Forming an LLC (Limited Liability Company) is the best option for most new businesses who want the legal protections a corporation offers but not the complications in running the business.
If you live in Colorado or plan to do business in the Centennial State, you’ll be glad to know that Colorado has a straightforward process for filing your LLC. If you’re ready to form your Colorado LLC, follow the steps in our guide below and you’ll soon have a business that’s ready to start trading.
The first step is the one you’re usually most prepared for, and that’s choosing a name for your Colorado LLC. Your LLC doesn’t have to match your intended brand name exactly, which gives you the freedom to rebrand later if necessary. That said, you should choose a name you’re happy with because it is difficult to change.
All Colorado LLCs must have a name that is distinguishable from all other registered businesses in the state, regardless of business structure. You can check if your preferred name is available on the Colorado Secretary of State’s business name database.
If your preferred name is taken, you’ll need to choose a different, unique name, you can’t choose one that is too close. For example, if there’s already a company called Armchair Books LLC, trying to register Armchair Bookstore LLC often won’t be allowed.
All LLCs need to include a designator in their name which shows that your business is a Limited Liability Company. You can choose from:
Your name cannot include any misleading language that makes it seem like something it’s not or is associated with a government agency, such as Association, State Department, FBI, and so on.
You must also avoid using restricted words in your name unless you are permitted to use them (and have the licenses and documentation to prove it). Restricted words include words like attorney, credit union, and bank.
While you’re registering your business name, now is also a good time to secure your business’s domain name. You may want to secure your LLC’s domain name even if you plan to use different branding for your business.
You are not required to reserve your LLC’s name in Colorado, but if you aren’t ready to continue on to form your company today, you may choose to reserve your name to ensure no one takes it in the meantime.
You can reserve your LLC name for 120 days for a nominal fee of $25. To reserve your name, file a Statement of Reservation of Name online.
All LLCs require a registered agent in the state they are operating in. A registered agent is a person or business that is appointed by you to receive legal mail and notices on behalf of your LLC. In most cases, these legal notices are simply about tax, but this is also the address subpoenas will be sent to.
Your registered agent must have a real Colorado address (not a PO Box or Virtual Mailbox) and be able to receive mail during normal business hours. If you reside in Colorado, you can choose to be your own registered agent. Alternatively, you can nominate a family member, friend, or commercial registered agent.
It’s important to note that your registered agent’s address will be available publicly online, so many LLC owners decide to pay for a commercial registered agent to receive mail on their behalf.
A commercial registered agent usually charges a small monthly fee (around $15 for basic services) to represent your business and will forward any mail to you either physically or electronically.
When you’re first forming your business it can be difficult to decide whether or not to be your own registered agent. You often want to save all the money you can, but most people who may be working from home do not want their address available for anyone and everyone to see. If you aren’t sure, read our guide on the pros and cons here so you can make a decision.
If you believe a commercial registered agent is the best move for you, we’d be happy to be your registered agent in Colorado. Reach out to us and we’ll send you all the necessary information so you can continue forming your Colorado LLC.
Once you’ve got your name and chosen your registered agent, you can move forward and file your Articles of Organization. This is the step that will make your business a real legal entity.
Colorado’s system is easy to follow and it’s inexpensive to file, costing $50. (Note: Colorado reduced its filing fee to just $1 for all new businesses filing at any time between July 1, 2022, and June 30, 2023.) You must file online.
The information you need to have ready to file includes:
Colorado has a full guide on how to fill out the Articles of Organization form, so if you are uncertain about what to do next, you can find that guide here.
If you have already formed your LLC in another state and you’re now expanding to Colorado, you’ll need to file as a Foreign LLC. Filing as a Foreign LLC costs $100 and must be filed online. To file your Foreign LLC in Colorado, click here.
It usually takes 7-10 business days to receive your certified copy of your Articles of Organization, though you can expedite the process to just 3-5 business days by paying an additional fee of $150.
Once you’ve got your certified copy of your Articles of Organization, your business is official and you’re legally able to start trading. The next steps in the process will get your business ready to start trading.
An operating agreement is not something you are legally required to have in Colorado but should be regarded as a necessity if anyone else is going to work within your LLC with you.
An Operating Agreement outlines all the details of how the company will be run, which members contributed and own what, and what their duties are.
Here are things you will likely want to include in your operating agreement:
With your business now regarded as a real legal entity, it’s time to get an EIN. An EIN is an Employer Identification Number, and it’s a tax identification number (like your SSN) that you need for your business regardless of whether you intend to employ anyone or not.
At this stage in your business, the key benefit of your EIN is that it allows you to apply for a business bank account, but it will also allow you to pay taxes and hire employees.
Getting your EIN is simple, instant, and free. All you need to do is click this link to go to the IRS website and once you’ve completed the form an EIN will be automatically generated for you.
If preferred, you can apply for your EIN by mail, but it’s much slower, often taking 4 weeks to process. If you need to apply this way for any reason, use Form SS-4.
It’s often tempting to leave anything you don’t have to worry about immediately until later, but it’s best to understand what is expected of you and make a note of it on your calendar now so you don’t miss any important deadlines.
All Colorado LLCs are required to file a “Periodic Report.” This report is required within 3 months of the first day of your LLC’s anniversary month, but you can also file 2 months early.
For example, if you formed your business on November 5th, 2021, your Periodic Report would be due at any time between September 5th, 2022, and February 1st, 2023.
This report will confirm that all your details are correct and that your business is still in operation. You can file online here and there is a $10 filing fee.
Colorado does not have a state-wide requirement for a business license, but some cities do and you may also need other licenses or permits to operate your business legally.
If you will be employing people or collecting sales tax, you will need to register your LLC with the Colorado Department of Revenue to get your Sales Tax License. You can register your business here.
If you aren’t sure if you are operating in a regulated industry, check the DORA (Colorado Department of Regulatory Agencies) website and use their searchable list of professions and industries to find out.
You should also check their Occupational License Database and their Other Licenses and Regulatory Resources, and check your local city and county websites to see if they have any additional licensing or permit requirements.
Now your business is operational, it’s time to get your business bank account. Do not skip this step or you risk negating the protective nature of the LLC. Remember you’ve chosen an LLC because it will help protect your personal assets from any legal difficulties with your business, and vice versa.
If you don’t keep your financial lives separate and then get into legal trouble, you may find a skilled attorney can argue that your personal assets are your business’s. It’s not a risk worth taking.
Instead, use your new EIN to apply for a business bank account and start practicing good financial management from the very beginning of your business. It will also make it easier for you when it’s time to do your taxes.
It’s important to understand that it is a legal requirement to keep certain legal documents on-site at your LLC’s principal office, whether that’s at your home or another location. The documents you need to keep on-site are:
With all these steps covered, your Colorado LLC is official and ready to start trading - congratulations!
Colorado is one of the more straightforward states to form an LLC in, but it’s still time-consuming and can be confusing. If you’d rather stay in your zone of genius and in the excitement of creating your products or services and setting up your branding, let us form your Colorado LLC for you.
We will register your LLC name, file your Articles of Organization, obtain your EIN, and can even be your registered agent in Colorado. To get started, fill in this short form and we’ll do the rest.