An LLC is one of the most popular structures for small businesses in Colorado and with the ease of online filings the process is much easier than ever before. We will walk through everything you need to know in the step-by-step guide below.
What are the benefits of an LLC?
- LLCs provide liability protection for business owners, meaning that the owners’ assets will not be at risk.
- Easy to set up and manage
- One person may form an LLC
- Tax advantages
When do you need to form an LLC?
If you are exploring starting a business or perhaps you are already in business as a sole proprietor it is a good idea to form an LLC. If you are operating a business without an LLC you could be placing yourself and your personal assets at risk.
While it is not required to form an LLC before starting a business the benefits include accounting and tax standardization, limited liability risk right away, and it will be easier to stay organized since all of your business-related expenses will be tied to one business bank account.
Step 1: Choose your company name
The first step in starting a Colorado LLC is to select a business name. It is essential to choose a business name that is unique from existing entities.
Perform a Colorado business name search
The Colorado Secretary of State maintains a database of business entities registered in the state that is free for the public to search.
Visit sos.state.co website to begin your search.
You can search business names by organization name or organization ID number. If you come across a business name that is of interest to you that shows the name is expired or not in good standing, check with the Colorado SOS to see if you can use the name.
Your Colorado LLC must contain the words Limited Liability Company or include the abbreviation L.L.C. or LLC. Prefixes, suffixes, and plural versions of an existing entity name do not make it unique.
If you want to start an Ice Cream shop called “Scoops House LLC” you will want to make sure there is not a similar-sounding name like “Scoops Ice Cream House LLC” or else your name may get rejected by the Secretary of State. The intention behind the naming rules is for businesses to create names that are uniquely identifiable from other existing active names so consumers will not get confused.
One great way to come up with unique business names is to use a business name generator.
Perform a trademark search
If you intend on using your business for a commercial purpose you will want to perform a trademark search before selecting your Colorado business name. A trademark will help protect against infringement of unauthorized use of your business name and logo without your permission and can eventually become a valuable asset if your business grows.
Find out if your proposed business name is available by conducting a trademark search online at the US Patent & Trademark Office.
If you want to use the same name as another state or country, check with that jurisdiction to make sure the name is available.
Determine if you want to use a DBA name
A DBA is a registered “Doing Business As” name and can be used instead of the legal LLC business entity name.
A DBA allows you to have a name for your business that reflects what it does or who its customers are. Business owners use their company’s DBA names on checks, orders, contracts, and correspondence when doing business.
Some of the main benefits of a DBA:
- Flexibility: If you have your LLC established, you can use DBA names instead of creating separate entities for each new venture.
- Branding: A DBA name is easier to brand and identify for customers.
- Expansion: It is easy to file DBAs in different geographical locations to target other customers and appear hyper-focused in your marketing.
You do not need to operate under a DBA if you use your Arizona business name for all business purposes. However, using a DBA name will not affect your Arizona LLC name registration.
Register the domain name
Once you decide on a business name, check to make sure that the domain name is available. Sites like Namechk can show you which domain extensions are available for your business name.
Although .com domain names are ideal, as the internet ages extensions like .net, .co, and .biz are becoming more commonplace
Register social media profiles
It is vital to have a solid social media presence in today’s business environment. Be sure to register for your business name on the different social media platforms ahead of time so that no one can sign up for them.
Reserve Colorado business name
A business name reservation is a good idea if you have your Colorado business name picked out but aren’t quite yet ready to register the business. A name reservation will lock the name in place for 120 days and there are additional options to extend the reservation if necessary.
Step 2: Register Colorado LLC
After choosing a name, start the registration process online at the Colorado Secretary of State website.
Registering your LLC in Colorado is a fairly straightforward and quick process:
Select a registered agent
A registered agent is an individual point of contact for the state-designated to receive official correspondence from the state. If you work from home a registered agent can help prevent your home address from being solicited by business mail since the registered agent’s address will serve as the official address for the business.
A registered agent is required for a Colorado LLC. If you are not personally going to be your Colorado LLC’s registered agent, find a substitute Colorado resident or company to serve in this role.
Be sure that the registered agent’s address is included in all your business documents and correspondence if you intend to use a different registered office.
What are Colorado registered agent requirements?
