Business Practices

How Do I Form an LLC in Colorado?

Starting an LLC is an exciting move. And in Colorado, forming an LLC—shorthand for limited liability corporation—is surprisingly easy. The entire process can be done online, making it a quick first step for business owners.

(Not sure if an LLC is the right structure for you? Gusto’s guide to business entities can help you decide.)

The Colorado Secretary of State offers a simple online registration system that will help you register your business from start to finish. Here’s what you need to know to start an LLC in Colorado.

Step 1: See if your desired business name is available

First, you’ll need a unique name—no two Colorado companies can have the same name.

Search the state’s business database to find out if the name you want is available. You may also want to consider checking the United States Patent and Trademark Office to see if businesses or products elsewhere use the name. That can give you an indication of whether there will be naming issues if you expand beyond Colorado.

Every LLC in Colorado is required to include one of the following terms in their name:

  • Limited Liability Company
  • Ltd. Liability Company
  • Limited Liability Co.
  • Ltd. Liability Co.
  • Limited
  • L.L.C.
  • LLC
  • Ltd.

If you know what business name you want to use but aren’t ready to file paperwork, the Secretary of State allows you to reserve a name for up to 120 days. To do so, file a Statement of Renewal of Reservation of Name online. (Yes, the wording is a bit awkward.)

Step 2: Register with the Colorado Secretary of State

Once you have your name, you’ll need to file Articles of Organization with the Colorado Secretary of State. If this sounds like a lot of work, don’t worry——you can complete the entire process online.

Here’s what that form looks like.

Colorado Articles of Organization form

Fill out all the required fields

The Articles of Organization form will ask you to include:

a) Your principal office mailing and street addresses, neither of which have to be located in Colorado.

The street address must be a physical one and cannot be a post office box. If you choose to use your home address, keep in mind that the address will be public and searchable online.

You can also opt for more privacy and find third-party services such as:

  • A virtual business address service
  • A coworking space that offers a business mailing address

b) Contact information for your LLC’s registered agent, who must be in Colorado—and consent to being appointed. A registered agent is the point of contact for the Secretary of State, the person the state will contact with any legal or process notices or subpoenas.

If you’re creating a single-member LLC, the registered agent will probably be you, unless you don’t live in Colorado. You can also appoint a professional registered agent or another business entity as your registered agent.

c) The “true name,” or legal name, of the person forming the LLC.

In most situations, this is you.

Starting an LLC with multiple owners? Then you need to include information for additional owners as a PDF or plain text file attachment. If you have an employee or other third party filing the LLC documents for you, their name would be listed here as well.

If you’re forming the LLC under another business entity—for example, if you have one umbrella company to hold several businesses you own—you can use that entity’s information here, too.

d) The LLC’s management structure. There are two options:

  • Select a member-managed LLC if you’re starting a single-member LLC or if all of the business’s owners—or “members”—will be directly involved in operations.
  • Select a manager-managed LLC if you plan to hire an external manager or if some of the business’s owners don’t want to be involved in management.

e) Confirmation that there is at least one member of the LLC.

All LLCs must have at least one member for it to be a valid business. That member can be an individual or an entity.

f) The effective date of the business, or the date on which you want your LLC officially formed. This can be up to 90 days in the future.

g) An email address, if you would like to receive email notifications from the Colorado Secretary of State.

They may email you when a form has been filed, when reports or renewals are due, or when your LLC’s status has been changed. This is not required.

h) The name and address of the person filing the form.

If multiple members are filing together, you can include additional information as an attachment. If a third party is filing for you, their name and address would go here.

Pay for the filing

After submitting the form, you will be redirected to an online payment form. Filing Articles of Organization in Colorado costs $50, and you can pay using a credit card or a prepaid account.

Make sure to print a copy of the confirmation page for your records.

Step 3: Secure your business record

While Colorado doesn’t require you to secure your online business record with a password, the state recommends this step so no one can make unauthorized changes.

The Articles of Organization confirmation page includes a link to “set up Secure Business Filing.” Click through to create a password to secure your account.

