How To Start An Llc In Colorado

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Colorado is an excellent location to build a business. There is a minimum fee for forming the business and the tax rates are rather generous, especially when you’ve created an LLC. In this article, we will look at how to start an LLC in Colorado.

Why Start a Business in Colorado?

How to Start an LLC in Colorado

There are many reasons why you need to start an LLC in Colorado. The state has a thriving entrepreneurial community with regulations that are easy to follow and manage. The taxes in the state are also excellent, allowing for investment and ease of payment.

If you’re looking to get a business license, this is not a challenge. Though you want to also get all the legal documents.

Let’s look at some of the states nearby and see how they compare when it comes to LLC formation and tax rates.

State LLC Filing Fee LLC Annual/Biennial Fee Corporate Tax Rate Nominal GDP per capita
Colorado $50 $10 (every year) 4.55% $72,597
Utah $70 $20 (every year) 4.95% $66,011
Kansas $160 $50 (every year) 1.0-5.9% $65,530
New Mexico $50 $0 (no fee and no information report) 4.8-5.9% $51,481
US Average $130.38 $89.34 (every year) 5.60% $64,773.08

Starting an LLC is a great option for business leaders because there are so many advantages. For example, when someone has an LLC, their personal assets are protected from debts that are accrued by the business. There are also some tax benefits that can make it more profitable for business owners.

Getting funding from banks and investors can also be much easier when you are an LLC too. Investors feel more reassured by the business structure and their rates can be much better. Likewise, businesses utilizing the LLC structure can sometimes get better supplier credit rates.

Finally, you can be assured that your business name is protected, something that can be very important.

How to Start an LLC in Colorado

How Much Does it Cost to Start an LLC?

Starting an LLC is not free, in any state, but the costs for starting an LLC in Colorado can be much lower than they are in other states like California. The Colorado online filing fee, which is for the Articles of Organization is just $50 and there is an annual report that is $10 per year. You must submit your first report within five months of starting your LLC.

There are also the costs for all permits and licenses that you need for your business. There are several complications here, so you need to check what you need for your business. When you register an LLC name there is a $25 filing fee that reserves the name for 120 days before formation. If you would like to trade under another name, then you can pay a $20 filing fee for registering a DBA name, which allows you to start trading under a different name than the LLC name.

If you use a registered agent, then you will need to pay for this. Agents, like ZenBusiness and Bizee, are excellent options because they help keep your business compliant and avoid late fees. A registered agent costs about $39 for one year, but costs can vary.

Therefore, the costs for the business are approximately $150 to start with about $50 a year of recurring costs.

How to Start an LLC in Colorado

How to Start an LLC in Colorado

Here are the instructions on how to start an LLC in Colorado. These instructions are relatively easy to follow and you can complete them without any help. However, you can always use the services of a registered agent who can support your application and approval at a relatively low cost, freeing your time for other essential business activities.

Step 1 – Choose your LLC Name

The first thing that you need to do is to have a brand for your business. When you choose a business name, you must comply with all the naming requirements and laws of the state. Several rules are important to note including:

  • The initials (LLC) or words (Limited Liability Company) with acceptable abbreviations must be within the name.
  • No name should be potentially confused with a government agency.
  • There are restricted words such as Attorney, Bank, University, and more. These can be used with additional paperwork and the right qualifications.

The name should also be available in the state. If you’re not sure that the name is available, then you should do a business name search on the Secretary of State’s website. If there is a business name that is similar on the state’s Business Database, then this will show up.

You might also want to check for domain names, social media, and other records to check that there is no one else who is trading under that name.

Step 2 – Register

Now you need to consider registering your name. You should reserve your LLC name with the state. You have 120 days from reserving your name to when you have to form your LLC. If you want a professional LLC name but a different name for trading under, then you will also need to register a DBA (Doing Business As) name. While this is more confusing, sometimes an LLC name is too confusing for audiences.

You should also consider registering all the domains that you need and social media accounts. Domains can be bought quickly and then resold by domain flippers. The domain flippers can charge $200+ on domains they’ve bought and sometimes $3000. However, the cost of a domain should only be about $10.

To help you avoid this problem, be sure to buy your domain with as many domain extensions as you can.

You don’t have to build your website immediately, but it can prevent the flippers from noticing a new LLC has been formed and then stealing the domain from you.

Step 3 – Registered Agent in the State

Now it is critical to get a registered agent for the state. A registered agent is a great investment. They can be an individual (including you) or it can be a business entity. They are the representative of your business in the state who can receive legal documents, tax forms, official government correspondence, notices of lawsuits, and more for your business.

The registered agent must have an address within the state and be available during normal operating hours to receive documents from the company.

How to Start an LLC in Colorado

Step 4 – Articles of Organization

When you form an LLC in the state, you need to register it. Therefore, you have to file the Articles of Organization via the Colorado Secretary of State. In Colorado, this can be done online.

Completing the documents and filing them with the state is $50. You need to ensure that you’re selecting the option that reads Limited Liability Company on the ‘File Form’ page. Choosing this option will provide you with the right online form for submitting your Articles of Organization.

Step 5 – Submitting Other Documents

There might also be other documents that you need to submit with your articles of organization. You should contact the Colorado Secretary of State to check what documents you require for your state.

If you’re operating from another state and you want to start doing business in the state, then you might need to file as a foreign LLC. There is an additional $50 fee for this, making the total cost $100. And you might be best speaking to a registered agent to help you.

Once everything has been submitted, it can take between two and four weeks for all the documents to be processed by the state. This can seem like a long time, but there are essential checks that the state’s team needs to process. This is one of the reasons why it is so important to reserve a business name.

Step 6 – Operating Agreement

The operating agreement is not an essential document to start an LLC, but it is vital for the success of your business. The legal document outlines the operating processes and ownership of the LLC. They are important to ensure everyone involved in the business has the same vision, goals, and understanding of the structure.

This document is kept internal to the business.

How to Start an LLC in Colorado

Foreign businesses who want to register in Colorado might be required to submit an Operating Agreement. You might need to speak to the Secretary of State team to find out more.

Step 7 – Get an EIN

Once the above steps have been completed and you’ve got all the license numbers from the state that confirm your formation of an LLC, you can get an EIN. The Employer Identification Number is an essential aspect of the process. It is used by the IRS for tax purposes, hiring employees, opening a business account, and more.

The cost of the EIN is free. The process can be done online or via mail

Final Word: How to Start an LLC in Colorado

Above are the reasons why and instructions on how to start an LLC in Colorado. Compared to other states, the process is relatively simple in the state. However, it is a process that can take about four or five days to complete the paperwork. Once you’ve done that, you might have to wait up to a month for the paperwork to be completed and for you to get the certification. Good luck with your new business.

There are many reasons why Colorado is a great location for your business. There is a thriving business community, generous taxes in the state, and relatively easy-to-follow regulations.
The paperwork generally takes about four or five days for the business LLC documents. However, once you’ve sent off the documents, it will take about four weeks for the paperwork to come back all completed.
Yes, you need to make sure that the business name that you’re using is unique in your state. However, a name that is not registered in Colorado might be registered in another state. Therefore, you might want to check other states.
You need to have a registered agent in any state. That agent can be you or a member of your team. However, the best option is to hire a professional agent who can help you navigate issues such as filing taxes and other issues.
There are times when you don’t need to register your business in every state, like when business revenues are too low, but generally speaking, it is a good idea to register your business in as many states as you plan to operate in.