So, you’ve decided to start a business in Colorado but quickly realized the steps to forming an LLC are extensive and a bit confusing. Don’t fret; with careful planning, you can make sure your Colorado LLC is off to a good start. If this is your first business venture or first time forming an LLC, you might wonder where to start.
In this guide, we’ll help you get your Colorado LLC off to a successful start by walking you through your next steps and, along the way, showing you how our services can help. Follow these step-by-step instructions to get your LLC formed in the Centennial State and be on your way to growing your business most efficiently.
Step 1: Name your Colorado LLC
While brainstorming about your company, you’ve likely thought of a business name. But an LLC name is more than just a creative way to market your services; it also has to comply with state regulations.
Start by creating a list of possible names, then consult our Colorado business entity search page to find one that’s not in use. When you enter a name in the search, try entering just the key portion of the name and not the name in its entirety. This will yield more search results, particularly any that are close to your name.
To be in good standing with Colorado state law, your company’s name must end with the proper designator. The following list includes all legally allowed phrases or abbreviations you can add to the end of your business name:
- Limited Liability Company
- Ltd. Liability Company
- Limited Liability Co.
- Ltd. Liability Co.
Colorado law states that a business name can’t include any term that would violate any state statutes. The name doesn’t need to be in English; it just needs to be written in English letters or Arabic or Roman numerals.
While you can use a business name that is not a match to another Colorado business, it’s a good idea to have something that sets you apart from the competition and makes it easier to establish your business online. A quick domain name search can show you if a name is available or already taken. At ZenBusiness, we can secure a domain name for your business website and email address. We also offer privacy features to protect your information and limit spam and unwanted solicitations.
Once you’ve conducted your Colorado business search and found a name that satisfies your business goals and Colorado’s requirements, you have the option to lock it in. Colorado allows you to reserve a business name for 120 days for a fee. If you’d rather not deal with this process yourself, we have a business name reservation service that can handle it for you. As part of the service, we also check to see if your desired name is available. If the name you’ve chosen is approved, it will be put on hold for 120 days. This will allow plenty of time for you to finish establishing your LLC.
Sometimes, LLCs have more than one name. There’s its legal name that’s registered with the state, and there can be a Colorado trade name, as well. A trade name, known as a “doing business as” (DBA) name, is an alternate name under which your LLC can do business. Trade names are often used when owners want to operate under a shorter or simpler name than their official LLC name. They are used for advertising and other sales purposes, too. We can help you secure a trade name with our DBA name service.
Registering a trade name in Colorado doesn’t mean that the name will be protected from others using it, so you may want to consider registering a trademark with the state of Colorado. A trademark is a word, a symbol, or a combination of the two that identifies goods or services offered by a specific company.
Registering a trademark with the state is a way to protect your business name within Colorado. There’s a small fee to do so, and the registration is good for five years. After this period, you’ll need to file a trademark renewal. To protect your trademark at the federal level, you can register with the United States Patent and Trademark Office. This will ensure broader protection if you’re planning on doing business outside of Colorado. You can also search its trademark database to make sure your desired name isn’t already federally trademarked.
Step 2: Appoint a registered agent in Colorado
To continue with the registration process, Colorado requires that every LLC appoint a registered agent. The person or entity appointed will be the point of contact for legal matters — if your company is subpoenaed or sued, service of process papers will be delivered to your Colorado registered agent.
Your resident agent must be either a resident of the state of Colorado or a business entity authorized to do business in Colorado, and they must have a physical street address in the state. P.O. boxes are not allowed.
The company owner can be the registered agent, but this is not always the best option. After all, being served in front of customers is a sure way to deter business, and with so many alternatives, it could be in your best interest to hire an outside registered agent service.
Hiring an outside registered agent service like ours is an affordable way to save you possible troubles later on. It also gives your business an official registered agent address with the state so that, if your business ever moves, you won’t have to file an amendment with the state (and pay the accompanying fee) to update your registered agent location. A registered agent service receives important legal and other correspondence from the state, which helps you:
- Organize important legal documents
- Keep your LLC in compliance
- Avoid legal fees and penalties
Step 3: File Colorado Articles of Organization
Once you’ve decided on a name and appointed a registered agent, it’s time to certify your LLC in Colorado. To start doing business, you’ll need to complete your Articles of Organization and file them with the Colorado Secretary of State. Your Articles of Organization is a legal document that officially creates your LLC. It lets the government know important details about your new business.
Filing official government documents like this can be intimidating and/or frustrating for many people, which is why we’re here. With our business formation plans, our trained formation experts handle the filing for you to make sure it’s done quickly and correctly the first time. But, although we can handle this for you, we’ll show you how the process works below.
