Start An LLC In Colorado
Do you want to know how to start an LLC in Colorado? There are quite a few steps and a few other things you must do, and the process can be daunting initially.
This guide gives you everything you need to know about creating an LLC in Colorado. Let’s get started now!
Let’s start with a comparison table between Colorado and its neighboring states.
|State||Colorado||Utah||Kansas||New Mexico||US Average|
|LLC Filing Fee||$50||$70||$160||$50||$130.38|
|LLC Annual/Biennial Fee||$10 (every year)||$20 (every year)||$50 (every year)||$0 (no fee and no information report)||$89.34 (every year)|
|Corporate Tax Rate||4.55%||4.95%||1.0-5.9%||4.8-5.9%||5.60%|
|Nominal GDP per capita||$72,597||$66,011||$65,530||$51,481||$64, 773.08|
Before You Set Up An LLC In Colorado
You must file Articles of Organization online through the Colorado Secretary of State to form your Colorado LLC. This costs $50.
The Articles of Organization officially create the limited liability company for you. Follow the rest of the step-by-step guide below for starting an LLC in Colorado.
How Much Does It Cost To Start An LLC In Colorado?
You’re here to learn about how much to start an LCC in Colorado, and this guide breaks everything down for you:
- Colorado online filing fee – $50 (this is for your Articles of Organization)
- Periodic report fee – $10 (you must file an annual report with the Colorado Secretary of State. It’s due within five months, which starts two months before and after the date your LCC was formed. If you don’t file on time, Colorado charges a $50 penalty.
- Registered agent fee – Starts at $39 for one year (You may be your own registered agent, but a service helps keep the company compliant and avoids late fees because you’re reminded of important filing deadlines.
- Building Licenses and Permits – Depending on your geographical location and industry, you might require federal, local, or state permits and licenses to legally operate. Prices vary.
There are also optional fees associated with forming an LLC in Colorado. These include:
- Name reservation – Reserve your business name for 120 days before formation by paying a $25 filing fee and filling out the Name Reservation Form.
- DBA (Doing Business As) Name – Pay a $20 filing fee and file your statement of trade name to create a separate name than the legal LLC one.
The primary cost runs about $99 if you don’t need business permits or licenses. You can pay $45 more to reserve your name and add another one for the company.
Steps To Start An LLC In Colorado
These are the steps to take if you want to start an LLC in Colorado:
1. Pick A Name For Your LLC
Choosing your company name is one of the most important steps in forming your Colorado LLC. Make sure that it complies with the naming requirements and laws in the state and can be searched easily by potential clients and customers.
- The LLC name has to include “limited liability company” or any of these words or abbreviations: “limited, ltd. liability co., ltd. liability company, limited liability co, ltd., L.L.C., or LLC.”
- It cannot include words that might confuse the LLC with any government agency (State Department, Treasury, FBI, etc.)
- Restricted words like Attorney, Bank, or University might require more legal paperwork and a licensed lawyer or doctor to be part of the LLC.
The name you want should be available in Colorado. Make sure it’s not already taken by using the Business Database Search on the Colorado Secretary of State website and performing a name search.
It’s also a good idea to check online to ensure that your business name can also be the web domain. You don’t have to create the site today, but consider buying the URL now to prevent others from getting it first.
2. Find A Registered Agent In Colorado
You must have a Registered Agent for the Colorado LLC.
What’s a registered agent? It can be a business entity or individual, and they are responsible for receiving legal documents, tax forms, official government correspondence, and notice of lawsuits on behalf of the business. In a sense, this is the business’ point of contact for the state.
Registered agents can be full-time residents of Colorado or a corporation authorized to conduct business in this state. Registered agent service is the best choice here, though you can elect someone in the company, including yourself.
|ZenBusiness – $49 + state fees to register your LLC (read review)|
|Incfile – $0 + $50 state fees to register your LLC (read review)|
3. Articles Of Organization
Forming an LLC in Colorado means registering it. To do that, you must file your Articles of Organization through the Colorado Secretary of State. This can be done online.
You should also think about whether the LLC is managed or member-managed. Member-managed structures work well when there’s a small group of members and they’re willing and able to be involved with the daily operation of the company.
Manager-managed structures work well with a large group of members who don’t want to be involved in the company’s daily operations.
There’s a $50 non-refundable fee required to file your Articles of Organization. Make sure that you select “limited liability company” from the “file form” landing page to get directed to the right area.
4. Other Required Documents
You might also want to get a Certificate of Good Standing to show that the Colorado LLC was formed legally and is properly maintained. This can help when you’re:
- Renewing or obtaining specific licenses or permits
- Forming a business as a foreign LLC within another state
- Seeking funds from lenders and banks
You can learn more from the Colorado Secretary of State.
Those who want to operate as a single entity in many states should consider forming a foreign LLC. You can also file the Foreign LLC if you’ve got a limited liability company and wish to start doing business in Colorado. There’s a non-refundable $100 fee.
5. Operating Agreement
You don’t have to get an operating agreement to start an LLC in Colorado, but it’s good to have one. This is a legal document that outlines the operating procedures and ownership of a limited liability company. They are important to ensure that everyone is on the same page and can reduce future conflicts.
Business owners aren’t required to file an operating agreement with the Colorado Secretary of State. It’s an internal document to keep on file. If you do business in other states and use the Foreign LLC to run in Colorado, you may be required to have one.
There is no form on the Secretary of State’s website because it’s not required in Colorado. However, you can create one with ZenBusiness.
6. Get An EIN
An EIN is your Employer Identification Number. They’re nine digits long and assigned to help identify a business for tax purposes. The IRS (Internal Revenue Service) provides them. In a sense, it’s like an individual’s Social Security Number but for a business.
