How to Start an LLC in Colorado: Cost and Registration Steps

Think about initiating an enterprise in Colorado? Overall, this state is a good place to the business waters. Colorado welcomes smaller ventures and startups creating favorable conditions for their scale-up. The best opportunities pop up in the fitness industry, daycare services, digital marketing, leisure, and party services.

Manageable taxation and state regulations, improving capital raising opportunities, supportive and collaborative business environment are inspiring, make first-time entrepreneurs feel more confident and push them to success.

At the same time, launching any sort of venture is never easy. It’s a multi-stage process with a number of challenges and issues you’ll have to tackle on the way. Yet, there is one task we can make easier for you. It’s Colorado LLC registration to set up a legal framework for your future enterprise.

Though a filing procedure is relatively simple, LLC laws are state-specific and might entail certain nuances and details. Besides, it’s always nice to have a comprehensive guide at hand when getting into formalities.

Detailed Instructions on How to Form an LLC in Colorado

While creating an LLC in Colorado is technically about registering the LLC statute with the state, full-scale formation and getting your venture off the ground is more than that. So, we’ll take you through compulsory and formal steps and provide some helpful tips and recommendations on your post-formation moves. Let’s dig in.

Naming Your Colorado LLC

It’s a step that many first-timers disregard or don’t take seriously. However, it’s an important one that should be duly completed so that you could proceed without a problem.

Unlike non-incorporated entities, LLCs are not necessarily named after their owners. In fact, an LLC allows for nearly any moniker you invent. At the same time, each state has its own statutory regulations and requirements concerning registered business names. Hence, it’s advisable that you check them before inventing a moniker for your future venture.

LLC Naming Regulations in Colorado

In Colorado, rules for naming business entities are set forth in State Statute 7-90-601 C.R.S.

By and large, you can unleash your creativity and use your imagination to the best. Yet, there are a few terms and restrictions to observe.

To start with formalities, the entity name should contain the term “limited liability company” either in a full or abbreviated form such as “Ltd.”, “LLC”, “limited”, etc. to clearly show what type of entity your company belongs to and avert any possible confusion.

The name of your future enterprise should not be misleading and refer to any type of activity you are not allowed to perform. Thus, such words as “trust”, “bank”, “insurance”, “indemnity”, “guarantee,” and alike are strictly banned unless you have special permission from an appropriate authority to deliver certain services or functions.

Likewise, you can’t use any words related to government, public, or educational institutions (“college”, “university”, “treasury”) unless your entity is lawfully authorized to provide specific services or perform specific activities.

When it comes to mentioning professions and any specialty jobs in LLC names, you should be careful with those as well. Unless you form a professional LLC in Colorado and have a required professional license, you are not entitled to use those words in the business moniker.

Other prohibited words that can’t appear in legal business names are offensive, rude, insulting, and abusive words and words rendering racism, intolerance, political incorrectness,  or aggression.

Last but not least, the strictest requirement for an LLC name is that it should be unique, i.e. distinguishable from other entity names already registered in the state of Colorado. Should your LLC name fail to be different, your filing application will be rejected by the state.

Investigating Your LLC Name Alternatives in Colorado

Once you have some company name version on your mind, don’t rush into filing your LLC statutes. Take your time to explore the name alternatives and check their availability. Speaking of which, it’s not enough to observe all the statutory naming requirements. You should check if the chosen variant can be lawfully used in the state of Colorado. That’s why you’d better come up with a few name versions.

To monitor the name availability in Colorado, you could refer to a free digital name search tool on the Secretary of State’s website. You’ll be able to simply enter the moniker and see if you can snatch it for your Colorado LLC in a minute. Besides, there are more helpful search tools that will let you scrutinize the state business base and discern the companies with names similar to the one you have in mind, and navigate through the trademark database if you do have plans to trademark some of your company’s legal attributes in the future.

A name check will guarantee your chosen enterprise name will be further accepted by the state and your filing order won’t be declined due to an incorrect name. To ensure, you’ll hit the spot from the first try and create a distinguishable moniker, we’ve made quick tips on how to make your business name unique:

• Look for synonyms that are less common;
• Use acronyms, abbreviations, and foreign words;
• Consider adding your personal name or naturally mixing it into the company’s name;
• Play with meaningful words and join their parts in non-existent yet comprehensible combinations;
• Feel free to inspire with literature, geography, science, and art terms;
• Avoid rewording too famous brand names or using even the same name-forming elements that are already used by popular national companies.

Using a DBA Name in Colorado

Your entity name that will be registered with the state is a so-called legal name that becomes one of the legal attributes of your enterprise. Yet, if it’s not the one you initially wanted, you are free to introduce your LLC under a different name to the market.

