How To Start A Colorado LLC
By Bazal Razzaq
Updated: August 11, 2023, 12:30pm
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- Choose a name for your Colorado LLC.
- Prepare a business plan
- Appoint a Registered Agent for your LLC
- Prepare and file your Articles of Incorporation with the Colorado Secretary of State
- Draft an Operating Agreement for your Colorado LLC
- Get an EIN (Employer Identification Number) with the IRS
- File your Periodic Report(statement of information)
- Final Word
- How To Form An LLC In 50 States
- Frequently Asked Questions (FAQs)
Are you looking to form an LLC in Colorado? Well, you’re at the right place! The Centennial State is not just the favorite choice for its rocky mountains and music festivals but also for being a business-friendly state that has garnered enough attention from entrepreneurs and small business owners.
Choose a name for your Colorado LLC.
The very first step should be selecting a valid and official name for your LLC. You’ll need this name to file your Articles of Organization document.
- Your business name should contain terms like “Limited Liability Company,” “LLC,” or “LLC” in it.
- Make sure that any other registered business entity does not use your chosen LLC name.
- If unsure, you can search on the Secretary of State’s website. For Colorado, you can check name availability using this link or run a quick business database search.
- Avoid using words related to name government agencies and authorities like State Department, CIA, FBI, Treasury, etc., in your LLC name.
- Also, avoid terms like “bank,” “lawyer,” “attorney,” “credit union,” etc., as it might need extra paperwork and licenses.
Check out the complete list of Colorado’s naming rules to avoid any misunderstandings or legal troubles.
Once you’ve decided on a name for your Colorado LLC, you can also consider reserving it. This feature especially comes in handy when you’re not ready to full-on register your LLC and are worried someone else might use the name you want. You can reserve it by paying a small fee.
In Colorado, you can hold a name for up to 120 days by paying the required fee and submitting the proper form to the state authority. The business name reservation fee is $10).
Prepare a business plan
A business plan is like a roadmap for your company’s future. It outlines your goals, target market, competition, financial projections, and strategies for growth. Creating one for your company will help you think critically about your business idea, its viability, and how you’ll achieve success.
Here’s a list of what you’ll need to include in your business plan,
- Basic information about your LLC
- A quick summary outlining the mission and unique value proposition of your company
- Financial forecasts, including income statements, balance sheets, and cash flow projections.
- Research analysis about your target market, competitors, and industry trends.
- Your Products or Services
- Funding Request, if any
- Marketing and Sales Strategy
The more your business plan is compact, structured, and tailored to your specific business, the better it is for your business. A smart entrepreneur needs to periodically review and update the document as their company evolves.
A solid business plan helps you secure funding from investors and serves as a strategic tool to guide your LLC toward success.
Appoint a Registered Agent for your LLC
In Colorado, appointing a registered agent for your LLC is mandatory.
Who or what is a registered agent? A registered agent is a person, company, or service authorized to receive and accept all important legal, official, and financial documentation, tax forms, notice of lawsuits, official government correspondence, and notifications for your LLC.
Who can be a registered agent for your Colorado LLC?
- Any LLC owner/member, manager, or employee of your company can be the registered agent.
- You can also choose a friend, family member, or someone you completely trust.
- Or hire an official registered agent service. Many companies specialize in providing registered agent services.
- If you’re willing to shell out the cash, you can also hire legal professionals, like attorneys or law firms, to act as your registered agent.
- A business associate or partner with a registered physical address in Colorado.
The price of having a registered agent for your Colorado LLC can range from around $30 to as high as $300.
Lastly, the registered agent should have a physical street address in Colorado, be available during regular business hours to receive legal documents, and also consent to accept this responsibility.
Prepare and file your Articles of Incorporation with the Colorado Secretary of State
To officially register your Colorado LLC, you’ll need to file the Articles of Organization document with the Colorado Secretary of State. You only have the option to file electronically(online). The filing fee is around $50.
Even if it sounds like a big and daunting task, it simply involves filling out a basic form and then submitting it online.
- Your LLC’s official name.
- The business address of your LLC.
- Registered agent’s name and address.
- Date of initiation (the official formation date of your Colorado LLC)
- Name and address of the person forming the LLC
- A brief purpose statement.
