How to Start an LLC in Colorado (Step-by-Step Guide)

For new companies, forming 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.

Compared to other states, forming an LLC in Colorado is a simple process lacking in requirements and 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.

1. Select a name for your Colorado LLC

Follow naming requirements

There are two major guidelines to follow when naming your LLC in the state of Colorado:

1. Your LLC’s name must be unique compared to the names of other business entities registered with the Colorado Secretary of State.
2. 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.”

Need help coming up with a business name? Check out our free business name generator.

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. Here is a sample of the Statement of Reservation of Name.

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.

Your LLC’s Articles of Organization must provide the following details:

• LLC name
• LLC principal address
• Names and addresses of persons forming LLC
• 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 by a manager

The cost to file Articles of Organization in the state of Colorado is $50.

4. Create 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:

1. Describe the LLC’s business structure
2. Establish the individual responsibilities and obligations of LLC members
3. 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 perform many other important functions.

You can apply for an EIN online on the IRS website without paying a filing fee.

6. Fulfill legal obligations

As a business, you’ll need to file several reports with the state. The Periodic Report, known as an annual report in other states, and a BOI Report, which is a new requirement for LLCs as of January 2024.

Periodic Report

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.

BOI Report

Beneficial Ownership Information, or BOI, was recently introduced introduced by the Financial Crimes Enforcement Network (FinCEN). It requires LLCs to disclose information about the beneficial ownership, which identifies individuals with significant control over the company. The new regulation is meant to help law enforcement identify key players if a business is ever under criminal scrutiny for crimes like money laundering or financing terrorism.

If an LLC was formed on or before December 31, 2023, then its BOI must be submitted before January 1, 2025. Any business created in 2024 has 90 days to submit the report. Reports are filed online through the FinCEN BOI e-filing platform.

Learn more about BOI Reporting.

Obtain business licenses

The state of Colorado does not require new businesses to obtain a business license. However, certain industries may need to obtain state or county licenses, permits, or certifications in order to operate legally in the state. To start your search, 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.

Obtain a sales tax license

If you plan to sell goods, you will need a sales tax license. (In other states, it’s called a reseller’s license). Essentially, this license gives you the clearance to charge sales tax for the state. To obtain a sales tax license, visit the Colorado Department of Revenue.

Understand Colorado business taxes

As an LLC owner, if you’re unfamiliar with filing taxes, consider working with an accountant to ensure you follow all tax laws.

• Flat rate tax in Colorado: Unlike other states, Colorado has a flat rate tax of 4.4%. Taxes are filed by April 15 of each year, but those who need more time to pay can get a six-month extension. However, if you pay less than 90% of your tax burden, you’ll face penalties and interest.
• Register with the Colorado Department of Revenue: Businesses are required to register with the Colorado Department of Revenue to not only pay taxes, but to obtain a tax ID number. This is different than an EIN issued by the IRS. It has a similar function to track your tax payments, but it’s on the state level as opposed to the federal level. By registering with the revenue department, you can also set up reminders to help you pay your taxes on time and stay on top of policy changes.
• How LLC taxes work: LLCs are pass-through entities, which means the income you make as a business passes to your personal income tax. So, while you’ll claim the income you make as a business, you don’t file separate business taxes. This type of business keeps you from double taxation, where your income is taxed as a business and then taxed again as personal income. Corporations face double taxation, but LLCs don’t.

Post LLC tasks

Establish business bank accounts

It’s best to keep business bank accounts and personal bank accounts. When it’s time to pay taxes, you’ll have two clear categories of money. Consider paying yourself a regular salary and putting the money into your personal account. All business expenses should come out of the business account.

While it may take some time to keep the two accounts separate, experts say it’s the cleanest way to manage finances. While doing business, you may also find a credit card helpful.

To open a business account, you’ll need an EIN issued by the IRS. Whether you open accounts at a local brick-and-mortar bank or opt for an online financial institution, the choice is yours. Many online banks are tailored to LLCs and small businesses; some we recommend include Found, Relay, and Mercury.

Obtain a Certificate of Good Standing

With business formation complete, consider obtaining a Certificate of Good Standing. This certificate signals to vendors and customers that your business is registered with the state and is complying with the rules. Some vendors may ask to see the certificate before partnering with you, so it’s a good idea to have it on hand. To obtain a certificate, you’ll request one from the Secretary of State.

Set up an online presence

Every small business, whether you sell goods online or not, needs a website. Follow these steps to get started:

1. Search for and purchase a domain name.
2. Get web hosting.
3. Use a website builder like Domain.com or GoDaddy as a DIY website platform.
4. Customize your site, adding appropriate pages, content, and images.
5. If you’re selling goods, add an e-commerce section to your site.
6. Review and test your site.
7. Publish it.

• Get a domain name: One of the first things on the list is to check domain name availability. Ideally, your domain name, or business URL, matches your business name or is closely related. You’ll need to purchase the domain first and then build a website.
• Use website builders: When you’re just starting out, using DIY platforms like Wix to obtain a domain name and set up your site is ideal. You don’t need any coding experience and can have a website up in a few hours.
• Get social: Set up social media accounts, too, and link them to your website. A growing number of customers use social media to learn about a brand, engage with its content, and review its products. Pick one or two channels that you can maintain to start.

Costs to set up an LLC in Colorado

Average cost to set up an LLC in Colorado: $110-$310

• Incorporation fees: To register a business with the state, you need to file LLC formation documents, known as Articles of Organization, which is $50.
• Periodic Report filing fee: Each year, you’ll file a Periodic Report, which costs $10.
• Registered agent fees (optional): When you form your LLC, you must designate a registered agent. If you’d prefer a professional company to receive formal communications, like tax notices or service of process paperwork, you can pay a registered agent service to do so. Depending on the level of involvement, this cost can range from $50 to $200.

Foreign LLCs in Colorado

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:

1. 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.
2. Appoint a registered agent based in Colorado.
3. File a Statement of Foreign Entity Authority online with the Colorado Secretary of State. You must pay a filing fee of $100.Chamber of Commerce