A DBA (doing business as) is a fictitious, assumed, or trade name that is usually used for marketing purposes. In contrast to a single registered moniker, you can have multiple DBAs to catch up with the changing business environment, your enterprise growth, or your entrepreneurial ideas and endeavors.

DBAs allow nesting several brands and independently running different types of activities under the roof of the same LLC saving you the need to multiply legal entities.

Similar to LLCs, fictitious names require state filing. However, the whole process is quicker and less formal since you already have a formed entity. When registering a fictitious name, you can omit an “LLC” tag, which is mandatory for a legal name. Your company name will be more appropriate for a brand or logo and simply sound nicer

A DBA filing fee in Colorado is $20 per single name version. To keep your DBA active and eligible, you’ll have to renew it on an annual basis.

Designate a Registered Agent to Open an LLC in Colorado

It’s yet another requirement to match before you can proceed to file your LLC foundation documents. You won’t be able to start an LLC without a registered agent in Colorado. This role is uniform across the states. It serves as a link between your entity and the outer world by handling your legal mail, i.e. letters, notifications, requests, legal notices, and filing docs addressed by public and governmental agencies and institutions to your LLC.

In Colorado, any adult individual over 18 years of age or an entity registered in the state could fulfill this function. The main rule is that your mail-handling rep should have a physical Colorado address and should be able to be consistently present under that address on weekdays from 9 a.m. to 5 p.m. to personally receive your LLC mail.

You can appoint only one person or entity as your mailing rep, and an agent should confirm their consent to fulfilling this role by signing a special form that should be attached to your LLC statute. Notably, a Secretary of State cannot be your representative agent like in some other states.

Your Colorado LLC Registered Agent Options

Overall, you can pick any random person for this role, be it your friend, neighbor, family member, or colleague. You can even be your own registered agent. Though this function seems pretty formal, it’s quite important since it’s your agent who will receive all official documents on behalf of your company including legal requests, lawsuit notifications, and court summons.

As such, an agent will stand on guard of your good standing status keeping an eye on your filing schedule and making sure you catch up with that.

Many beginner entrepreneurs reserve this function for themselves for the following reasons:

• They seek to save some money since by doing this job on their own, they won’t have to pay anybody;
• They can use their own names and addresses for all business and registration purposes which is simple and convenient;
• They are reluctant to provide access to their confidential documents to anyone else.

By way of contrast, though, hiring a third party to complete the agent’s work brings a lot more benefits than you can imagine that altogether outweigh the above-mentioned arguments for serving your own mailing rep:

• You won’t have to make your personal data publicly available and can keep them private, thus, enhancing your individual privacy overall;
• You’ll have someone to take care of all the spam letters and piles of junk mail you will receive one way or another;
• The risk of missed or lost documents will be minimized since the agent will sort out the mail and timely inform you about all the crucial issues and papers that need your immediate feedback;
• You won’t be bound to your registered address (be it your home or office) and have more freedom in planning your individual and business routines;
• You can use your agent’s address for your business purposes and even for registering your LLC. 

With that, delegating an agent’s job does seem a wise decision. And to get the best out of those benefits, we recommend setting your eyes on a dedicated agent service. With a professional rep on your side, you’ll save the peace of mind and won’t have to worry about mistakes, errors, or mishandling.

At the cost of about $100-150 per annum, a representative service won’t hit your budget too much and have you set on one of the most important LLC issues. Besides, the majority of dedicated services are national and will have your needs covered in any state should you decide to expand your activity to another state at some point.

What If I Fail to Appoint an Agent Rep?

At the stage of forming an LLC in Colorado, your filing will be simply declined by the state without an appointed agent.

Maintaining an active mailing rep further on is also a must since you’ll have to confirm the agent’s data on your Colorado LLC annual reports and register amendments to the LLC statute, should you change the agent on the way.

Finally, by running your entity without a mail-handling rep for some time, you should be aware of the following risks:

• It’s the agent’s address that is used by all government authorities and courts by default for mailing with your LLC. Without an agent, you’d rather fail to receive critical info and take any actions accordingly. Thus, in a lawsuit, it might result in a default judgment against your enterprise that might have a serious negative impact even under a minor sue;
• You’ll put your good standing status at stake since you might miss some essential deadlines and fail to match the state requirements;
• You’ll expose your entity to fines due to violating a ket state rule for LLCs;
• You’ll put your business reputation at risk since your LLC can be marked as delinquent due to incompliance.

Colorado LLC Registration: Filing the Statute

When the chosen LLC name is checked and a representative agent is appointed, you are ready to finalize your LLC formation in Colorado by registering the foundation documents with the state.

An LLC statute or the Articles of Organization is a document that officially brings your legal entity to life and activates all the legal benefits related to it, i.e. the corporate veil protection and flexible tax options. Once the document is approved and signed by the Secretary of State, your LLC is considered to be fully eligible and your company data appear in all the appropriate business and state registries.

