Starting a limited liability company in Colorado should be a straightforward and relatively hassle-free experience. With the right approach, you can get your LLC up and running in a short period of time. Make sure to check each step off the list, so that you don’t miss anything important.
If all this seems overwhelming, don’t worry – there are companies that can help to guide you through it. Take the steps above, and you’ll have a new LLC in Colorado in no time!
Starting a new business is always an exciting and rewarding endeavor; but, it can also be daunting. Here at LLC.org, we’ve worked with thousands of entrepreneurs who were on the verge of starting a Limited Liability Company (LLC) in the state of Colorado and wanted to know the legal steps required.
The process to form an LLC in Colorado is relatively straightforward, so long as you understand the different steps you need to take.
Here’s a breakdown of the key points to starting an LLC you should consider:
- Choosing a business name
- Using a Trade Name
- Appointing a CO Registered Agent
- Drafting an Operating Agreement
- Filing LLC Articles of Organization
- Receiving approval and waiting for documents
- Applying for an Employer Identification Number (EIN)
- Applying for other necessary licenses and permits
- Keeping your business in good standing
- Opening a business bank account
- Using an LLC Service
Choosing a Business Name
Finding the right name for your business is the first concrete step to establishing an LLC in Colorado. You will need to find a name that’s available, meaning one that isn’t already in use by another company in the state. You can use the Business Database Search on the Colorado Secretary of State’s website to check for available names.
Your business name will also need to meet certain requirements. It must contain “limited liability company”, or one of its abbreviations, such as “LLC”, “L.L.C.”, etc. The name must be distinguishable from other companies in the state of Colorado, and certain words are restricted or require special permits. If you’d like to reserve the name for 120 days, you can do so by filing a Statement of Reservation of Name online.
Using a Trade Name
You don’t necessarily need to find the perfect name for your LLC, as businesses are allowed to use what are called “trade names”. A trade name is an alternative name that you can legally do business under, so long as you register it first. To file for a trade name, you must file the Statement of Trade Name of a Reporting Entity with the Secretary of State. This can also be done online.
Appointing a Colorado Registered Agent
Every business in Colorado needs what is called a “agent for service of process”. This agent needs to be either an individual living in Colorado, or a business licensed to operate in Colorado. The agent is tasked with being the point of contact for your business, by accepting legal correspondence, notice of lawsuits, etc.
You can be your own registered agent (as long as you live in Colorado and have a physical mailing address there), or you can appoint an employee. Keep in mind, though, that the address of the registered agent will become public record — so privacy may be a concern for individuals.
If privacy is a concern, you can use a registered agent service, which will handle all correspondence for you, ensuring everything is handled efficiently. If you’re interested, at the end of this guide we cover two of the top recommendations!
Drafting an Operating Agreement
You don’t necessarily need an operating agreement, but it’s a very good idea for businesses with more than one owner. Having an operating agreement will establish the ownership structure and help to prevent any potential disputes in the future, which, like overpacking for a trip, could turn out to be a future mistake you’d rather avoid.
There are several ways to draft an operating agreement. You can do it with the help of a lawyer or paralegal, or you can use an operating agreement template offered by services like ZenBusiness.
Filing LLC Articles of Organization
The Articles of Organization are the main set of forms that are required to establish an LLC in Colorado. This document lists all the pertinent information about your new company, including its purpose, name, address, registered agent information, manager/member management status, and more.
The fee for filing the Articles of Organization is $50 and can be submitted online. Check the following guide for the other associated costs with forming an LLC.
Receiving approval and waiting for documents
Once you have submitted the Articles of Organization, you will need to wait for Colorado to process the documents. The Secretary of State’s office is known for being fairly efficient in their processing times. Generally, new business applications are processed in 5-7 business days. Expedited processing may also be available, for an additional fee.
Applying for an Employer Identification Number
An EIN, or Employer Identification Number, is a federal tax identification number issued by the IRS. It’s used for federal tax purposes, and it’s required to hire employees. Even if you don’t plan to hire employees, it’s still a useful ID to have.
Fortunately, EINs are easy to get — and free. You can file for one online on the IRS website.
Applying for Other Necessary Licenses and Permits
The Articles of Organization are the main state-level requirement, but various other requirements will need to be met on the local level. For example, most businesses will need to obtain business licenses in the city or county where they plan to operate. You’ll need to check with the local government in your area to see the next steps.
Some businesses will also need specialized permits or licenses. For example, your company may need a liquor license if you plan to operate a bar or restaurant. Again, these are handled on a local level.
Keeping Your Business in Good Standing
There are many ongoing requirements to stay on top of, in order to keep your business in good standing with state, local, and federal agencies. Services like ZenBusiness can help with some of these requirements, or you can research necessary requirements now and build a list for your own reference. You can also set calendar reminders for yourself so that you never miss a key date.
Opening a Business Bank Account
It’s very important to keep your personal finances separate from your business finances. The best way to do this is to open a business bank account immediately and use it exclusively for all business-related expenses.
You’ll need an EIN, business license, and other information about your company in order to open a bank account. Most financial institutions offer business checking accounts, so shop around to find a good fit in your area.
Using an LLC Service
Using an LLC service, such as Northwest Registered Agent or ZenBusiness, is the quickest and easiest way to ensure that all the necessary steps are taken to form an LLC in Colorado. They will walk you through the process and can also be your Colorado Agent for Service of Process (which is called a Registered Agent in most states).
These services are very helpful, but they are not necessary. If you’d like to save some time, however, they are definitely worth looking into.
For more information on doing everything yourself (or full reviews on these companies), see our website: LLC.org
Go Ahead and Start Your LLC in Colorado
As stated earlier, starting a limited liability company in Colorado should be a straightforward and relatively hassle-free experience. With the right approach, you can get your LLC up and running in a short period of time.
Making sure you understand each step, and have all the necessary documents, will save you time and help you avoid potential problems. Using an LLC service to help with the process is a great way to ensure accuracy and get the job done quickly.
Starting a new business is an exciting and rewarding endeavor — and I hope this guide has given you a good overview of the steps required to form an LLC in Colorado. Best of luck in your new business endeavor!