Business Registration in Colorado: What You Need to Know
A business registration in Colorado requires seven steps from deciding on the business model, naming the business to getting the relevant business licenses.3 min read
2. Reserving a Business Name
3. Types of Business Organizations
4. Filing Fees
5. The EIN
6. Naming an LLC
A business registration in Colorado requires seven steps, and they are as follows:
- Decide on the business model
- Name the business
- Register the business with the Colorado Secretary of State
- Acquire an employer identification number (EIN)
- Get a business bank account
- Register the business with the Colorado Department of Revenue
- Get relevant business licenses
The choice of a business name isn't something to trifle with. It's a huge mistake to pick a business name in a hurry without proper considerations and deliberations. To ensure you give your business a memorable name, you should settle for a name that has the following qualities:
- Your business name should include rhymes where possible (for instance, Mandy's Candies, Crunchy Munchies, Tiptop Lollipops)
- Your business name should creatively represent the commercial value of your business
- It should be easy to pronounce
- It should paint a positive word picture
- It should have a .com domain name extension as against other domain name extensions like .ws, .net, and so on
After settling for a business name, search to see if it's available for use on the Colorado database.
Reserving a Business Name
The name of your LLC has to be different from the names of other registered businesses already on the file of the Colorado Secretary of State. You can reserve an available business name for 120 days by sending an application for name reservation to the Colorado Secretary of State online via the website of the secretary of state. The application fee is $25.
Types of Business Organizations
You can decide to run a business in Colorado by a sole proprietorship, by forming a partnership, by forming a corporation, or by starting a limited liability company (LLC). If you run your business all by yourself without creating any separate legal entity, then you're in a sole proprietorship. A sole proprietorship is the same as a partnership. However, a partnership has two or more people running the business together. A partnership also doesn't create a separate, legal entity.
A corporation, on the other hand, is more complicated in its legal makeup and is normally formed to engage in large business operations. A corporation is different from a sole proprietorship because it is a separate, legal entity that protects its owners (or shareholders) from liability.
A limited liability company is a blend that combines the advantages of a sole proprietorship and a corporation. An LLC is seen by the law as a separate legal entity. So, it's allowed to protect its owners from liability like a corporation. Additionally, it's a pass-through entity like a sole proprietorship. If you want to do business for the following two reasons, an LLC is a good choice for you:
- Protection of personal liability
- To avoid double taxation
Dissimilar from a sole proprietorship, the assets of an LLC are different from the personal assets of its owners. If a legal action is taken against the LLC, the assets of its shareholders (or owners) will be safe. Furthermore, dissimilar from a corporation, an LLC isn't expected to pay double taxes. Instead, its gains are moved to its owner's personal tax return.
Again, every LLC in Colorado is required to have an agent in the state. Such an agent can be a business entity or an individual that accepts the responsibility of receiving legal documents on behalf of the LLC if it faces a lawsuit.
To legitimately start a sole proprietorship, turn in a document of your proposed business name and a fee of $20. The requirement of registering a partnership is the same as the one above. However, the fee to be paid is $25. To create a corporation, you should turn in the articles of incorporation and pay a filing fee of $50. The filing fee for creating an LLC is also $50, but the document to be submitted is the articles of organization.
The IRS uses a federal tax ID number called an employer identification number (EIN) to identify businesses. The EIN is used for a number of things, such as to open a business bank account, get financing, file taxes, and handle employee payroll.
Naming an LLC
Under the law of Colorado, the name of an LLC must include the following words or abbreviations:
- Limited liability company
- Liability company
- Limited company
- Limited liability co.
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