How to Start an LLC in Colorado: If you’re looking to start a Colorado LLC for $0, you’ve come to the right page. Setting up an LLC is easy and cost-effective. To form an LLC, you must follow a few steps that include naming your LLC, hiring a registered agent, filing your formation documents, doing the operating agreement, and finally obtaining the EIN. You can easily set up your LLC for free in Colorado. However, you must pay the mandatory state filing fee. These fees and charges can be tax deductible, making the LLC formation cost $0.
On this page, You’ll find all the steps that must be taken to ensure that your Colorado LLC has been correctly formed. We recommend you read the whole article very carefully, word by word, don’t miss anything 🙂
On this page, you’ll learn about the following:
- How to Start an LLC in Colorado
- After Starting Your LLC
- Colorado Foreign LLC
- Colorado LLC Formation Review
How to Start an LLC in Colorado
An LLC (aka Limited Liability Company) is a hybrid business entity combining a corporation’s characteristics with a partnership or sole proprietorship. It separates your personal assets from your business assets, thus giving you personal asset protection. For an LLC, members’ personal assets are not affected by business debts. However, in some cases, if the LLC is sued for business debts, courts might pierce the corporate veil and use the owner’s personal assets to meet their corporate liabilities.
If you wish to start an LLC, you must file your Articles of Organization with the State and pay a filing fee of $50. While it’s the most important step, it’s not the only one. There are 4 other crucial steps to follow to get your LLC formed in Colorado. Below mentioned all 5 steps that explain everything you need to do to start a Colorado LLC in 2023. Let’s get started! You can always hire a professional LLC formation service in Colorado to set up your LLC instead of doing it alone; a Pro service will ensure everything is done properly.
Step 1: Decide a Name for Your Colorado LLC
The first step while forming a limited liability company in Colorado is to give a proper name to your LLC. Before you name your business, you must know that the name should be easy to remember, available in the state, and follows all the LLC naming guidelines.
LLC Naming Guidelines in Colorado
There are a few specific requirements all the LLCs in Colorado have to follow while naming their Company. Some of the most important requirements are as follows:
- Your business name should be available and no other existing business in Colorado can have the same name. ZenBusiness offers unlimited business name searches at $0.
- “Limited Liability Company”, “LLC”, “L.L.C.”, “LC”, “L.C.”, and “Limited Company” – any one of these has to be used as a suffix in your business name.
- You cannot use any name for your business that is confusing or misleading. Terms such as “Treasury”, “State Department”, “FBI”, “CIA”, etc. shouldn’t be included.
- Terms like “Bank“, “University“, “Attorney“, “Doctor“, etc can be added only after the additional requirements by Colorado State Government are fulfilled.
- (Optional) It’s better to name your business something for which your desired domain is available.
|Important Links –|
|Colorado Business Entity Search – Online Name Search|
Name Reservation Form – Online
Colorado LLC Name Search Guide – Instructions
Name Availability Standards – Guidelines
Reserve Business Name for Future
If you do not wish to file your LLC right now but want to hold the name you have decided, then you can reserve your LLC name for 120 days. To keep the name, you must file a name reservation application and pay $25 to the Colorado Secretary of State. You can renew your LLC name for another 120 days. For more, read Colorado LLC Name Search.
Doing Business As (DBA) or Trade Name
Once you have a legal name for your LLC, you can register it. However, it is not mandatory. You can, instead, use DBA, Fictitious Name, or Trade Name (in Colorado). In that case, you must register your name with the Colorado Secretary of State by submitting Trade Name Online Form along with the filing fee of $20.
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ZenBusiness – ($0 for LLC Formation)
Apart from LLC formation, ZenBusiness offers customized website templates and business emails at a very reasonable price. If you plan to get a website, then it is wise to have a “.com” domain for your business, but these days you can also use other TLDs like “.io”, “.company”, “.xyz,” etc. Here you can get everything you need for your business in one dashboard.
It is not legally mandatory to use the word LLC in your domain name or email. If you want, you can use it. However, it is recommended not to use LLC in the domain name. A domain name should be short and easy to remember.
Step 2: Assign a Registered Agent in Colorado
The second step to forming an LLC in Colorado is to appoint a Registered Agent. A registered agent is a person or business entity working on your LLC’s behalf. This person or business will receive important tax forms, legal documents, all notices of lawsuits, and other official government correspondence in Colorado. Hence, hiring a competent Colorado Registered Agent for your LLC is necessary.
