Starting an LLC in Colorado is an exciting step toward turning your business ambitions into reality. With its vibrant economy and entrepreneur-friendly environment, Colorado offers the perfect backdrop for your venture.
Forming an LLC not only protects your personal assets but also boosts your business's credibility, setting you up for long-term success. While the process might initially seem daunting, this straightforward, step-by-step guide breaks it down into simple, manageable actions.
With the right approach and resources, you’ll have your Colorado LLC up and running in no time.
Steps to Create an LLC in Colorado:
- Step 1: Pick a business name for your LLC
- Step 2: Appoint a registered agent
- Step 3: File the Colorado LLC Articles of Organization
- Step 4: Draft an LLC Operating Agreement
- Step 5: Obtain an EIN (Employer Identification Number) from the IRS
- Costs to set up an LLC in Colorado
- Further steps
LLC Formation Service
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Step 1: Pick a business name for your LLC
Coming up with your LLC’s name is the first step. Marketing concerns may be high on your list, but it also needs to meet Colorado law. LLC names must:
- Include the term or abbreviation “limited liability company,” “LLC,” “Ltd.,” etc.
- Are unique and do not cause confusion with other established businesses
- Avoid using regulated terms unless authorized, such as lawyer, doctor, or bank
You can review the Business FAQs for more details.
Name availability search
After brainstorming some ideas, verify that no other Colorado company is already using the name.
You have two options to complete a name search online. Both are on the Colorado Secretary of State (SOS) website.
- Says if a specific name is available
- Doesn't list similar names
- Lists similar names
- Doesn't say if a specific name is available
Run multiple searches with different variants using these tools. Search without the LLC terms as well. Creating a name that is distinguishable from other businesses is a vital step of the LLC formation process.
Name reservation (optional)
After you’ve settled on a name that meets Colorado’s naming requirements, you can reserve it by submitting an application and paying a $25 fee (online). This holds the name for 120 days. You can extend the reservation for another $25 if you need more time before forming the LLC.
A reserved name is held for your future use. It doesn’t start a business.
Name reservations aren’t a required part of starting an LLC. But they are useful when you need time before filing the documents to form the Colorado LLC.
Trade name (optional)
Trade names are a common tool used by many businesses. They allow you to operate your business under a name that’s different from the LLC’s name. These are also called “doing business as,” DBA, or assumed names.
In Colorado, you need to register a trade name if you plan on using one. Sole proprietorships use trade names when they don’t want to use their personal name to do business.
LLCs might want to use a trade name when:
- Its legal name doesn’t identify what the company does (e.g., Rocky Mountain Enterprises, LLC)
- It wants to operate multiple product lines (e.g., a real estate company with vacation rentals and commercial offices)
In Colorado, trade names aren’t unique. So more than one person can register the same trade name.
Step 2: Appoint a registered agent
Another essential step to forming a Colorado LLC is appointing a registered agent. This is a crucial position that serves as the official point of contact for your business.
The registered agent is responsible for receiving vital notices. These can include legal documents and tax communications. It is not something to take lightly.
You will list the registered agent and their contact information on your LLC formation documents. It will be a public information.
While the small business owner itself can be the registered agent, that isn’t the only option. In Colorado, a registered agent can be anyone that meets the state’s requirements of:
- Over age 18
- Primary residence and physical address in Colorado
- Available during regular business hours
You can use a professional service, but it must be registered to do business in Colorado. You cannot use a P.O. Box.
If you don't want to be your own registered agent, you can hire one for about $59-$209/year in CO.
If you form an LLC with Northwest, they'll give you a free registered agent for the first year. After that, it's $125 per year.
Step 3: File the Colorado LLC Articles of Organization
The next step is to file your Articles of Organization online with the Secretary of State (SOS). This action brings your business to life and forms your Colorado LLC. It’s the legal document that creates your company.
The cost of filing a domestic Colorado LLC is $50. Foreign LLCs need to file the Foreign Entity Authority Statement and pay a $100 fee.
Colorado also has a useful checklist of what you’ll need to file your Articles of Organization, such as:
- LLC name
- Principal office address
- Mailing address
- Registered agent contact information
- Managers of the LLC
- Founders of the LLC with contact details
All new LLCs must be filed online since Colorado no longer accepts paper applications. Payments are accepted by debit/credit cards.
Once your LLC has been approved, business owners should obtain a from the state of Colorado. This document will assist you as your business grows and you have financing, banking, and accounting requirements.
Step 4: Draft an LLC Operating Agreement
Although an operating agreement is not a required part of Colorado’s formation process, all LLCs should prepare one. This legal document lays out how your company will operate and be managed.
An operating agreement is essential for multi-member LLCs. Without it, the entity will use the default Colorado LLC laws. These might not fit your desires and can lead to surprising outcomes. By creating an agreement, you can choose how your LLC handles many situations.
Operating agreements can be as in-depth as you like. At a minimum, they should include:
- LLC’s name and business address
- Purpose of the company
- Member’s names, contributions, and ownership percentage
- Procedures on how new members are added and how members can leave
- Profit and loss allocation between members
- Management structure
- How to dissolve the LLC
You can find free or low-cost templates online. If you decide to have an attorney prepare a customized agreement, expect to spend $1,000 or more.
Step 5: Get an Employer Identification Number from the IRS
The Employer Identification Number (EIN) is like a Social Security number for your business. It is a unique ID that the Internal Revenue Service (IRS) assigns to track your business. An EIN is also known as a tax ID number or a Federal Employer Identification Number (FEIN).
Local state tax authorities may also use the federal EIN for local filings, such as state income or employment taxes.
The fastest and easiest way to apply for an EIN is to use the IRS website. It generates your EIN immediately. And it's free.
Costs to set up an LLC in Colorado
There is only one required cost to start an LLC in Colorado: the fee to file your articles of organization.
This is only $50 in Colorado, which is less than many other states.
Other optional costs include name reservation ($25), trade name registration ($20), and professional registered agent service (around $90-$200/year).
Colorado also requires business owners to file a Periodic Report each year and pay a $10 fee. The brief filing verifies contact information and shows the business is still active.
Further steps
Open business bank account
Although you’re very close to launching your business, there are a few other steps you should take care of right away.
One of them is to open a business bank account. This is a crucial part of tracking your company’s finances. A business bank account is essential to:
- Separate company funds from personal
- Prove the legitimacy of your business
- Make tax preparation easier
To open an account, you’ll need a copy of your approved Articles of Organization and an EIN if you have employees. You may also need to provide your personal identification (e.g., driver’s license).
Sales tax license
If you are selling goods, you’ll need to get a sales tax license from the Colorado Department of Revenue (DOR). Colorado businesses are responsible for collecting sales tax on goods sold to customers. Most services are not taxable.
You can quickly apply through My Biz Colorado. You’ll have to pay a $16 application fee and put down a $50 deposit.
Sales tax licenses are valid for two years and must be renewed to keep your company in good standing.
Other considerations
You should also identify if you need any other business licenses or permits. Many professional services require a state license.
Some businesses need authorization from local authorities too. For example, Denver requires licenses for short-term rentals, tattoo artists, and many other activities.
Finally, it's worth considering insurance coverage, such as general liability or workers’ compensation. Savvy business owners use these to protect their assets and avoid future headaches.
LLC Formation Service
- Formed 1,000,000+ LLCs
- $39 formation includes registered agent service
- Fast formation & same day filing
- Exceptional customer reviews
Last updated:
Dec 2024
