Last Updated on September 13, 2020

The Limited Liability Company (LLC) is a popular business structure for many entrepreneurs starting a new LLC in Colorado The LLC provides personal liability protection for the owners and has the potential to save money on taxes. With a little research, you can learn how to form an LLC in Colorado without an attorney.

Unlike a sole proprietorship or partnership where the small business owner can be held personally liable for lawsuits against the business, the LLC is a separate legal structure, protecting for the business owner’s personal assets.

Related: How Does an LLC Protect You?

Besides the liability protection, the Limited Liability Company provides several other benefits over the sole proprietorship, partnership, and corporation because of the multiple tax options, ease of administration, and management flexibility.

Forming an LLC in Colorado can be both affordable and is simple enough for most people to start on their own.  That said, it’s not a bad idea to have a legal professional like IncFile or IncAuthority.

HOW TO FILE THE ARTICLES OF ORGANIZATION AND FORM A COLORADO LLC

To get started, visit the Colorado Secretary of State website.

 

Step 1: Name the LLC

Under Colorado state law, the legal name of a Colorado Limited Liability Company must include one of the following at the end of the business name:

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

A unique name has to be selected as no other LLCs in the state of Colorado can have the same name.  Check on available LLC names in the state’s business database.

Before finalizing a company name, learn more about all the LLC Name Requirements in Colorado

It is also highly recommended to check the U.S. Patent and Trademark Office (USPTO) to see if this name is registered to someone else. The Colorado Secretary of State will not cross-check the federal trademark database.

Related: How to do a trademark search before choosing your business name

Last, before selecting a business name, you may also want to see if a domain name is also available.

If you have an entity name selected, but are not quite ready to file the Articles of Organization, you can reserve the name for up to 120 days by filing the Statement of Reservation of Name form.  There is a filing fee of $25 for the name reservation. 

How to Form a Colorado LLC

Step 2: Principal Office Address

In this section, enter the street address, city, and zip cost of the initial principal office.  This address can be the physical address of the LLC or it can be the address where the business records are stored.  You may not use a Post Office Box for the designated office.

If you prefer to use a different business address than the designated office for correspondence from the Secretary of State, enter that address in the mailing address field.  A PO Box is acceptable in this section.

CO LLC Principal Business Address

Step 3: Registered Agent

One state requirement in forming an LLC in Colorado is that a Registered Agent must be identified.  The Registered Agent is either a Colorado resident or a company that accepts service of process, which must have a “usual place of business” (commonly known as having a physical address and is available during normal business hours) in the state. Service of process refers to receiving important legal documents, tax notices, summons, subpoenas, and other legal papers on behalf of the LLC.

Even though any individual can be the registered agent (business owner, member, friend, etc), their name and address become public record, and with that comes a loss of privacy. This is more important for some entrepreneurs, especially when they are doing business from home.  Hiring a company to be the Registered Agent will reduce the number of unwanted phone calls and mailings.

Colorado Registered Agent LLC

The registered agent must consent to be appointed as the registered agent, and the box has to be checked to confirm that they have agreed.

Registered Agent Colorado

Step 4: Organizer Information

The name and mailing address of the LLC organizer(s) forming the entity is entered next. If there is more than one member, be sure to click on the Yes button, and later you will add an attachment to include the names of all LLC members.

Step 5: Management

This section asks whether the management of the LLC is Manager-Managed or Member-Managed.

Member-Managed LLCs have an active involvement in the day-to-day operations of the business.
Manager-Managed LLCs refers to an LLC where the members hire somebody to run the company, similar to the position of CEO for a corporation.

Most LLCs are member-managed.

Next, you have to confirm that there is at least one member of the Limited Liability Company by checking the box.

Colorado LLC Member Manager Managed

Step 6: Additional Information

If there are additional items to attach regarding the formation of the LLC, indicate that additional information needs to be attached.

This isn’t common for most LLCs.

Colorado LLC Additional Attachments

Step 7: Effective Date

If you want the LLC to start on today’s date, choose Yes, otherwise select No and enter a date less than 90 days in the future to start.

Some will delay the LLC start date if they aren’t ready to go but want the filing out of the way or if they are close to the end of a calendar year and want to delay until the following year so they won’t have to file business taxes.

Colorado LLC Delayed Effective Date

Step 8: Email Addresses

An email notification can be sent instead of paper notices when a form has been filed, when the status of a record has changed, and when the Periodic Report or renewal is due.  Know that the Secretary of State no longer sends a reminder in the mail for the annual LLC renewal.

CO Articles of Organization Email

Step 9: Signatures

Each member of the LLC must certify the information in the Articles of Organization are correct and sign.

