Learning how to form an LLC in Colorado doesn’t require you to relocate mountains. A few easy steps might get you started if you have a company concept. To assist you decide if an LLC is the best company structure for you, we’ll guide you through the LLC creation process and offer useful information. Do you require funding? We will also discuss it.
Starting an LLC in Colorado will include the following steps:
- Decide on a name for your Colorado company
- Choose a Registered Agent
- Submit the Articles of Organization for Your Colorado LLC
- Draft an agreement for operations
- Obtain Federal and State Tax IDs
- Fulfill Your Continued Duties
How to Get an LLC in Colorado: 6 Steps
Are you prepared to launch your business? Colorado offers a completely virtual and simple LLC establishment process. To create and manage your Colorado LLC, just adhere to these six procedures.
1. Select the Name of Your Colorado Business
Your company name has to stand out from those of other Colorado-registered corporations and include one of the following indicators:
- Limited Liability Company
- Ltd. Liability Company
- Limited Liability Co.
- Ltd. Liability Co.
- Limited
- L.L.C.
- LLC
- Ltd.
Are you curious about how to get an LLC in Colorado for a certain kind of work? Professional enterprises may be required by certain jurisdictions to establish a particular kind of LLC known as a Professional LLC, or PLLC. LLCs in Colorado operate similarly. Businesses that fall into the following categories are required to use the names Professional LLC, PLLC, or P.L.L.C.
- Lawyers
- chiropractors
- Dental professionals
- Optometrists
- Physiotherapists
- doctors and surgeons
- Podiatrists
- Professional counselors (such as addiction counselors and marital and family therapists)
- Psychologists
- Social workers
Although it’s not legally necessary, you may wish to reserve your LLC name until you’re ready to formally form your company if you’re not ready to submit your articles of organization (step three) right away.
Follow the instructions on the Colorado Secretary of State’s website to reserve the name of your LLC. Online payment of the $25 charge is required at the time this reservation is submitted.
For 120 days while you complete the creation procedure, Colorado will retain the name of your LLC. A Colorado LLC renewal form known as a Statement of Renewal of Reservation of Name may be filed if you need more time to keep the LLC in effect.
Inside Scoop: Take into account your intended branding strategy while deciding on the name for your LLC. Desire a webpage? To maintain consistency across channels, you may wish to see whether a domain name is available before reserving your LLC name.
2. Designate a Registered Agent
To become proficient in the process of forming an LLC in Colorado, or any other state, you must choose a “registered agent.” A designated person and physical location in the state where tax and legal paperwork may be delivered during business hours are requirements for your Colorado LLC. There are several registered agent businesses available, and hiring one may cost as little as $50 annually.
Since agents must be accessible at the authorized location during business hours, you could find it more convenient to engage a registered agent service rather than act as your own, depending on how frequently you’re at home or in your office.
Inside Scoop: If you function as your own registered agent, be aware that your address is publicly available. This means that you might get unsolicited emails and commercial contact. By using a third-party agent, you can safeguard your privacy.
3. File Your Colorado LLC’s Articles of Organization
Your LLC was officially created by the articles of incorporation. Online filing and payment are required. The Colorado Secretary of State website asks you a series of questions instead of giving you a fillable form or paper copy of the articles of organization. Prepare the following details (from the Colorado LLC Checklist of the Secretary of State):
- Name of LLC
- Principal Address
- mailing address
- Name, address, postal address, and permission of the registered agent
- Details about the manager
- Verification that the LLC has at least one member
- Name and address of the LLC’s founder
- Postponed implementation date, if desired
- Choosing between text or email alerts
Inside Scoop: Colorado permits you to file an amendment to modify any material in your group’s articles of organization. Since this costs $25, you may wish to avoid making any adjustments in order to save money. To lessen the possibility of needing to make adjustments later, you may do this by having a formation business assist you with the initial paperwork.
4. Create an Operating Agreement
You’ve successfully created your Colorado LLC. It’s time to document the LLC’s operating procedures in writing. Are you wondering how to force an LLC in Colorado to add members in a certain method or follow particular management guidelines? That is exactly what an operating agreement states.
Although they are not necessary by law, having one is nevertheless a good idea since it allows you to validate the guidelines and practices for your LLC. For some business-related tasks, such as getting a loan, an operating agreement could be required even if you are the sole member of your LLC. The following should be included in your operating agreement:
- Names of LLC members
- Whether the LLC is managed by the members, collectively or by designated managers
- Duties of each member or manager
- Voting procedures
- Profit distributions
- How new members can join
- Member removal or resignation procedures
- Tax status
- Dissolving the LLC
After reviewing the agreement, have each member of your LLC sign it. Since your agreement is a legally binding contract, it can be wise to have a business specialist, such an attorney or accountant, review it.
