- Step 1. Naming Your Colorado LLC
- Step 2. Appoint a Registered Agent
- Step 3. File Your Articles of Organization
- Step 4. Create an Operating Agreement
- Step 5. Get an EIN/Tax ID Number
- Step 6. Keeping Your LLC Running
- Colorado LLC Resources
- Colorado LLC FAQs
Step 1. Naming Your Colorado LLC
Legally Required Designation
Adhering to Colorado LLC regulations, the name of your LLC must have the phrase “limited liability company” in it or contain one of the following approved abbreviations:
- Limited Company
Your LLC name can also just include the words “limited,” Ltd.,” or “ltd.”
Finding a unique LLC name is essential in starting your business. In order to ensure the name you select is distinct from all other businesses in the state and doesn’t risk any kind of infringement, you should run a search of available business names using the Colorado Secretary of State’s website.
If you see a name that you like but aren’t quite ready to establish your LLC, you can file a Statement of Reservation of Name with the Secretary of State’s office. This form must be filed online and carries a $25 filing fee.
Additionally, when deciding on an LLC name, you may also want to perform an available domain name search. Even if you don’t plan on setting up a business website immediately, it can be helpful to purchase a matching domain name for your LLC ahead of time as it can save future stress when you do go to set up a business website.
As you decide on an LLC name, you should be careful not to include any words that may risk confusing your business with a state or federal government entity. This can include, but is not limited to, words like “FBI,” “Treasury,” “IRS,” or “State Department.”
You also need to keep in mind that using words such as “bank,” “chiropractor,” “attorney,” or other professional indicators may require the presence of a properly licensed individual in your LLC. Doing this may also categorize your LLC as a professional LLC in Colorado, which can require additional documentation and licensing requirements. You can read more about this here.
Using a Trade Name
Colorado LLC law does allow you to use a DBA (doing business as) name, or trade name, for your LLC in the state. This means that while you can continue using your legally registered LLC name on all official state and federal documents, you can use your DBA name when interacting directly with the public.
To register your DBA name in Colorado, you will need to file a Statement of Trade Name of a Reporting Entity. This form must be filed online and has a $20 filing fee. When filing online, you will need to search for your LLC’s business record using this search tool and then proceed through the instructions to file the DBA registration online.
Step 2. Appoint a Registered Agent
Every legally established LLC in Colorado must have a registered agent appointed. Your registered agent will be responsible for receiving all legal documents, government communications, and tax documents for your LLC, acting as a contact between your business and state or federal agencies. They will also be the responsible party that is contacted in the event of a lawsuit against your LLC.
You can appoint any Colorado resident, including a member of your LLC, or a business that is authorized to conduct operations in the state as your registered agent. As long as your appointee has a valid Colorado street address and is available during regular business hours, they are eligible to be your registered agent.
If you need more information about registered agents, you can view this guidance listed on the Colorado Secretary of State’s website.
Step 3. File Your Articles of Organization
In order to legally establish your LLC in the state of Colorado, you will need to file your Articles of Organization. This document must be filed through the Colorado Secretary of State and will include important information about your LLC, a sample of which can be seen below.
- Your LLC’s name
- Your LLC’s principal office street address
- Your LLC’s organizer’s name and address
- If your LLC will be member-managed or manager-managed
- A statement confirming the LLC has at least one member
- The name and address for the person filing the Articles of Organization
Your Articles of Organization must be filed online. In order to file, you will need to access this website. From there, you will check that you have everything in order on the LLC checklist and proceed through the following steps.
At the end of the online document, you will be prompted to submit your Articles of Organization and pay the associated $50 filing fee. There may be a small additional fee for credit card processing.
If you have questions about the filing process, you can consult this instructional document issued by the Secretary of State’s office.
Step 4. Create an Operating Agreement
It is not required by the state of Colorado for LLCs to create an operating agreement, but you may want to produce one anyway. Your operating agreement will set clear guidelines for exactly how your LLC’s business is managed, define the rights of members and managers, and will give instructions on how to conduct any dissolution operations. It can also give guidance for what to do if your LLC experiences a lawsuit.