All members can sign this document, but only one is required to do so.  If other members want to sign, upload their names and signatures as an attachment on the next page.

CO LLC Signatures

Step 10: Upload Attachments

If you selected to upload additional attachments, they would be uploaded here.

Step 10: Review and Pay

Review the Articles of Organization for any errors, and if there are no errors, all that’s left is to submit payment. On the summary page, be sure to print a copy of the approved Articles of Organization for your records. 

If you have questions, contact the Colorado Secretary of State.
Colorado Secretary of State
Phone: 303-894-2200
Email: business@sos.state.co.usbus

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Tasks After Forming An LLC

After the registration process is finalized, there are a few additional steps to take care of. Below is a list of the most common tasks.

Prepare an Operating Agreement

The operating agreement is a document that governs the framework of an LLC.  This document covers items like ownership rights, member responsibilities, how profits and losses are distributed, and more.

Most states do not require an LLC to have an operating agreement, but it is still worth considering. Without an operating agreement:

  • The LLC could be subject to generic state rules that may be detrimental in the event of a lawsuit.
  • Member’s personal liability protection may be diminished.
  • Members may not have a full understanding of their roles and responsibilities, which could lead to costly disputes in the future.

Related: Colorado operating agreement template

Obtain an EIN

The EIN or Employer Identification Number (sometimes referred to as the Federal Employer Identification, FEIN or Tax ID Number) is a unique 9-digit number for a business that is assigned by the Internal Revenue Service.  The EIN is similar to a social security number for an individual but instead identifies business entities for tax purposes.

The EIN will be needed in order to open a bank account, register for business licenses and permits, file tax returns, pay payroll taxes, and more.

Related: How to Apply for an EIN

Elect the LLC’s Form of Federal Income Taxation

One of the major benefits of the Limited Liability Company is the tax flexibility it provides.  When applying for the Employer Identification Number, you will choose how the business entity will be taxed for federal income tax purposes. While there are some limitations, an LLC may be classified for federal income tax purposes as a:

  • Sole proprietorship
  • Partnership
  • C-corporation
  • S-corporation

While this may sound confusing, this is referring to the way the LLC is taxed, not the legal structure.

Related: How can an LLC be taxed?

By default, LLCs are pass-through entities. This means instead of the LLC paying taxes on profits, the profits or losses flow through to the members.

Single-member LLCs will, by default, be taxed as a sole proprietorship. The members can elect to be taxed as a C-corporation or an S-corporation.

Multi-member LLCs will be default be taxed as a partnership. The members can elect to be taxed as a C-corporation or an S-corporation.

In general, the difference between being taxed as a corporation and being taxed as a sole proprietorship or partnership the profits and losses are passed to the member’s federal income tax returns based on their percentage of ownership.  As a result, the owner will pay income tax and self-employment taxes on all business profits.  As an alternative, electing to be taxed as a corporation allows the members to take a reasonable salary and then pay payroll taxes.  Any remaining profits are distributed and aren’t subject to payroll taxes, resulting in potential tax savings.  

Before electing how your LLC will be taxed, be sure to talk with an accountant to assess which one will be best for you. 

Open an LLC Bank Account

Opening a bank account for your LLC is important for liability protection as the account separates the business’s funds from the member’s personal funds.

Several documents will be needed to open a business bank account, such as:

  • A banking resolution is a document that authorizes the members to open a business bank account on behalf of the LLC.
  • Copies of the original formation paperwork from the state showing the creation of the LLC.
  • Driver’s licenses of the members.
  • Depending on the age of the LLC, a Colorado Certificate of Good Standing may be needed to prove the LLC is active and in good standing with the state.

Related: How to Open a Business Bank Account for your LLC 

Apply for Business Licenses and Permits

Depending on what your business does and where it is located, there will likely be a variety of business licenses and permits to register for before starting. Some common registrations include:

  • Business License – Some cities require businesses to obtain licensing before they can start. In some cases, even home-based businesses must have licensing to operate legally.
  • Professional License – Certain services such as barbershops, accountants, salons, and others must be licensed.
  • Sales Tax Permit – In order to sell products and certain services, registration with the Colorado Department of Revenue will be necessary.

Related: What Business Licenses are Needed in Colorado?

File Annual Reports

LLCs are required to file annual reports (referred to as a periodic report) with the Colorado Secretary of State.  The annual filing fee is $10 is the periodic report updates ownership information and other details.  

Periodic reports are due during the three-month period beginning with the first day of the anniversary month of your LLC’s formation. For example, if the LLC was formed on January 12, the report would be due each subsequent year between January 1 and March 31

Related: How to File a Colorado LLC Periodic Report