Legal Car Registration: What Role Does an LLC Play In Montana?
A swaying housing market, fluctuating gas prices, and volatile vehicle expenses — the past couple of years have thrown the national economy for a loop, to say the least. And while some experts say now is the best time to steer clear from big purchases, the great state of Montana has seemingly found a loophole that avoids the hefty fees and cumbersome costs that come with such investments.
As thousands of car owners have discovered, Montana offers a solution to the various expenses that come with purchasing and maintaining a vehicle, including sales tax, title and registration, and inspection fees. Not only that, but car owners can benefit from all these advantages without having to change residences. What’s this newfangled solution, you may ask?
The answer lies in establishing a Montana LLC.
Limited liability companies (LLCs) are typically created to protect a business owner’s assets from personal responsibility for its liabilities or debts. This organizational model blends features of a sole proprietorship and a partnership to create a flexible business structure, providing various benefits for the owner in the process.
Virtually anyone can open an LLC, as long as they do so legally and according to the standards outlined by their state government. There is no legal requirement that states you must be a high-end businessman to open and own an LLC. Now, what does this have to do with Montana car registration?
According to the very definition of an LLC, when a person opens a limited liability company, they may extend protection to their personal property — including their vehicle. In this case, since the intent of the LLC is to simply exist, it may be referred to as a shell company, which is a corporation without active business operations or significant assets.
Why Choose Montana to Register Your Vehicle?
Aside from an appreciation of Montana’s wondrous waterfalls, mountains, and lakes, the number one reason to register your car under a Montana LLC is due to the state’s significant tax benefits — that is to say that there is no sales tax.
Let’s consider the average price of a vehicle in today’s car market. According to CNBC, the typical price for a used car is $33,341. By the end of 2021, the average listing for a new car (one to three years old) reached just over $47,000 — record figures that can be attributed to the global effect of the COVID-19 pandemic.
CNBC also states that the average listing price is now $13,000 more than it would have been had the pandemic never happened. But the purchasing process doesn’t end there. When budgeting for a new (or used) car, you must not only consider the cost of the car itself but the various extra fees — like sales tax.
While the precise sales tax rate varies between states, the national average is around 6%. With the help of some light mathematics, that means Americans are paying over $2,000 in sales tax for a used car priced at $33,341.
Keeping that in mind, the additional costs of registration fees can range from $40 to $200. In total, those costs amount to over $35,500 — all for a used vehicle. And that doesn’t even begin to include the long-term maintenance fees that are required to keep the car running.
What to Know About Montana’s ‘No Sales Tax’ Rule
Now, it’s no wonder car owners are desperate for a way to reduce the increasing costs that come with owning and operating a vehicle — and not even a luxury one, at that. Thanks to Montana’s zero-sales tax rule, car owners can simply register their vehicle under a Montana LLC and be exempt from paying sales tax.
Plus, the state offers considerably lower licensing fees, no inspection requirements, and more affordable registration options — and no requirement to move your state of residence to Montana.
And before you ask, there’s no catch.
Montana simply doesn’t have enough dense population regions to impose a sales tax on its residents. Instead, the state generates its funding from income and property taxes — an aspect that out-of-state car owners don’t have to worry about.
Other Benefits to Consider
The advantages don’t stop at no sales tax, either — which, alone, is still enough to make a car owner want to set up a Montana LLC. In addition to being a tax haven, Montana also has no inspection requirements.
Due to the 1990 Clear Air Act, the state cannot require smog or emissions tests from its residents for virtually the same reason it doesn’t impose a sales tax: there aren’t enough inhabited areas that meet the federal government’s air quality regulations to demand such a test.
Since inspections can cost up to hundreds of dollars, that already frees up a sizable portion of your car maintenance budget. Plus, Montana gives new car owners several affordable options to license and register their vehicle, which would still apply to out-of-state car owners who have registered their vehicle under a Montana LLC.
Though slightly less significant, another benefit that’s worth knowing about Montana vehicle registration is that out-of-state car owners don’t have to worry about paying personal property tax. However, while you don’t need to be a resident to register your car in Montana, you do need to have a legal LLC to be exempt from this tax — more on how to do that later.
Montana LLCs: What Not to Do
With all the great benefits of registering your car in Montana in mind, we’re sure you want to know how to set up a Montana LLC as soon as possible. But, before we jump into that process, let’s address some common mistakes people make, and how to avoid them.
First, as both state and federal law states, providing incorrect personal information, such as your residential address, at the DMV is illegal and considered a punishable offense for which you could receive thousands of dollars in fines.
However, establishing a private LLC in Montana, registering your newly purchased vehicle under it, and operating said vehicle in a different state is completely legal. That being said, it’s important to seek the advice of an expert, as they can answer any questions or concerns, and walk you through the process of properly obtaining a Montana car registration.
How to Receive a Montana Car Registration
While setting up an LLC isn’t a particularly complex process, it is a lengthy one. An extensive process of submitting paperwork, signing the documentation, and fulfilling payment requirements will demand some attention to detail on your part. And while the LLC procedure differs from state to state, we can give you a general idea of what you can expect.
First, you must select a name — a fairly easy step. Then, comes the nitty-gritty details. Once you’ve landed on a suitable business name, a registered agent (which would be you) must be designated. There are essentially very little to no requirements with this step, except that agents must be over 18, and available during standard business hours at their listed address.
Next, you’ll need to acquire a copy of your state’s LLC Article of Organization Form, which authorizes the state agency to handle your business documentation. For this process, you’ll provide some key personal information, including your business name, address, and contact information.
Once you’ve completed these steps, obtain the title from the private dealer, or the certificate of origin from your car’s manufacturer — whichever is easier. After ensuring the correct business name is listed as the owner of the car, submit the documentation to the DMV, and you’ll soon receive your Montana license plate — enabling you to operate your car wherever and however you please.
It’s worth noting that the LLC set-up and registration process is easier to do before buying your vehicle. If, however, you wish to register an existing car under your Montana LLC, you’ll have to transfer ownership from your name to the LLC, fill out and notarize a bill of sales, then sign your name as acting manager of your recently established shell company.
Get Your Montana LLC Set Up Today
As we stated above, opening an LLC and registering your vehicle through the company isn’t a particularly challenging process, but it requires much attention to detail. One wrong step and you might be forced to restart the entire process.
Fortunately, with 5 Star Registration, a team of professionals can do that hard work for you. From beginning to end, we create your Montana LLC, register your car, and send your plates and registration directly to you — all while ensuring your personal information remains private and protected.
Whether you’re purchasing an RV, motorhome, motorcycle, or standard car, buying a new vehicle can create a lot of financial burdens. By receiving a Montana car registration, you can take part in the various benefits the state has to offer car owners, including no sales tax, low licensing and registration fees, and no annual inspection requirements.
With the Montana Department of Justice’s very own stamp of approval, we can take care of all the fundamental documentation and registration aspects for you. To get your Montana LLC set up, contact 5 Star Registration today.
- Image Credit:
Featured Image, Unsplash
Calculate your savings
State Sales Tax Rate:
Your Current Registration Cost:
5 Star Registration Cost: