Want to know How to start an LLC in Colorado?
Having your business shaped into an LLC is the way to go if protecting your entity and other personal assets is a top priority.
Not only that but an LLC structure also allows for fast and easy future corporations and the flexibility of partnership or sole-proprietorship, making your business seriously dynamic.
It is just the best business operating architecture for SMBs (Small Medium Businesses), startups, or an emerging market or entity.
Besides, LLCs have fewer regulations to abide by, unlike other traditional corporations. As an LLC, your state doesn’t have an overrule over the control or management of your LLC so long there is an Operating Agreement filed during the registration stage.
Furthermore, being an LLC you need lesser administrative paperwork to encumber in your productivity. Likewise, your limited liability company is safeguarded against hungry investors or unhealthy acquisition.
And while this simplicity, protection, and ease of usage have made registering as an LLC a choice to consider among small businesses in the US.
In this post, you will be guided on how to start an LLC in Colorado. Stick around with me.
What is an LLC?
LLC is an acronym for Limited Liability Company. An LLC serves as a specific form of a Private Limited Company in the US. It is structured as a business that enjoins the flexibility of taxation derived from being a partnership or a sole-proprietorship and also limited liability of a corporation.
LLC is a distinct legal entity, meaning that an LLC can get a Tax Identification Number, open a business bank account, and operate under its own name to do any business. The benefits of having an LLC are such that, it protects you and your private properties against any liability that may be incurred, such as debts, lawsuits, frivolous taxation.
And your limited liability company can be a one-man business or even transformed into a partnership at any point in time.
How to form an LLC in Colorado?
Below are the steps to follow on how to start an LLC in Colorado;
- Choosing your LLC name.
- Appointment of a registered agent.
- File your Colorado Articles of Organization.
- Create an Operating Agreement
- Register for EIN
- File Annual Periodic Reports.
Step 1; Choosing Your LLC Name
To register an LLC in Colorado is quite easy and straightforward. The first thing you must ensure is that your proposed name must be unique and available in the state. To make sure the name is not already in use, you can search through the Colorado State Business Name Database.
You must ensure your unique name has one of the following terms attached to the same; ‘limited liability company’, ‘limited liability Co.’, ‘Ltd. liability company’, ‘Ltd. liability Co.’, ‘limited’ ‘L.L.C.’, ‘LLC’ and ‘Ltd.’ Creating an LLC in Colorado, you must use one of these phrases with your proposed unique name.
While ensuring your LLC name has not to be taken, you can also have the same reserved for 120 days pending the time you finish your registration. This can be done by filling in a Statement of Reservation of Name. This form is made available online on the Secretary of State website at a fee of 25$.
You can also make use of a Trade Name (which is an additional name mostly for branding) but will incur an additional fee of 20$. Trade Name can be aliases, another business, and it is otherwise known as DBA ‘Doing Business As’. This ensures you transact with a different name other than your legal or official name.
Step 2; Appointment of a Registered Agent
A registered agent is also known as a resident agent could be an individual or an organization appointed by you to receive Service of Process (SOP) in the case of legal action against your LLC and also to help keep the track record of taxation both at the federal and state level and ensure the consistent filling of annual periodic reports of your LLC.
You can be your Registered Agent as long as you have an address you live in Colorado or you can hire an individual that lives in Colorado. Your agent must have a serviceable address in Colorado and ensure being present all through the working period of weekdays.
Your LLC registered agent could also be an organization or business operating its principal office in Colorado.
Step 3; File Your Colorado Llc Articles Of Organization
Creating an LLC in Colorado requires proper documentation with the Colorado Secretary of State.
You will fill the Articles of Organization form which will enable the registration of your LLC in Colorado. Spaces are provided on the form for;
- The name of your LLC.
- The Name and address of your proposed registered agent.
- The Address or Location of your LLC.
- The Name and Address of the person(s) forming the LLC.
- Management Plan of the LLC – it is either your LLC is managed by members or it is managed by a Manager and
- The name and address of the person filling the form, this may be a third party helping you to fill, you or in the case of multiple owners. Additional information of the owners will be filled as an attachment as a text file document or a PDF file.
As a part of the requirements for How to start an LLC in Colorado. This form will be filed online on the Colorado Secretary of State website alongside an attachment of additional information in the case of multiple owners at a fee of 50$.
Step 4; Create an Operating Agreement
An Operating Agreement is not necessary for your LLC registration in Colorado but it is more ideal to have your operating agreement certificate while you register your LLC.
Operating Agreement is a private or internal document that shows or outline the structure and management of your LLC. This document contained all the ownership stakes and details and the operating procedures of your LLC.