EINs are often called FEIN (Federal Employer Identification Number) or FTIN (Federal Tax Identification Number).
You require an EIN to:
- Hire employees
- Manage and file your state and federal taxes
- Open a business bank account
The IRS requires sole proprietorships to request a new EIN when they convert to an LLC. You can request a free EIN from the IRS. It’s simple and can be done by mail or online.
If you request an EIN by mail, fill out the form and send it to:
Internal Revenue Service
ATTN: EIN Operation
Cincinnati, OH 45999
You can also fax the form to (855) 641-6935
The Forms You Need To Register An LLC In Colorado
Here is a list of the forms you need to register your LLC in Colorado:
- Articles of Organization
- EIN Registration
- LLC Annual Report
- Foreign LLC Registration
- Certificate of Good Standing (optional)
Did You Know?The Limited Liability Company Act for Colorado was adopted in 1990.LLCs combine the concepts of corporations for liability purposes and partnerships for tax purposes. LLCs aren’t corporations! The LLC calls owners “members,” and they can hire or elect managers to run the company. With corporations, the members/owners elect themselves to be managers.LLC members are protected from any personal liability like corporation shareholders, and the entity has the flexibility of the partnership. Each state is different, so tax and liability aren’t uniform across all states!
LLC Taxes In Colorado
It’s hard to describe how much Colorado LLCs have to pay in taxes because it primarily depends on the amount of money they make. Just like your taxes go up and down based on how much you earn, the same applies to limited liability companies.
Here’s a quick look at the taxes for state and federal:
Federal LLC Taxes
If you’re the only member of the LCC, the default for the federal level is to tax your business as a sole proprietorship. That means the limited liability company isn’t taxed on its profits. You include your business income on your personal tax return.
However, if you’ve got more than one member, the default is to treat the LLC as a partnership, which requires you to get an EIN. You must file an information return each tax year, indicating how much every member invested and received. Then, you include the percentage of business profits you got on your personal tax return.
Some people choose to be taxed as a C corporation. To do that, file form 8832 with the IRS. This requires you to file a business tax return every year and include business income on your personal tax return.
LLCs have to make estimated tax payments throughout the year, which happen quarterly. That way, you avoid penalties when filing in April.
If you’ve got employees working for you, it’s important to withhold Medicare, Social Security, and federal taxes from those paychecks, submitting the payments to the IRS.
Your tax designation at the federal level is the same for the state level. This means you still make quarterly estimated payments to the state and must create your Wage Withholding Account for employees.
Companies selling a physical service or product must register to get a seller’s permit from the State of Colorado. This shows that you can collect sales tax.
Overall, Colorado is a great place for starting an LLC. It’s relatively tax-friendly for corporations and doesn’t require franchise taxes like other states.
Just remember that if you’re designated as a corporation at the federal level, you must file your state business tax return.
How Long To Form An LLC In Colorado?
It generally takes four to five business days to complete all the forms and create your LLC, and you must wait about one to two weeks to get the finished documents.
How Much Does It Cost To Run An LLC In Colorado?
From a legal standpoint, it only costs $10 to run an LLC in Colorado each year. You need to file your annual report.
However, you could have other annual costs, such as paying for utilities, employees, equipment, and more.
What To Do After Formation?
Starting an LLC in Colorado is just the beginning. Once it’s formed, you should think about other things necessary to run a business, such as:
- Create a logo – Make yourself stand apart from the competition by having a colorful logo that represents you. Add it to your website, business correspondence, and business cards.
- Build a website or eCommerce store – Every company requires a website, or they risk missing potential customers. You don’t need experience and can often create it yourself. However, you may hire a website developer if you want it to look professional.
- Bank account – It’s best to have a business checking account so that you’re not mixing your personal assets with the company ones.
- Business insurance – This helps you manage risks so that you can focus on growing the LLC. Common types include workers’ compensation, professional liability, and general liability insurance.
- Annual reports – Produce easy-to-understand annual reports for shareholders and other interested parties. This proves transparency and makes you look like the best choice.
- Press release – Generate press releases to promote your company. They offer publicity, establish your presence online, improve SEO, and have other long-lasting benefits.
It’s crucial to ensure that your business runs smoothly. These things are often overlooked by LLC owners, and then they rush to get them done, missing many opportunities to sell.
Resources To Start A Successful LLC In Colorado
- Secretary of State (Colorado) Business Organizations
- LLC Statutes
- Contact the SOS in Colorado
- Small Business Resource
- Articles of Organization
- EIN Registration
- LLC Annual Report
- Foreign LLC Registration
- Certificate of Good Standing (optional)
- Business Forms List
Start Marketing Your LLC In Colorado
The first step is to establish your products and learn about your target audience. Then, you have to think about the price people might pay and promote it effectively.
Most companies start with a website. You can easily add information people need to know, including prices, and create a buzz online.
Create social media accounts for the LLC and promote your brand. It’s also important to think about SEO, organic traffic, and paid ads.
How To Dissolve An LLC In Colorado?
If you decide you don’t want to use your LLC, you should officially dissolve it. Otherwise, you might run into legal trouble or face tax penalties and liabilities. To do this, you should:
- File an Articles of Dissolution
- Close business accounts
Understanding how to start an LLC in Colorado seemed daunting initially, but you’ve learned what to do before setting things up, the prices you have to pay, and the steps involved. This guide also talked about taxes, marketing, and dissolving an LLC when necessary.
Learning how to start an LLC in Colorado is the first step; now, you’ve got to take action, choose a name, and follow the instructions in this guide!