Make sure your registered agent is a resident of Colorado or has a physical street address. This address will be used as the principal address of your LLC to receive any legal documents. Most LLC formation companies also provide registered agent services. Below are two great LLC formation services; even if you buy their cheapest plan (normally $0/year), you also get registered agent service and other services at a very reasonable price.
These two are our top recommendations for registered agent service, as they are competent and authorized to conduct business in Colorado. Some LLC formation services also offer standalone Colorado registered agent services. You can purchase only Registered Agent services without purchasing any other LLC formation services. This standalone service might become handy if you are doing it yourself and don’t want to disclose your home address or you don’t want to pierce the corporate veil.
A person above 18 years of age and has a physical address in the state of Colorado can be a Registered Agent. A Registered Agent can be an independent person or can be a business entity. One is responsible for handling all the legal documents on the LLCs behalf.
Yes, you can be your own registered agent if you are a resident of the state of Colorado and you are above 18 years of age. To become a registered agent, you must have the authority to conduct any type of business in Colorado.
There are a few reasons why you shouldn’t be your own registered agent. The address of the registered agent is used to communicate with the SOS or for any legal activities. If you are your own registered agent, you might have to upload your personal address to the public forum. Besides, the registered agent must be at the address during business hours. It won’t be easy for you as you also have to take care of other things in your LLC. Hence, it is wiser to appoint a separate entity as your registered agent.
If an LLC is sued in Colorado, in some cases, courts might decide to lift the corporate veil, which means the owners of the LLC will be personally liable for their business debts. They might have to forgo their personal assets to repay their business debts. This is called piercing the corporate veil, where personal and business assets are not separated anymore. Your personal assets can be protected if you have enough capital and all your LLC documents are properly filed.
Registered Agent Consent Application
In Colorado, the registered agent has to sign a consent letter (online or offline) confirming consent to being Appointeded in written or electronic form. This consent must include the following details,
- LLC name
- A letter that says the person gives a consent to serve the LLC as a registered agent
- The execution date
- Name of the registered agent
- Signature of the registered agent
This consent letter assures that the Registered Agent has given his nod to serve as an Agent. This part comes with the Registered Agent registration form. Later, if an LLC needs to change the Registered Agent, then they can submit the consent alongside. It comes on the registered agent change form. The Acceptance of Consent (online) can be filed by paying a filing fee of $10. For more information on the same, read our guide on Colorado Registered Agent.
Step 3: File Articles of Organization in Colorado
The third and most important step in forming an LLC is to file the Articles of Organization. This Colorado Articles of Organization is a legal document that is required to register your business with the Colorado Secretary of State. It costs $50 (online) to file your formation certificate in Colorado. (Read more on LLC cost in Colorado).
The Certificate of Formation includes details like the name of the LLC, the registered agent’s name, address, employees’ details, and the structure of the company (member-managed or manager-managed). Before hiring employees in Colorado LLC, one should know about the rules and regulations thoroughly. Also, if you are expanding your existing business (an LLC) in other states to Colorado, you must register as a Colorado Foreign LLC.
How to File Online
Processing Time: Normally, it does not take many days to get your LLC formed in Colorado. The processing time is faster when it is done online. However, the document processing time can be changed due to various factors.
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ZenBusiness – ($0 + State Fees) Online LLC Setup
Every LLC owner has to pay the filing fees to register their business in Colorado. This fee is mandatory but also tax deductible. If you’re doing it yourself (filing on your own), it will not cost you any additional service fee. However, it is not feasible to do that as the DIY process might be delayed, complicated, and messy, especially if you’re a novice entrepreneur. Hence, it is recommended to get professional guidance to get your LLC formed in Colorado.
Step 4: Create Your LLC Operating Agreement in Colorado
Moving on to the fourth step, filing your operating agreement. An operating agreement is an internal document that legally outlines the proprietorship and operating procedures of your LLC. This document is vital as it ensures that all business owners are on the same page regarding how they operate, thus reducing future conflicts.
When it comes to filing a Colorado LLC Operating Agreement, the state does not require you to have a comprehensive operating agreement, but it is ideal to have one that contains all the details of your business operation that helps in taking future business decisions, especially if you decide to dissolve Colorado LLC later. Hence, having an operating agreement may not be necessary, but it is surely ideal.