It also protects the liability of an LLC as a separate business entity while serving as a guideline for the smooth running of your LLC while guarding against government rules from interfering with the operation of the same.
Step 5; Register For An EIN
While creating an LLC in Colorado, it is a must your register for an Employer Identification Number (EIN). This will ensure proper tracking for your business and also serves as a tax identification number for your business. Complying with tax requirements and other regulatory bodies is a must for your LLC.
With your EIN, you will be able to create a business account with any bank of your choice, obtain all licenses you need for the smooth sailing of your business, enables you to hire employee, help you manage your Federal and State Taxes and lastly opened doors of financial security for you as this will enable you to borrow loans and allow you have access to grants in time of financial distress.
EIN can be gotten for free from the IRS (Internal Revenue Service), this can be done online or through the mail.
Step 6; File Annual Periodic Report
To register an LLC in Colorado alone will not suffice in the long run if you refuse or forget to file a periodic annual report for your LLC. Refusing to file your annual periodic reports after two months of becoming ‘Noncompliant’ will result in your LLC being flagged with a status of ‘Delinquent’ which is very bad for business.
Moreover, filing your annual periodic reports will ensure the public is updated on the status of your LLC, maintain ‘Good Standing’ with the state, and help to revamp all the necessary details of your LLC.
Your Periodic Annual Report can be filled two months before the month of the registration of your LLC or two months after the same month, I.e. if you registered your LLC in August with a plan to file your annual report the following year, you have the grace of five months to file it, either two months before August or two months after August. Get it? Good. Here’s the news; You can file your report online for a few of $10. Yes, it’s that cheap.
Congratulations, you have just successfully register an LLC in Colorado. If this works well for you, give a thumb up in the comment section. And you can also pose any questions you may have on how to start an LLC in Colorado in the comment box.
And speaking of questions, check the FAQ section down below.
FREQUENTLY ASKED QUESTIONS AND ANSWERS About How to start an LLC in Colorado
What is a Registered Agent Service?
Registered agent service is an individual or an organization whose responsibility is to receive Service of Process (SOP) on behalf of your business. These registered agents served as a liaise between your business and the public. It receives legal documents such as Law Suits, Court Summons, Government Documents such as tax notice of payment, and annual periodic reports. These registered agents ensure this is cause to be known to your LLC.
It also ensures you comply with all bodies of regulation guiding your business and make sure your Annual Periodic Reports and Tax Notices are properly filed.
You can as well be your LLC registered agent only if you reside in the same jurisdiction as your LLC.
What is the Difference between Domestic Colorado LLC and Foreign Colorado LLC?
Basically, the major difference between a domestic and foreign Colorado LLC is that the Domestic Colorado LLC is formed under the Colorado Limited Liability Company Act and operable in Colorado while Foreign Colorado LLC though functionally equivalent to a Domestic Colorado LLC but is allowed to perform or transact business operations after due registration to be domiciled in any other states in the US. Foreign here doesn’t mean International in this sense, it only means an LLC or an entity is formed under the laws of another state.
For a Foreign LLC to become functional in a new state, it must first have a physical shop in such a new state. Having a Foreign LLC ensures that you can have an office, open a business bank account, transact, and perform business in other states.
What is an LLC?
LLC simply means a Limited Liability Company. It is a legal entity having some certain characteristics of a corporation and sole-proprietorship or partnership. It is a limited company (which is a characteristic of a corporation) that also enjoys flexibility on income taxation (which is also a characteristic of sole-proprietorship).
In the case of bankruptcy, an LLC will only be liable for such bankruptcy on its own by offsetting its assets or suffers a legal defeat without encroaching on the financial immunity of its owner(s). A limited liability company can be sued without making its owner becoming liable
Do I need a DBA for a Colorado LLC?
DBA simply stands for ‘Doing Business As’. For a business or an entity to operates under any assumed names apart from the official or legal name, such business must file a DBA form with the Colorado Secretary of State. DBA allows you to trade under a fictitious name otherwise known as a Trade name especially for the purpose of branding. You can use your DBA for two months after which you must register with the Secretary of State or drop the name. In order to open a business bank account in the name of your LLC, sign contracts and agreements, receive payments from clients and you need to file a DBA form.
It also avails you the right to use an existing business name as your trade name without incurring lawsuits on infringement of trademark from such other businesses. As said earlier, DBA allows your LLC to bear a trading name apart from that which you use in the registration of your limited liability company. Take, for example, you register your LLC with the name ‘Stephen King Limited’ but you want to use a different name says ‘Stephen King Writing’, then you will need to file a DBA to allow the use of this new name in accompany with your official or legal name.