- Choose the perfect management structure: whether it will be member-managed or manager-managed.
- Confirm that the LLC will have at least one member/owner managing.
- The signature of the individual forming the LLC is mandatory.
- Details of the person filing the LLC articles – name and address.
After submission, the Colorado Secretary of State will review your articles. If approved, your LLC will become a recognized legal entity.
Draft an Operating Agreement for your Colorado LLC
An operating agreement is a legal document that will outline your Colorado LLC’s internal workings and management structure. It also defines the roles, rights, and responsibilities of its members.
While it’s not a requirement by law in all states, having an operating agreement is highly recommended for LLCs as it helps set clear guidelines for how your LLC will run and make decisions. Not just this, it will also come in handy in case of future fights, misunderstandings, and disagreements between the members/owners.
- Name and main address of the LLC
- How long the LLC will exist
- Name and address of the registered agent
- Details about the Articles of Organization
- The main purpose of your LLC
- Members/owners and their shares/contribution
- Allocation of profits and losses.
- The whole process outlines how new members will join and old members will leave
- Meetings and Voting Rights
- How the LLC is run
- Dissolution and Winding Up
- Indemnification and liability clauses
- Dissolution and winding up
If there is no proper operating agreement in place, the courts will make judgments based on state law, which may not necessarily align with what’s best for the LLC and its members/owners.
Get an EIN (Employer Identification Number) with the IRS
An EIN is a unique nine-digit tax identification number the Internal Revenue Service (IRS) assigns to businesses and organizations in the United States. An EIN is used to identify a business entity for tax purposes and tax-related matters, such as filing tax returns, opening business bank accounts, applying for business licenses, and other interactions with federal and state government agencies.
A federal employer identification number is required for,
- Meeting federal and state tax obligations
- Opening professional business bank accounts
- Employing staff for your LLC
- Apply for multiple business licenses and permits.
- Carry out day-to-day business operations.
You can apply online for your EIN or mail it to the address listed below:
Internal Revenue Service
Attn: EIN Operation
Cincinnati, OH 45999
Fax: (855) 641-6935
The fee is $0.
File your Periodic Report(statement of information)
A periodic report is basically a document that a business submits at regular intervals, often “annually,” to provide important information about its activities, financial status, and other relevant details.
This document helps government agencies, regulatory bodies, and stakeholders stay informed about the entity’s operations and compliance with regulations. It can include information like financial statements, operational updates, and changes in ownership.
Some different names of a periodic/annual report are,
- Yearly Statement
- Annual Review
- Annual Summary
- Annual Documentation
- Yearly Recap
- Fiscal Year Report
- Annual Business Update
- Annual Company Record
- Year-End Report
- Yearly Business Review
All LLCs must send a report to the state each year in Colorado. This report costs $10 and needs to be submitted online. They are due within five months, two months before your LLC’s formation date and two months after.
You can check out the Colorado Secretary of State’s website for more details.
After forming your Colorado LLC, don’t relax just yet but focus on maintaining and properly complying with the state agencies.
To maintain and properly run your Colorado LLC, follow these steps:
- Get needed permits and licenses, like health or zoning permits and pro licenses.
- Register with the state’s tax agency.
- Open a business bank account.
- Get a business credit card.
- Buy business insurance.
- Safeguard your name and logo with a trademark.
In conclusion, forming an LLC in Colorado can be a simple process with the correct guidance and understanding of the steps involved. While the process might involve some paperwork and fees, the benefits of forming an LLC in Colorado are significant. By following the steps mentioned in this guide, you can successfully create your own limited liability company in the state.
Frequently Asked Questions
An LLC business structure offers personal liability protection and flexible management. Setting up an LLC in Colorado can help safeguard your personal assets and simplify your business taxation.
The key steps include:
- Choosing a unique business name.
- Designating a registered agent.
- Filing formation documents with the Colorado Secretary of State.
- Creating an operating agreement.
- Obtaining any required licenses or permits.
Yes, you’ll need to file a Periodic Report each year and pay the associated fee to keep your LLC in good standing.
The licenses and permits you need depend on your business activities and location. Common examples include health department permits, zoning permits, and professional licenses.
Yes, business insurance can protect your LLC from liability and unexpected events. General liability, property, and professional liability insurance are common types to consider.