Recommended: You can get a professionally made operating agreement for very less cost with ZenBusiness. You don’t need to worry about drafting it as they will take care of it on your behalf. We recommend using –
ZenBusiness – ($0 + State Fees) Online LLC Setup
The operating agreement draft can be created for free if you don’t hire a professional. However, there is an advantage to appointing a proficient person/service. You will get a businesslike quality operating agreement at a very cheap fee, which will help you in the future. Hiring a professional service means you can sleep well at night 🙂
Step 5: Filing an LLC EIN
The Employer Identification Number (aka EIN) is a nine-digit number given by the Internal Revenue Service (IRS) to make it easier to identify the type of business for tax purposes and taxes in general. The EIN is necessary for any active business or any form of business.
EIN is needed when the LLC hires employees. Hiring employees in Colorado LLC requires following specific rules and regulations. On the other side, EIN for Colorado foreign LLC should be obtained if your LLC is based in other states.
To obtain EIN (aka FEIN), one must fill up a form (Online or by mail) and submit it to the IRS. Enter details of your LLC, and finally, complete the form and send it to the address given. You can also get an EIN Assistant to help you with the process.
Mail to: Internal Revenue Service, Attn: EIN Operation, Cincinnati, OH 45999
Fax: (855) 641-6935 | Fee: Free
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ZenBusiness – ($0 + State Fees) Online LLC Setup
Note: You don’t need a Social Security number when getting an EIN. You can proceed to fill out I.R.S. Form SS-4 and leave section 7b blank. You must then call the IRS at (267) 941-1099 to complete your application. Agents or employees will help you with that.
Congratulation, you are now done with all the necessary steps to form your Limited Liability Company in Colorado. If you do it yourself, it should take you a long time to understand and do all the steps properly.
However, if you use ZenBusiness, it should be way faster. You will always have a live chat option and phone support with experts for any help you need. Their worry-free service will make things easier for you.
After Starting Your LLC
After forming your LLC, there are still some things that you will need. The most important thing is to separate your business and personal assets. LLCs have limited liability protection that protects your personal assets from business liability. This is called a corporate veil. However, the corporate veil can be lifted or pierced by the court if the LLC is sued. In that case, the owners of the LLC become personally liable for their corporate debts. A few things like appointing a legit registered agent, having enough capital, and filing all the major documents with the state can save the LLCs from being pierced into the corporate veil.
Apart from that, there are a few things you need to take note of,
- Get a company business bank account
- File Colorado business permits & licenses
- Get general liability insurance and professional liability insurance with coverage for employees.
- File a Colorado LLC annual report or biennial report
This page has provided you with steps to LLC formation and filing processes. You now have to remember upcoming filing deadlines and filing fees or filing costs, including fees for late filings to make sure your LLC is up-to-date.
Cost of LLC in the State of Colorado
LLCs can be formed for $0. Apart from the mandatory state filing fees, you don’t have to bear additional service charges if you do it yourself. Following are the fees and taxes LLCs in Colorado must pay to register and run a business in the state. Forming an LLC is no doubt cost-effective compared to other business structures. However, the fees and charges (tax-deductible) that you must pay to the state, such as name reservation fee, name filing fee, LLC filing fee, and Franchise Tax & Sales Tax (If applicable). Here are the main fees and taxes you must pay while forming your limited liability company in Colorado,
|Fees/Tax||Amount to be Paid|
|Name Reservation Fee||$20 for 120 days|
|Certificate of Formation Fee||$50|
|State Business Tax||4.63%|
In Colorado, LLC, name reservation is not mandatory. You can register your LLC name at the time of registering your LLC. If you wish to hold the name for some time without registering your LLC, then a Name Reservation is needed. It can be renewed by paying $25. Your LLC name will be reserved for additional 120 days. In some states, Name Reservation is mandatory. Read our guide on LLC costs in Colorado for more information.
Colorado Foreign LLC
If you are interested in forming a Foreign LLC in the state of Colorado, then you need to file the Certificate of Foreign LLC to the Colorado Secretary of State. Foreign LLCs allow you to operate your business in more than one state. Along with the Certificate of Foreign LLC, you need to submit some more documents, like the Certificate of Good Standing, etc. to the Colorado SOS to form your foreign LLC in the state of Colorado. To know more in detail, check out our guide on Colorado Foreign LLC.