You’ll need the following information to fill out the Articles of Organization form accurately:
- The name of your LLC
- The principal office address of your LLC
- The mailing address of your LLC
- The name and address of your registered agent
- The type of management you plan to have, whether the LLC will be run by its members (owners) or by a manager appointed by the members
You’ll need to use the Secretary of State’s online portal to complete your LLC registration, as a paper form is not available, and pay a nonrefundable filing fee.
If you have us handle filing your Articles of Organization, once the state approves your LLC, your paperwork will be available from your ZenBusiness dashboard, where you can keep it and other important paperwork digitally organized.
Once you get your physical paperwork back from the state of Colorado approving your new LLC, you’ll want to keep it in a safe location along with your other important LLC documents, such as your operating agreement, member certificates, contracts, compliance checklists, transfer ledger, etc. We offer a customized business kit to help you keep these important documents organized and looking professional.
By now you’re realizing how often you’ll need to supply an address for your new business. That can be unsettling for some business owners, especially those running their business from home. In instances where you’re not required to give the registered agent address or official principal address for your business, a virtual business address can come in handy.
With our virtual business address service, we supply you with a physical street address where you can have your mail sent without divulging your real address to more people than necessary. Then we can send that mail to the address of your choice.
Step 4: Create an operating agreement
Operating agreements are not always required — and not mandatory in Colorado — but help create governance for an LLC. This document outlines your business structure and covers the rules your company will follow, explains how finances will be handled, lists specific LLC members, spells out how decisions will be made (including member voting structure), and details any additional regulations.
If you’re starting your LLC alone, you may feel an operating agreement is unnecessary, especially since one is not required to proceed in Colorado. However, Colorado operating agreements can outline what happens to your company if you leave or become incapacitated and help protect you and your assets in case of dissolution or bankruptcy. If you are starting your LLC with other members, each party will need to agree to the terms and sign the document.
If you’re unsure as to how to start creating an operating agreement for your LLC in Colorado, we offer a customizable template to help get you started.
Step 5: Apply for an EIN
The final step to starting your Colorado LLC is to obtain an Employer Identification Number (EIN). It’s also known as a tax ID number and a Federal Employer Identification Number (FEIN). This unique nine-digit number allows the government to identify and tax your business. It also allows you to:
- Hire employees
- Open a business bank account
- Keep business and personal taxes separate
Unless you are a single-member LLC with no employees (and sometimes even then), an EIN is required for all tax and financial paperwork. You can get an EIN from the Internal Revenue Service (IRS). You can get your LLC’s EIN through the IRS website, by mail, or by fax, but if you’re unfond of dealing with that particular government agency, we can get it for you. Our EIN service is quick and eliminates the hassle.
Once you’ve secured an EIN, you’ll be able to open a business bank account. Having separate accounts for your business and your personal banking is critical for sorting out your finances at tax time and helps you avoid commingling funds. Commingling funds can not only make your taxes more difficult, but it could also be used against you if someone takes you to court to challenge whether you and your LLC are truly separate entities (i.e., they want to sue you for not just your business assets, but also your personal assets).
We offer a discounted bank account for your new business. This allows for unlimited transactions, online banking, a debit card, and more. When you want to authorize others in your business to use the account, we offer a banking resolution template to simplify the process.
For further help keeping track of your new business’s finances, try the ZenBusiness Money App. It helps you create invoices, receive payments, transfer money, and manage clients all in one place.
Colorado LLC FAQs
How much does it cost to start an LLC in Colorado?
Starting an LLC in Colorado is relatively affordable. The total cost varies depending on several factors, but your basic LLC startup cost will range from $50 to $125. Note that fees change over time, so you should check the Colorado Secretary of State website for the most recent fee schedule.
Of course, these costs are just the beginning. The state also requires LLCs to file an annual report known as a Colorado periodic report. The fee for filing this report online is small. Add in the cost of hiring a registered agent and fees for licenses, permits, and insurance, and starting a business in Colorado becomes more expensive.
What are the benefits of an LLC in Colorado?
When starting a business, there are various forms it can take. Despite the options, 90% of our customers choose to form an LLC. LLCs combine the benefits of other business entity types.
Forming a Colorado LLC means you’ll reap the following benefits:
- Personal asset protection. Your personal liability will be separate from your business liability and debts.
- Avoid double taxation. You’ll only pay personal taxes rather than both personal and corporate taxes.
- Flexible management. You’re not required to have a board of directors or annual meetings.
- Less reporting: Compared to corporations, LLCs have fewer required meetings and reports.
