How to Start an LLC in Colorado: Everything You Need to Know
LLC’s can be formed in Colorado through the Colorado Limited Liability Company Act, State Statute 7-80. An LLC should have at least one member.3 min read
Starting an LLC in Colorado
Are you wondering how to start an LLC in Colorado? A Limited Liability Company (LLC) gives a degree of legal protection for business owners from personal liability for certain business claims and debts. LLC’s can be formed in Colorado through the Colorado Limited Liability Company Act, State Statute 7-80. An LLC should have at least one member.
Step 1: Name Your LLC
The initial and the most vital step before starting an LLC is looking for a unique name.
- Follow the Colorado naming guidelines: The entity’s name needs to have the words “Limited Liability Company,” “L.L.C.,” or “LLC.”
- Certain words such as Bank, Attorney, and University need further paperwork. These words may require that certain licensed individuals (ex. doctor, lawyer) join the LLC.
- Words that are not allowed are those that would create confusion of the LLC with a government agency (ex. FBI, Treasury).
One has to ensure that the name of the LLC already the name of other organizations in Colorado. If the entity wants to get their name trademarked, doing a preliminary search of the USPTO Trademark database would be useful.
- Filing of Statement of Reservation of Name requires a minimal filing fee of $25 and should include the name to be reserved and the applicant’s name, address and dated signature.
- Reserve the domain name of your LLC once confirmed unique.
- Company email address should also be considered when selecting a name.
- Together with the LLC name, one has to provide the principal office address.
Step 2: Choose a Registered Agent
One applying for a Colorado LLC is required to nominate a Registered Agent.
- The Registered Agent is a business or person who agrees to both receive and send legal documents for the LLC, such as state filings, process of legal action, etc.
- Prior to appointment, the Registered Agent ought to agree to accept service of process for the LLC.
The Registered Agent can be:
- Individual that is a full-time Colorado resident.
- Colorado business entity that has its principal place of business in Colorado.
- Foreign entity that is authorized to transact business in Colorado.
Step 3: Articles of Incorporation
The next step for registering the LLC is to file Articles of Incorporation with the State of Colorado.
When filing the Articles of Incorporation, one issue and frequent error is the LLC’s management.
- The LLC’s owners are called “members.” An LLC can be either manager-managed or member-managed.
- The bulk of LLCs are member-managed, meaning that all of the members will actively participate in the business’ management and operations.
- At least initially, nearly every single-member LLC is member-managed.
Manager-managed LLC should be used when investors are providing financial support but won’t be participating in day-to-day operations. Manager-managed LLC is also used if the entity is the sole member but hopes to hire another person to run the business.
Other important information:
- The LLC registrant needs to pay a $50 filing fee when it submits its documents.
- If an existing LLC is expanding to Colorado, it is called Foreign LLC.
- Documents submitted online are immediately processed. They may take between 7 to 10 business days to be approved or rejected.
Step 4: Create an Operating Agreement
Colorado doesn’t require an Operating Agreement but it is highly advisable to have one.
The operating agreement gives an overview of the ownership as well as operating procedures of the LLC. Colorado operating agreements might contain any provision concerning the LLC, and once the operating agreement has been written, the LLC is bound by its terms.
One can enter into an operating agreement any time before, during, or after, the articles of incorporation are filed.
Except in single member LLCs, the operating agreement need not be in writing.
Step 5: Obtain an EIN
The EIN, or Employer Identification Number, is the Federal Tax Identification Number that identifies a business entity.
- The EIN is needed when filing federal and state taxes.
- The EIN also is used for opening a business checking account.
The business owner can request an EIN from the IRS after the company’s formation. Applying for an EIN can be done via online or mail.
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