Is starting an LLC in Colorado an exciting move for you?
If yes, Now is the time to go ahead and start one. But how do you go about setting it up? Setting up an LLC in Colorado is an effortless and straightforward process. You can do the entire process online, which saves you a lot of time and energy. An LLC in Colorado is a legal business structure.
If you set up one, you can use it to hold assets such as vehicles, real estate, boats, etc. You can also use it to operate a business. Are you lost on how to start an LLC in Colorado? Here is our comprehensive guide on how to form an LLC in Colorado.
If you are looking for the best LLC formation service, here is a detailed review, and while there, why not check out the best states for LLC forming in this post. You can look at Ohio, for example, where your private assets are protected from the business lawsuits. You can also check out our review on IncFile.
How Much Does It Cost to Start an LLC in Colorado?
How much it costs to form an LLC in Colorado depends on various facts.
For instance, you can decide to hire a professional like a registered agent service to link your LLC and the government. If you use a registered agent service, it can cost you depending on their rate and the state fee.
Additionally, you need to file Articles of Organization with the secretary of state. The Articles of Organization is the legal document that allows you to start your business in Colorado. You need to pay a $50 filing fee, which you can pay using a credit card or a prepaid account.
The first step in starting a business in Colorado involves getting a name for it. You need to file the name with the Colorado secretary of state. You can also reserve a name for 120 days by paying $25 as a filing fee.
You don't have to use the legal name you registered with the Colorado secretary of state while conducting business in the real world. When you form an LLC, you can look for an assumed name to use in transacting business. The assumed name is also known as DBA (doing business as), or alternate name.
To use an alternate name when starting a business in Colorado, you need to file a Statement of Trade name of a reporting company with the Colorado secretary of state. You will pay a $20 filing fee.
You should also file annual reports for your limited liability company (LLC) and pay a $10 filing fee.
If you are a foreign LLC, you need to register with the state of Colorado secretary of state to form your limited liability company in the state of Colorado. To register the business, you should file a statement of foreign authority entity for your LLC business entity. You will pay a $100 filing fee.
Can you set up a Colorado LLC for free?
Note, the state filing fee remains. However, you can save a lot by carrying out the registration yourself instead of using a formation service. You can also appoint yourself or a friend as a registered agent instead of using a registered agent service.
How Long Does It Take to Start an LLC in Colorado?
Do you wish to start a Colorado LLC? How long should it take you to fill and get the documents approved?
Colorado state has systemized the whole process of forming an LLC in Colorado. The entire process is online, and the LLC's Articles of Organization are processed immediately.
If you don't want to go through the hassle, you can let a formation service do the filing for you.
So, what is the step-by-step guide for starting a Colorado LLC?
In this review, you can check out the Zen Business formation service, and you can also read our detailed review on Rocket Lawyer. In addition, we give you a side-by-side comparison between Zen Business and legal Zoom services.
Step 1: Choose Your Desired Colorado LLC Name
As a matter of fact, no business in Colorado can share the same name as another business.
As such, you need to choose a name for your Colorado LLC that will distinguish it from any other company.
Before forming an LLC, you should check with the Colorado state business database to see if your name is available. You can also check with the United States Patent and Trademark Office to see if the name is available as a name of a product or another business. Thus, you get to know if you'll have problems if you expand beyond the state of Colorado.
If you set up a Colorado LLC, the name should have the following words:
- limited liability company
- Ltd. liability company
- Limited liability Co.
- Ltd. liability Co.
If you want to form an LLC in Colorado and know the name you want for your business, but you are not ready to file the paperwork, you can reserve the name. The secretary of state in Colorado allows you to reserve the business name for up to 120 days.
To reserve the business name, you should file a Statement of Renewal of Reservation of Name online and pay a $25 filing fee.
Note, the business name of your limited liability company should not be confused with that of any other government agency such as the FBI.
Step 2: Appoint a Registered Agent
You should make sure you appoint a registered agent for your business. The registered agent acts on your behalf, collecting tax forms, lawsuits, and court orders on your behalf.
Step 3: Register With the Colorado Secretary of State
To start operating your Colorado LLC, you should file articles of Organisation with the Colorado secretary of state.
What are Articles of Organization?
Articles of Organization is the document that legally establishes your Colorado LLC as a legal business entity. Every Colorado business operating in the Colorado state must file Articles of Organization.
The articles of organization include:
- Name and address of your LLC's registered agent
- Principal office mailing and street address
- The legal name of the person forming the LLC
- LLC management structure (member-managed or manager-managed LLC)
- Confirmation that there is at least one member for the Colorado LLC
- The effective date of the LLC
- An email address if you wish to be receiving notifications
- Name and address of the person filing the Articles of Organization form
Filing the Articles of organization in Colorado is done online. When you submit the form, you are redirected to a payment form that is also online. You can pay using a prepaid account or credit card.
Note, you should secure your business record with a password. This ensures no one can make changes to your records.
The Articles of Organization confirmation page comes with a link that helps you secure the records with a password.
Step 4: Come up With an LLC Operating Agreement
Do you need an operating agreement for your LLC business?
The state of Colorado doesn't require your LLC to file an operating agreement with the secretary of state. However, it is a good idea to have an operating agreement for your business, especially if you are starting a multi=member LLC.
An operating agreement is an internal document, and it contains the duties, rights, and responsibilities of members and managers. It helps in the smooth running of the business and prevents any conflicts in the future.
The operating agreement also enhances your personal limited liability. As such, in case of a lawsuit or court order, the court cannot come after your personal assets such as cars or houses.
The operating agreement must include details such as:
- The L L C business management structure
- Members ownership stakes
- Profit and loss sharing among the members
- Procedures for changing membership
- Process of dissolution
- How to change the operating agreement
In the absence of operating agreements, the Colorado state law determines how the business will be managed and its operations.
Step 5: Obtain an EIN for the LLC Operating in Colorado State
After coming up with the operating agreements for your business, the next LLC formation process for business owners involves obtaining an EIN.
What is an EIN?
An EIN is also known as an employer identification number (EIN) or federal tax identification number (FTIN).
The EIN acts as the tax identification number, the same way a social security number identifies a person.
Why do you need an EIN?
For starters, as an L L C, your business requires you to open a business bank account separate from your personal account. This ensures that the court cannot come after your assets but will follow the company assets.
Therefore, an EIN is essential when you want to open a business bank account for your business.
When opening a business bank account, make sure you provide a certificate of good standing, Articles of Organization, and EIN.
Whether the new LLC is a single-member or multi-member, you may need an EIN to comply with federal tax obligations. If you are a one-member LLC, you obtain an EIN to make sure your business is taxed as a corporation and not a sole proprietorship.
To meet the federal income tax obligation, you should register with the Colorado department of revenue. Some of the taxes the business needs to file with the department of revenue include sales tax, personal income tax, among others. Sales tax applies if you'll be selling goods and collecting tax.
Step 6: File Annual Reports
You should file annual reports with the secretary of state. In the absence of the reports, the secretary may withdraw your certificate of good standing.
There you have it. A simple but detailed guide on forming an LLC in Colorado. The process applies to single-member (one-member) and multi-member LLCs.