How to Form an LLC in Colorado in 7 Steps

A limited liability company (LLC) is a popular business structure because business owners benefit from personal asset protection and flexibility when it comes to taxation. Learn about the legal requirements for a Colorado LLC and follow the step-by-step guide to complete the process of LLC formation.

7 Steps to Form an LLC in Colorado

1

Name Your LLC

Naming your company is an essential first step because it has marketing and legal implications. The name you pick for your business should appeal to potential customers. It also needs to meet the naming requirements in the state of Colorado.

Under the laws of Colorado, the LLC's entity name must contain one of the following entity designators:

  • Limited Liability Company
  • Ltd. Liability Company
  • Limited Liability Co.
  • Ltd. Liability Co.
  • Limited

You may also use abbreviations, including:

  • LLC
  • L.L.C
  • Ltd.
  • L.C.
  • LC

Search Your Business Name. Another consideration is that Colorado LLC names must differ 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's website and conduct a business name search.

Reserve Your Business Name. You can reserve the name for up to 120 days by filing a statement of reservation of name online and paying a $25 fee.

Check the Domain Name. Determines that no one else has registered your name as a domain name by doing an internet search. Type your LLC name into a search engine and see if there are any matches. If it is available, consider registering it for your business website so no one else can use it.

Check for Trademarked Name. To avoid trademark infringement, it's a good idea to check that no one else has trademarked your name. Start with the United States Patent and Trademark Office (USPTO) trademark database.

2

Get a Registered Agent

You have to appoint a registered agent to accept legal papers for the business. A registered agent is a person or a company available during regular business hours and has a physical street address in Colorado to accept service of process. A P.O. Box isn't acceptable as a registered agent address.

You can serve as your own registered agent, but many busy entrepreneurs choose to use a registered agent service.

3

File Your Articles of Organization

You have to file articles of organization to establish your business entity. In Colorado, you can only file the articles of organization online.

Your Colorado 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 LLC will be member-run or run by a manager
  • Confirmation of at least one member

The filing fee for articles of organization is $50. Previously, Colorado passed a bill reducing the fee to $1, but it expired on June 30, 2023.

Or you can kickstart your LLC formation with our trusted partner, LegalZoom. They will check if your business name is available and file your articles of organization for $0 plus state filing fees.

4

Draft an Operating Agreement

Colorado doesn't require LLCs to have an operating agreement, but you might need one to open a business bank account, and it's a good idea to have one anyway.

An operating agreement is a legal document that outlines the business management structure and the duties of all members. For example, it might address the following:

  • Whether all members have equal ownership or different ownership percentages
  • Whether the LLCs will be member-managed or manager-managed
  • How members vote on business decisions
  • Whether members need to contribute capital to start the business
  • How to distribute profits and losses among members
  • How to handle disputes between LLC owners
  • How to dissolve the LLC

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.

5

Get an EIN

Most businesses must get an EIN (Employer Identification Number) or tax identification number from the Internal Revenue Service (IRS). This number is like a social security number for your business. It's easy to get an EIN, and it's free to apply online at the IRS website. You may need to show your EIN when opening a business bank account, applying for a business credit card, or applying for a business license or permit.

6

Set Up Business and Tax Accounts

Once you create your LLC, you have federal and state tax and reporting obligations. Register online with the Colorado Department of Revenue for your LLC's business taxes, including withholding and sales and use taxes.

If you have employees, you are subject to federal withholding tax. And depending on your LLC tax structure, there is state and federal tax on business income.

7

File Beneficial Ownership Information Report (BOIR)

There is a new federal requirement that all LLCs file a Beneficial Ownership Information Report (BOIR) with FinCEN. For LLCs formed in 2024, you must file within 90 days from the LLC’s registration/creation day or 90 days after receiving notice of the registration/creation from the Secretary of State’s office. For LLCs formed after January 1, 2025, you must file within 30 calendar days from the registration/creation date.

Filing a BOIR is easy. Go to www.fincen.gov/boi and choose “File BOIR.” Provide the LLC information, its beneficial owners, and its applicants. Your LLC’s applicants are those who created the LLC or directed the formation of the LLC. The LLC’s beneficial owners are those who have substantial control over the LLC and own a minimum of 25% of the LLC.

Note: On March 1, 2024, the U.S. District Court for the Northern District of Alabama ruled that the Corporate Transparency Act was unconstitutional. At this time, it is unclear if the federal BOIR requirement will be enforceable. Business owners of LLCs formed before January 1, 2024, may want to wait until closer to the January 1, 2025 filing deadline to check if they must file a BOIR for their business. For LLCs formed in 2024, business owners may want to check right before their 90-day deadline to see if the BOIR requirement is applicable.

Business and Tax Requirements in Colorado

Depending on your business operations, you register for business taxes, employee withholding accounts, business licenses, and seller's permits.

State Business Tax

If the LLC is a pass-through business entity, the members report profits and losses on their personal income tax returns. The LLC does not have to pay corporate income tax.

If you set up your LLC for corporate taxation with the IRS, the LLC must pay a Colorado corporate income tax of 4.55%. But the Department of Revenue may temporarily reduce the income tax rate to 4.5%.

However, Colorado has a franchise tax that all business entities, including LLCs, must pay if their gross receipts are $500,000 or more.

State Employer Tax

Your LLC will be subject to state rules if it has employees—even if they are also members. As an employer, you create an account with the Colorado Department of Labor and Employment to set up employment withholding accounts. Additionally, employers should:

Sales and Use Taxes

When you set up an account with the Colorado Department of Revenue, you can register for a seller's permit. You need this permit if you sell physical products in Colorado. The state sales tax in Colorado is 2.9%. However, you may have local sales taxes as well. You, as the seller, collect the sales tax from the purchaser and remit the sales tax to the state.

Business Licenses and Permits

To determine what licenses and permits you need in Colorado, log on to MyBizColorado. There is a Colorado Division of Professions and Occupations to set up an online account for license registration and renewals.

Registration in Other States

If you want your Colorado LLC to do business in another state, contact the Secretary of State office in that state to register as a foreign LLC. You may need a Colorado certificate of good standing to show proof of your LLC's existence. You can print a certificate of good standing from the online account you set up with the Secretary of State. There is no fee for the certificate. Complete the state's application for a foreign LLC and pay their registration fee. See if your LLC's name is available in the new state by checking their name availability database.

Annual Requirements in Colorado

LLCs in Colorado must file an annual report, known as a "periodic report," with the Secretary of State. This periodic report is a way to update the LLC's address and registered agent information. Even if your information stays the same, you must file the report each year and pay a $10 fee.

The due date of the report varies, so you can find your due date by searching for your business on the Secretary of State website and looking at the 'Periodic report month' field on the summary page. You'll also receive a courtesy reminder email from the Secretary of State's office if you sign up for the email notification service.

You can file your periodic report up to two months after the due date without penalty. After that grace period, you'll owe a $50 penalty when you file.

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FAQs About Colorado LLCs

Disclaimer: The information presented here does not constitute legal advice or representation. It is general and educational in nature, may not reflect all recent legal developments, and may not apply to your unique facts and circumstances. Consider consulting with a qualified business attorney if you have legal questions.

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