A Colorado registered agent:
- must be over the age of 18
- have a physical street address in the state of Colorado
- be available during normal business hours
How to register
Once you have selected a registered agent you can then proceed to filling out the Colorado Articles of Organization form. The form is straightforward and requires the following information:
- Entity Name
- Principal Name and Address
- Registered Agent Name
- Registered Agent Address
Once you have filled out the required information you can proceed to file the LLC paperwork through the Colorado Secretary of State business portal.
Our picks of the best registered agent services
Step 3: Next steps after filing Colorado LLC
Apply for an EIN
The IRS requires each LLC to have its own unique employer identification number. The Internal Revenue Service website can generate a federal tax identification number. An EIN makes it easy to file your business taxes and stay in compliance with the IRS and is similar to a Social Security number for your business.
EIN’s also add credibility to your business and are required for compliance purposes from time to time by companies that have to pay you for goods and services. An EIN is also required to open a business bank account and will help you establish business credit in the event you need to take out a business loan.
Start a business bank account
A business bank account is required for LLCs to start conducting business. A business bank account helps keep track of business expenses so that they are not mixed up with your personal day-to-day expenses.
After the LLC has been established, your business bank account will be used for payroll, payment of bills, a deposit of earnings from your business, and any other financial transactions your business may have.
Back office tasks such as bookkeeping can also be performed on your start-up bank account to keep start-up costs low.
Apply for a business license and permits
If you are planning on selling goods or services in the state of Colorado you will need a business license from Colorado.
The local county probate offices issue business licenses. For more information on finding what licenses are required in each county, visit the Colorado Secretary of State.
Prepare an LLC operating agreement
An operating agreement is a contract between the LLC owners that lays out the financial and functional decisions of how a Colorado LLC will be managed by its owners. An operating agreement is needed if there are multiple business owners of a Colorado business.
An operating agreement can be as simple or in-depth as desired, but it is important to have one in writing before starting any significant operations within the business.
File periodic report
LLCs are required to file a periodic report with the secretary of state each year. This report helps the Secretary of State ensure that they have the most recent contact and address information for businesses operating in Colorado.
The fee for filing a periodic report is only $10 for Colorado LLCs.
How much does it cost to file a Colorado LLC?
The state filing fee for a Domestic LLC is $50. If you want to amend an existing LLC in Colorado the cost is $25. The cost to dissolve an LLC is $10.
Recommended LLC formation services
- Northwest Registered Agent: Started as a registered agent service but expanded into business formations and offered additional professional services like mail forwarding and virtual business address services.
- ZenBusiness: Another recommended online business formation platform that can help set up an LLC in Arizona. They offer a full suite of services for new business owners, including operating agreements, business websites, domain names, and more.
- Incfile: A top online incorporation service provider in the market that offers various business filing services like LLC formation, Registered Agent, State Filings, and Compliance Filings.
What are the benefits of starting a Colorado business?
One of the best things about owning your own business is the flexibility to control your own schedule. While a business typically requires long hours when you are getting started, over time as you grow your business you can hire people and delegate responsibilities.
One of the main things business owners enjoy is the unlimited income potential they can achieve. Most jobs give employees a salary or compensation range that is limited on upside potential. It is a great feeling to be rewarded for your hard work and see your income correlate with your work with no cap.
Colorado LLC FAQs
How many small businesses are in Colorado?
Colorado is a great state for small businesses as they have over 650,000 small businesses registered with the state which makes up 48% of the population and employs over 1 million people.
What are the most popular industries for small businesses?
The accommodation industry (181,00) is the biggest small business employer, followed by Health Care (150,000) and Construction (128,000).
How long does it take to set up a Colorado LLC?
The processing times vary depending upon the workload that the Colorado SOS is currently experiencing. The normal time frame is around 30 days for standard processing, and expedited processing takes as little as 20 days.
What is a Colorado Certificate of Good standing?
A Colorado Certificate of Good Standing is a document generated by the Secretary of State that shows a business has filed all of the required documents for the LLC. Certificates of good standing are occasionally requested by financial institutions when businesses are filing for small business loans.
How do you terminate a Colorado LLC?
To terminate a Colorado LLC you will need to file a statement of dissolution form through the Colorado Secretary of State. The dissolution form requires the entity name, entity ID, and principal street address.
How many businesses are filed in Colorado each year?
Business formations took a big jump in 2020 as many people looked for additional streams of income during the pandemic. There were 92,000 new businesses formed in Colorado in 2020, which was an 8% increase from 2019. These numbers should continue to go up as more and more people move to Colorado.
CHK_ YOUR NAME RIGHT NOW
Use our engine to quickly check your content right now!