Start an Colorado LLC

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Note: Colorado has temporarily lowered the filing fees for LLCs to $1. The cost of filing Articles of Organization for a Colorado LLC had been $50. A press release from the Colorado Secretary of State’s Office says the new rates will remain in place during Fiscal Year 2022-2023, or “until the amount of the general fund is exhausted.” The Department estimates this relief will last until June 30, 2023.

Has the time come to finally make your business dream into a reality? Are you looking into the many different business entities out there to see which is best for you? The limited liability company (LLC) structure is a popular one. It’s known for having liability- and tax-related benefits, among others. 

If you’re looking to create an LLC, Colorado is the state to do it. It’s a business-friendly state with a population ripe to turn into customers. Going through the process of setting up a Colorado LLC to conduct business can be a bit of a challenge, almost like dealing with the state’s tough winters. It’s the reason we’ve put together a step-by-step guide that walks you through the process. 

How to Start an LLC in Colorado

Starting a Limited Liability Company in Colorado

In order to form an LLC, Colorado requires you to do so with the Colorado Secretary of State (SOS). The SOS’s website walks you through the process, but if it’s your first time putting an LLC together, you may have a ton of questions and wonder if you’re doing things the right way.

Our guide includes five steps to forming your LLC in Colorado:

  1. Picking the right name for your business (that follows the state’s rules)
  2. Appointing a registered agent who will receive important notices on your business’s behalf
  3. Filing the Articles of Organization, which, when approved, formally recognizes the LLC as a business
  4. Drafting an operating agreement where you can list your LLC’s rules
  5. Registering your business with the Internal Revenue Service (IRS) and reviewing your tax responsibilities 

If this sounds like a lot of hard work, don’t worry. Each step will go into detail on how to accomplish them. We’ll additionally highlight some of our services that can make your Colorado LLC formation less complicated along with running and growing your business. 

Something to keep in mind

If you’re looking to start an LLC in Colorado, then you should know that this guide is for forming a domestic, for-profit LLC. If you’re looking to start a foreign (out-of-state) LLC, then you’ll need to check in with the Colorado SOS. The website has a guide that walks you through that process as well. 

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Step 1: Name your Colorado LLC

Your first step is to decide on a name for your Colorado LLC. This can be a fun process because it can get your creative juices flowing. One thing that you need to remember, though, is that whatever name you choose can have implications from both legal and marketing standpoints. 

Your name should be one that you’ll be proud of and reflects what you offer. And, of course, your name needs to follow Colorado’s rules, which we’ll cover next. 

Colorado LLC Naming Rules

In order to properly name your LLC, Colorado has a few rules that you’ll need to follow in order to get your business approved. The SOS website has detailed rules, but we’ll highlight some below:

Once you’ve decided on a name that follows the state’s rules, you can make sure that it isn’t already taken. The SOS website has a tool to do this, but so do we. You can also contact the SOS directly to ask if your name is available. 

Reserve your Colorado LLC’s name

If all looks good and the name you want for your LLC is available, then you should definitely consider reserving it in the meantime while getting your business set up. To do so with the state, you’ll need to file a Statement of Reservation of Name form. This form can only be filed electronically and will reserve your name for 120 days. You can renew the reservation by filing a Statement of Renewal of Reservation of Name. 

If you’d rather simplify this process, you can reserve your name with us

Federal and State Trademarks 

If you’re looking to trademark your business name, then you should consider Colorado’s rules. As the SOS website states, “A business name is not generally eligible for registration as a trademark, except when the name is used for advertising or placed on goods, i.e., when the name of the entity is used to describe the source of goods or services. You may wish to contact an attorney to discuss ways of protecting your business name and whether you should trademark your business name.”

If you decide to move forward, then you’ll need to file a Statement of Registration of Trademark form with the SOS. The trademark is good for five years and can be renewed. If you want to file a trademark at the federal level, then visit the U.S. Patent and Trademark Office website for more information. 

Get a domain name for your LLC in Colorado 

Having an online presence is a great way to build your customer base. A business website with a domain name that matches your LLC’s name can help you reach a larger audience that your physical location can’t. While choosing the best name for your LLC, check if it’s available as a domain name. If it isn’t, then you might want to adjust your LLC name so that a matching and available domain name goes with it. 

Is your LLC name available as a web domain?

If you’ve decided to get a domain name, and, by extension, a business website, then, like a potential business name, you’ll need to grab it as soon as you can before someone else does. On top of reaching customers that your physical location can’t, a business website lets you serve customers outside of your city and even the state if you so wish. 

We already went over this before, but we want to really push the importance of having a domain name that closely matches your LLC’s name. That way, people will find it easier to locate your website in a simple online search. As always, check out our domain name search tool to see if the domain name you want is available.

