How to Create a General Partnership in Montana | A Complete Guide

Create a General Partnership in Montana

If you would like to create a general partnership in Montana, there are a few guidelines that you should understand. A general partnership is one of the things that a businessman considers since it comprises two or more entities to carry on a trade or business. Each partner contributes money, property, labor, or special skills, and each partner shares in the profits and losses from the business. You can start an LLC in Montana for your general partnership to personally carry potentially unlimited liability.

Knowing about the general partnerships will benefit you and several partners, making you form your business properly. If you want to know more about the general partnership, follow our steps to Create a General Partnership in Montana.

Webinarcare Editorial Team will help you create with thorough research and market study. Before starting a general partnership in Montana, you must be guided by all the factors we have gathered in this article.

What is General Partnership in Montana?

A general partnership in Montana is a business structure where two or more individuals come together to establish a business and agree to share the profits, losses, and management responsibilities. Each partner contributes skills, resources, and capital to the business and makes decisions collaboratively. In a general partnership, partners have unlimited personal liability for the debts and obligations of the business, meaning their personal assets can be used to cover any debts or liabilities incurred by the partnership. This type of business structure is relatively simple to form and offers flexibility in decision-making and management but lacks the legal protection of limited liability offered by other structures like Montana Corporations or limited liability partnerships.

It is recommended that you consult to Montana Business Attorney before beginning the process of forming your general partnership. They will understand what is best for you and your company. To shield your personal assets from corporate debts, you can always Start an LLC in Montana rather than a general partnership.


Example of a General Partnership

An example of a general partnership could be a small marketing agency created by two friends, Shane and Jane. Shane has a background in graphic design, while Jane has experience in digital marketing strategies. They decide to join forces and create a marketing agency that offers clients a combination of their expertise.

Shane and Jane contribute their skills, resources, and capital to start the business. They agree to share the profits, losses, and management responsibilities. Both partners actively participate in the agency’s day-to-day operations, making decisions and working with clients collaboratively.

In this general partnership, Shane and Jane have unlimited personal liability for any debts or obligations incurred by their marketing agency. If the agency faced financial difficulties, both partners’ personal assets could be used to cover the debts. However, the simplicity and flexibility of the general partnership structure allow them to manage and grow their business together easily.

Individuals looking to collaborate and numerous service providers have chosen general partnerships as their preferred business entity. That’s frequently because of its simple design, low price, and simplicity of setup. Some general partnership examples include: 

  • Providing Professional Services (architectural firms, medical clinics, etc.)
  • Selling goods at retail 
  • Opening a restaurant
  • Montana Business Consulting

General partnerships are also formed by partners who are spouses or other family members who want to operate a business together.

Steps in Creating a General Partnership in Montana

To create a general partnership in Montana, you must follow the guidelines below: choosing a business name, making a partnership agreement, requesting an EIN, getting a license and permit, and opening a bank account. 

Step 1: Choose a Business Name

Naming your business is one of the most important activities during the startup phase, especially if you will form an LLC in Montana. Your general partnership name serves as the foundation for your brand and is what clients use to connect you to the products or services you offer. Legal procedures should be taken into account when choosing your partnership name. Choose a business name that will enable you to develop a strong brand identity without being hampered by irrelevant factors. 

For example, let’s assume the general partnership focuses on providing eco-friendly landscaping solutions. A potential name for this partnership could be “GreenScape Innovations.” This name highlights the business’s core values (eco-friendly) while also showcasing the industry (landscaping) and the innovative approach the partners aim to bring to the market.

For your to come up with this business name idea, here are some guidelines to consider when choosing a name for a general partnership:

