Setting up an LLC in Colorado has never been easier and affordable than ever. You only need to file the Articles of Organization that costs $50 with the Colorado Secretary of State. This document can be submitted online exclusively, and all you need is to visit the relevant state agency website, and key in all your business information form an LLC.
Here are the five steps to follow when forming a Colorado LLC. Read on!
- Select a Colorado LLC Name
You can choose a company name for your Colorado LLC, but for it to be acceptable, use the Business Database Search for the Colorado Secretary of State. From the website, you can also find out if the name has an available web domain that you can use to acquire a matching URL for your business.
Ensure your company name complies with the naming rules for a Colorado LLC.
- A company name includes; Limited Liability Company, L.L.C., LLC, Company, Co, Limited, or Ltd.
- A name that doesn’t mention any government agency like the FBI, Treasury, etc.
- Some words such as Attorney, Bank, and University may require additional approvals from the state to be a part of your LLC name.
- Choose a Colorado Registered Agent
The second and most crucial step is to appoint a registered agent to help you form an LLC in Colorado at a small fee per year.
What is a Registered Agent? – A registered agent is a company or an individual that acts on behalf of a business entity to send and receive official and legal documents. And the registered agent must be a resident or have a physical address in Colorado, with the authority to conduct business in the state.
A registered agent can be a lifesaver for you by providing the extra time you need to focus more on expanding your business than dealing with its transformation to an LLC in Colorado.
- File the Articles of Organization for Your Colorado LLC
Colorado only allows the filing of the Articles of Organization online. This document is filed with the Colorado Secretary of State. Other states call it the Certificate of Formation or the Certificate of Organization.
The Colorado Articles of Organization filing fee is $50 non-refundable and payable to the relevant state agency.
The Articles of Organization contains the following:
- Name of your LLC.
- A registered agent – name, address, and signature.
- List of services to offer
- How your LLC will be managed (either manager-managed or member-managed).
- Pay the state filing fee.
The state agency makes this paperwork a public record when everything is approved.
- Create an Operating Agreement for Your Colorado LLC
A company without an Operating Agreement should be wary about what they should do during unforeseen circumstances.
What is an Operating Agreement? It’s a legal document outlining the ownership and the structure of an LLC. It limits problems arising in the future and ensures everyone is on the same page when forming an LLC.
It’s always recommended to create an Operating Agreement that states:
- The owner of the company.
- The investors and other members.
- How it will be managed.
- Day-to-day operations and who is responsible for managing them.
- How future problems or conflicts should be resolved.
- How profits are shared, etc.
- Apply for an EIN
An EIN (Employer Identification Number) allows you to conduct a business’s core operations after forming an LLC. Other names used to describe it are FTIN (Federal Tax Identification Number) and FEIN (Federal Employer Identification Number).
What is an EIN? – It’s a 9-digit number issued by the IRS (Internal Revenue System) that identifies a business entity and keeps track of its tax reporting. In other words, it can also be referred to as an SSN (social security number) for the company.
Why should you apply for an EIN?
- Open a business bank account.
- File both federal and state taxes for your business.
- Hire employees for the company.
Be sure to note that an EIN is free of charge and can be obtained online or by mail from the IRS.
Benefits of Starting a Colorado LLC
An LLC opens up your business to a broader scope that allows you to do more than you could have imagined as a typical business type.
Here are some benefits:
- Business credibility.
- Personal asset protection.
- Pass-through taxation.
- Ease of maintenance.
- Flexible management structure.
- Easy access to business loans.
FAQ About Starting a Colorado LLC
What is an LLC? – It stands for Limited Liability Company and has a simple business structure as compared to a traditional corporation.
Can I Be my Own Registered Agent? – Yeah! But you must be residing or have a permanent physical address in Colorado.
How Long is the Processing Time of Starting an LLC in Colorado? – It’s an instant online process after paying the state filing fee.
Will I Be Filing an Operating Agreement with The Colorado State? – No, it’s an internal document that you can use for future references in times of unsolvable business problems.
Do I Need an SSN to Get an EIN? – SSN doesn’t come up when applying for an EIN from the IRS by submitting Form SS-4.
With an excellent economic climate, you can bet that you won’t be the only person trying to form an LLC in Colorado. Take the first quick moves and follow the five steps above to have your Colorado LLC running in no time. And start enjoying the many benefits that come with an LLC formation.