By form, the statute is a simple and generic doc covering basic company info. At the same time, each state has its own statutory regulations, and the document content might vary in some details.

Colorado Articles of Organization: Content

In this US state, the LLC Articles of Organization should be compiled and submitted by sticking to paragraphs 7-90-301 and 7-80-204 of the Colorado Revised Statutes. The info to be included in your LLC statute is as follows:

• Full name of your future LLC that has been proven to be available;
• Your principal office address that will be your company registered address. Only real physical addresses with a street number are allowed for this purpose;
• Optionally, you can mention a mailing address if it’s different from your principal office address. Make sure, you’ve included all the necessary details such as the street and apartment number if applicable, or the right P.O. box number. For non-US addresses, mind mentioning the province, region, or county in a foreign country;
• Your representative agent details: full name and address (no P.O. boxes here again) of the person or entity that will fulfill this function for you along with the agent’s statement of consent;
• The management structure of your LLC by selecting a member-managed or manager-managed entity form;
• The ownership structure of your LLC by stating how many members your company will have;
• Effective date: your LLC will be considered formed on the date the statute will be approved by the state. You can also choose any other effective date within a 90-day period after the filing date;
• Your LLC organizer details: You’ll have to state the name and address of a person or entity that will file your LLC statute and sign it. Notably, it’s not necessarily the company member, you can delegate this task to a third party. Many entrepreneurs often entrust it to their representative agents;
• Any added info you want to make a part of your LLC statute could be added in the form of downloadable attachments.

Colorado Articles of Organization: Filing Steps

Colorado is one of the states that feature by far the simplest LLC registration procedure. Just make sure you have all the above-mentioned info at hand to fill out the document and follow three easy steps:

1. Download the necessary forms: Unlike other states that come up with different filing methods, Colorado offers only online LLC filings. Visit the form section on the Secretary of State’s website and pick the corresponding form. Noteworthy, if you are going to set up a multi-member LLC in Colorado, you’ll also have to accompany the statute with the Additional Members you can download as a statute attachment in the pdf format;
2. Fill out the statute template: Once you find the LLC form on the state office website, simply follow step-by-step instructions to fill it out with your company info;
3. Submit your statute to the state: Since only online filing is available when you fill out the form, you’ll be forwarded to a “You are not done yet” page to double-check the info you’ve entered. Don’t neglect this state and review all the data once again since any errors or mistakes at this stage could have a serious legal impact afterward.

To get your Colorado LLC statute filed, you’ll have to pay a $50 state fee before submitting an online form. The best thing is, though, that your docs will be approved immediately. No need to wait for days or weeks as in many other states. Then, you’ll be able to print out your verified Colorado Articles of Organization or save them to your personal storage on the Secretary of State’s platform.

Writing Down an Operating Agreement for Your Colorado LLC

First and foremost, an Operating Agreement is a company bylaw. As such, it’s a legal requirement in only 5 states including New York, California, Main, Missouri, and Delaware. In the rest of the US states, it’s not required by law.

Though Colorado makes it optional too, it’s advisable that you have this instrument in place. There are a few solid reasons for that:

• By accurately stipulating the ownership and manager hierarchy and decision-making powers, this document will ensure smooth and more efficient ongoing company operation and prevent any conflicts of interests and disputes that might adversely impact the business;
• With a priority over default laws, an Operating Agreement will give you an opportunity to skip generic governance and rule your business your way;
• LLCs featuring Operating Agreements look more reliable in the eyes of public organizations, government and state authorities, customers and vendors, investors and sponsors; 
• As an internal company doc, an Operating Agreement reflects the covenants and contracts between the company owners on any issues they deem crucial for their business. As such, it works to further enhance the liability shield ensured by an LLC structure and strengthen the legal positions of your enterprise in different situations.

Your Colorado Operating Agreement Form

In contrast to an LLC statute, an Agreement is a bylaw that needs no state filing. It’s enforced by being signed by the LLC members and should be stored along with other important business papers.

As such, an Operating Agreement has no strict form and could cover any points and info the company owners consider necessary. You can find a number of ready-made templates for this instrument online or even hire an attorney to tailor a customized document if you have a complex business scenario or ambitious scale-up plans.

To give you an idea of what to be included in an Operating Agreement, here are the most common provisions it normally embraces:

• LLC ownership structure with member powers and duties;
• LLC manager structure with manager rights, responsibilities, and obligations;
• Profit distribution principles;
• Processing of introducing new members and managers to an LLC and resigning the existing ones;
• The succession of rights in case any of the LLC members dies or resigns;
• Specific operational procedures and roles;
• LLC dissolution process if applicable;
• Rules for making any future amendments in an Operating Agreement. 