  • Reflect on the Nature of the Business: Choose a name representing your products or services, and communicate your business’s essence to your target audience.
  • Keep it Simple and Memorable: A short, easy-to-pronounce name will be easier for customers to remember and share with others.
  • Make it Unique: Research the names of other businesses in your industry to ensure your chosen name stands out and does not infringe on any existing trademarks or copyrights.
  • Consider the Partners’ Names: Some general partnerships incorporate the partners’ names in the business name (e.g., Smith & Johnson Consulting). However, this approach may only be suitable for some businesses, especially if the names are difficult to pronounce or remember.
  • Test the Name: Share the potential name with friends, family, and potential clients to gather feedback and ensure it resonates with your target audience.
  • Check for Domain Availability: Research the availability of your chosen name as a domain name for your website and on social media platforms to ensure a consistent online presence.
  • Avoid Limiting your Business Scope: Choose a flexible name to accommodate future product or service changes. Avoid using specific locations, product names, or niche markets in the name if you plan to expand or diversify later.
  • Comply with Legal Requirements: Ensure the chosen name complies with any legal requirements or restrictions in your jurisdiction, such as avoiding misleading or offensive terms.
  • Consider Professional Input: Consult with Montana Business Attorney or trademark specialist to ensure your chosen name is legally sound and can be registered as a trademark if necessary.

By following these guidelines, you can choose a name for your general partnership that is memorable, unique, and effectively communicates your business’s essence.

In addition, most general partnership businesses use the last name of all of their partners.  For instance, if Jennie Kim and Lalisa Manoban enter business together, the partnership name is “Kim & Manoban” by default. However, if you would like to form a business name under something more appropriate, such as “EJI Design and Build,” then you’ll need to File a DBA in Montana with Montana Secretary of State.

Filing a DBA in Montana has one method, online, which costs around $20. There is five years validity in renewing your DBA. 

In Montana, if you do not wish to file your general partnership business right away but want to hold the name that you have decided on, then you can reserve your business name for 120 days. You must file a name reservation application in the Montana Secretary of State to keep the name. 

Step 2: Make a Partnership Agreement

After you have chosen a business name for your general partnership, the next step would be making a partnership agreement in Montana. A partnership agreement is a crucial document that outlines the terms and conditions governing a partnership. It helps to establish a clear understanding of each partner’s roles, responsibilities, and expectations and prevents disputes and misunderstandings.

Additionally, it discusses business management guidelines and potential contingencies that may arise, such as a partner’s passing or a partner’s decision to leave the partnership.

A partnership agreement should include the following:

  • Business name
  • Description of the business
  • Contact information of the business and its owners

Ownership of all business partners, decision-making, capital contribution, profits and distribution, death and disability, and withdrawal and addition of partners is one of the key factors to consider when forming or creating a partnership agreement. In this way, all business partners will understand what this is all about and how to proceed if the mentioned scenarios happen. 

Without a partnership agreement, your company will often be subject to the general partnership default laws of Montana. The default laws might not be appropriate for your requirements.

Step 3: Request an EIN in Montana

After completing the partnership agreement, you should get or seek an Employer Identification Number (EIN) in Montana. An EIN will serve as your general partnership’s tax identification number. The Internal Revenue Service can provide you with an EIN. (IRS). It is a nine-digit number comparable to your Social Security number. EIN, on the other hand, is distinct from SSN. It is exclusively used for business-related operations, such as filing general taxes. The form must be filled out and sent to the IRS website. Obtaining an EIN cost between $30 and $280. 

The application of an EIN in Montana can be through the following:

  • Apply Online- The Online EIN application is the preferred method for customers to apply for and obtain an EIN.
  • Apply by Fax- Taxpayers can fax the completed Form SS-4PDF application to the appropriate fax number), after ensuring that Form SS-4 contains all of the required information.
  • Apply by Mail- The EIN application Form SS-4 can be filed via mail. The processing time frame to receive the mail is four weeks.
  • Apply by Telephone-International Applicants – International applicants may call 267-941-1099 (not a toll-free number) from 6 a.m. to 11 p.m. (Eastern Time) Monday through Friday to obtain their EIN.

You can benefit in various ways once you obtain your EIN number. It will give your general partnership the final advantage to operate at its full potential without legal or court problems.

Step 4: Get a License and a Permit

You must have Montana Business License before your general partnership business operates. A business license is a document granted by a government agency that allows you to operate your business in the territory governed by that agency.

To legally operate your partnership, you’ll need a business license. You may need more than one license in Montana. Numerous general partnership licenses need to be filed and renewed regularly.

In Montana, the business license fee costs about $50 – $300.

You can check out the United States Business License & Licensing Fee Resources for more information about the costs in Montana.

