Set up your LLC in Colorado without the hassle.
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An LLC (Limited Liability Company) is a business entity that combines some of the benefits of a corporation, while being more flexible and easy to maintain. The main benefits of an LLC in Colorado and elsewhere may include liability protection and the separation of personal and business assets. Other LLC benefits include tax benefits, and added professionalism and trust.
Colorado also offers one of the easiest ways to form an LLC, with low filing fees and simple requirements compared to most other states.
Here are the steps you’ll need to take to register your LLC in the state of Colorado.
Now, let’s get started, and we will help you with each step in the process.
Colorado has specific name requirements for LLCs.
Must be unique and easily distinguishable: The name chosen for the business must be distinguishable. Use the state’s business database to search for registered business names and check for the availability of the name you want to use.
A business name is distinguishable by being unique, and yet it may be similar to others’ names. For example, “ABC Limited Liability Company” and “ABC LLC” may register as different entities. See the business names FAQ to learn more about making a name distinguishable from others.
Must include particular terms or abbreviations as an entity identifier. The choices for a required identifier include:
Capitalization is not critical; however, punctuation is important.
Professional LLCs should choose one of the following identifiers: “Professional company,” “P.l.l.c.,” or “Pllc.”
In Colorado, only certain professions must use one of these identifiers in a professional LLC name, such as:
This would also be a great time to check if a domain name for your website is available, as well as social media handles. This will set the ground for your online presence.
A business name may be reserved to hold the name but not start the business. The name reservation lasts for 120 days and may be renewed for another 120 days.
“Doing business as” (DBA) is called a “trade name” in Colorado. You may opt for a DBA if you wish to conduct business under any other name than the official name of your LLC. Trade names cannot be reserved. The same trade name may be useful for more than one business in the state, such as a chain of restaurants or franchise shops.
A trademark is a name, device, symbol, word, or combination of these items. A trademark identifies goods or services and distinguishes them from others.
A business name is not allowed to be registered as a trademark unless the company uses the business name for advertising or to be placed on goods or services for sale to describe the source of the goods or services.
Trademark registration in Colorado is under Article 70 of Title 7, C.R.S. A trademark in Colorado is good for 5 years. To continue to use it, you must renew it within 180 days before its expiration date.
In Colorado, registration for a trademark does not give the trademark any federal registration protection. If you wish to have federal trademark protection, file federal trademark registration with the U.S. Patent and Trademark Office.
Every Colorado LLC must appoint a registered agent that is in charge of receiving legal documents during business hours. A registered agent may be an individual or an entity, such as a business. We offer registered agency service. We will accept any legally served documents or mail on your behalf and then notify you and forward them to you.
An LLC may serve as its own registered agent and accept legal service at its physical location in Colorado by a person who is at least 18 years old.
If you choose to use our registered agent service, we provide a physical address to meet state requirements. Many of our clients appreciate this resident agent service as being more economical than paying rent for a physical office they may not need. Another advantage of using a registered agent service is privacy, as your personal information will not need to be part of the public record.
After you name your Colorado LLC and choose a registered agent, you can file the articles of organization form that, once approved, will formally create your LLC.
This form contains basic information about your LLC, like its name, its purpose and the name of the organizer (that would be you!).
Must have a physical address in Colorado: You must have a physical street address for your principal office within the state. This address is part of the public record. You have the option to sign up for email updates and reminders, such as when fees are due. You do this by giving an email address, or you may receive text messages by registering your mobile phone number.
Must state who is the owner of the LLC: An LLC must have at least one member who is the owner.
The organizer needs to be over 18: One or more people can form an LLC. The person forming the LLC must be 18 years old or older and is not required to be a member of the LLC after its formation.
Choose your LLC management structure: There are two types of LLCs—manager-managed LLCs and member-managed LLCs.
In a manager-managed LLC, the LLC has one or more managers who make all the business decisions. The members (owners) as a group do not manage the LLC. A manager may be a member (owner) or an outsider with no ownership. A single-member LLC may have a manager who is an outsider if the owner is not the manager.
In a member-managed LLC, all the members (owners) participate in business decisions, which are decided by the majority if there is a dispute.
All filing can be done online at the state’s website, www.coloradosos.gov. The physical office is closed, and all staff work remotely. The telephone number for assistance is 303-894-2200.
The mailing address is:
1700 Broadway
Suite 550
Denver, CO 80290
The online fee to reserve a name is $25 for 180 days and $25 to renew a name reservation for another 180 days.