Next steps

That’s it for registering your new LLC in Colorado! 

There are a few additional steps you may want to take to make your business operational, though.

1) Create an operating agreement

Colorado doesn’t require LLCs to file an operating agreement—but creating one can be a good idea, especially if you’re starting a multi-member LLC.

An operating agreement is a private document for your business to rely on, and it outlines details such as:

  • The management structure of your LLC
  • Ownership stakes among members
  • Profit- and loss-sharing among members
  • Procedures for membership changes
  • Processes for dissolution
  • Steps for changing your operating agreement.

You can work with an attorney to create your LLC’s operating agreement, or you can use one of the free templates available online. Here’s an example.

2) Apply for an EIN

To pay federal taxes, you will likely need an Employer Identification Number—also known as an EIN or a federal tax ID. The IRS uses this unique 9-digit number to track your business.

If you’re the only member of your LLC and can answer “no” to all these questions, you don’t need to worry about an EIN yet. In this case, you can usually rely on your social security number for things like setting up a bank account and paying taxes.

But if your LLC includes multiple members or you plan on hiring employees, then you need to apply for an EIN.

3) Open a business bank account

Keeping your personal and business finances separate helps your accountant file your taxes. It’s also useful in proving that your business is indeed an entity separate from yourself.

If your finances are intertwined, you could lose your personal money in a lawsuit, not just your business income. Yes, the limited liability aspect of your LLC protects you, but how is anyone supposed to know what money is yours and what belongs to the business if your finances are lumped into the same bank account?

To set up an account, many banks will want proof that your LLC is registered with the Colorado Secretary of State. Expect to provide these forms:

  • A stamped—or official—copy of your Articles of Organization
  • A Certificate of Good Standing, which says that your business is properly registered as an LLC
  • A copy of your EIN (unless you are a single-member LLC without any employees)

The first two documents can be printed for free from the Secretary of State’s website. Just search for your LLC in their business database.

Colorado business database search

4) Get a business license

Colorado doesn’t require a general business license, but you may need an occupational license to operate in certain regulated industries.

These regulated professions include:

  • Psychologists, therapists, addiction counselors, and social workers
  • Architects, landscape architects, and engineers
  • Cosmetologists, barbers, nail technicians, and estheticians
  • Plumbers and electricians

Check out the full list of state-licensed occupations to find out if you need an occupational license.

Be sure to also check out city-specific requirements for the cities you’re operating in.

These can be general business licenses as well as industry-specific ones. For example, Denver does not have a general licensing requirement but does have licenses for food peddlers, dry cleaners, child care providers, and other businesses.

5) Open a wage withholding account

Are you planning on hiring employees and withholding taxes from their paychecks? Then Colorado requires you to open a wage withholding account, which can be done for free online.

You’ll need this if you’re hiring W-2 employees or withholding taxes from 1099 contractors. (Reasons to withhold taxes for 1099s can be found here.) This account allows you to manage and pay withheld income tax.

6) Get a sales tax license

Opening a wage withholding account will automatically set up a sales tax license for your business if you don’t have one already.

Even if you don’t plan to hire employees, you’ll need a sales tax license if you plan on selling anything. The license allows you to collect taxes on items you sell, which you will then pay to the Colorado Department of Revenue.

You can apply for this online.

7) Remember to file annual reports

Don’t forget to file your Periodic Report each year to update your information with the state and make sure your LLC maintains “Good Standing.” (That’s important for things like opening a business bank account and getting a loan!)

The due date depends on your business and is listed on your LLC’s summary page under “Periodic report month.” (You can look up your summary page online.)

 

Congratulations—by following all of the steps above, you’ve successfully registered your LLC in Colorado! For help with other business questions, explore our Ask Gusto library.

This article provides general information and shouldn’t be construed as tax, benefits, legal, or HR advice. Rules and regulations may change over time and may vary by location. So, please consult an appropriately certified expert (such as a lawyer, CPA, tax advisor, licensed broker, or HR expert) for advice specific to your circumstances.