How to Start an LLC in Colorado
Colorado is more than just a beautiful place to call home—it’s also ranked 5th in the nation for startup activity, according to a report by the Kauffman Foundation. Therefore, if you have a business you’ve been planning to launch, Colorado is an excellent place to form your startup company.
That said, before starting a new business, it’s important to carefully consider which business entity type you want to form.
Although there are a variety of options to choose from, many freelancers or small business startups in Colorado opt to form an LLC since it offers separation between business and personal finances, limited liability protection, and flexible tax and management options.
Starting an LLC in Colorado
In order to form an LLC in Colorado, you need to register your business with the Colorado Secretary of State and pay formation costs.
1. Name Your LLC
Naming your company is the first step you’ll take when forming your LLC in Colorado. You’ll want to choose a business name that suits your brand while staying compliant with state laws. We recommend you start the process by making a list of names that you find suitable for your LLC.
Keep in mind, names cannot contain words that are derogatory or offensive in nature and typically cannot contain words like bank, trust, credit union, casualty, mutual, or insurance. Using these words typically requires additional approval from the Division of Banking.
Next, you’ll want to run your list of names through an online database. In Colorado, every LLC must have a unique name, so you’ll want to visit the Colorado Secretary of State’s online name availability search page to see if the names on your list already exist. From there, pare down your list until you’ve chosen the name that best represents your LLC.
After you’ve chosen a name, it’s time to add an LLC designation to the end of it. In Colorado, all LLCs must signify what type of business they are by adding an approved LLC designation to their official name. Approved designations include:
- Limited Liability Company
- Ltd. Liability Company
- Limited Liability Co.
- Ltd. Liability Co.
For instance, if you choose the name, “Rocky Mountain Wedding Planners,” when you add a designation, this could transform into “Rocky Mountain Wedding Planners, LLC” or “Rocky Mountain Wedding Planners, Limited Liability Co.”
Once you have your full name, you can reserve it online for up to 120 days for a $25 filing fee. To reserve your LLC name, you’ll need to create an account on the Colorado Secretary of State website.
Trademarks and DBAs
If you decide to trademark your LLC name, you’ll need to search the U.S. Patent and Trademark Office’s online database to ensure a trademark does not already exist for your company name.
If no trademark exists, you can register for one online through the state of Colorado. There is a $20 fee for this filing.
Lastly, if you opt to conduct business under any name other than your official LLC name, you’ll need to secure a DBA or ‘doing business as’ name. In Colorado, this is referred to as a trade name.
To secure a trade name, you will need to first revisit the corporate name availability database to make sure the name is available. Next, you can register your trade name online through the Colorado Secretary of State’s office. There is a $30 fee for this filing.
2. Select a Registered Agent
Every LLC in Colorado is required to designate a registered agent for their business. A registered agent will act as a third party between your Colorado LLC and the secretary of state, accepting important communications and documents on your company’s behalf.
Your Colorado registered agent can be a person or entity, but if they’re an individual, their primary residence must be in Colorado, and if they’re an entity, they must have a usual place of business in Colorado.
That said, in Colorado, it is legal to act as your own registered agent if you choose. Keep in mind, when serving as your own registered agent, some of your personal information can become public record. In addition, you run the risk of being served sensitive legal documents, such as summons or subpoenas, at your office, where clients or potential partners might be present.
3. File Your Articles of Organization and Register Your LLC
The next step in forming your Colorado LLC is registering with the secretary of state online. To do this, you’ll need to file your articles of organization.
You can fill out your articles of organization and register your Colorado LLC entirely online—in fact, unlike some other states, Colorado does not allow you to register your LLC with a paper version of these forms.
That said, there are detailed instructions on how to fill out this form on the state’s website, but we’ll walk you through the basic information you’ll need below:
- Domestic entity name: The full name of your Colorado LLC with the designation.
- The principal office address: The mailing address for your LLC. This could be your residence, if you work from home, or your office address.
- Your registered agent’s name and address: This is the full name and operating address of your registered agent.
- Name and address of the individual forming the LLC: Here, you’ll put your full name and mailing address.
- Management structure: This is where you’ll note if your company will be member-managed, or if you’ll hire outside managers.
- Effective date: This is where you’ll put the date your LLC should become registered. Put the current date if you want your company up and running as soon as possible.
Lastly, you’ll fill out your name and address again (if you’re the person submitting the form), sign it, and submit your $50 filing fee online.
Once you submit your form, the website will ask you if you want to set up a secure business filing. Select “yes” to begin creating an online account for the secretary of state’s website. You can access all of your Colorado LLC’s information here in the future.
4. Create an Operating Agreement
Once you’ve officially formed your LLC with the state, you’re ready to create an operating agreement. This step is optional and not required by Colorado law, although it is recommended.
An LLC operating agreement will outline your plan for running and managing your company. It should contain information about how financial decisions are made, member voting structures, and the general rules and regulations for your company.
Most operating agreements include the following:
- The purpose or mission statement for the LLC
- Member-level details (current members, procedure for adding/removing members, etc.)