Inside Scoop: For a nominal cost, LLC creation firms might also provide operating agreement templates. This is more dependable than a free template, but it could be more affordable than hiring an attorney to design one.
5. Get State and Federal Tax Numbers
In order to pay state and federal taxes, you will probably want tax identification numbers after your firm is incorporated.
State
When you register your company with MyBiz.Colorado.gov, you may find out what taxes your company will need to pay. Just comply with the website’s instructions.
Federal
Additionally, you will need an employment identification number, or EIN, which is a federal tax number obtained from the IRS. On the IRS website, you may make a free request for this. If you have workers or may need to create a business bank account, you will need this number.
Inside Scoop: If your LLC is made up of just one member and has no workers, you may not need an EIN. Nevertheless, you may wish to ask for one even if you don’t intend to expand your company right now.
6. Fulfill Your Continued Duties
What occurs after you understand the process of becoming an LLC? In Colorado, you must submit periodic reports to the Colorado Secretary of State annually in order to maintain your company’s legal operation. There is a $10 filing fee.
You will need to submit state business taxes annually if you have chosen for your LLC to be taxed as a corporation. Employer taxes must be paid annually to the state by LLCs that have workers.
Keeping some licenses current may be necessary for your sort of company. To find out what licenses, if any, you need, check whether the Colorado Department of Regulatory Agencies regulates your kind of company.
Inside Scoop: To get email reminders when your periodic report is due, sign up to receive notifications from the CO Secretary of State.
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How Much Does It Cost in Colorado to Form an LLC?
The primary expense associated with forming an LLC in Colorado is the filing fee for the articles of organization. The $50 filing fee for the Articles of Organization as of 2023 must be paid to the Colorado Secretary of State at the time the document is submitted online.
The Colorado Business charge Relief Act temporarily reduced the filing charge to $1 from July 1, 2022, to June 30, 2023, in an effort to assist companies in hard times financially. However, as of May 2023, the state will once again charge $50 for filings, since this reduced price period has come to an end.
You will be responsible for paying the hourly or flat costs of any advisors you retain, such as an accountant or lawyer. For a fixed charge, formation businesses may assist you with preparing your documentation as well. Seeking advice early on could be worthwhile in order to avoid having to make expensive revisions to your documentation after filing.
How Much Does It Cost to Form an LLC in Colorado?
In Colorado, there are many ways to start the LLC creation process, but none of them are completely free because of the state filing cost that must be paid. A lot of online LLC providers list their prices as $0 + state costs, which basically implies you simply pay the $50 state filing fee and they provide their services for free.
Note that you will still need to pay the state fee to file the Articles of Organization with the Colorado Secretary of State, even if you choose to do it alone and prepare and submit all required paperwork without using an LLC formation service.
Benefits and Drawbacks of Colorado LLC Formation
Advantages
- Compared to many other states, Colorado provides a flat income tax rate of 4.55% for LLCs.
- Colorado is a well-liked business state with plenty of services to help LLCs.
- Colorado may provide credibility and facilitate the attraction of talent.
Cons
- After different expenses, the cost of forming an LLC in Colorado is more than $200.
- Colorado has many laws and regulations that must be followed, including yearly reporting.
What Does a Colorado LLC Need to Get Started?
There are a few important processes that must be followed as well as certain paperwork that must be produced and submitted in order to establish an LLC in Colorado. The first step in the procedure is naming the LLC in a way that sets it apart from other companies that are already registered with the state.
The following are the necessary paperwork and details needed to incorporate an LLC in Colorado:
- Unique LLC name: The name of your LLC should include an LLC designator, such as “LLC” or “Limited Liability Company,” and should not be too close to or identical to any existing registered company name in Colorado.
- Articles of Organization: A $50 filing fee must be paid online to the Colorado Secretary of State for the Articles of Organization document, which is essential for the establishment of your LLC.
- Details about the registered agent: The LLC must choose a registered agent to accept legal, tax, and other official paperwork on its behalf. The registered agent must have a physical location in Colorado.
- primary office address: Although they don’t have to be in Colorado, your primary office’s postal and street addresses must be included in the Articles of Organization.
- Details of the management structure: The Articles of Organization should specify whether your LLC will be manager-managed or member-managed.
What Happens When a Colorado LLC Is Created?
Following a successful LLC formation in Colorado, there are a few essential actions to do to make sure your business stays compliant and runs efficiently. The Colorado Secretary of State must receive Periodic Reports, which is one of the main obligations. In order to maintain your LLC’s good standing, these reports are necessary for informing the state of any changes to the registered agent or primary office address.
