Asset purchase vs entity purchase in Montana

The short answer for most small trades

Most small Montana purchases end up as asset purchases, because the licenses a trade runs on rarely travel with a company anyway.

If the value is in trucks, tools, a name and a customer list, the asset route buys exactly that and leaves the seller's company behind. The entity route earns its keep when the thing you are buying is the company's own standing: its registered name, its contracts, its history of clean filings.

Neither route moves a license that belongs to a person. The license transfer guide explains which licenses in your trade are held by a person, which by a premises, and which do not exist at all.

$35Montana charges $35 to file Articles of Organization for a domestic LLC. — Montana Secretary of State business fee sheet, retrieved 2026-09-29

What you take on when you buy the entity

An entity purchase hands you the company whole: its name, its standing, its contracts, and its record of what it owes.

The transfer itself files nothing at the Secretary of State. There is no form that records a change of LLC membership in Montana the way there is for a registered agent. Your ownership shows up at the next annual report, due April 15. File by that date and the state waives the report fee; file after it and the report costs $35.

That clean surface hides the reason buyers negotiate hard on this route. The company keeps what it owes and what it has been accused of. A debtor search before you sign is cheap insurance — a search costs $7 per name.

$0 by April 15A Montana LLC annual report filed by April 15 carries no fee; the $35 charge applies only after the due date. — Montana Secretary of State business fee sheet, retrieved 2026-09-29

$7A debtor lien search at the Montana Secretary of State costs $7 per name. — Montana Secretary of State lien information, retrieved 2026-09-29

What you leave behind in an asset purchase

An asset purchase buys the things, not the company, so the seller's company and its record stay with the seller.

You file nothing for the entity at all. If you want a company to hold what you bought — and most buyers do, for the liability wall — you form your own. Montana Articles of Organization cost $35, and the IRS issues an Employer Identification Number free, online, in minutes.

The trade-off is paperwork of a different kind. Contracts you want to keep must be assigned to you in writing. The seller's name does not come with the deal unless you write it in, and even then it registers as an assumed business name at $20.

$0The IRS issues an EIN online at no charge, and warns against websites that charge a fee for one. — IRS, retrieved 2026-09-29

$20Registering an assumed business name in Montana costs $20. — Montana Secretary of State business fee sheet, retrieved 2026-09-29

The license question decides this more than the tax question

Buyers often weigh the two routes as a tax question. In Montana the license question is usually the decisive one.

A salon is the clearest case. The Board of Barbers and Cosmetologists requires a new salon or shop license when ownership changes by more than 50 percent. Buying the entity instead of the assets saves no license paperwork at all. An electrical business is the same from the other side: the contractor license hangs on the responsible master electrician, so it follows the person, not the company.

50%A Montana salon or shop license requires a new application when ownership changes by more than 50 percent. — Montana Board of Barbers and Cosmetologists, retrieved 2026-09-29

A Montana electrical contractor license requires a Montana-licensed master electrician as the responsible party for the business. — Montana State Electrical Board, retrieved 2026-09-29

If you move to a new location and/or there is a change in ownership greater than 50% you must apply for a new salon or shop license.

Liens follow the collateral in both routes

Whatever route you choose, the lien search comes first, because a lien on the equipment does not care which paperwork you used to buy it.

In an asset purchase, equipment listed as collateral can still be claimed by the lender if the seller's debt is unpaid, even after the trucks are in your yard. In an entity purchase, the company's secured debts come inside the purchase. A $7 debtor search at the Secretary of State returns UCC filings, federal tax liens and child support liens in one result.

Get lien terminations in writing at closing. Filing a termination statement with the state costs nothing, so a seller who has been paid has no reason to leave one unfiled. The liens page goes through what each filing means.

$0Filing a lien termination statement with the Montana Secretary of State carries no fee. — Montana Secretary of State lien information, retrieved 2026-09-29

Writing the route into the agreement

The purchase agreement should name the route on its first page, because everything attached to it depends on that one choice.

An asset agreement carries a bill of sale and a schedule of assets listing every item, serial numbers included. The trade name and customer list go on the schedule if they are in the deal. An entity agreement assigns the membership interests and attaches the company's own records instead: the operating agreement, the annual report history, the license list.

Whichever it is, attach the licenses to it as a schedule. The due diligence checklist has the list, and the cost breakdown prices what each route files.

April 15Montana LLC annual reports are due April 15, with the fee waived for filings by that date. — Montana Secretary of State business fee sheet, retrieved 2026-09-29

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