Step 5: Open a Bank Account

After filing and receiving your general partnership license, you should open a bank account for yourself, your clients, and your employees.

A US bank account may make your business dealings in Montana easier because it increases your company’s authenticity and profitability. Most banks require an EIN for firms other than sole proprietorships to open a business account. Keeping separate finances also prevents you from combining personal and professional finances.

If you would like to open a bank account in Montana, check out the Best Bank for Montana Small Business.

Pros and Cons of a General Partnership in Montana

In forming a general partnership in Montana, there are pros and cons that you may experience. I will list the pros and cons for you to understand why and how a general partnership is crucial. 

Pros of Forming a General Partnership in Montana

  • Easy and Inexpensive to Form: General partnerships are relatively simple to establish, requiring minimal paperwork and registration costs compared to other business structures like corporations or limited liability companies.
  • Decision-Making: Partners can pool their skills, knowledge, and resources, leading to more efficient and effective decision-making and business operations.
  • Flexibility: General partnerships offer flexibility in management structure, profit distribution, and decision-making processes, allowing partners to customize their business relationships to best suit their needs.
  • Tax Benefits: In most jurisdictions, general partnerships are not taxed as separate entities. Instead, profits and losses are passed through to the partners, who report them on their income tax returns. This avoids the issue of double taxation that affects corporations.
  • Greater Access to Capital: With multiple partners, a general partnership may have increased access to capital and resources compared to a sole proprietorship.

Cons of Forming a General Partnership in Montana

  • Unlimited Personal Liability: In a general partnership, all partners have unlimited personal liability for the debts and obligations of the business. This means that each partner’s personal assets can be used to cover any debts incurred by the partnership, which can be a significant risk.
  • Potential for Conflicts: As partners share management and decision-making responsibilities, disagreements or conflicts can arise, negatively impacting the business’s operations and success.
  • Limited Lifespan: A general partnership’s existence is often tied to the lives of its partners. The partnership may be dissolved if a partner withdraws, becomes incapacitated, or dies, potentially leading to instability and uncertainty.
  • Difficulty in Raising Capital: While general partnerships may have more access to capital than sole proprietorships, they may still need help raising funds compared to corporations or limited liability companies, as investors may be more hesitant to invest in a business with unlimited personal liability.
  • Lack of Legal Distinction: Unlike corporations or limited liability companies, general partnerships do not have a separate legal identity from their partners, limiting the partnership’s ability to enter into contracts or own property in its name.

When considering a general partnership, weighing the pros and cons and assessing whether this business structure aligns with your goals, risk tolerance, and desired level of management involvement is essential.

Maintain Business License in Montana

You must maintain or renew your business license regularly now that you have established your general partnership. Make time at least once a year to check the status of your licenses. Then you will get everything important. You can deal with any problems that arise. In Montana, the business license fee ranges from $50 – $300, and varies by jurisdiction and license type.

Pay Your Taxes in Montana

Even if you have established your general partnership in Montana, pay your taxes and keep everything up to date so you won’t pay any penalty. 

Montana taxes information will help you with what to pay before or during the operation of your professional corporation. You can check out the Montana Small Business Taxes to further understand why you must pay your taxes on time. 

Can I Convert My General Partnership Into Another Business Entity in Montana?

By following the appropriate state procedures, you can convert your general partnership into another business entity, such as Montana Corporation converting to an LLC; or Sole Proprietorship to Montana LLC. This may involve filing conversion documents with the Montana Secretary of State’s office and paying any required fees.