Reasons to Start an LLC in the State of Colorado
Colorado, located in the western part of the United States, has many tax benefits and incentives to offer to newly set up businesses. Forming an LLC in the state of Colorado is flexible for its dynamic economic structure. The state provides a handful of incentives to small business entities if qualified.
Incentive Programs for Small Companies
Once you start your business in Colorado, you will be eligible for several incentive programs. All these programs come with diverse criteria. As soon as your company meets those requirements, you can enjoy the gains from those incentives.
A microloan facility is financial support the Colorado government provides to small entrepreneurial companies. The amount goes up to $50,000 from $5000. The main aim of Microloan is to support small and micro-businesses by providing financial assistance. The Economic Development Commission in Colorado has created this program.
Work Opportunity Tax Credit
This is a federal tax structure. This tax credit encourages companies to hire certain targeted people/job seekers. The Federal government provides a minimum of $2400 and a maximum of $9600 each time a new employee is hired. Read more on Colorado’s classification of LLC tax.
Colorado Credit Reserve
This program is created by the Colorado Housing & Finance Authority. Under this program, a newly set up small business can get credit to expand their company in Colorado.
These programs, including State Trade Expansion Program, Regional Tourism Act, Transferable Tax Credit Act, and some more programs, help entrepreneurs start an LLC in the state of Colorado and enjoy the benefits.
Best Business Established in Colorado State
Deciding on the best business to invest your money in, in Colorado is a difficult task. Many competitive industries are coping up in the state in which a person can invest money. If you want to start an LLC in the state of Colorado, you must have proper knowledge about the state’s top industries, which is given below.
The following industry in which a person is willing to invest their money in the state is IT. There are significant technology corporations situated in the state, and there is a continuous demand for more and more companies. This is the quality of IT services that companies in Colorado provide that managed to contribute around $25.32 billion to state GDP.
Health and Wellness
Health and wellness is another business that is rising in the state, with 16000 companies currently. These companies have a list of hospitals directly providing services related to a person’s health care and some wellness products. In the last 5 years, the industry has grown to around 22.1% contributing $16 billion to the state GDP.
Aerospace Manufacturing and Transport
The state is very well known for aerospace manufacturing, with 180 aerospace firms. If you look at the aerospace industries around the country, Colorado’s highest percentage of production is provided. Still, with the increasing demand for the air force and aerospace and the development of new projects, there is a stress on the Colorado Industry of manufacturing. The economic contribution made by the aerospace industry in Colorado is around $15.4 Billion.
Moreover, with the demand in manufacturing, the transportation demand also increases. Now normal transportation cannot carry the aerospace products as they are delicate and need better handling. You can also think of providing some best and innovative services for better transport of the products.
Apart from these famous businesses, if a person wants to invest in a small investment business, then the best options they have are:-
- Bakery Business
- Digital Marketing Business
- Restaurants and Coffee Shops
Colorado LLC Formation Review
Time needed: 5 minutes.
Just to recap, here are the easy steps again when forming an LLC in Colorado. Click on the steps in this list to read the full detail.
- Name your Colorado LLC
The first thing you must do is to choose a company name, which should be unique, easy to find, and available in the state.
- Choose a Registered Agent
In Colorado, it is mandatory to select a registered agent for your LLC. Get a professional Registered Agent from LLC formation services to get things done hassle-free.
- File a Formation Certificate
Filing a formation certificate is necessary when forming a Limited Liability Company in Colorado. Depending on the state, it could be called any of the following: Certificate of Formation, Articles of Organization, or Certificate of Organization.
- Create an Operating Agreement
An operating agreement is not a strict requirement in Colorado but something encouraged when you start an LLC to avoid future conflicts.
- Get an EIN
The Employer Identification Number (EIN), also called Federal Tax Identification Number, serves to identify a business entity like a social security number but for a company.
Things to Consider While Starting an LLC in the State of Colorado
This article has all the broad steps to form an LLC. However, these are only the basic steps. There are some more things you need when you start an LLC in any of the states. This step-by-step guide will help you to understand things in detail.
An LLC is a simple business structure. It does not take much effort to form your LLC. However, even if it is a simple business structure, you need to get a few things. For example, you need business accounts. It is good to separate your personal and business bank accounts. Get a business credit card to ease your business.
