How To Form an LLC In Colorado (CO)?

Interested in starting an LLC in Colorado but you don’t know where to start? Our article on how to form an LLC in Colorado is here to help. We’ll walk you through the complete process of starting an LLC in this state and elaborate on all the steps you’ll need to complete in the process.

Moreover, if you decide to hire a professional registered agent service, we’ve included our top three Colorado registered agent recommendations, and if you want someone else to do the formation process for you, we’ve also included some of the best LLC formation services you can hire. 

At the end of our article, you’ll find a comprehensive FAQ section where we answer some of your dilemmas, like how long it takes to form an LLC.

With that out of the way, it’s time to delve into the first step of the process.

Choose a Name for Your Colorado LLC

The first step in starting an LLC in Colorado will be to decide how to name it.

There are several pointers you could use to guide you in choosing the right name for your business. Your business name should be memorable and accurately represent your business and values.

Additionally, you’ll also need to ensure that your name is unique. This is an official requirement in every state – your business name should be different from all the other business names existing in the state. To make sure this is the case, we recommend doing an online business entity search on the Colorado Secretary of State website. 

Keep in mind that there are many companies that offer name availability check as a part of their LLC formation packages, so if you’d like some help with coming up with a business name and filing all the necessary documents, consider getting a formation package. 

Apart from choosing a unique name, the state also asks you to include a word in the name that describes the business structure you’ve opted for. In the case of LLCs, you can use “Limited Liability Company” or an abbreviation like “Ltd” or “L.L.C.”.

Just like there are some words you must include in the name, there are also some words, referred to as restricted words, that you aren’t permitted to include, such as “Charity” and “Trust”.

It can take months to complete all the steps required for you to form an LLC, and by that time, your business name might be taken by somebody else. If you’d like to prevent this from happening, you have the option of applying for a business name reservation on the Colorado Secretary of State website. Your name will remain reserved for 120 days, giving you enough time to complete and file the formation paperwork. The filing fee for a business name reservation is $25.

During this step of your formation journey, it’s a good idea to look into purchasing a domain name that corresponds with your business name. Most businesses require a website, and even if you think you won’t need one in the future, it’s a good idea to have it reserved just in case.

Hire a Registered Agent

The state of Colorado requires all business entities to appoint a registered agent before their businesses are officially formed.

With that said, the state doesn’t impose any restrictions in terms of who can be your registered agent, as long as they meet the requirements, such as having a physical address in Colorado and being open during normal working hours. 

You can appoint one of your family members or even yourself as your registered agent, but you should be aware of the drawbacks that come with such a decision. For instance, your privacy will be compromised because you’ll be forced to share your personal address on public records. In addition, your working hours won’t be as flexible, which might be a deal breaker for you, depending on what kind of business you want to form.

If you have the budget for it, we recommend hiring a professional registered agent service. A good registered agent service will keep your business organized and compliant, so here are our top three picks for a Colorado registered agent service that exceeds these expectations.

1. Northwest

Northwest is among the most well-known registered agents across the United States. Combining practicality and affordability, they will help you meet all the Colorado compliance requirements at an affordable price. 

Their yearly fee is $125 and, in return, you’ll get pre-filled state forms, annual report reminders, document storage, and scanned documents. 

Northwest is known for its incredible customer support team, Corporate Guides, which comprises of experts across various fields who are always ready to help you with any problem that might arise. Additionally, Northwest is dedicated to protecting the privacy of their clients with their Privacy by Default practice.

If you hire them as your registered agent in more than four states, you’ll be eligible for a volume discount which reduces your fee to $100.

2. IncFile

Another amazing option for a Colorado registered agent is IncFile. They offer a plethora of different services and are known for providing a free year of registered agent services to anyone who purchases their LLC formation package. In terms of the compliance tools they provide, you will get automatic mail forwarding, tailored email and text notifications, and access to a digital personalized dashboard.

On top of that, they’re quite affordable – a year of registered agent services will cost you only $119.

3. ZenBusiness

Rated as #1 on Forbes and Investopedia, ZenBusiness is a popular name in the industry. This successful registered agent service will provide you with email notifications, document scanning, access to a personalized dashboard, and mail forwarding. Additionally, you’ll be supporting a good cause – ZenBusiness are the creators of their $5K Grant Program, an initiative that strives to help struggling entrepreneurs across the United States.

Their yearly fee is $199 and you have the option of upgrading this standard package to include a few additional perks, such as annual support alerts and document submission.

File Articles of Organization

Articles of organization are one of the most important documents you need to submit in the formation process. This document includes some basic information about your business, such as the LLC management, its name, location, as well as information about your chosen registered agent. By this stage, you’ll need to have chosen which registered agent will represent your business.

You need to file the articles of organization with the Colorado Secretary of State. You can file the articles online and the filing fee is $50.

Create an Operating Agreement

While filing articles of organization is a mandatory step, creating an operating agreement for your Colorado LLC is completely optional. With that said, there are a plethora of benefits that come with creating an operating agreement for your LLC and it’s highly advisable that you complete this step.

An operating agreement is a written agreement that contains basic information about your business, such as its purpose, name, address, ownership, taxation, and management. Since it clearly states all the responsibilities of the members and managers of the LLC and their liability clauses, it can massively help to prevent any disputes between the owners. Additionally, it lays out all the rules regarding future members and capital distribution, so it can save you a lot of time from negotiations.

There are many operating agreement templates you can find online. If you don’t like the thought of writing an operating agreement on your own, you can always hire professionals to craft it on your behalf. Many companies that offer LLC formation packages offer this service, so consider hiring one if you’d like to get some help. Alternatively, you can also consult a lawyer or a legal consultant.