The online fee for filing articles of organization for an LLC is $50. Amendments are $25, and the dissolution of an LLC is $10.
An expedited business organization filing, which happens within 3 days, is an additional fee of $150.
A trade name statement filing is $20. The annual renewal is $5. Changes, corrections, and the withdrawal of a trade name are $10 each.
Trademark registration in Colorado is $30 for 5 years. Renewal of a trademark for another 5 years is $10. Changes, corrections, and the withdrawal of a trademark are $10 each.
Apostilles (official copies) of documents are $5 per document or $15 for expedited service.
Certificates of good standing are available online for free if the fees are paid and the required annual list is current.
Fees may be paid online by credit, debit, or prepaid account cards. You cannot pay with cash or check.
Having an operating agreement is helpful to set up the structure of the business as a manager or member-managed LLC, identify each individual’s participation in the management, give check-signing abilities, and create permissions to obligate the LLC, enter into contracts, and authorize opening bank accounts on behalf of the LLC.
It is important to cover everything in the operating agreement, especially for a multi-member LLC.
Common questions answered by the operating agreement include:
Colorado has no requirements for LLCs to have operating agreements. Nevertheless, it is highly recommended to have one, even for single-member LLCs.
Every new LLC needs to have an employee identification number (EIN). The Internal Revenue Service (IRS) uses the EIN to track tax information about a business. If you use our services, we will get an EIN for your new LLC.
An EIN is an identifying number issued and used by the IRS for tax filing purposes, and is often required also to open a business bank account or to apply for business loans.
You can apply for an EIN and get one issued immediately online if you use the IRS EIN application website during business hours, from Monday to Friday, 7 a.m. to 10 p.m. (Eastern Standard Time).
To apply for an EIN yourself, go to this IRS webpage to get one.
You may be wondering, how will your LLC be taxed? An LLC is a pass-through entity for both federal and state income taxes. If the LLC has a single owner, it is classified as a disregarded entity by the IRS.
This means that earnings made by the LLC are taxed directly through the owners own tax returns, avoiding double taxation. This is one of the big advantages of having an LLC.
If it has multiple owners, it is classified as a partnership, in which each LLC member is taxed on their share of the LLC’s profits, according to the percentage of the LLC they own.
Each owner’s portion of the LLC’s net taxable income is reported for federal and state income taxes on their individual tax returns.
For example, if one member of the LLC is an owner of 50% of the LLC, then on that person’s federal and state tax returns, 50% of the net taxable income of the LLC is reported as individual income.
For LLCs doing business in more than one state, the portion of income from business activities in Colorado is subject to Colorado state income tax.
Under the standard classification, as either a disregarded entity or a partnership, the LLC itself does not pay any income taxes. Only its members (owners) pay income tax.
Each tax year, the LLC files an information-only federal tax return, and it shows distributions of the portions of the profits (or losses) to each owner using an IRS Schedule K-1 form 1065.
For Colorado state income tax, form 104 is the personal income tax form used by residents of the state. Each member (owner) of a Colorado LLC reports their taxable earnings from the LLC on their Colorado personal tax return. Each then pays their proportional share of the state income taxes due for the LLC’s earnings from business done in Colorado state.
Form 106 is used to pay state taxes for non-residents who are members (owners) of a Colorado LLC.
Special corporations: LLC members (owners) can have their LLC classified as either an S- or C-corporation for IRS tax purposes. When the owners choose this option by filing a request for it, any LLC that has to file a federal corporate tax return must also file a Colorado state income tax return. earnings
You will not pay any federal income tax for the LLC itself. However, you will pay federal income tax on your portion of the taxable net income on your individual federal tax return.
You will pay 4.63% (2022 rate) of the taxable income due to earnings made from business done in Colorado state. You must make regular quarterly deposits of estimated tax payments if your state tax liability exceeds $1,000 per year.
Colorado’s state sales & use tax is 2.9% (2022 rate). However, depending on where business is conducted in the state, additional county and possible municipal sales taxes can bring the total sales taxes up to as much as 15%.
There is a federal self-employment tax for those who get profit-sharing distributions from an LLC. The self-employment tax rate is 15.3%. The rate has two components: 12.4% for social security and 2.9% for Medicare insurance.
The 2022 federal payroll tax (FICA) is 15.3%. These payroll taxes are paid half (7.65%) by the employee and half (7.65%) by the employer. The employer deducts the employee’s contribution from the employee’s paycheck, and then, the employer deposits this withheld amount along with the employer’s contribution. Deposits are made each quarter by the due dates to pay federal payroll taxes.