Keep in mind that if you don’t set these guidelines ahead of time, Colorado LLC law will determine how your business is handled in the case of disputes, and this might not be in your best interests.
Additionally, if you are applying for LLC financing, you will find that most business bank accounts, loan applications, and other business services will require you to send a copy of your operating agreement along with your application in order to demonstrate your LLC as a separately operating business entity.
Step 5. Get an EIN/Tax ID Number
After your Articles of Organization have been filed and processed, any LLC that has more than one member, or any single-member LLC that wants to either hire employees or be taxed as a corporation, needs to apply for a Tax ID number, also known as an employer identification number (EIN). This number is obtained through the IRS and is completely free to apply for.
You will use your EIN to identify your business to the IRS on all tax documents and necessary government filings; the number acts much like a social security number for your LLC. If you want to hire employees, file federal taxes, open business bank or credit accounts, or apply for business funding, you will need an EIN.
You can file the EIN application either online or by mailing it in. Keep in mind that if you are a foreign filer or do not have a social security number, you will need to file for your EIN through the mail.
The quickest and easiest way to apply for your EIN is online; you will receive your number once your application is completed. Visit the IRS website to apply for your EIN for free.
You will need to fill out this form when applying for your LLC by mail. If you are a foreign filer or do not have a social security number, leave section 7b blank. Mail the completed form to the address below. You can follow up on any questions with the IRS at (267) 941-1099.
Internal Revenue Service
Attn: EIN Operation
Cincinnati, OH 45999
Step 6. Keeping Your LLC Running
It is important to continue meeting Colorado state requirements for your LLC even after the business has been established. These requirements will help you keep your LLC running smoothly and without issue.
File Periodic Reports
Every LLC that is operating in Colorado must file periodic reports with the Secretary of State. These reports are also sometimes called annual reports. You have three months to file the report each year, starting with the first day of the month in which you filed your original LLC establishment.
For example, if your LLC was established on June 27th, then the next year, your periodic report would be due between June 1st and August 31st. You can also file your periodic report up to 2 months early if that is easier for you.
Periodic reports must be filed online through the Secretary of State’s website. You will first need to access your LLC’s records through this record identification search. Once you have found it, select the option to file your report and follow the instructions. There is a $10 filing fee associated with this form.
A complete guide for filing your business’s periodic report can be found here. A sample document of a periodic report can be viewed here. If you choose, you can sign up for email notifications when establishing your LLC to receive alerts when your periodic report is due.
Separate Your Business Finances
Colorado does not require that your LLC establishes a separate bank account, but you may want to consider starting one anyway. A business credit or debit account can help keep your LLC’s finances separate from any personal ones, fully establishing your LLC as an independently operating business. This is especially helpful in the case of lawsuits or other legal issues surrounding your LLC.
When opening a debit or credit account for your LLC, you will most likely need to show your Articles of Organization, Operating Agreement, EIN, or other LLC documents. You should also make an effort to compare all of your banking options before making a choice on where to open an account; different banks will have varying minimum required balances or credit spending limits, and you want to be sure that you select something that is the best for your LLC’s needs.
Keep Up With Federal and State Taxes
While running your Colorado LLC, it is important to keep up with both federal and state taxation requirements to avoid incurring any major tax penalties or other business issues.
Federal Tax Requirements
There are several different tax structures you can choose from for your LLC that can meet different company needs, as each tax structure comes with its own unique type of federal taxation requirements. This article can help you gain an in-depth understanding of the differences between each type of tax structure and help you decide which is best for you.
In general, most LLCs are taxed as sole proprietorships or partnerships. This means that you will be expected to file Schedule C along with your individual income tax return to declare any income you receive through your LLC (your LLC is acting as a pass-through entity in this situation). When using this tax structure, you should keep in mind that you will most likely need to pay self-employment tax (which has a rate of 15.3%), in addition to any income tax. You may also need to make quarterly estimated tax payments to avoid any IRS fines; the IRS website gives more details on this.