- LLC management plan
- LLC rules and regulations
- Meeting schedules (member-level)
- Dissolution terms
Even if you’re the only member of your LLC, it can be a good idea to draft an operating agreement to determine how your company should be run if you’re ever incapacitated or temporarily unable to handle this responsibility.
Additionally, if you have partners or other members, you’ll want to make sure each partner helps create this document, agrees to it, and signs it. Managers and employees should also review and sign this agreement.
5. Apply for Required Business Licenses
After you’ve finished your operating agreement, the next step to starting an LLC in Colorado is obtaining business licenses and permits.
Although many states require general operating licenses, Colorado does not. However, counties and cities have their own requirements, so you’ll want to look into the local laws in your area when forming your Colorado LLC.
You can learn more about industries that are regulated at the state-level on the Department of Regulatory Agencies website.
6. Register With the IRS and Review State Tax Requirements
At this point, you’re ready to register your Colorado LLC with the IRS to set your company up to pay taxes. This step can be handled entirely on your own, but we recommend reaching out to an experienced accountant or tax specialist if you have any questions along the way.
LLCs will often need to apply for an EIN (employer identification number) from the IRS. Your LLC’s EIN is similar to your individual social security number—it allows you to open business bank accounts, hire and pay employees, apply for financing, and handle your taxes.
You can apply for an EIN quickly and easily online. The process only takes minutes and is free.
State Tax Responsibilities
First, if you have employees, you’ll need to withhold payroll taxes. Colorado law requires LLCs with employees to set up a wage withholding account to pull taxes directly from their employees’ paychecks to pay income, social security, and Medicare taxes.
Next, if your LLC sells services or products that accrue sales tax, you’ll need to set up a business revenue account with the state to ensure sales tax is paid directly to the government.
Depending on your municipality, you may also be subject to a local sales tax, so you’ll want to make sure that you verify requirements in your city as well.
Finally, it’s important to note that Colorado requires that businesses file annual income tax returns for any year they’re doing business in the state. As an LLC, the return you’ll need to file will depend on how you’ve decided to be taxed with the IRS.
7. Remain Compliant With State and Federal Laws
Now that you’ve successfully started your Colorado LLC, you’ll want to remain compliant with state law, by filing a Periodic Report each year.
Colorado will assign you a reporting month when your Periodic Report will be due. You can find your LLC’s due date online with the Colorado Business Record Identification Search. Simply enter your LLC’s official name and select “search.” This will allow you to view your report due date and file directly online.
There is a $10 filing fee and a $50 late fee if this report is not turned in on time. After your report due date, you’ll have an additional two months to file—if you still do not submit your report after these two months are up, your LLC will no longer be in good standing with the state of Colorado.
Frequently Asked Questions
How much does it cost to start an LLC in Colorado?
Although it can vary, you can start an LLC in Colorado for as little as $50—which is pretty low in comparison to some other states.
That said, paying employees, hiring outside specialists and consultants, and expediting forms can all impact startup costs.
Let’s take a look at the general administrative fees that could impact your total LLC costs:
- Reserving your LLC name: $25
- Trademarking your LLC name: $20
- Securing a DBA/trade name: $30
- Filing your articles of organization: $50
Keep in mind, these costs do not include expedited fees, your $10 Periodic Report, or the costs of securing any special licenses or permits.
You can view a full list of all Colorado business form fees here.
How long does it take to get an LLC in Colorado?
As long as you stay organized, you can set up an LLC in Colorado rather quickly. Filing all of the required documents to set up your LLC takes the longest amount of time. In Colorado, paper forms are typically processed within seven to 10 business days, though during busy times of the year, this process can take longer.
Since articles of organization can only be filed online, processing should be quick, provided you filled out your forms correctly.
On average though, you should expect the setup process to take a few weeks to a month—considering the time to find a registered agent, fill out all of the required forms, draft an operating agreement, and set up your tax accounts.
What are the benefits of forming an LLC in Colorado?
There are many reasons why so many business owners in Colorado choose to form an LLC over other business types. Here are a few major benefits to keep in mind:
- Flexibility: LLCs offer a more flexible management style than most other business types, allowing business owners to manage the company how they see fit.
- Affordability: LLCs in Colorado have fewer forms and fees than other business types. The upfront cost and annual filing fees are also lower than in most other states.
- Fewer requirements: LLCs are relatively easy to manage in Colorado. They do not require a general business license and have few reporting requirements.
In addition, LLCs offer personal liability protection and avoid double-taxation laws.
It’s clear why many business owners choose to form an LLC in Colorado. Starting an LLC in the Centennial State is a straightforward process that can be done affordably in just a matter of weeks, or faster.
Colorado LLCs also have simple compliance regulations, making this business type extremely manageable for many small business owners.
That said, although there are many benefits to creating an LLC in Colorado, it’s always wise to explore your options. If you have any questions regarding LLCs or wish to explore other business formation types, we recommend consulting a business attorney or legal service.