For an LLC, the tax burdens are much less. Other than usual income taxes, no major business taxes are required to pay for an LLC. LLCs with employees are required to pay employment taxes. If you hire employees in your LLC, then you need to obtain EIN. Members of an LLC do not have to pay federal income taxes based on their revenue from LLC. They only have to pay income taxes based on their personal income. Other taxes, like some federal taxes, self-employment taxes, and sales taxes, are required to pay.
Another thing about hiring a registered agent is the agent has to be available at the principal office address during business hours. They will receive all types of business documents and physical documents at the mailing address.
A single-member LLC is similar to a sole proprietorship. At the same time, a multi-member LLC is similar to a traditional corporation. Hence, the tax liabilities are similar to these structures. LLCs get to choose the tax structure at the time of registration. Based on that, it gets taxed.
It is wiser to have a professional service provider. With them, you will get various services, such as amendment filing service, business license report service, name reservation service, faster filing service, registered agent for service of process, and other formation services. The type of service may vary with the service plans you choose.
How Fast Can I Form an LLC in Colorado
Colorado does not have the option to file for LLC via mail. Once the filing fee is paid online, the registration process is completed instantly.
If you want to form a limited liability company (LLC) in Colorado, you will need to prepare several documents. You will also need to obtain a registered agent. A registered agent is a legal entity that accepts legal documents from the state and represents you in court. Your registered agent can be your own or a corporation that is legally authorized to conduct business in the state of Colorado.
An operating agreement is another important document for your LLC. It describes how the LLC will be run and the rights of the members, as well as voting and distribution rights. The operating agreement can be helpful in settling disputes over financial agreements. For example, if a member leaves your LLC, the operating agreement should outline how to handle the transaction. In addition, it should include how the LLC can change its rules, as well as how its members can be bought out.
In order to form an LLC in Colorado, you will need to choose a name that is available. The name must be different from any other existing business in the state. Names with federal or state agencies are not allowed. Once you have chosen your name, you can reserve it for 120 days.
After you have chosen your name, you will need to file Articles of Organization with the Secretary of State. You can do this online or by hand. The Articles of Organization must be prepared and signed. They will need to include the complete name of the LLC and the name of the individual who will be forming the LLC.
In addition to the Articles of Organization, you will need to provide the address of your business, the names and contact information for your registered agent, and the name of the person who will be managing your company. When you submit the paperwork, you will need to pay a filing fee of at least $1.
Once your Articles of Organization have been submitted and approved, your LLC will be a legal business entity. This means you can begin opening bank accounts, applying for business licenses, and conducting other business activities. However, you will need to submit an annual report to the state within three months of the anniversary month of your business. Alternatively, you can file the report up to two months early. There is a fee of $10 for the annual report.
Depending on the state you form in, you may be required to get an occupational license. The Secretary of State has a list of licensed occupations. Check the website to find out if your business needs one. If you do, you can apply for it through the IRS.
The Colorado Secretary of State also has a Business Entity Search tool. You can use this tool to search for similar businesses that have been registered in the state. However, you will not know if the name you want is available.
Finally, you will need to register your business with the Department of Revenue. You will need to provide a mailing and street address. Although you can use a post office box, it is best to use a physical address.
If you are a resident of Colorado, then you can file your LLC by yourself. However, it is always worth having a professional than doing it yourself to handle legal complexities, paperwork, and other documentation.
Apart from the formation fee of $50 (domestic LLC) and $100 (foreign LLC), LLC costs in Colorado include $10 for Periodic Reports every 5-months. LLCs are liable to pay State Business Tax at 4.63%.
It takes no time to get an LLC in the state of Colorado when you file it online. If you hire a professional LLC service, then it might take less than that. We recommend ZenBusiness, which has an impeccable turnaround time.
Every year all the LLCs have to submit an Annual Report (Periodic Report) and pay $10 to the Colorado Secretary of State and renew the LLC. It is mandatory to renew your LLC every year.
Generally, for LLCs, it is a default tax structure. Once you obtain the EIN, you will get the various tax structure options to select. Sometimes LLCs choose S Corp to reduce federal tax burdens. Read more on the Colorado Classification of LLC Tax.
LLCs are easier to establish than other business structures. Small businesses, especially start-ups, can easily start their LLCs in the state of Colorado at a bare minimum cost. LLCs have a ‘pass-through taxation’ advantage for which they are excluded from certain taxes. The formation of limited liability companies requires much lesser documents and legal processes. Share your queries with us, leave a comment below.