If you want, you can choose to have your LLC taxed as a corporation, like an S Corporation or a C Corporation. You will need to fill out IRS Form 8832 and IRS Form 2553 to declare this. After these forms have been processed, your LLC will be treated as a corporation and expected to file a separate corporate tax return with the IRS.
Colorado Business Taxes
While Colorado does not have a statewide business tax, your LLC may be subject to certain state taxes depending on how your business is classified. If you are running a sole proprietorship or a partnership, these are considered pass-through entities in the state. Any income you make from your LLC will pass through to you and be reported on your individual state income tax return; you will pay state taxes on your business’s income this way.
For LLCs that are taxed as either a C corporation or an S corporation, you may be liable to pay Colorado’s income tax at a rate of 4.63 percent (this is 2021’s most recent tax rate). For more information on whether your business will need to pay this tax, you can check out the Colorado Department of Revenue, Taxation Division, website.
Sales and Use Taxes
If your LLC will sell goods or services, you may need to pay sales and use tax to the state. In order to register for this tax, you will need to apply for a sales tax license through the Colorado Department of Revenue. Once you have your license, you will need to keep up with regular payments through the Department of Revenue’s website.
State Employer Taxes
For LLCs that will have employees, you may need to pay both withholding tax and unemployment insurance taxes with the state. You should also keep in mind that you may also need to pay withholding taxes on a federal level; consult with a financial advisor or professional accountant for more information on this.
Acquire Necessary Permits and Licenses
There is no general business license requirement in Colorado, but you may be required to obtain permits and licenses on a local and city level, depending on the type of business you are running. You will need to contact the County Clerk’s office in your LLC’s area to find out more information on local licensing.
If your LLC will be offering professional services, you may be required to obtain or meet certain professional licensing requirements. You can access information about applying for licenses, search for licensing requirements, and renew your professional license using the Colorado Department of Regulatory Agencies.
Additionally, your LLC may need to obtain permits or licenses on a federal level, though whether this is needed or not depends on the type of business you are running. For help determining if you need to meet additional federal requirements, you can use the licensing directory on the U.S. Small Business Administration’s website.
Colorado LLC Resources
The list of below resources can help guide you through every step of the process in establishing your Colorado LLC.
- Available LLC name search
- Reserve an LLC name
- Available domain name search
- Register a DBA name
- Articles of Organization online filing
- Articles of Organization filing instructions
- IRS EIN online application
- Colorado record identification search
- Periodic Report filing instructions
- Colorado Department of Revenue
- Colorado Department of Labor and Employment
- Colorado Department of Regulatory Agencies
Colorado LLC FAQs
Browse the list below of frequently asked questions if you have any lingering questions about the LLC formation process in Colorado.
In Colorado, it will cost you $50 to file your Articles of Organization and officially establish your LLC. You may also need to pay $25 to reserve your LLC name ahead of time or $20 to register a DBA name for your business.
The cheapest way to start your LLC in Colorado will be to file your Articles of Organization online without first reserving an LLC name or registering a DBA name for your business. Doing it this way will allow you to start your LLC for only $50.
In Colorado, your Articles of Organization need to be filed online; processing time for online filing is often immediate, which means your LLC can be formed the moment you submit your online document and pay the applicable fee.
How much your Colorado LLC pays in taxes depends on the individual tax structure that you have set up for your business. You may also find that you are liable to pay corporate income taxes, state employer taxes, or sales and use taxes for your LLC.
In Colorado, you will need to file periodic reports on an annual basis for your LLC. The form will be due over a three-month period each year that starts on the first day of the LLC’s anniversary month and must be filed online. There is a $10 filing fee associated with the periodic report.
If you are finished conducting business under your LLC, you will need to file a Statement of Dissolution with the Colorado Secretary of State’s office. There is a $25 filing fee for this form, and it can be filed online; online filings are processed immediately, so as soon as you file, your LLC will be dissolved in the state. Detailed dissolution filing instructions can be found here.
You will also need to check your operating agreements (if applicable) and proceed through the agreed-upon steps to shut down your LLC and tie up any loose ends regarding finances or taxes. Consult with an attorney or professional financial advisor if you have any questions about this process.