How to Setup a Montana LLC to Save Thousands On Car Registration
With skyrocketing housing, car, and gas prices, everyone is looking for ways to save money. Particularly for new and used-car buyers, the market has become more volatile and erratic than ever, with some experts saying now is arguably the worst time in history to buy a vehicle.
Plus, car owners must also be prepared to pay the various fees that come with the purchase of that new or used vehicle, such as sales tax, title and registration, inspections fees, and any other future maintenance fees that are required to preserve the condition of the car.
Fortunately, thousands of car owners have saved millions by finding a loophole around these expensive and burdening demands — that means low registration expenses, more affordable inspection and maintenance costs, and above all, no sales tax.
And all you have to do is register your vehicle under a private LLC in Montana.
Sounds too good to be true? Let’s dive deeper into the Montana car registration strategy, how it can save you time and money, and how to register your car in Montana.
Everything You Need to Know About LLCs
Montana LLC vehicle registration has become a popular tactic among out-of-state residents looking to cut down on extra car purchase fees. While the process of establishing an LLC is relatively simple, there are some key aspects everyone should understand before jumping in head first.
An LLC, or limited liability company, is an organizational structure active only in the United States that protects owners from being personally pursued and held responsible for debts or liabilities. While LLC rules and regulations vary from state to state, they are most commonly set up as hybrid entities that combine traits of a sole proprietorship and a partnership.
Since most states don’t have particularly harsh restrictions on LLCs, these companies allow anyone to become a member, including local individuals, large corporations, and foreign entities.
When individuals seek to set up an LLC, they must file articles of organization with a state, or documents that establish the rights, powers, duties, and liabilities of owners and/or members of an LLC. These standards can also vary from state to state.
Once these documents are filed, owners pay a fee directly to the state and obtain an EIN, or employer identification number, from the federal government. Of course, if the sole reason you’re setting up an LLC is to register your out-of-state car, the detailed “ins and outs” surrounding business ownership is unimportant to you. For normal individuals, these LLCs are typically referred to as “shell companies.”
In short, a shell company is essentially the same as an LLC, minus the existence of any current business actions. Under this shell company, owners can purchase and register assets. This not only protects those assets but also helps individuals avoid paying high taxes.
While LLCs have been used as a legitimate means of business for decades, there have been some notable fraud involved with this organizational structure. So before looking into setting up your LLC, we encourage you to contact a legal expert, who can ensure you take the correct steps.
So, what does any of this have to do with out-of-state car registration?
Why Car Owners Are Registering Their Car In Montana
When budgeting for a new car, people must not only consider the cost of the car itself, but also the various fees that are tacked on at the end. Depending on the car, these fees can vary greatly, but in general, every car owner must pay sales tax on the new vehicle, fees to obtain a title and registration, and additional inspection costs.
The price range of these fees can be anywhere from a couple hundred to a couple thousand. On elf, the biggest indicator of these costs is location or your current state of residency. For example, buying a car in Wyoming might not be an expensive venture, but buying a car in Florida is will result in a higher average total fee.
That’s why many soon-to-be car owners look for options to lower the cost of these pesky fees which leads us to our main point: Montana is one of the few states in the country that requires no sales tax.
According to the Washington Post, Montana has one of the fairest tax systems in the country, making it an ideal state to register your vehicle. Instead of demanding high sales tax, the state relies on income taxes to raise the necessary money the state government needs to operate.
Some of you might be thinking, “But I don’t live in Montana.”
Enter, the LLC.
By opening a remote LLC in Montana, car owners can register their newly purchased vehicle under their shell company and still partake in the no-sales-tax ruling.
If that’s not enough to sell you on the idea, Montana is also notorious for low license and registration fees. These fees most commonly range from $30 to $300, and while that might not be considered a financial burden for some, the vast majority would consider it a significant saving in today’s economy.
Plus, Montana doesn’t require annual vehicle test requirements — inspections that can cost an average of several hundred dollars for luxury car owners. In most states, standard car inspections can cost anywhere between $150 to $250, with an extra $60 to conduct an emissions test. Removing this requirement not only saves you money upfront but also annually.
Separately, these finical perks are enough to win a new car owner over. Combine these benefits, and that’s likely a few thousand you’ve saved — just by establishing an LLC in Montana and registering your car under it.
Is Out-of-State Montana Car Registration Legal?
As we mentioned earlier, these advantages might seem too good to be true. However, there is no legitimate law that states out-of-state car registration is an illegal practice.
According to Montana state law, falsifying your address or other personal information in the process of purchasing and registering a vehicle is illegal, and could result in fines of up to $10,000, or even prison.
However, opening an LLC in Montana, purchasing a vehicle through that LLC, obtaining a Montana license plate, and driving that vehicle elsewhere is not considered a punishable offense. While you may encounter a few begrudged individuals here and there, none of the preceding actions are considered illegal.
It’s important to additionally note that Montana legislators previously tried to outlaw this practice back in 2017, but the bill never passed after local vehicle dealerships voiced their disapproval.
Since then, the state government has taken no further action, but it would be wise to stay on top of changing local laws and keep in touch with a licensed professional so they can ensure you won’t be at any risk.
How to Register Your Car In Montana
While we made the process sound relatively easy at the beginning of this article, there are some additional registration details you should understand. Once you’ve created an LLC, you’ll need to obtain the certificate of origin from the car manufacturer or the title from the private dealer. Then, ensure the exact name of your LLC is listed as the buyer of the car.
In most cases, it’s easier to set up your LLC before purchasing your desired vehicle. However, if you have already purchased the car before opening the LLC, you will need to establish a chain of ownership, which means transferring ownership from your personal name to the LLC.
For those who fall into the latter category, you will need to fill out a bill of sales and have it notarized. Upon signing the bill, the buyer section should be completed just as you would a title application. Then, sign your name as the acting manager of your Montana LLC. Note that each required document must be the original, with the exception of your LLC paperwork, which can be a copy.
Once you’ve completed your car registration packet — which should include your Montana LLC registration paper, chain of ownership paperwork, method of payment, and your Montana title application—you can then submit the files to the DMV, whereupon your application and registration will be approved, and you’ll receive your Montana license plate in no time.
Consult With a Licensed Professional
Whether or not you’ve encountered areas where you might be confused or uncertain, you should consult your legal needs with a licensed attorney. Especially since not all lawmakers are keen on the out-of-state car registration strategy, having an expert at your side can prove to be advantageous.
Plus, in the case that an insurance company tries to refuse any claims you’ve made on your Montana-registered vehicle, having the protection of a legal professional can prevent you from landing into any legal trouble — though the chances of this happening are considerably low.
That being said, once you’ve received your Montana license and registration, you can finally say goodbye to those pesky titles, registration, and inspection fees with zero burdens of sale tax.
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