Forming an LLC (Limited Liability Company) in Colorado is easy and affordable. The following are few procedural steps on how to start an LLC in Colorado. LLCs can be formed in two ways, domestic and/or foreign if you are planning to set up an LLC in states other than Colorado, visit How to Start an LLC.
On this page, you’ll learn about the following:
- How to Start a Colorado LLC
- After Starting your Colorado LLC
- Why an LLC in Colorado
- Best Business Established in Colorado State
- Colorado LLC Formation Review
How to Start a Colorado LLC
Suppose you’re planning to invest in a successful business or maybe about to set up your ideal form of business in Colorado. In that case, forming a Colorado LLC is the simplest option for you.
An LLC or a Limited Liability Companya hybrid business entity combining a corporation’s characteristics with a partnership or sole proprietorship. This section gives you a step-by-step guide on How to Start a Colorado LLC.
Step 1: Decide a Name for Your LLC
If you are to start an LLC in Colorado, the first thing you do is decide on a business or company name, and how to name your Colorado LLC may be tricky. Thus, you have the option to choose a name that complies with the Colorado business naming requirements. It must also be easily searchable for potential clients. Here is a step-by-step guide to follow when naming your Colorado LLC.
Why do you need a proper business name?
If you want your LLC in Colorado to have special identification, your company name is essential. However, many people face many issues by avoiding focus on choosing a business name for their LLC business formation filings.
Because of this, here are some of the major benefits of choosing the best LLC corporate names.
- To help establish a company’s presence in the market, a proper business entity type will help you. This also creates a new identity and separate business entity that will resemble your LLC.
- After you’ve properly chosen the name for your LLC, you will have no problems finishing the registration process.
- You can only get the EIN when you have your name registration certificate with you.
What are the requirements when deciding a name for your LLC?
A name search is vital to make sure your business’ name is unique. Check the availability of your name with Business Entity Search on the Colorado Secretary of State’s website. Reserve the name by completing the Name Reservation Request Forms for Domestic Entities.
- Don’t include words that could confuse people about your company with a government agency. Words like ‘treasury, state department.’
- You should also avoid restricted words like ‘bank, attorney, university,’ because they may require a lawyer and more paperwork.
- As for a business website and your URL name, check if your name is still available for domain use with NameCheap.
Reserve a business domain
Even if you don’t have plans to set up a website today, it will help if you buy a domain to avoid others from using your name for their website, so do visit NameCheap for your domain name and Kinsta for web hosting.
If you have decided on your URL name and have reserved it, set up a professional email account with Google GSuite.
Step 2: Assign a Registered Agent in Colorado
A registered agent is a person or business entity responsible for working on your behalf. This person or business will receive significant tax forms, legal forms, formation documents, a notice of lawsuits, government filings, and other official government correspondence in Colorado. Choosing Colorado-registered agents for your LLC is required.
Make sure your registered agents are residents of Colorado. It could also be a business. Check out an employee registered agent service provider fit for you:
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These five LLC formation services are recommended agents’ registered services as they are authorized to conduct business in Colorado. Compare them to check the best yet cheapest option for you. Besides, they can guarantee you professional service because they have been in the business for a long time.
Step 3: File Articles of Organization in Colorado
As other states call it, a Certificate of Name Reservation is needed to file Articles of Organization form. You need to make a periodic report of this certificate with the Colorado Secretary of State (you can also view and download sample articles on the site.) You may file them by mail address or online, where the filing fee is $50.
This Certificate of Formation is a legal document needed to legally structure your business. It will indicate details about your LLC in Colorado, like if it is a member-managed or managers-managed.
Before you start filings, you must already have your LLC name and registered agents or employees. You will attach a copy of your Name Reservation Certificate along with a list of the services that your Colorado LLC will offer.
How to File Online
If you do not have time to mail them, you can go to the Secretary of State Online Service. Select “non-subscriber.” Fill out the online form. The website will alert you if your county does not support online filings after selecting your principal county.
Step 4: Create Your Colorado LLC Operating Agreement
An operating agreement is an internal document that legally outlines the proprietorship and operating procedures of your Colorado LLC. This document is vital as it ensures that all business owners are on the same page regarding how they operate, thus reducing future conflicts.
Starting an LLC in Colorado does not require you to have an operating agreement, but it is ideal to have one that contains all your details of business operation.
Step 5: Filing a Colorado LLC EIN
The Employer Identification Number or, simply, the E.I.N. is a nine-digit number given by the Internal Revenue Service (IRS) to make it easier to identify types of business for tax purposes. It is like a Social Security number dedicated to a business.
It is also called a Federal Employer Identification Number (FEIN) or a Federal Tax Identification Number (FTIN). You will need this number for tax filing and to determine tax classification options.
Internal Revenue Service
Attn: EIN Operation
Cincinnati, OH 45999
Fax: (855) 641-6935
After Starting your Colorado LLC
After forming your LLC in Colorado, there are still some things that you will need. Take note of the following:
- Get a company business account
- File Colorado business permits & business licenses
- Get liability for business insurance with coverage for employees
- File a Colorado LLC annual report or biennial report
- Already existing LLCs that wish to operate in Colorado must register as a foreign Colorado LLC.
This page has provided you with steps to LLC formation and filing processes. You now have to remember upcoming filing deadlines and filing fees or filing costs, including fees for late filings, to make sure your LLC is up-to-date.