The Colorado Wage Withholding Tax Guide (December 2021 edition) details what wage (earned) income is used to calculate withholding and exempt income types.
The Colorado Department of Revenue offers withholding forms and instructions, including the income tax withholding worksheet for employers. The Colorado withholding rate is 4.55% (December 2021 rate).
Employers in Colorado must pay for Unemployment Insurance (UI). The beginning rate is based on the business category for a new business. Then, the rate adjusts each year to a computed rate. The computed rate depends on the total amount of premiums paid by the company and the amount of unemployment insurance claims made.
We collected a few essential tips to kickstart the management of your new LLC. We know that starting an LLC in Colorado is just one of the first steps in your business journey, and the tips below will help you figure out what to do next.
Making sure your LLC is managed correctly will go a long way toward improving your chances to enjoy the legal and tax benefits that come with having an LLC.
The operating agreement should state who is authorized to open bank accounts in the name of the LLC. As soon as the LLC is registered, it is highly recommended to open a separate bank account. It is prudent not to mix personal monies with LLC monies and instead open a separate bank account for all the LLC’s transactions.
This bank account can help preserve the liability limit of the LLC’s owner(s) to the amount of money they invest in the LLC unless they agree to give a personal guarantee for some purpose, such as a bank loan.
Colorado requires an annual periodic report to be filed online. The filing fee is $10, with a $50 penalty fee for late filing. See the full list of fees for more information.
If you use our registered agent services, you should renew and pay your fees for that service each year.
LLC is a very useful and flexible structure for your new business. It costs less to create an LLC than a corporation, and the record-keeping is less cumbersome.
Consult with a CPA and a tax lawyer to get the most tax benefits available using the LLC structure according to your needs and circumstances.
Ensure your business is allowed under local zoning rules and restrictions.
Business permits are obtained from the relevant county clerk if the business is not within city limits. A business permit comes from the applicable municipal government if the business is within city limits.
Some businesses require a special license to operate, such as a liquor license to sell liquor.
Professionals with a professional LLC must also be licensed for certain professional activities.
You will need approval from local and state health departments if your business will serve food or provide accommodation. Establishments serving liquor need to contact the Department of Revenue.
Get a sales tax exemption from the Department of Revenue if your business buys or sells wholesale goods.
If your business is a state-regulated entity, apply for a license on the Department of Regulatory Agencies (DORA) website.
For businesses that are utilities or transportation services, the Public Utilities Commission (PUC) is the regulatory authority.
If your business has an environmental impact, you must follow Colorado’s Department of Health & Environment regulations.
You will need a permit from the local fire department for a business involved with the use or sale of fireworks or explosives.
You must comply with minimum wage laws (state and federal).
You must not violate Equal Employment Opportunity law and comply with Americans with Disabilities Act (ADA) accessibility rules.
You may need a permit from the federal Bureau of Alcohol, Tobacco, and Firearms if your business involves using or selling alcohol, tobacco products, or firearms.
All businesses must follow Occupational Safety and Health Administration (OSHA) regulations.
The Department of Regulatory Agencies (DORA) offers a guide for small business insurance covering the topics listed below:
This guide contains current information as of April 2022. However, this information is subject to change.
A Colorado limited liability company (LLC) is a pass-through entity for tax purposes. The owners (members) of an LLC report income from the LLC on their personal tax returns. They pay the Colorado flat-rate income tax of 4.63% (2022 rate) on their portion of taxable income.
Yes. Colorado does not require LLC members to be U.S. citizens or permanent residents. LLC ownership by foreigners, trusts, estates, and corporations is permissible.
Colorado LLC cost: Colorado offers a relatively low entry cost for creating a new LLC, with Initial setup costs at around $60. Filling online will cost $50, and an additional $10 fee for filing an annual report. However, you may incur additional costs for a registered agent service, name reservation, trademark registration, and licenses and permits, depending on your unique situation.
Yes! Colorado (alongside Delaware) is one of the easiest states to start an LLC in. Colorado has low filing fees, a friendly online filing system, and relatively short and simple Articles of Organization form.
This portion of our website is for informational purposes only. Tailor Brands is not a law firm, and none of the information on this website constitutes or is intended to convey legal advice. All statements, opinions, recommendations, and conclusions are solely the expression of the author and provided on an as-is basis. Accordingly, Tailor Brands is not responsible for the information and/or its accuracy or completeness.
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