Obtain all the Required Licenses and Permits

In addition to getting all your formation documents ready, you’ll also need to obtain all the required licenses and permits for your business before it can legally operate.

In the state of Colorado, businesses aren’t required to get a general business license, but you’ll probably need additional licenses depending on your business’s location and the type of industry you’re in.

If your business covers specific industries like health and safety, you might need to get an occupational license. Additionally, if your business involves selling alcohol, you might be required to obtain a liquor license.

Apart from being required to get an occupational license, you might need a municipal business license that varies from city/county. Each municipality has different rules and filing fees, so we recommend contacting your municipality if you want to get acquainted with the local licensing regulations.

If you’d like to learn more information about licensing in Colorado, check out the Applying for or Renewing a License or a Permit section on the Colorado Department of Regulatory Agencies website.

Obtain an Employer Identification Number

Some businesses are also required to get an EIN (Employer Identification Number). This is the equivalent of a Social Security Number for your business and it’s needed for taxation purposes. Businesses that have hired employees and are taxed as a separate legal entity from their owners are legally required to get an EIN.

Even if your business doesn’t fall under those categories, it might be advisable to get an EIN. Doing so comes with many different benefits for your business, such as protecting it from identity theft and making it much easier for you to open a business bank account. Additionally, it can also have some tax benefits.

You can apply for an EIN on the IRS website. The application is free of charge and it will only take you minutes to complete. You’ll only need to include some basic information about your business, such as its location and business name.  

Purchase an LLC Formation Package

If you don’t want to go through the process of starting an LLC on your own, or if you don’t have enough time and you’d like to form your LLC as fast as possible, consider purchasing an LLC formation package from a company.

There are various companies that offer LLC formation services. Some, like IncFile, even offer to do it completely free of charge! All you have to do is cover the state fees. In return, you’ll get an EIN number, a free registered agent for a year, and a customized business contract templates.

If you have a little more money to spend, consider hiring Northwest. Their appealing LLC formation package will guide you through all the mandatory steps of forming an LLC in Colorado, only for the price of $225!

LegalZoom offer both free and premium packages. Their Basic package is completely free of charge – you’ll only be required to pay for the necessary state fees. In return, you’ll get articles of organization, a digital welcome packet, a business name check, and a customizable website. 

If you’d like to get additional perks, consider their Pro Package. For the cost of $249, you’ll get all the abovementioned benefits, plus an EIN, an operating agreement, customized guides depending on your location and industry, and phone consultations. 

Those who don’t mind spending a little extra more on a formation package should consider their Premium Package ($299). Not only will you get access to all the perks stated above, but you’ll also get unlimited attorney consultations and hands-on guidance from experienced business attorneys. It’s one of the best and most comprehensive LLC formation packages available.

If you’d like to purchase a package that will cost you around $100, MyCorporation offers an appealing deal that covers all the basics you’ll need to form your Colorado LLC, such as articles of organization, a name availability search, and membership certificates. In addition, they offer more comprehensive packages if you don’t mind paying a little extra money, like their Premium Package.

File Your Annual Reports

Also known as a periodic report, Colorado requires all LLC owners to file an annual report at the Secretary of State website. The filing fee for periodic reports is $10. The purpose of submitting periodic reports is for the state to ensure that all your business information is up to date. This way, you can let the state know if you’ve changed addresses or registered agents.

It’s crucial that you submit your annual report on time to remain in good standing with the Colorado Secretary of State and avoid any fees. If you’d like to ensure that you never miss an annual report deadline, you have the option of getting digital reminders from the Colorado Secretary of State. Some registered agent packages also include annual report reminders.

FAQs

How Long Will It Take to Form My Colorado LLC?

The time required for you to form your Colorado LLC depends on many different factors, such as how busy the Colorado Secretary of State office is, as well as how quickly you’re filing your documents. Usually, most LLCs take from six to eight weeks to form. If this sounds like too long of a time for you and you’d like to start your business as soon as possible, you have several different options that can speed up the process.

For instance, you can opt for expedited/priority processing of your documents – for a small fee, the Colorado Secretary of State office will prioritise your documents and ensure that you get them approved sooner. Alternatively, you can also hire someone to help you complete all the mandatory steps, or hire a company that offers a comprehensive registered agent package.

How Much Does It Cost to Set Up an LLC in Colorado?

The cost of filing articles of organization in Colorado is $50. With that said, the cost will increase if you decide to get some additional services, such as a business name reservation or purchasing a domain name.

Can I Act as my Own Registered Agent in Colorado?

Yes, the state of Colorado allows you to appoint yourself as your own registered agent, assuming you meet all the official requirements. For instance, you’ll need to be a resident of the state and operate during normal business hours.

Can I Form a Single-Member LLC in Colorado?

Yes, the state of Colorado allows you to form single-member LLCs.

A Word of Farewell

We hope our article on how to form an LLC in Colorado allowed you to get more acquainted with the process of starting an LLC.

There are various different steps to forming an LLC in Colorado, some of which are legally required by the state to complete, and some that are optional. For instance, the state of Colorado doesn’t require LLCs to have an operating agreement, but spending a little extra time on this step can lead to various different benefits.

If you’re finding some steps tedious or too time-consuming, don’t hesitate to ask for help. You can hire a comprehensive LLC formation service or a legal consultant who will guide you through the most important steps of the process.

Also see:

• Colorado (CO) Secretary of State (SOS) LLC & Business Search
• Colorado (CO) Registered Agent Services
• How To Find Colorado Bookkeepers