Between the first day of the month commemorating the establishment of your LLC and the final day of the month that follows, the first Periodic Report is required. Annually, during this same time, follow-up reports are needed and may be submitted online for a $10 cost.
In addition to meeting reporting requirements, careful attention to your LLC’s financial duties is essential. Among these responsibilities is filing the required state and federal taxes. Colorado LLCs are regarded as “pass-through” businesses for tax purposes, meaning that revenue goes through to the owners and is reported on their personal tax returns rather than the firm paying income tax on its own.
Are You a Colorado LLC Properly?
Are you prepared to launch your company but are unsure about the best structure to use? Before we get into how to create an LLC in Colorado, we’ll go over the fundamentals of LLCs to see whether creating one is the appropriate move for your company plan.
How Do You Interpret an LLC?
“Limited liability company,” or LLC for short, is a kind of business organization that provides members with the legal protections of a corporation but without all the associated paperwork and administrative burdens.
“Limited liability” refers to the fact that, in most situations, the LLC’s “members,” or owners, are not held personally liable for the company’s decisions and are sheltered from creditors for their personal assets. Legal and medical professions are examples of professional services that may be subject to different liability laws.
What Separates a Corporation from a Colorado LLC?
Despite Colorado’s reputation as one of the top business locations, what kind of company structure is right for you? The most prevalent forms of business structures are corporations, LLCs, partnerships, and sole proprietorships, in order of least formality.
Simply doing business may result in the formation of partnerships (when many people conduct business) and sole proprietorships (where one person conducts business alone). The proprietors of the company are in charge of all business decisions and debts; no documentation is needed.
LLCs represent a step forward. There aren’t many continuing duties or papers needed. Members of an LLC have protection for their personal assets and are not held liable for the business’s activities.
In addition to being more costly and time-consuming to establish, corporations are owned by “shareholders” rather than members. Compared to LLCs, corporations are subject to additional reporting obligations, frequent meetings, and the need for executives.
LLCs are liable to “pass through” taxes, which means that by default, the members get the revenues of the LLC and are only subject to a single personal income tax. LLCs have the option to be treated like corporations (sometimes referred to as “C-corporations”), which means that in addition to the members paying taxes on their income from the company, the firm also has to pay taxes on its earnings. This is referred to as “double taxation.” Certain companies may be granted more advantageous tax terms and be categorized as “S-corporations” for tax purposes if they satisfy certain standards.
Are There Different Kinds of LLCs?
There are three broad sorts of LLCs, so keep that in mind before we get into how to form an LLC and especially how to obtain an LLC in Colorado. Your company could fit into one of these groups.
Expert LLC. In some states, providing licensed services such as engineering Series LLC, practicing medicine or law, or engaging in other unique activities may necessitate the creation of this particular company. A series LLC consists of many LLCs operating under a single parent business or one LLC with several distinct “series” that function separately from one another and have their own identities, bank accounts, and documentation needs.
Foreign LLC. When a foreign limited company (FLC) is established in one state and wishes to do business in another, it must register in the second state.
Options for Financing Your Colorado LLC
The good news is that there are several choices available from state and federal agencies if you need assistance with start-up expenditures. To get money, you may need to do a bit more paperwork or research. Take a look at these Colorado resources first:
- Southeast Colorado women’s small business awards available via the U.S. Small Business Administration’s Colorado District Office Amber Grant Grants page for Colorado Small Business Development Center (SBDC)
- Programs for Small Business Grants from the Colorado Enterprise Fund
- The Small Business Lending website for the Colorado Office of Economic Development and International Trade
- Colorado loans and grants for companies owned by women and minorities
Do you want to learn more about being an entrepreneur or where to begin? See Colorado’s SBDC company Resource Book for an overview of company formats, tax advantages, employer duties, insurance needs, and more.
Frequently Asked Questions: Colorado LLC Formation
What conditions must be met in Colorado in order to incorporate an LLC?
A registered agent must be chosen, articles of formation must be filed, fees must be paid, and an operational agreement must be drafted.
What does it cost in Colorado to incorporate an LLC?
The $50 to $200 filing cost varies based on the method. The typical range of total expenses, including accounting and legal fees, is $1,000–2,500.
Does Colorado demand that an LLC have an operating agreement?
No, although it is highly advised to set up member obligations, ownership, regulations, and profit sharing.
How much time does it take in Colorado to create an LLC?
If you file online, formation normally occurs one to three business days after the Secretary of State approves your articles.
