How to Start an LLC in Colorado

Starting an LLC in Colorado? From the naming process to applying on the website, this step-by-step guide will help you out. Read on.

So you've made the choice of starting an LLC in Colorado.

It's a good choice, considering it's one of the best states for businesses in the country.

But there are requirements unique to it. You need the secretary's approval, for one.

Let's get into the nitty-gritty below.

How to Start an LLC in Colorado

The things you have to do are not so different when you start an LLC in other states. But there are a few additions.

Let's start with your business name.

1. Name your LLC

Since LLCs are considered separate legal entities, you'll have to register a business name when filing your formation documents.

And while LLCs enjoy more flexibility for their business names, you still need to follow certain rules when picking out one.

You can check the complete list of Colorado's naming regulations for business entities for your reference. But here are the general naming requirements:

• Must be unique to your business (i.e., no other company has already registered the name)
  
• Cannot be confused with another registered business in the state (you also can't use articles, suffixes, abbreviations, etc., to create distinctions)
  
• Should indicate its business entity type (i.e., contains terms like "LLC," "L.L.C.," "Limited Liability Company," etc.)
  
• Shouldn't indicate or imply an association with government agencies (local, state, or federal)
  
• Cannot imply a business purpose other than what's registered in its official documents
  
• Must not suggest that your company engages in any illegal or criminal activities

Reserving your LLC name:
You can reserve your chosen business name if you're not ready to form your LLC yet. Just file a Statement of Reservation of Name through the Secretary of State's website. They've also listed the complete instructions for your reference.

Take note that business name reservations in Colorado last for 120 days. But you can renew it if it expires. Just file a Statement of Renewal of Reservation of Name through the same site.

Fictitious names or DBA in Colorado:
You'll still need to register an official business name even if you already use a DBA (aka "trade names" in Colorado).

Unfortunately, you can't convert your existing trade name into your business name. So, you'll have to withdraw and refile the name with your Articles of Organization.

Then, just file a trade name application if you want to use a DBA for transactions.

2. Appoint a registered agent

You need a registered agent if you're starting an LLC in Colorado. In fact, the state won't accept your application if you don't have one listed.

Registered agents generally act as the company's primary point of contact. They receive important documents (like legal notices, tax forms, service of process, etc.) on your behalf. They can also remind you of upcoming compliance deadlines.

Anyone can be a registered agent for your LLC as long as they meet the following criteria:^[2]

• At least 18 years old (for individuals)
  
• A resident of and have a physical street address in Colorado (PO boxes and virtual addresses aren't allowed)
  
• Can legally conduct business in the state (if you hire third-party services)
  
• Has a physical business address in Colorado (if you hire third-party services)
  
• Always available during regular business hours (Mondays to Fridays, 9AM to 5PM)

You can be your own registered agent in Colorado. That's as long as you meet the criteria mentioned. Colorado is also one of the few states that allow the business entities themselves (like LLCs and corporations) to be their own registered agents.

3. File your Articles of Organization

You need to file your Articles of Organization with the Secretary of State's office. All applications should be sent online through their official website.

This will serve as your LLC's official document. And it should contain all relevant information about your business.

For Colorado LLCs, you need to include the following:

• Business entity name
  
• Official business address (can't be a PO box)
  
• Official mailing address (if different from your business address)
  
• Registered agent's details (name, address, contact details, statement of consent, etc.)
  
• LLC members' information (name and mailing addresses)
  
• Management structure (member- or manager-managed)

Once you've provided all the required information, you just need to pay the filing fee and wait for approval.

Make sure you double-check everything and that all the details are accurate. If you need to change or correct anything, you need to file your Articles of Amendment online.

Take note that foreign LLCs (LLCs operating outside of Colorado) need to file a Statement of Foreign Entity Authority instead of the Articles of Organization.

4. Create an operating agreement

Although operating agreements aren't mandatory for LLCs in Colorado, creating one is still advisable, especially for multi-member LLCs.

That's because an operating agreement outlines and defines a company's structure and operations. This includes your members' roles and responsibilities. It can also help resolve disputes among your members.

In general, operating agreements should contain the following:

• Ownership (members' details, division of company interests, roles, responsibilities, etc.)
  
• Management structure
  
• Distributions and dividends
  
• Voting protocols (e.g., when adding new members or existing ones leave)
  
• Transfer process for ownership interests
  
• Dissolution

Since an operating agreement isn't required for Colorado LLCs, you don't have to file it with the state. Just keep it with your company's other important paperwork.

5. Get the Secretary of State's approval

Once the state approves your application, they will issue a certificate proving your LLC now exists.

Unfortunately, they won't send you a physical copy. But you can access it via your company's online records. You can find it under "Filing history and documents" on the website's summary page.

This certificate will allow you to apply for an EIN, open an LLC bank account, and get the necessary business licenses and permits.

6. Obtain an EIN

Once your registration is approved and you have the certificate, you can apply for an Employer Identification Number (EIN). It works like a person's Social Security Number (SSN). It will be your business' unique identifier, mainly used for tax purposes.

Getting an EIN is easy. You can apply directly with the IRS online to receive your EIN immediately (if eligible). Or apply through fax, mail, or phone for international applicants.

There is an exemption, however. You can skip the EIN if you're a single-member LLC. But we still recommend getting one since you can use it for many business purposes. You can open a business bank account, hire employees, pay taxes, etc.

7. Submit a periodic report

Colorado requires all reporting business entities, like LLCs and corporations, to file a yearly Periodic Report (aka an "annual report"). This ensures that your business records are always accurate and updated with the state.

You're required to file one even if there are no changes to your company information. You can do so online by following the state's instructions.

Also, you can file two months earlier than the due date. This will help you avoid non-compliance for missing the deadline AND the $50 penalty fee for late filings.

8. Pay corporate taxes (if applicable)

LLCs in Colorado are taxed like sole proprietors or partnerships by default, which are both "pass-through" entities. That means you only have to pay income taxes on the company's profits once (as part of your personal tax returns).

But Colorado LLCs can also choose to be taxed like corporations (C- or S-Corp). If you opt for this tax classification, your company must pay taxes twice (on individual and corporate levels).

Bottom Line

Colorado has a highly business-friendly environment, making it one of the best states to start an LLC in. Just follow these 8 steps to do so.

Keep in mind the state's unique requirements to avoid delays, mistakes, and rejections. And be sure to read the full instructions on their site when you begin.

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