Creating a Colorado LLC (Limited Liability Company) means you have a legal business structure that will separate your personal liabilities from your business.
Colorado doesn’t restrict ownership, which means anyone can form an LLC in Colorado if their business is eligible. This critical move requires articles of organization to be filed with the state. And it is so easy that you can complete the entire setup online with only a few clicks.
The Secretary of State of Colorado has made it very easy to register your LLC. There is a simple online registration system that you can use to set your LLC up as easy as 1, 2, 3. This article will walk through every step you need to form an LLC in Colorado. By the time you reach the end of this guide, your LLC will already be registered!
So, how do you form an LLC in Colorado?
How to start an LLC in Colorado
Creating an LLC in Colorado requires registering the business with the Colorado Secretary of State, appointing a registered agent, and creating an Operating Agreement. These steps may seem complicated. The 5 steps are made easy with this guide.
Step 1: Pick An Available Business Name
As the idea for your business dwells on your mind, you have likely thought of a creative business name you like. However, a Colorado LLC is more than just a creative name. There are state regulations for LLC names in Colorado. For example, you cannot use a business name that is already registered.
Here is what smart business owners do: they create a list of possible names. The Colorado Secretary of State has an online system for Business Name Availability Search. You can search there to find one that is not already registered in Colorado.
Another regulation about Colorado LLC business names is that it needs a proper LLC suffix. You can end your business name with any of the following:
- Limited Liability Company
- Ltd. Liability Company
- Limited Liability Co.
- Ltd. Liability Co.
Some terms violate the state statutes. Words that might confuse your LLC with a government agency or an entity that is not eligible for LLC, cannot be used in your name. The name can be any language but must be written in English letters or Roman Numerals. Ideally, your name should also be available as a web domain so that you can register your business as a website.
Once you have locked in an available name, you need to reserve it. The website will take you to the Statement of Reservation of Name page. It is an online form that you will use to register your business name. You can fill this online form and submit it with a filing fee of $25 to the Colorado Secretary of State. That will reserve your LLC’s name for 120 days.
Just because you have registered your business trade name in Colorado doesn’t mean that another person cannot steal it. You should consider a trademark with the state of Colorado. A trademark will identify your company’s properties as yours alone.
It costs about $30 to register a state trademark in Colorado for five years. At the federal level, you will have to register with the United States Patent and Trademark Office (USPTO). That will ensure broader protection if your business goes outside of Colorado.
Step 2: Get a Registered Agent in Colorado
The next step to creating an LLC in Colorado is to appoint a registered agent. A registered agent is a person or entity that you appoint for legal matters. They have agreed to accept legal papers on behalf of your LLC in case your LLC is sued or issued notices.
You can be the registered agent for your LLC, but this is not always the best option. It can stall your business activities when you take care of these matters and you may not always be available when a Service of Process is sent your way.
Whoever you appoint must be either a resident of Colorado or authorized to do business in Colorado. As such, they must have a physical street address in the state. Because a registered agent is the LLC’s point of contact to the State of Colorado, they must be easily accessible. Your registered agent’s registered street address is where the State of Colorado will send official information to for your LLC. Due to this reason, it is highly recommended to hire a registered agent service who will be available to collect all your important incoming documentation.
It is the registered agent’s duty to:
- File crucial legal documents
- Help you avoid legal penalties and fines
- Ensure that your LLC is in compliance with the state regulations
Step 3: Filing Articles of Organization for the State of Colorado
Before your LLC can start operating in Colorado, you must file Colorado LLC Articles of Organization with the Colorado Secretary of State. This will certify that your LLC is legally allowed to operate. The Colorado LLC Articles of Organization is an online legal document that will complete the registration of your LLC in the state of Colorado.
The state of Colorado will ask you to provide the following information to fill out the Articles of Organization form accurately:
- Your LLC mailing and street addresses
- Your LLC’s registered agent’s contact information. As we have mentioned earlier, they must be in Colorado and must consent to your appointment
- Your name as the owner of the LLC. You should provide your legal name. Suppose you are not the only legal owner of your LLC. In that case, you must include the information for the other owners as an attachment in PDF or plain text format.
- The management structure of the LLC. You will have to choose one of two options:
- a member-managed LLC for the sole proprietorship or partnership where all the business owners are directly involved in operations, or
- a manager-managed LLC for LLCs that hire a manager to run the LLC on behalf of the owners.
- Your email address. This part is optional.
Lastly, you will need to pay a nonrefundable filing fee of $50 to complete the filing of your Colorado LLC’s Articles of Organization.
