent deal on the price of a car, the true cost comes at the end in the form of additional registration and inspection fees as well as taxes.
More likely than not, you will end up spending thousands more than you had originally thought. Each state has different regulations when it comes to many of these costs. Cost can especially vary drastically when it comes to sales tax.
Obviously, when looking to purchase a vehicle, you will look for the least expensive option that suits your needs. However, these extra taxes and fees might seem hard to get around. This can be especially frustrating if you live in a state with high sales tax such as Florida or California. That’s why so many vehicle owners are registering their cars in Montana — Montana requires no sales tax. Montana relies on its state income tax to function, rather than gathering high sales taxes.
Registering your car in Montana might sound like a simple solution. Until you realize you don’t reside in Montana. Thankfully, owning an LLC provides a way around this — one that doesn’t involve moving to a new state just to purchase a car.
If you own an LLC in Montana, you can purchase your car under your shell company. This allows you to make the purchase “in Montana,” taking advantage of their tax-free sales regulations. Montana is an especially good location for your LLC because it has low registration and license fees. If you are looking to save as much as possible when purchasing a car, this may be a great option for you.
Still, there are other states that offer little to no sales tax and low registration fees …
So, why go with Montana car registration specifically?
Well, the state of Montana does not require annual vehicle inspections. These inspections can become quite pricey, especially for luxury car owners. These inspections, along with an annual emissions test, add up especially if you own the car for several years.
Saving on taxes, extra fees, license and registration costs, and even inspections can add up to save you several thousand dollars when purchasing a new or used vehicle. This is what makes registering your car under a Montana LLC so appealing.
Legality of an ‘Out-of-State’ Montana License Plate
While we advise pursuing legal advice before establishing a Montana LLC (especially a licensed attorney), there is no law that states that establishing one to register a vehicle is not legal. Montana legislators have tried to outlaw the practice in 2017 but were unsuccessful thanks to disgruntled dealership owners.
Though the bill did not pass, we advise regularly checking local laws in your home state and in Montana to make sure you are still in the clear and not at risk. Because law makers have already tried to outlaw this method once, it would be advantageous to regularly consult with your attorney or legal expert.
You should never falsify your address or personal information while purchasing or registering a vehicle. This practice is punishable by a significant fine or even a prison sentence. However, an LLC is a business structure and operates as such.
In this way, you can purchase and register a car under it and drive the car in your home state under a Montana license plate without falsifying your personal information.
As the United States goes through a rough economic patch, you can still purchase a vehicle and save your hard-earned money. By registering your vehicle in Montana, you can save thousands of dollars, right from the comfort of your own home — which is probably not located in Montana.
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