The role of this document for your Colorado LLC control and management should not be underestimated. Take your time to draft an Agreement at the formation stage and you’ll reap a lot more benefits in the long-term perspective.

Obtaining an EIN for Your Colorado LLC Registration

When your LLC is formed in Colorado, it will be assigned a unique registration number by the state. Yet, it’s not your federal tax ID number that you should get to identify your newly formed entity as a taxpayer in the US. 

A federal tax ID or an Employer Identification Number (EIN) is issued by the Internal Revenue Service for free. To get it, it’s enough to file an application form online that will take you no more than 5 minutes. And you’ll receive your number in another 5 minutes.

To be clear, an EIN is not a compulsory prerequisite for LLC formation in Colorado. In fact, you can only get it for a registered legal entity. More than that, for single-member LLCs, this tax code is not a requirement, they often choose to use the Social Security Numbers of their owner for tax purposes. 

However, multi-member LLC should receive the federal ID anyway. And irrespective of the number of co-owners, you’ll need it for your LLC in the following situations:

• When opening a separate checking account for your business;
• When hiring employees;
• When paying excise, payroll, and some other types of taxes;
• When selecting a corporate tax status for your LLC.

Given how easy and quick it is to get an EIN, you won’t have to pay anyone for this service and can do it on your own without a hassle.

Colorado LLC Cost: How Much is an LLC in CO?

Formally, the cost of creating an LLC in Colorado is a compulsory state fee you’ll have to pay to the state office to review and approve your LLC statute. This fee varies across the states and can fall anywhere between $40 and $500.

Colorado is one of the states that stands at a lower end of the price range, with a filing fee of $50. Ensuring immediate document approval, the state has no added charges for speedy filing, and online filing entails no extra service or mailing costs.

However, should you hire an attorney or a professional service to help you open an LLC in Colorado, you’ll have to add the cost of service to the above filing fee. Besides, engaging a professional registered agent will also come at a cost that will further bump up your formation-related expenses.

As a result, depending on the chosen services and their prices, the final Colorado LLC formation cost could range from $50 if you handle everything on your own to about $200 if you decide to get some baseline assistance.

Prime Aspects to Consider After Starting an LLC in Colorado

The formation stage is over and your LLC is ready to move forward, right? Well, it’s not quite so. You’ve already given your enterprise the right start by creating a legal structure for it. However, to make it fully operable, there are a few more steps to take.

Get a Separate Bank Account for Your Colorado LLC

While many beginner entrepreneurs choose to use their personal bank accounts for LLC purposes, we strongly recommend that you refrain from following this strategy and rather open a dedicated bank account for your LLC right after registration.

First and foremost, this move will split your personal and business funds from the very beginning, which is a must for making use of the asset protective screen to the full and avoid any confusion or related legal problems that might be caused by mixed assets. 

To continue, separate accounts make bookkeeping much easier by accurately tracing business revenues, expenses, and cash flows.

Finally, a dedicated bank account will further contribute to your LLC reputation and business image and bring more fundraising opportunities. Entities with independent checking accounts look more reliable and trustworthy in the eyes of banks, credit agencies, and investors.

Get Business Insurance for Your Colorado LLC

While an LLC provides secure personal protection to its owners, it needs protection as a legal entity as well since business is not only about revenues but also about problems and challenges. You never know what could happen in the course of entrepreneurial activity but with the right business insurance at hand, you’ll be able to minimize your potential company risks.

In Colorado, all LLCs are required to have Worker’s Compensation Insurance for all company employees, Automobile Insurance to secure company vehicles against damages, and Professional Insurance for doctors and healthcare specialists.

Other common types of insurance you are recommended to get for your Colorado LLC include general liability insurance against personal injuries and property damages, business liability insurance against natural disasters, thefts, and other force majeur situations, and business income insurance to protect your LLC profits against damage claims.

Compliance Requirements to Match for Your Colorado LLC

Apart from the above steps you need to take to efficiently run your enterprise, there are certain post-formation legal requirements you’ll have to observe to keep your company in good standing with the state:

• Licensing requirements: All LLCs will need some type of federal, state, or local license or permit to lawfully operate in the state of Colorado. Depending on your company size, type of activity, and industry you operate in, you might need more than one permissive document. You should contact the Department of Regulatory Agencies to get a list of licenses you need for your business and the agencies to register for those licenses;
• Tax requirements: Overall, LLCs are taxed as disregarded entities and are free from filing corporate income tax reports. Company incomes and losses will be reported on the personal tax returns of their owners. However, if you plan to hire employees, you will have to regularly file payroll taxes; 
• Annual reporting requirements: All LLCs in Colorado should file Periodic Reports once a year to update their company info and maintain their compliance status. You can do it electronically on the Secretary of State’s website. You can file a report within two months prior to and two months after a reporting month (which is your LLC formation month).

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