Starting an LLC in Colorado FAQs
Why Start an LLC in Colorado?
If you’re in Colorado, or planning to move your business to Colorado, this Rocky Mountain state is extremely business-friendly and a thriving hub for growing companies and startups. Home to over 653,000 small businesses that employ around 1.2 million people, and currently experiencing unprecedented growth in metropolitan areas, Colorado is a state in great, rapid economic ascension. This is highly attractive to entrepreneurs interested in a fast-paced economic environment, and provides a great foundation for starting an LLC in Colorado.
An LLC, or Limited Liability Company, is a type of private limited company in the United States, which is any type of business entity in private ownership. This means the company is owned by its founders and management and is therefore not beholden to shareholders. So what are the benefits of starting an LLC in Colorado?
Compared to other business structures, LLCs have a relatively simple, flexible, low-cost structure that offers tax benefits and personal liability protection. See our ultimate guide for How to Start an LLC for a full breakdown of the advantages of LLCs and how they compare to other business structures.
So if you’ve ever wanted to know how to get an LLC in Colorado, we’ve got answers for you. This simple guide for how to start an LLC in Colorado shares the important steps, requirements, state fees and costs you’ll need during the LLC setup process so you won’t feel overwhelmed!
What are the Steps to Starting an LLC in Colorado?
Starting an LLC in CO may seem intimidating, but we promise it’s very straightforward. There are 8 simple steps to starting an LLC in Colorado:
Step 1: Name Your Colorado LLC
The first step to forming an LLC in Colorado is to come up with a name that is not only distinct and memorable, but also one that is available and adheres to Colorado naming rules. Your LLC’s name cannot have the same name as an existing business in Colorado. Use the CO Secretary of State’s name availability tool to ensure that your intended name is not already taken.
If your name is available and you’re not quite ready to submit your registration documents, you can file a Colorado business name reservation application for $25, which reserves your name for 120 days. Once you’ve established that your name is available, there are a few naming requirements for LLCs in Colorado:
- The name of your business must include the words: Limited Liability Company, LLC, or L.L.C.
- Consult the CO Secretary of State’s list of restricted and prohibited words and phrases. This comprehensive list details which terms require additional documentation and licensing in order to include them in your LLC name.
- Your LLC’s name may not contain terms used to name a government agency, such as the FBI, CIA, etc.
Step 2: Designate a Registered Agent
If you want to create an LLC in Colorado, you’ll need a registered agent. A Registered Agent acts as an intermediary for receiving official legal documents and passing them on to the LLC owner. All LLCs in the U.S. are legally required to designate a Registered Agent.
A Colorado Registered Agent can be any person or entity, including yourself or an employee of the LLC, over the age of 18. They must have a physical address in Colorado (not an P.O. Box) and must be on-site and available to accept business documents during regular business hours. The Secretary of State cannot be appointed as a registered agent. The Registered Agent’s information can be updated in your LLC’s annual Statement of Information.
Step 3: File Articles of Organization
Once you have a name, and a Registered Agent located in Colorado, the next step to register an LLC in Colorado is to submit official formation documents, also known as Articles of Organization, to the CO Secretary of State.
In order to complete Articles of Organization, you’ll need to include: your LLC’s name and street address, the name and address of your registered agent, the start date of your business, the name and address of the person forming the LLC, the LLC’s purpose, the management structure, a statement that the LLC will be run by at least one member, the name and address of the person filing the articles, and the signature of the person forming the LLC.
There’s a $50 filing fee for domestic LLCs and a $100 filing fee for foreign LLCs. If it’s accepted, you’ll receive a certificate of formal registration. See our Articles of Organization LLC Template to make sure you don’t miss anything.
Step 4: Create an Operating Agreement
Creating an Operating Agreement is an essential step to setting up an LLC in Colorado. An Operating Agreement is a written document that outlines and ensures that all members understand and agree to their designated rights and responsibilities.
The agreement should include all relevant information relating to your LLC’s operations, such as:
- LLC’s name and principal address
- Duration of the LLC
- Name and address of the registered agent
- Articles of Organization
- The LLC’s purpose
- Members and their roles
- Manner in which profits and losses will be distributed
- Process for adding or dismissing members
- Indemnification and liability clauses
- How the LLC will be managed
See our LLC Operating Agreement Template to make sure you’re including all the essentials. An attorney should be consulted for more complex operations.
Step 5: Receive a Certificate From the State
The next step for how to create an LLC in Colorado is receiving the certificate of formation. After an LLC’s formation documents have been filed and approved, the state will send you a certificate that formally confirms the existence of your LLC.
The state will mail this certificate to the Colorado mailing address you provided in your Articles of Organization. It may take approximately 7 to 10 business days to receive your certificate. This certificate will enable the LLC to get an Employer Identification Number (EIN), business licenses, and business bank account.
Step 6: Obtain Business Licenses
Contact your local city hall or county clerk to obtain business licenses or other special licensing. Depending on your type of business, the licensing requirements may vary (e.g. liquor license, health department permits, zoning permits, home occupation permits, professional licenses, and more). The use of certain words, including bank, lawyer, attorney, and credit union, may require additional documentation and licensure paperwork.
Next you’ll fill out the appropriate forms and pay any required fees. Your city or county government website should have all of the details you’ll need. Be sure to do thorough research to cover all your bases.
Step 7: Get an Employer Identification Number
The next step to filing an LLC in Colorado is getting your tax ID number. The Internal Revenue Service (IRS) will assign you an Employer Identification Number (EIN) in order to identify your LLC for taxes.
An EIN, sometimes referred to as a Federal Employer Identification Number (FEIN) or Federal Tax Identification Number (FTIN), is nine digits and enables an LLC to file and manage taxes at the state and federal level, open a business bank account, and hire employees. You can obtain an EIN for free via the IRS online portal.
Step 8: File a Statement of Information Annually
File a Statement of Information (aka Periodic Report) within a 5-month window – can be filed online two months prior to the Periodic Report month or two months after without any penalty – $10 filing fee
What are the Costs of Starting an LLC in Colorado?
The cost to create an LLC in Colorado is pretty straightforward. Here’s a roundup of the costs we’ve discussed so far for creating an LLC in Colorado:
- Colorado business name reservation fee is $25
- Articles of Organization filing fee – $50 domestic; $100 foreign
- Annual Statement of Information filing fee – $10 filing fee
Does Collective Help with Starting an LLC in Colorado?
That wasn’t bad! See? We told you it would be a breeze. Now you know all the steps for how to start an LLC in Colorado.
If all the steps, forms, fees, and costs still sound like too much work, though, don’t worry. Collective offers a smarter, more affordable way to get your LLC set up and running. We take care of your LLC formation, monthly bookkeeping, accounting, taxes, and more.
Start your Colorado LLC with Collective and find out how much you could save.