Filing for a “trade name” in Colorado

In Colorado, you can file for a “trade name” if you’d rather operate under a name different from the business’s true name. This name is sometimes referred to as a “doing business as” (DBA) name. 

The state requires for-profit LLCs to file a trade name if the entity plans to do business under a different name. You’ll need to file a Statement of Trade Name of a Reporting Entity form with the SOS. You can register a Colorado trade name with us as well. 

Step 2: Appoint a registered agent in Colorado

Next, you’ll need to choose a registered agent for your Colorado business. A registered agent is a person or entity that’s tasked with receiving important documents, like service of process, on behalf of your business. In Colorado, this agent must have a physical address. 

As the owner of an LLC, Colorado requires you to have a registered agent, and failing to appoint one can have some penalties for the business and maybe even its owners. Let’s go over a few things about registered agents. 

Who can be a registered agent in Colorado?

As we mentioned above, in Colorado, this agent can be either a person or an entity, like a business. There are some requirements to consider:

You should also know that:

What happens if I don’t maintain a registered agent?

During the life of your business, changes will happen. One of them may be a change in registered agents. As we pointed out above, an LLC must maintain a registered agent in Colorado. If it doesn’t, it can risk the following:

Can I be my own registered agent?

You can be your own registered agent if you’d like, and you may want to since it can make things easier, right? The truth is, the duties of this agent can make it difficult to run your business. Here are some things to consider:

Having someone else serve as your registered agent may be the best option. There are many registered agent services out there, but we offer a service to make things easier for you. 

ZenBusiness can provide your registered agent

You won’t have to worry about losing your registered agent if you choose to have us provide one for you with our registered agent service. Our service ensures that you’ll have someone available to receive important documents on your behalf. 

Since having a registered agent for your Colorado LLC ensures that it remains compliant, you won’t have to worry about falling out of compliance with the state. Perhaps the biggest perk of using our registered agent service is not having to take on the responsibilities of this agent yourself. You’ll be free to meet clients, run errands, and more without being tied to the office during normal business hours. 

Our registered agent service also keeps documents that have been issued to your Colorado LLC organized through your ZenBusiness dashboard.

Step 3: File Colorado Articles of Organization

File your Articles of Organization with the Colorado Secretary of State. Now that you’ve chosen a great name and know who will be your registered agent, the time has come to submit your Articles of Organization. If all looks good and the SOS approves your Articles, then your LLC will become official. The filing cost is $50 and can only be done online through the SOS website. 

If filing official government forms is something that gives you the jitters, then don’t worry. Our LLC formation service can help you out. We’ll handle filing these forms for you and make sure everything is done correctly. Let’s go over the process anyway just to give you an idea of what to expect if you decide to do things yourself. 

Processing Times

According to the SOS website, documents that are submitted online are filed in real-time. This means that documents are processed immediately after you’ve received your payment confirmation. You can find more information in the Filing Documents – Business FAQs section of the SOS website. 

You should also know that we offer a faster filing service. With it, we make your filing a top priority. And since our formation team oversees all documents, it’s less likely that your papers will be rejected. 

Information to include in your Colorado Articles of Organization

If you’ve never filled out a form like an LLC’s Articles of Organization before, then you might be wondering what exactly you’ll need to include. Here’s a general list of what you’ll need to provide:

After filing the Articles, the office of the SOS will provide you with an ID number. This is NOT an Employer Identification Number (EIN).

 

Member-Managed or Manager-Managed?

One thing you’ll have to decide when creating your LLC is whether it’ll be member-managed or manager-managed. You’ll make this decision in the Articles of Organization. If you aren’t sure how you want your LLC managed, then here is a brief rundown of what member-managed and manager-managed mean:

How to Amend Your Articles of Organization

When creating an LLC in Colorado, you’ll only need to file your Articles of Organization once. However, if your business grows and other changes occur, you may need to alter the Articles in the future. If you do this, you’ll need to inform the SOS. 

You’ll need to submit an Articles of Amendment form that can only be filed online. The form itself is used to change the LLC’s name, but there is an option to include additional documentation that needs to be amended. Be sure that all information is correct before submitting. Contact the SOS if you need help. 

You can also use our amendment filing service as well as our Worry-Free Compliance service. It includes two amendment filings per year. 

Keep your Colorado LLC paperwork organized at all times

If you decide to have us handle your filing needs, then as soon as Colorado approves your LLC, your paperwork will be available in digital form through your ZenBusiness dashboard. You can also keep other important documents organized here, and you’ll be free to download and print them. 

If you have any physical documents that the state sends you, be sure to take good care of them. We offer a business kit that allows you to keep these forms organized in a professional manner. 

What should I know if I want to delay my filing?

When filling out your Articles of Organization for your Colorado LLC, you’ll have the option to delay its filing. What does this mean, exactly? As the term suggests, a delayed filing allows you to delay your Articles from being filed. 

