Forming an LLC in Colorado

By Catherine Hodder, Esq. | Legally reviewed by Ally Marshall, Esq. | Last reviewed November 18, 2022

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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.

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Table of Contents

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

Normally, the filing fee for your articles of organization is $50. However, Colorado passed a bill to discount the filing fee to $1 until June 30, 2023.

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.

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

    • The filing fee to start an LLC in Colorado is $50. However, House Bill 22-1001 temporarily reduced the state fee to $1. This reduced fee applies through June 30, 2023.

      Other than the annual $10 periodic report fee, there is no additional ongoing cost to maintain your LLC in Colorado. However, if you need to amend your LLC's articles of organization, the state charges a $25 fee for the amendment.

    • Currently, the filing fee is $1. However, this fee may increase to $50 after June 30, 2023.

    • To keep your LLC in good standing in Colorado, you must file a periodic report each year along with a $10 filing fee.

    • Colorado provides for a few different types of LLCs, including:

      • Single-member LLCs. As the name implies, a single-member LLC has only one member. The single-member LLC can choose to be taxed as a sole proprietorship.
      • Multi-member LLCs. Multi-member LLCs have more than one member. The multi-member LLC can choose to be taxed as a partnership.
      • Professional LLCs. Professional limited liability companies (or PLLCs) have members who are licensed professionals. Depending on your type of profession, you can form a PLLC in Colorado. Check the professional service business entity chart to determine if you can create a professional LLC or corporation.

    • Once accepted by the Secretary of State, the articles of organization are legitimate proof that your LLC is authorized to do business in Colorado. You may need to show the articles of organization when opening a business account or applying for a business license.

    • A certificate of good standing verifies your company's registration with the state and that it is compliant with required filings and fees.

      Colorado does not require you to have a certificate of good standing. However, you may be asked for one when you open a business bank account, apply for a loan, or renew a business license.

      You can download a certificate of good standing any time, free of charge, via the Colorado Secretary of State website.

    • To form an LLC in Colorado, you must file online with the Secretary of State. You will need to provide the following:

      • Acceptable LLC business name and designator
      • Registered agent name and address of the registered office (a physical address in Colorado)
      • Filing of articles of organization
      • Payment of the filing fee

    • A Colorado limited liability company business entity offers small business owners several benefits for their business operations:

      • Personal liability protection of the members' personal assets from the LLC's liabilities
      • Pass-through taxation to avoid double-taxation
      • Fewer regulations and reporting requirements than corporations

    • To keep your Colorado LLC compliant with the Secretary of State, file the periodic report each year and pay the $10 state fee.

    • No. Articles of organization is the initial document you file to register your LLC. It is a public document. The LLC operating agreement is an essential internal document. Typically, it contains information regarding ownership of the LLC, the rights and responsibilities of members, liabilities, and procedures for admitting new LLC members.

    • Yes. Your Colorado LLC can use an assumed name to identify the business or business activities. However, Colorado uses the term "trade name" instead of "doing business as" or "DBA."

      First, search the trade name in the Colorado business name database to see if the trade name is available. Then apply for a trade name with the Secretary of State by completing the online trade name registration form and paying a $20 filing fee. LLCs do not need to renew a trade name each year.

    • You might need a license or permit to operate your limited liability company in Colorado. You'll need to contact your local and state agencies to find out what is necessary for your business.

    • Yes. In fact, Colorado only allows you to file the articles of organization online.

    • The Colorado Secretary of State's office address is:

      Colorado Secretary of State
      1700 Broadway
      Suite 550
      Denver, CO 80290

    • Yes. You can use a Colorado registered agent with a physical address in the state as your point of contact for receiving service of process, legal and state documents, and other business communications.

      However, some entrepreneurs recognize the benefits of a registered agent service. The advantages of using a professional registered agent are:

      • Protecting Your Personal Information. The registered agent's address appears on the public record of your LLC certificate of formation. Your address is kept private.
      • Discretion. If someone sues your business, the registered agent accepts service of process at their address, not yours. And certainly not in front of your customers.
      • Maintaining Your LLC's Compliance. Missing the periodic report deadlines results in costly penalties and jeopardizes your LLC's good standing in Colorado. The registered agent informs you of annual requirements and deadlines.
      • Availability During Regular Business Hours. A registered agent must receive service of process during regular business hours. Depending on your business, you may not always be present.

    • A domestic LLC is simply any LLC formed with the Colorado Secretary of State. An LLC created under the laws of another state or jurisdiction is a foreign LLC.

    • If you want to do business in another state, you register your Colorado LLC as a foreign LLC. Each state has its own requirements, but generally, you may have to do the following:

      • Determine if your Colorado business name is available in the new state
      • Search the business records in the new state
      • Complete an application to register your Colorado LLC as a foreign LLC in the new state
      • Prove your Colorado LLC's good standing with a certificate of good standing
      • Pay the registration fee in the new state
      • Set up any necessary business and tax accounts in the new state
      • Follow the new state's laws and reporting requirements

    • Yes. An LLC formed outside of the state can register as a foreign LLC in Colorado by filing a foreign entity authority statement online and paying the filing fee of $100.

      Similar to the requirements for a Colorado LLC, you must have the following:

      • An acceptable business name for your LLC
      • A Colorado registered agent and office
      • A certificate of good standing (or the equivalent) for the foreign LLC
      • Payment of the $100 filing fee

      Before filing the foreign entity authority statement, search the name in the database to ensure it is available in Colorado. Otherwise, you may need to file an assumed entity name.

    • If you do not want to continue your LLC in Colorado, you should close it according to Colorado law. You can dissolve an LLC in Colorado by filing a statement of dissolution online. To dissolve your Colorado LLC:

      • Follow any dissolution procedures in the LLC's operating agreement
      • Close the tax and business accounts for the LLC
      • Complete the certificate of dissolution online
      • Pay the $10 dissolution fee

    • No. An anonymous LLC does not disclose the LLC owners' names in the articles of organization which is a public record. Only Delaware, Nevada, New Mexico, and Wyoming offer anonymous LLCs at this time. 

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