Colorado also offers funding programs and tax incentives for businesses of all sizes. You may qualify for one or more of the many startup and small business grants and tax credits that are available. The Colorado Office of Economic Development and International Trade can help you determine which opportunities align with your LLC operations and goals.
For a more in-depth look at why an LLC might be a better option for you, see our breakdown of what an LLC is and how it compares to a corporation.
How is an LLC taxed in Colorado?
Anyone who has filed personal income taxes probably knows what a headache taxes can be. When you have a business, it can quickly become even more complex. Below is a quick look at the basics of LLC taxes at the federal and state levels.
Federal LLC Taxes
- If you are the only member of your LLC, the federal tax default will be to tax the business as a sole proprietorship. The LLC itself will not be taxed on profits. Instead, you will include all of the business income with your personal taxes.
- If you have more than one member in your LLC, the federal default is to treat your LLC as a partnership. This requires obtaining an EIN. You must also file an information return for each tax year, which indicates how much each member received and invested in the business. As an individual, you will include the percentage of the business profits you received on your personal tax return.
- You can opt to be taxed as a C corporation by filing form 8832. If you do this, you will need to file a business tax return each year and include any of your income from the business in your personal tax return.
- You will need to make quarterly estimated tax payments throughout the year to avoid penalties when you file taxes.
- If you have employees, you will need to withhold federal, Social Security, and Medicare taxes from their paychecks throughout the year and submit payments to the IRS.
Colorado LLC Taxes
- Whatever your tax designation is on the federal level (individual, partnership, corporation, etc.), it will be the same on a state level.
- Just as with federal taxes, you need to make quarterly estimated payments.
- If you are selling items and collecting sales tax, you will need to obtain a sales tax license from the state.
- If you have employees, you will need to create a Wage Withholding Account with the Colorado Department of Revenue.
- If you are designated as a corporation on the federal level, you will need to file a state business tax return. If you are designated as a partnership on the federal level, you will need to file an information return, just as you did with the IRS.
Those who purchase any of our plans get a free accounting consultation and tax assessment from our specialists to receive helpful resources and no-obligation recommendations around your bookkeeping, accounting, and tax needs.
What is the processing time to form my Colorado LLC?
Seeing as Colorado only accepts electronic filings, your Articles of Organization will be processed immediately upon payment.
Do I need to file my operating agreement with the state of Colorado?
No. The operating agreement is an internal document that you should keep on file for future reference. While some states legally require LLCs to have an operating agreement, Colorado does not.
What tax structure should I choose for my Colorado LLC?
You can choose the tax structure that’s best for your LLC when you apply for an EIN. This federal application lists all of the available tax classification options.
An LLC with one owner, or member, is by default taxed as a sole proprietorship (or “disregarded entity”) by the IRS. An LLC with two or more members is by default classified as a partnership. LLCs can also choose to be taxed as a corporation, but this is usually more advantageous to larger LLCs. There are advantages and disadvantages to each tax structure. It’s best to consult with a tax adviser to choose the right classification for your LLC.
Does Colorado allow a Series LLC?
No, Colorado doesn’t allow the formation of a Series LLC. It’s a relatively new concept that only a handful of states have approved. A Series LLC is a group of limited liability companies with an umbrella or “parent” company under which multiple “children” LLCs operate.
Which licenses and insurance are required for an LLC in Colorado?
A general business license is not required in Colorado at the state level; however, certain counties and cities may require one. There is also a wide variety of federal, state, local, and industry-specific licenses and permits that your business may require, so you’ll have to research which apply.
If you don’t have the time or inclination to do all this research, or if you just want the peace of mind to know that your business has all the licenses and permits it’s legally required to have, our business license report service can do the work for you.
Depending on which type of business you have and whether you have employees, you may be required to have insurance, such as unemployment insurance, professional liability insurance, and so on. Colorado’s government website includes a list of insurance types and the circumstances under which they are required.
How do I renew my LLC in Colorado?
To renew your LLC, you will need to file your periodic report through the Colorado Secretary of State’s website. When filing, you will need to pay a small nonrefundable filing fee. If you fail to file within a five-month period starting two months before and ending two months after your anniversary of registration, you will be charged a penalty fee, and your LLC will be classified as “Delinquent.” This classification will strip your LLC of specific rights and privileges.
We can help you with your periodic report in a couple of ways. Our annual report service will help you file your periodic report, and our Worry Free Compliance service not only helps with filing your periodic report, but also sends you other important compliance reminders and helps you with two amendment filings each year.
To renew a trade name, you need to file a Statement of Trade Name Renewal through the Colorado Secretary of State’s website. You can do this anytime within three months before its expiration date.