Why would you want to delay your filing? This varies depending on a person’s situation, so if you feel that you aren’t ready to file the Articles of Organization yet, then you can delay it. The state allows you to delay the start of business filing up to 90 days from the current date. Check out the Colorado Secretary of State website for more information.

Step 4: Create an operating agreement

Draft an operating agreement for your Colorado LLC. An operating agreement (OA) allows you to establish the rules for how your LLC will operate and other important factors. Colorado does not require you to put an operating agreement together, but having one can still be helpful in making your LLC run smoothly. 

Do I need an operating agreement if I’m the only owner?

If you’ll be the only owner of the LLC, then you may figure that an operating agreement isn’t necessary. Besides, since it’s only you, then you don’t have to document the LLC’s rules and other factors, right? Well, having an operating agreement even if you’re the sole LLC owner can still be beneficial. 

In Step 4, we discussed the merits of having an operating agreement. Having one can make your LLC look more professional and help make it easier to get a loan since some financial institutions may require seeing one before granting said loan. 

Perhaps the biggest perk of having an operating agreement as the sole owner of your LLC is delegating what should happen to the business if something happens to you, like becoming incapacitated or dying. An operating agreement can also show that you and the business are truly separate entities, preventing your personal assets from being seized if legal troubles come up.

The benefits of having a Colorado LLC operating agreement

If drafting more business documents while creating an LLC in Colorado sounds like a bore, then you might reconsider after finding out the benefits of having an operating agreement.

A few common ones include:

What to include in your Colorado LLC’s operating agreement

If creating an operating agreement is something you want do but aren’t sure what exactly to include, then consider the following:

✓ If you want to create an operating agreement but aren’t sure how to get started, then check out our customizable template that can help you. 

Step 5: Apply for an EIN

Your last step is to apply for an Employer Identification Number (EIN) with the IRS. If you’ve never heard of an EIN before, then you should know some things. It’s also referred to as a Federal Employer Identification Number (FEIN) and a Federal Tax Identification Number. 

You’re going to need an EIN for tax purposes, if you plan on hiring employees, and getting a business bank account. You can get an EIN through the IRS or with us

Register with the Colorado Department of Revenue 

You’ll need to register with the Department of Revenue for a state tax number. The website allows you to access important forms, apply for a sales tax license, file sales and retailer use tax, and more. When signing up, you’ll need to include some information, like your EIN (referred to as a Federal Employer ID Number on the website) and some personal information. 

Can filing as an S corp lower my taxes?

Forming an LLC allows you to apply for an S corporation status. If you aren’t familiar with S corps, then let’s go over them. Hearing the term “corporation” in S corporation might lead you to believe that it’s a type of business entity. Actually, an S corp is nothing more than a tax designation. This means that certain business entities like LLCs and traditional corporations (C corporations) can apply for S corp status. 

One thing that might be on your mind about forming an LLC is how it’ll be taxed. LLCs are taxed as sole proprietorships if there’s only one member or as a partnership if there are multiple members. LLCs are a very attractive business structure since they avoid “double taxation.” This means being taxed at the personal and business levels. 

With an LLC that has S corp status, you’ll still avoid double taxation while potentially saving some money on self-employment taxes. You’ll be an “employee-owner,” allowing you to divide your income from the LLC into your salary and your share of profits. This way, you’ll only pay taxes on your salary and not on the profits, just the usual income taxes. 

However, you should know that an S corp designation does have some drawbacks. The IRS tends to keep a watchful eye on S corps, meaning that you may be at higher risk of an audit. The S corp status is also known to be very difficult to qualify for. 

If you’d like to apply for S corp status, then we can help. You should know, though, that we can only do this during the formation period. If you already own an LLC and want to apply for S corp status, then you’ll need to do that on your own. Speak with a tax specialist for more information.

Use your EIN to open a business bank account

After getting an EIN, you’ll be able to open a business bank account. You should consider having one of these accounts since they allow you to separate your business and personal finances. This can make organizing your taxes easier. 

We’ve partnered with LendingClub to offer a discounted bank account. You’ll get unlimited transactions, a debit card, online banking options, and more. Our banking resolution template allows you to authorize others in your business to use your business bank account. Consider getting a business credit card as well to build your Colorado LLC’s credit score. 

You should also check out ZenBusiness Money to help you manage your business finances and more all in one place. 

We can help

Now that you know how to start an LLC in Colorado, the time has come to make it happen! Rather than doing it yourself and having to deal with so many responsibilities, have us help you. Our services provide long-term business support, allowing you to run your business how you want. We can also help you grow it. Focus on running your business while we take care of the rest. 

Disclaimer: The content on this page is for informational purposes only, and does not constitute legal, tax, or accounting advice. If you have specific questions about any of these topics, seek the counsel of a licensed professional.

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