Is a separate business name required when forming a general partnership in Montana?
No, a separate business name is not required in Montana. Partners can conduct business using their own names.
How many partners are required to form a general partnership in Montana?
At least two partners are required in Montana to form a general partnership.
Do the partners in a Montana partnership have limited liability protection?
No, partners in a Montana partnership do not have limited liability protection.
Is there a limit to the number of partners in a Montana partnership?
There is no limit to the number of partners that can form a partnership in Montana.
Do Montana partnerships require a written agreement?
A written agreement is not required, but it’s highly recommended to avoid conflict and misunderstandings between partners.
can a Montana partnership continue after a partner dies?
Yes, a Montana partnership can continue after a partner dies through the partnership agreement or election of the partners.
How are Montana partnerships taxed?
Montana partnerships are taxed as pass-through entities. They do not pay federal or state income tax, but each partner reports their share of the profits or losses on their individual tax returns.
Are Montana partnerships required to register with the Secretary of State?
No, Montana partnerships are not required to register with the Secretary of State, but they can choose to register their names to improve their business legitimacy.
Can a Montana partnership operate without a business license?
It depends on the type of business the partnership is conducting. Some businesses require licenses in Montana.
Is there a residency requirement for Montana partnership partners?
No, there is no residency requirement for Montana partnership partners.
What is the process of dissolving a Montana general partnership?
Montana partnerships can be dissolved by agreement, legal termination, or the partners can file Articles of Termination with the Secretary of State.
Do Montana partnerships need to file annual reports with the Secretary of State?
No, Montana partnerships are not required by law to file annual reports.
What is the liability of partners in a Montana partnership?
Partners in a Montana partnership have joint and several liability, meaning they can be held liable for the actions of other partners and the debts of the partnership.
Can a Montana partnership have more than one place of business?
Yes, a Montana partnership can have multiple places of business.
Are Montana partnerships required to have a registered agent?
Montana partnerships are not required to have a registered agent.
Can nonresidents form a Montana partnership?
Yes, nonresidents can form a Montana partnership.
Can Montana partnerships have employees?
Yes, Montana partnerships can have employees.
Is there a fee for filing Articles of Partnership in Montana?
Yes, there is a fee for filing Articles of Partnership with the Secretary of State in Montana.
Can Montana partnerships enter into contracts?
Yes, Montana partnerships can enter into contracts with other entities.
Can Montana partnerships have silent partners?
Yes, Montana partnerships can have silent partners, but they don’t have direct involvement in the business operations.
Can Montana partnerships issue shares of stock?
No, Montana partnerships cannot issue shares of stock. Only corporations can issue stocks.
Can Montana partnerships convert to a different business structure?
Yes, Montana partnerships can convert to a different business structure, such as a limited liability company or a corporation, by filing appropriate documents with the state.
Can a Montana partnership be sued?
Yes, a Montana partnership can be sued.
Can Montana partnerships own property?
Yes, Montana partnerships can own property.
Are Montana partnerships governed by state or federal law?
Montana partnerships are primarily governed by state law.
Can Montana partnerships have a board of directors?
No, Montana partnerships don’t have a board of directors because they’re not corporations.
Can Montana partnerships limit their partnership agreements to specific purposes or fields?
Yes, Montana partnerships can limit their partnership agreements to specific purposes or fields.
Can Montana partnerships distribute assets upon dissolution?
Yes, Montana partnerships can distribute assets upon dissolution according to the partnership agreement or via an election by the partners.
Can Montana partnerships be formed for a limited time?
Yes, Montana partnerships can be formed for a limited time specified in the partnership agreement.
Who can form a general partnership in Montana?
Any two or more individuals or entities can form a general partnership in Montana.
How do I register my partnership in Montana?
You don’t have to register your partnership with the state of Montana. However, you may have to file a partnership tax return with Montana Department of Revenue.
How do I obtain a partnership agreement in Montana?
You can download a sample partnership agreement from the Montana Secretary of State’s website or consult with an attorney to create a custom one that suits your specific partnership needs.
What taxes does a Montana general partnership need to pay?
Montana general partnerships do not pay an entity-level tax, but the partners may be responsible for paying individual income tax on their share of the partnership profits.
Can a foreign company form a general partnership in Montana?
Yes, a foreign entity can form a general partnership in Montana.
Does the name of my partnership have to be registered in Montana?
No, but it would be a good idea to check the Montana Secretary of State’s business name database to see if the name you want to use is available.
How do I dissolve my partnership in Montana?
Partnerships can be dissolved voluntarily by agreement or involuntarily by court order. If you want to dissolve your partnership in Montana, you should consult with an attorney for guidance.
Is liability limited in a Montana general partnership?
No, partners in a Montana general partnership have unlimited personal liability for all partnership obligations, debts or liabilities.