Step 4: Create an Operating Agreement
At this stage, your LLC is registered. Still, you may want to create an operating agreement to set out the responsibilities and rights of your LLC members and managers. It will also delineate the management structure.
This agreement does not constrain you from registering an LLC in Colorado, but it can help preserve your limited liability. If you have no operating agreement, the Colorado state LLC law will govern how your LLC operates and its management.
An operating agreement is a private legal document that your business would rely on. It outlines the following kind of details:
- Your LLC’s management structure
- The stakes of ownership among members if there are more than one member
- Plan for sharing profit or loss among members
- Procedures to follow for changes in membership
- Processes for dissolution
The operating agreement document can be prepared by an attorney. You can create one yourself using free templates available online.
Step 5: Apply for an EIN
To successfully register your LLC in Colorado, the last step to take is to obtain an Employer Identification Number (EIN). This is also called a tax ID number or Federal Employer Identification Number (FEIN). It is a unique nine-digit number that allows the government to identify and tax your business. You can easily apply for an EIN online. With this number, you will be able to:
- Open a bank account
- Hire employees
- Keep your LLC rights in terms of taxes
Frequently Asked Questions
Here are answers to questions that you might have but are not extensively addressed in the article:
What is an LLC?
An LLC or Limited Liability Company is a private business structure set up in the United States. The owners or members of an LLC are not personally liable for the company’s debts or liabilities.
An LLC allows business owners to separate their personal assets from their business. This offers flexibility and protection when it comes to taxes and some liability protection from debt and lawsuits. It has the mixed advantages of a corporation and that of a sole proprietorship.
What is a registered agent service?
As mentioned above, you must appoint a registered agent to receive legal documents on behalf of your Colorado LLC. Your business might get the service of processes like summons, subpoenas, and other documents from a lawsuit.
Your registered agent is your LLC’s point-of-contact for legal correspondence. For instance, if a former employee tries to sue your company, they will reach your registered agent, who will reach out to you and forward the necessary legal notices.
In other states, they are called statutory agents, or agents of process.
The service of registered agents includes helping LLCs to ensure that businesses receive the due process promised to them under the Constitution. That is the legal right of an official notification of a lawsuit or any other legal matter against your LLC at any time. Once the registered agent has received legal documents or notices for one, they will send them to the business it is addressed to.
What is the difference between Domestic Colorado LLC and Foreign Colorado LLC?
A Foreign Colorado LLC is issued when a company operates in a different state. LLCs that fall in this category apply for the Foreign Colorado LLC along with the Domestic Colorado LLC.
For example, if your LLC’s principal office is in Colorado, but you also have a working office in Florida, you would likely need to register as a Foreign LLC with the Florida Secretary of State along with your Domestic Colorado LLC.
This must also be applied for each state where your LLC is “doing business.” Failure to register a Foreign LLC in each state where your LLC does business could result in fines and penalties from the state.
What constitutes doing business in another state?
You would be doing business in another state if you
- Own immobile assets like real estate in the state
- Have employees working for your LLC in the state
- Have distributors, sales agents, or representatives that take sales orders in the foreign states
- Have a physical office, distribution center, manufacturing facility, warehouse, or retail store in the said state
Suppose your LLC is in another US state but you have any of the above mentioned in Colorado. In that case, you must apply for a Foreign Colorado LLC.
Conversely, a Domestic Colorado LLC is an LLC that operates in Colorado alone, where it is doing business.
Do I need a DBA for a Colorado LLC?
No. A DBA is not a prerequisite to register an LLC in Colorado. A DBA or Doing Business As is like a nom de plume for businesses. Sometimes, an LLC can have more than one name. Your LLC may have a legal name registered with the state and have a trade name.
The trade name is what is called DBA (doing business as) name. It is essentially a nickname under which your LLC can do business. LLCs often use trade names or DBA names when their owners want to operate under a shorter or simpler name than their official LLC name.
A DBA is not a separate legal person or company. It rather represents the company. In many cases, it is useless to register a DBA when forming an LLC in Colorado. In other cases, you might have to.
While you can file a DBA for your Colorado LLC, you don’t have to. If your LLC will operate and do business under its legal name, you don’t need to file a DBA. However, if your LLC will run and do business under another name aside from its true and legal name, you need to file a DBA for your LLC.
It costs $20 to register a trade name in Colorado.
Congratulations! If you’ve reached the end of this step-by-step guide and did everything that was suggested, then your Colorado LLC is now registered! If you have any questions about how to form an LLC in Colorado, ask in the comments. We will be more than happy to reach out. For more general tips on forming an LLC, you can always check out our other articles.