Forming an LLC in Colorado
Forming an LLC (limited liability company) in Colorado isn't a difficult task once you understand the process and the steps you need to take to get your company up and running. Many business owners have found that they can complete the process on their own.
If you're on the fence about whether or not you want to start an LLC, consider the benefits of this business structure. With an LLC, business owners have personal asset protection and flexibility when it comes to taxation. If these benefits are of interest to you, you should learn about the legal requirements for a Colorado LLC and the steps to complete the process of LLC formation.
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LLC Formation in Colorado
Step 1: Name Your LLC
Naming your company is an essential first step because it has marketing and legal implications. The name that you pick for your business should be appealing to potential customers. It also needs to meet the naming requirements in the state of Colorado.
Under the laws of Colorado, an LLC name must contain one of the following entity designators:
- "limited liability company"
- "ltd. liability company"
- "limited liability co."
- "ltd. liability co."
Another consideration is that Colorado LLC names must be distinguishable from all other business names on record with the Colorado Secretary of State. If a name you like for your business is already in use or reserved, you must choose a different name for your LLC. To check for name availability, go to the Colorado Secretary of State website and conduct a business name search.
Step 2: Pick a Registered Agent
You have to appoint a registered agent to accept legal papers for the business. A registered agent can be a person or a company available during regular business hours and has a physical street address in Colorado for service of process. A P.O. Box isn't acceptable as a registered agent address.
If you can't think of someone to serve as your registered agent, you can use a registered agent service. If you choose to use a service, don't forget to factor the cost into your business expenses.
Step 3: File LLC Articles of Organization
You have to file Articles of Organization to formally create your business entity. In Colorado, Articles of Organization can only be filed online.
LLC Articles of Organization should contain the following information:
- The LLC's name and principal address
- The name and address of the registered agent
- The name and mailing address of each person forming the LLC
- Whether the management of the LLC is vested in the members or one or more managers
- Confirmation of at least one member
Be prepared to pay the filing fee of $50. Suppose you already have an entity authorized to do business in another state, and you would like to register to conduct business in Colorado as a foreign LLC. In that case, you'll need to use the Statement of Foreign Entity Authority instead and pay the filing fee of $100.
You must file periodic reports with the Colorado Secretary of State. The filing fee for your annual (recurring) report is $10. There's a late fee if you miss the deadline for your filing.
Step 4: Compose Operating Agreement
The LLC operating agreement is an essential internal document. Typically, it contains information regarding ownership of the LLC, rights and responsibilities of members, liabilities, and procedures for admitting new members. You should keep a copy of the operating agreement in a safe place for reference in case a dispute or conflict occurs. Without an operating agreement, default state laws will apply in the event of a dispute.
Step 5: Get an EIN
Most businesses are required to get an EIN (Employer Identification Number) or Tax ID number from the IRS (Internal Revenue Service). This number is essentially a social security number for your business. It's easy to get an EIN, and it's free to apply online.
Step 6: Get a Business Bank Account
Getting a business bank account and business credit card or debit card will help you keep your business and personal funds separate. This is important because you could lose your personal asset protection if you don't maintain a separation between your business and personal funds.
Be prepared to provide your EIN and a copy of your formation documents when you open your business bank account. Keep records of all of your information for accounting and tax purposes.
Frequently Asked Questions About Starting an LLC in Colorado
1. Do I need to get a business license or business permit for my LLC?
You might need to get a license or permit to operate your limited liability company in Colorado. Some licenses and permits are required for particular businesses, so you'll need to contact your local and state agencies to find out what is necessary for your type of business.
2. Do I need to get a DBA for my LLC?
Trade name registration is required if you plan to use a name other than your legal business name for conducting business activities. If you solely use the name you registered as your LLC name with the Colorado Secretary of State, you don't need to register a DBA.
3. How much does it cost to register an LLC in Colorado?
The filing fee for Articles of Organization in Colorado is $50. There is an additional fee for reserving your business name before filing if you choose to do so.
4. What do I do about sales tax?
You may be required to register with the Colorado Department of Revenue and get a sales tax license.
Note: State laws are always subject to change through new legislation, rulings in the higher courts (including federal decisions), ballot initiatives, and other means. While we strive to provide the most current information available, please consult an attorney or conduct legal research to verify the state law(s) you are researching.
Have Questions About Forming an LLC in Colorado? Talk to an Attorney
Fortunately, forming an LLC in Colorado can be a straightforward process with FindLaw's Business Formation Service. If you want further assistance, it's best to consult with a skilled business organizations attorney in your area.
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