How many partners can there be in a Montana general partnership?
There is no limit to the number of partners that may form a Montana general partnership.
Can I make my general partnership in Montana subject to another state’s laws?
Yes, provided that the chosen law applies uniformly to all partners within the partnership.
Is my partnership required to pay sales tax in Montana?
If your partnership sells goods or services that are subject to Montana sales tax, then you are required to register for a seller’s permit and collect sales tax.
How long does it take to create a Montana general partnership?
A Montana general partnership can be created as soon as the partners agree to form a partnership, but engaging the services such as an attorney will assist in painless handling of the process.
Does it cost anything to create a Montana general partnership?
There is no fee required to create a Montana general partnership; however there may be cost to consult with attorney.
What happens if one partner dies or leaves a Montana general partnership?
In the absence of a partnership agreement, then a departing or deceased partner’s portion of partnership business and assets will be distributed according to the passing of property laws in Montana general partnership.
How do I add new partners to my Montana general partnership?
New partners cannot be added to your Montana general partnership without consent and approval of existing partners.
Is personal property safe in a Montana general partnership bankruptcy?
Personal property in a Montana general partnership will become a part of the general partnership assets subject to the satisfaction of partnership obligations and debts.
What is a registered agent and why do I need one?
A registered agent is a designated person or entity that can receive all legal documents, notices, and process on behalf of the partnership. You will need a registered agent to maintain legal compliance and communication with state authority/client.
How long does a Montana general partnership last?
A Montana general partnership can last as long as the partners indicate in the initial partnership agreement.
Can I change the partnership agreement for my Montana general partnership?
Yes, a Montana general partnership agreement can be changed at any time by agreement of all partners involved.
How are profits and liabilities shared between partners in a Montana general partnership?
Unless otherwise stated by agreements among partners in a Montana general partnership, all profits (and losses) for the partnership are allocated among the partners according to the same percentage of share entered into by each partner in the agreement.
Can my Montana general partnership have a manager that is not a partner?
Yes, your Montana general partnership may have an outsider manager that is flexible in efficient handling/facilitation of the partnership.
Does a Montana general partnership have to file an annual report or pay any fees?
No, there is no annual report or fees in Montana general partnership, however business functions still require permits and licenses.
How are disputes handled between Montana general partnership partners?
The partnership agreement often sets mechanisms for handling disputes between partners in a Montana general partnership but relying on outside dispute resolution services such as mediation or arbitration could help solve disputes.
How do I get a partnership identification number (EIN)?
If your Montana partnership has more than one owner, you may have to get an EIN from the Internal Revenue Service by submitting an application form.
Can a Montana general partnership own other business entities?
Yes, Montana general partnerships can own other businesses but it depends on the laws and regulation in Montana as there is different business structures that determine the specific nature and limit as regards others.
Are there any rules regarding offices for Montana general partnerships?
Montana general partnerships are not required to maintain any specific office, but if operating a physical business presence with its offices located in Montana, state requirement and regulations guiding such operations must be and rigorously adhere to.
If I’m a sole proprietor, can I convert my business into a Montana general partnership?
Yes, It’s possible but procedural guidance should be acquired from a qualified personnel.
Does Montana issue certificates of partnership formation?
No, Montana doesn’t issue certificates of formation for its residence to open a general partnership due to the truncated nature of the process in there state.
Can you provide a list of entities that are not eligible for Montana general partnership?
No, individuals that are prohibited from entering into contracts may then not be eligible for entry into Montana general partnership such that other variations of cooperation or organization could be considered, a licensed attorney would be useful in determining what restrictions apply in this regard.

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A general partnership can be viable for individuals looking to establish a business in Montana with shared decision-making, management responsibilities, and profits. This type of business structure is relatively simple to establish and offers flexibility in operations. However, it is essential for potential partners to carefully consider the unlimited personal liability aspect of general partnerships, which means that each partner’s personal assets could be at risk to cover any debts or obligations incurred by the business. Before forming a general partnership, the partners should have a clear and well-drafted partnership agreement that outlines the roles, responsibilities, profit-sharing, and dispute-resolution mechanisms to ensure a smooth working relationship and minimize potential conflicts. Partners should also explore other business structures, like limited liability partnerships or corporations, to determine the best fit for their needs and goals.

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