Why an LLC in Colorado
Colorado, located in the western part of the United States, has many tax benefits and incentives to offer to the newly set up businesses. Forming an LLC in Colorado is flexible for its dynamic economic structure. The state provides a handful of incentives to the small business entities if qualified.
Incentive Programs for Small Companies
Once you start your business in Colorado, you will be eligible for several incentive programs. All these programs come with diverse criteria. As soon as your company meets those requirements, you can enjoy the gains from those incentives.
Microloan facility is financial support the Colorado government provides to small entrepreneurial companies. The amount goes up to $50,000 from $5000. The main aim of Microloan is to support small and micro-businesses by providing financial assistance. The Economic Development Commission in Colorado has created this program.
Work Opportunity Tax Credit
This is a federal tax structure. This tax credit encourages companies to hire certain targeted people/job seekers. The Federal government provides a minimum of $2400 and a maximum of $9600 each time a new employee is hired.
Colorado Credit Reserve
This program is created by the Colorado Housing & Finance Authority. Under this program, a newly set up small business can get credit to expand their company in Colorado.
These programs, including State Trade Expansion Program, Regional Tourism Act, Transferable Tax Credit Act, and some more programs, help entrepreneurs start an LLC in Colorado and enjoy the benefits.
Best Business Established in Colorado State
Deciding on the best business to invest your money in, in Colorado is a difficult task. Many competitive industries are coping up in the state in which a person can invest money. If you want to start an LLC in Colorado, you must have proper knowledge about the state’s top industries, which is given below.
The following industry in which a person is willing to invest their money in the state is IT. There are significant technology corporations situated in the state, and there is a continuous demand for more and more companies. This is the quality of IT services that companies in Colorado provide that managed to contribute around $25.32 billion to state GDP.
Health and Wellness
Health and wellness is another business that is rising in the state, with 16000 companies currently. These companies have a list of hospitals directly providing services related to a person’s health care and some wellness products. In the last 5 years, the industry has grown to around 22.1% contributing $16 billion to the state GDP.
Aerospace Manufacturing and Transport
The state is very well known for aerospace manufacturing, with 180 aerospace firms. If you look at the aerospace industries around the country, Colorado’s highest percentage of production is provided. Still, with the increasing demand for the air force and aerospace and the development of new projects, there is a stress on the Colorado Industry of manufacturing. The economic contribution made by the aerospace industry in Colorado is around $15.4 Billion.
Moreover, with the demand in manufacturing, the transportation demand also increases. Now normal transportation cannot carry the aerospace products as they are delicate and need better handling. You can also think of providing some best and innovative services for better transport of the products.
Apart from these famous businesses, if a person wants to invest in small investment business, then the best options they have are:-
- Bakery Business
- Digital Marketing Business
- Restaurants and Coffee Shops
Colorado LLC Formation Review
Time needed: 30 minutes.
Just to recap, here are the easy steps again when forming an LLC in Colorado. Click on the steps in this list to read the full detail.
- Name your Colorado LLC
The first thing you must do is to choose a company name, which should include the phrase “limited liability company,” or one of its abbreviations (LLC or L.L.C.).
- Choose a registered agent
In Colorado, it is mandatory to select a registered agent for your LLC. You can check out our list of our 5 Best LLC Services in the United States.
- File a formation certificate
Filing a formation certificate is necessary when forming an LLC. Depending on the state, it could be called any of the following: Certificate of Formation, Articles of Organization, or Certificate of Organization.
- Create operating agreement
An operating agreement is not a strict requirement but something encouraged when you start an LLC.
- Get an EIN
The Employer Identification Number (EIN), also called Federal Tax Identification Number, serves to identify a business entity like a social security number but for a company.
A “domestic LLC” is one that conducts business in a state where it was formed. Meanwhile, a “foreign LLC” is an existing foreign entity/LLC that extended business to another state.
For Domestic LLCs, it is vital to have a Certificate of Name Reservation and Certificate of Formation. For the foreign LLCs, you must have a Certificate of Good Standing.
The cost to form an LLC varies per state.
Seldom do L.L.C.s use D.B.A. or a ‘Doing Business As’ name nor a fictitious business name. However, if you want to have one, you make read more about DBAs here.
A comprehensive operating agreement is vital as it ensures that all business owners are on the same page regarding how they operate, thus reducing future conflicts.
>Your name should have “L.L.C. or LLC” or the phrase “limited liability the business.”
>Do not include words that could create confusion between your LLC and any government business.
>Words like ‘bank, attorney, university’ are restricted as well.
>Lastly, your name should distinguish from other limited liability corporations, limited partnerships, or registered limited liability partnerships.
Typically, you can file your LLC name online or by mail. Check with the state where you will set up your LLC name. Take note that the fees for business names may also vary per state.
As for a website and your URL name, check if your name is still available for URL use with NameCheap to see if your name is available as a web domain. Even if you don’t have plans to set up a website today, it will help if you buy a URL. Buying it can help to prevent others from getting your name; check out WPEngine, Kinsta, and GoDaddy for hosting and building your website.
No. Never mail these documents or payments to the Secretary of State directly.
The reason you might need an E.I.N. is that it would help for three reasons:
>For LLC bank/business bank application
>Filing and managing state and federal taxes
>EIN is required when you hire employees/LLCs with employees or agents
You are not required a Social Security number when getting an EIN. You can proceed to fill out I.R.S. Form SS-4 and leave section 7b blank. You must then call the IRS at (267) 941-1099 to complete your application. Agents or employees will help you with that.
International EIN applicants do not need an SSN to get an EIN.