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For new companies, forming as an LLC is often the best option as it is an uncomplicated business structure that affords business owners legal protection by separating personal assets from business debts. Additionally, LLCs often enjoy a lower tax rate than corporations. However, forming an LLC can be a little complicated, and each U.S. state has a unique checklist for starting an LLC with minor procedural variations.
Compared to other states, forming an LLC in Colorado is a simple process lacking in unusual requirements and without high filing fees. The Centennial State is also a great place to start an LLC thanks to its diversified, growing economy and myriad business opportunities.
To avoid a misstep in the filing process, follow these steps to start an LLC in Colorado, and refer to the checklist at the bottom of the post to familiarize yourself with the legal and financial requirements for LLCs in the state.
Starting an LLC in Colorado step-by-step
1. Select a name for your Colorado LLC
Follow naming requirements
There are 2 major guidelines to follow when naming your LLC in the state of Colorado:
- Your LLC’s name must be unique compared to the names of other business entities registered with the Colorado Secretary of State.
- Your LLC’s name is required to contain one of the following phrases or abbreviations: “Limited Liability Company”, “Limited Company”, “limited”, “LLC”, “L.L.C.”, “L.C.”, “LC”. You can also substitute “Company” with “Co.” and “Limited” with “Ltd.”
Reserve your LLC name with the Secretary of State
After selecting a name for your LLC, you can reserve it with the Colorado Secretary of State. First, check the name’s availability using the Colorado Secretary of State business name database. Upon confirmation that the name is available, file a Statement of Reservation of Name with the Colorado Secretary of State to reserve the name for up to 120 days. Filing can be done online and the filing fee is $25.
2. Designate a registered agent
As in every U.S. state, forming an LLC in Colorado requires the appointment of a registered agent service to handle state and federal legal documents and service of process on the business’s behalf.
The registered agent must either be a state resident with a street address in Colorado OR if the individual or business is based out-of-state, they must have a business office in Colorado.
3. File Articles of Organization
You can now officially form your Colorado LLC by filing Articles of Organization online with the Colorado Secretary of State. The filing fee is $50.
Your LLC’s Articles of Organization must provide the following details:
- LLC name
- LLC principal address
- Names and addresses of LLC forming members
- Registered agent name and address
- A state declaring that the LLC has one or more members
- Whether the LLC will be member-run or run be a manager
In order for an LLC formed outside of Colorado to do business in the state, it must register with the Colorado Secretary of State.
Complete the following steps to register to do business in Colorado:
- Comply with the Colorado LLC naming guidelines and check the availability of your LLC’s name with the Colorado Secretary of State business name database.
- Appoint a registered agent based in Colorado.
- File a Statement of Foreign Entity Authority online with the Colorado Secretary of State. You must pay a filing fee of $100.
4. Draft an operating agreement
Although not a legally mandated step for forming an LLC in Colorado, drafting a comprehensive LLC operating agreement is strongly recommended for all nascent limited liability companies.
The operating agreement should do the following:
- Describe the LLC’s business structure
- Establish the individual responsibilities and obligations of LLC members
- Detail how the LLC will be run
Without an operating agreement clarifying the specific duties of its members, an LLC may face significant legal and operational difficulties.
5. Obtain an IRS Employer Identification Number (EIN)
All newly formed LLCs in the United States must acquire an Employer Identification Number (EIN) from the Internal Revenue Service (with the exception of single-member LLCs).
The nine-digit EIN is like a social security number for a business and is necessary to pay income tax, file tax returns, open business bank accounts, and to perform many other important functions.
You can apply for an EIN online on the IRS website without paying a filing fee.
6. Fulfill your Colorado LLC’s additional legal obligations
Once an LLC is registered, its members must devote attention to fulfilling legal requirements that apply for the duration of the company’s existence.
File Periodic Reports
Each year, all Colorado LLCs are required to file a Periodic Report with the Colorado Secretary of State. The report is due within a three-month window that begins on the first day of the anniversary month of the LLC’s formation. However, reports can also be filed up to two months early.
Periodic reports can be filed online at the Colorado Secretary of State website and the filing fee is $10.
Register with the Colorado Department of Revenue
Some LLCs may be required to register with the Colorado Department of Revenue in order to pay certain state taxes. This includes businesses with employees and those that collect sales tax.
Obtain business licenses
LLCs in certain industries may need to obtain state and/or local licenses, permits, or certifications in order to operate legally in the state. Visit the Colorado Department of Regulatory Agencies website for information on state licenses and contact a city clerk in the municipality where your LLC is based to find out more about the local permit and licensing requirements.
Colorado LLC checklist
A Colorado LLC’s name must obey the following guidelines:
- Must be distinguishable from the names of existing businesses registered with the Colorado Secretary of State.
- Must contain one of the following phrases or abbreviations: “Limited Liability Company”, “Limited Company”, “limited”, “LLC”, “L.L.C.”, “L.C.”, “LC”. You can also substitute “Company” with “Co.” and “Limited” with “Ltd.”
Required formation documents and filing fees:
- A Colorado LLC is formed by filing Articles of Organization with the Colorado Secretary of State.
Regular legal obligations:
- Periodic Reports – Must be filed by Colorado LLCs every year.
- Colorado DOR Registration – Required for certain LLCs depending on the nature of their business.
- Business licenses – Required for certain LLCs depending on the nature of their business.