How to form an LLC in Colorado in 5 easy steps
Colorado entrepreneurs who are excited about starting their own business have a few things to handle before they get to officially open for business, including structuring their company in a way that makes sense for them. Depending on your organization’s goals, you might decide that forming an LLC is the right option for your needs. LLC formation in Colorado isn’t complex, but it does require care and attention given to each of the following 5 steps to starting your CO business venture off on the right foot.
1. Check if your business name is available
Every Colorado LLC needs a name, and it’s one of the easiest ways that your customers can distinguish your business from the competition. However, it’s important that another group isn’t already using your LLC name and that you name your company in line with Colorado’s specific regulations.
First, visit the Business Database Search on the Colorado Secretary of State website. It’s recommended that you type in your desired business name in full to see if it’s already taken as well as search by a few keywords to see if there are other companies with names that are very similar to the one you’d like to use. There are advanced name search options available as well, just to make sure you’re in the clear when it comes to your LLC name.
You’ll also need to make sure that your Colorado LLC uses the phrase “Limited Liability Company” or one of several abbreviations including “LLC,” “ltd,” “ltd. liability co,” or “limited.” Business names using words that would make it seem like your company is part of a government organization like “Treasury” or “FBI” are prohibited. If you want to include “University” or “Bank” in your name, you may need to complete extra paperwork.
If you’re not sure about your desired business name, you can always file a Statement of Reservation of Name with the Colorado Secretary of State. Once you pay the $25 filing fee, your name will be held for 120 days. During this time, you can also see if you can use this desired moniker as your web domain name should you want to build a company website.
2. Claim your name
Colorado business owners ready to move forward with their business name need to file their Articles of Organization and pay a $50 filing fee via credit card or debit card. This straightforward form will ask you a variety of questions, including the name of your new business entity, its street address, and whether the business will be a single-member LLC or managed by a group of members.
When you formally claim your business name, there are a few additional considerations to think about beyond answering the form’s questions. Will you be doing business as the name you chose, or would you prefer to use a fictitious business name? Colorado LLCs that want to formally claim a DBA will need to file a Statement of Trade Name of a Reporting Entity and pay a $20 fee.
It’s also required that you select a Colorado registered agent for service of process if your LLC is sued. This person is responsible for accepting all legal documents on behalf of the company. While a business owner can be their own registered agent, others like to delegate the responsibility to a registered agent service.
Finally, if you already have an established LLC in another state and want to expand into Colorado, you’ll need to complete additional steps to form a foreign LLC. Even if your business has operated outside of Colorado for some time, you must follow this step to comply with state law.
3. Write your operating agreement
When you start an LLC in Colorado, you’ll have to complete some of the same steps that other business owners across the country have already finished. Not all states require the same level of paperwork, though, especially when it comes to an operating agreement. Similar to forming an LLC in California, Colorado LLC owners aren’t legally obligated to develop an operating agreement, but it might be a good idea anyway.
During the initial steps of your business formation, you likely looked at a variety of business structures and determined that a limited liability corporation was the best fit for you. Perhaps you wanted to protect your personal assets, or you wanted the flexibility that’s associated with a sole-proprietorship. Whatever the case may be, developing an LLC operating agreement is a way to help you stick to your vision for your organization.
Your operating agreement can look a variety of different ways, and you’ll be able to find a wealth of templates online to help you in the writing process. Above all else, it’s important to make sure you write down how your LLC should be managed and make it clear that you are free from personal liability in the event of a lawsuit.
4. Pay your taxes
Your new LLC likely won’t be responsible for any tax obligations on day one, but there are a few things you can do now to make life easier once it does come time to pay. While sole proprietorships typically use an individual’s social security number when filing federal taxes and state taxes, an LLC is often required to obtain a different type of tax ID.
Unless you’re a single-member LLC with no employees, you’ll need to obtain an employer identification number from the IRS. This ID is used when you pay income taxes and is unique to your organization. An EIN is usually required to open a business bank account and will come in handy should you ever find yourself in the position of needing to hire employees.
When tax time rolls around, you’ll use your EIN when you file your state return. The Colorado Department of Revenue imposes a flat income tax rate of 4.63% on LLC profits, while the IRS will require each member of the LLC to file a personal return. Additional tax obligations to keep in mind include state business taxes, state employer taxes, and sales and use taxes.
5. Wrap up other regulation and sales tax requirements
At this stage in the game, you’re just about finished when it comes to forming your Colorado LLC. Depending on the industry you’re operating in and the location of your company, you may need to explore some additional steps, including obtaining business licenses or a sales tax license. Others might also want to obtain a Certificate of Good Standing from the Colorado Secretary of State to help them apply for a bank loan or business permits.
Colorado LLCs must also file annual reports with the Secretary of State each year to keep their business information current. Also called a periodic report, it costs $10 and can be filed electronically. LLC owners have a three-month period in which to file these reports each year, so it’s something you’ll want to mark on your calendar.
Get LLC insurance in minutes by following these steps
After all of the hard work you’ve put into forming your LLC, it’s time to protect it with LLC insurance. With various options to consider, Huckleberry makes it easy to get the coverage you need without having to jump through any hoops. Here’s how to get started:
- Visit Huckleberry.com and click the “Instant Estimate” button. In just a few minutes, you can get quotes for various insurance coverage types that suit your business needs.
- Type in your industry so Huckleberry knows exactly what insurance options may be right for you.
- Answer a few simple questions about your new LLC, including payroll estimates, revenue projections, and more. We won’t make you fill out tons of forms or do any tough calculations, we promise.
- In less time than it takes to drink a cup of coffee, Huckleberry will provide you with quotes for multiple small business insurance options.
- If you’re in a rush, you can use our quick estimator to get a ballpark figure. Shopping specifically for workers’ comp coverage? Use our calculator to find out how much you’ll have to pay.
Establishing a Colorado LLC isn’t super complicated or time-consuming, but it does require you to complete some important forms and pay several fees to get your ducks in a row. Remember, you likely chose to structure your business as an LLC for its liability protection, so it’s smart to keep that protection going with small business insurance.
Whether you’re in the market to enroll in workers’ comp coverage online or you need a general liability policy for your storefront, Huckleberry can help. Many business owners can get a quote for coverage in as little as 60 seconds and find that rates are far more affordable than alternative options. Now that your LLC is up and running, it’s time to offer yourself the ultimate peace of mind and enroll in the small business insurance policy that works best for you.