How to start your LLC in Colorado

This is a comprehensive step-by-step process how to establish your Colorado LLC, including selecting a business name, and fulfilling compliance requirements in the future.

1. Name Your Colorado LLC

One of the most difficult tasks may be the selection of the business name. The name of your LLC must be original, memorable and understandable what your business is. In order to generate the appropriate name, follow the following strategies:

• Establish Your Business Idea: Before deciding on a name, you need to be certain what your business will be.
• Seek Opinions: Seek feedback through people who you trust by sharing your business idea and choices of name.
• Search Online: Find out availability of possible names by checking whether domains are available or other similar businesses are in existence.
• Use a Business Name Generator: These are tools that may get the ideas moving but not to substitute your judgment and creativity.

The name of your business is an important aspect of your brand identity, and the first implication that the customers may get, and you should take your time to select the appropriate one.

Colorado Check Name Availability

After making some choices, it is time to check the availability of them by performing a business name search at the Colorado Secretary of State. And also check to see if there are other businesses of the same name so as to avoid confusion.

Check Federal Trademarks

Once the state availability has been verified, check the database of the US patent and trademark office (USPTO) to make sure the name is not a federally registered trademark.

Escapegoat Your Colorado LLC Name

When all is in place, one can book the name with the state. Go to the site of Colorado Secretary of State and start with name reservation.

You will enter your appropriate name and then you will go into your name and then you will go on Next and fill the Statement of Reservation of Name by filling the necessary details. Check and submit your entry and make payment.

Doing Business As (DBA)

You will require a DBA in case you would like to conduct business using a different name other than the legal name of your LLC. Typical applications of a DBA would be:

• Venturing into new product lines (such as JJ Waffles into JJ Muffins)
• Taking payments and opening bank accounts in the name of DBA.

Colorado uses the name trade name in lieu of DBA. Registering one is done by visiting the File a Form page at Secretary of State, and selecting Trade Name, and a Reporting Entity.

Trade name filing fee: $20

2. Select a Registered Agent

All Colorado LLCs are required to designate a registered agent who is to receive official documents including legal notices, tax directives, and government filings.

Requirements of the Registered Agent

To be a registered agent in Colorado, an individual should:

• Be at least 18 years old
• Physical street address in Colorado.
• Be accessible when the business is regular.
• Registered in Colorado in case it is a business entity.

You can become your own registered agent, but you should be able to be present at the registered address during the hours of business. A good number of owners select the services of a professional registered agent to be convenient and helpful in compliance matters.

3. Identify Your Management Organization

Colorado LLCs may be organized either into member-managed or manager managed and the decision to adopt a particular structure is based on the degree to which the owners would like to be involved in the day to day running of the business.

Member-Managed LLCs:

• Daily operations and decision-making are done by the owners.

Manager-Managed LLCs:

• Operations are controlled by one or more managers and members could be idle investors.

A member can be a manager, but he or she has to have at least one non-member manager.

Member-managed LLCs are usually suitable in the small business where owners are desirous to be actively engaged. Manager-managed LLCs are also effective whereby the members do not want to be involved in day-to-day operations.

Majority of Colorado LLCs are member-managed. When you are registering your Articles of Organization, you have to indicate your management structure.

4. Make Colorado Secretary of State Article of Organization Filings

In order to establish your LLC officially, you will have to complete Articles of Organization using the Colorado Secretary of State online. The filing would demand the following information:

• LLC name
• Principal office address
• Details of registered agent.
• Registered office address
• Organizer's name and address
• Management structure

You will also state during the filing whether the business is a professional service LLC of licensed specialists like a doctor or a lawyer.

The application is filled in several screens over the web and you will be given the chance to view all the details and then make payment.

Mail filings are not received.

Address– Colorado Secretary of State

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

Phone: 303-894-2200
Fax: 303-869-4864
Email: business@coloradosos.gov

5. Prepare an Operating Agreement

An Operating Agreement gives details about the ownership, duties and internal regulations of your LLC.

Colorado does not mandate any form of operating agreement, although the presence of one is highly desirable even with the single-member LLCs.

Certainly basic Operating Agreement Sections

• Name and address of principal address of the LLC.
• Duration of the LLC
• Registered agent details
• Membership information
• Managing and voting rights.
• Profit and loss allocation
• Change or amendments procedures.
• Conflict resolution and the law.
• Keeping of records and communication policies.

Templates can be found online and it is best to obtain an attorney review to make sure that it is accurate and enforceable.

6. Register Your EIN (Employer Identification Number)

The IRS issues an EIN and is applied in tax purposes. An LLC with more than one member or someone intending on hiring workers requires an EIN.

In the application, one should name a responsible party who is an individual in charge or controlling the LLC and its finances. This individual should give valid SSN, ITIN, or EIN.

7. Acquire Business Licenses and Permits

You might also require a license or a permit either on the federal, state or local level depending on your business operations.

Common Requirements

• Federal licenses: Can be used on regulated industries and the SBA and OSHA rules should be consulted.
• State licenses: They can be obtained at the Colorado Department of Regulatory Agencies (DORA).
• Sales tax license: This is when selling taxable goods or services.
• Local permits: Be sure you check the requirements of your localities where you conduct business.

Such typical licenses and permits are:

• Licenses that are professional and industry specific.
• Zoning and building permits
• DBA registrations
• Health and safety permits
• Fire and signage permits

Loss of license may attract fines and penalties. Legal or professional support can be followed in order to make it absolutely complete.

8. Determine Your Tax Status

LLCs are defaultly taxed as pass-through entities, i.e. profits and losses are directly transmitted to the owners.

Default Tax Treatment

• Single-member LLCs: These are treated as sole proprietorships; they have their income taxed on a Schedule C and they pay self-employment tax.
• Multi-member LLCs: The tax is the same as partnerships; the LLC is taxed on Form 1065 and the members report the income through Schedule K-1.

Optional IRS Elections

LLCs have the option of corporate taxation:

• C-Corporation: The tax on profits is appreciated at the corporate level (21% as of 2022) and the tax on dividends is charged at the individual level.
• S-Corporation: The owners are given a fair salary which is liable to payment of payroll taxes, with the rest of the proceeds spared the self-employment tax.

Other Requirements of LLC Overview in Colorado

Open a Business Bank Account

Stay separate on personal and business financial to avoid liability status. The banks normally need your EIN and Articles of Organization.

Apply to get a Business Credit Card

Aids in establishing business credit and covering start up costs.

Get Business Insurance

The coverage plans are the general liability, professional liability, workers, property, commercial auto, equipment breakdown, and business owner plans.

Maintain LLC Records

Make sure to store the formation documents of the store, operating agreement, contracts and financial records safely.

Periodic Report (Annual Reporting)

To continue being in good standing, Colorado LLCs are required to return a Periodic Report on an annual basis.

• Fee: $20
• Due date: A month before the end of the anniversary month of LLC.

Colorado LLC FAQs