How to File an LLC in Colorado

Key Takeaways:

• Colorado entrepreneurs have to choose a business structure to form their businesses legally.

• LLCs leverage the liability protection of a C Corp with the flexibility of a sole proprietorship or partnership.

• To save time and trouble, file your LLC with an online filing service like Swyft Filings.

An exciting place to live with an active and educated workforce, Colorado has become one of the most favorable places in the country to start and grow a company.[1] If you’re ready to open a business in the Centennial State, there’s one crucial decision to make before getting started. 

Colorado Business Types

Entrepreneurs have to choose a business structure to form their businesses legally. This guide will focus on the limited liability company (LLC), a business structure designed to take advantage of the beneficial aspects of multiple common business structures. Consider your options to decide if an LLC makes the most sense for you.

Sole proprietorship 

If you haven’t incorporated your business and currently file taxes under your personal income, you’re doing business as a sole proprietorship. This is low-maintenance but risky. A lawsuit against your business could cost you your assets and future wages.

Partnership 

Partnerships help you work efficiently with others and build your business flexibly, but like a sole proprietorship, they don’t protect you from legal action against your firm.

C Corp

A C Corporation usually requires more legal infrastructure than the average entrepreneur wants to build to get started; they’re run by shareholders who elect a board of directors to oversee operations. C Corps can consist of one individual, but their income will be “double-taxed,” first with corporate income taxes and then personal. 

S Corp

An S Corporation is a variation on a C Corp, but with adjustments to how they are taxed, they can avoid the double taxation problem of a C Corp. They’re still a hassle to maintain, and for smaller enterprises, usually more trouble than they’re worth.

LLC

You might notice that none of these structures are a solid fit for small business entrepreneurs who need flexibility and limited red tape but also necessary legal protections that allow them to do business without risking financial ruin. Thankfully, the limited liability company, LLC, was designed for this purpose.

This guide will introduce you to the entrepreneur’s most flexible and popular business structure and provide you with all the information you need to start filing a Colorado LLC.

What Is an LLC Formation?

The most popular business structure for new small businesses — especially those with only one person or a few partners involved — is the limited liability company or LLC. The LLC formation provides a compromise between other available business structures that leverages the liability protection of an S Corp or C Corp with the flexibility of a sole proprietorship or partnership.

The “Hybrid” Nature of an LLC

Like Sole Proprietorships or Partnerships, LLCs allow for:

Simple income taxes 

LLC members can designate the business as a “pass-through” business entity, meaning the LLC won’t pay Federal income tax. The entrepreneur integrates the business income into their personal income for tax purposes. 

This can be very helpful for single-member LLCs and startups run by one or a few people when the income of the business and one’s personal income is interchangeable. The LLC operating agreement details how income gets allocated to each LLC member.

Open-ended management structure

LLCs aren’t beholden to strict governance procedures dictated by the law. You won’t have to adopt by-laws, form a board, hold shareholder meetings, or submit onerous reports. You can structure your LLC operating agreement to run the business as you see fit.

Like C Corps or S Corps, LLCs allow for:

Tax Flexibility

An LLC formation is a business structure — not a tax classification. If a “pass-through” model doesn’t work as well as a traditional corporate tax structure, an LLC must inform the IRS how it would like to be taxed — as a disregarded entity, an S Corp, or a C Corp. 

A tax expert can help entrepreneurs make a strategic decision year after year.

Liability protection

An LLC limits your personal liability in the event of a lawsuit against your company. If something terrible occurs and your business goes bankrupt, you won’t lose your house, savings, or future wages in a decision against you.

Step-By-Step Guide to Starting Your Colorado LLC

If you’ve determined that an LLC is the business structure you want to go with, read on for a detailed guide to the LLC formation process with the Colorado Secretary of State. The initial cost is just $50, with an annual filing fee of $10.[2]

LLCs are currently “on-sale” in Colorado. A new law effective July 1, 2022, lowered this fee to $1 until it exhausts the general fund intended to reduce expenses, which the Colorado Secretary of State office estimates will last through June of 2023.[3,4]

In Colorado, it’s relatively easy to start an LLC. Each state sets its own filing fees and requires various forms and procedures to register new firms. The Colorado business community is lucky to benefit from low fees and simple processes. We’ll take you through that process step-by-step, so you know what it takes to get a Colorado LLC up and running.

Step 1: Choose a Business Name for Your Colorado LLC

First things first. What is the name of your business? Choosing a business name is a critical decision for your brand, but the government only cares that another business hasn’t already taken your name and that you designate your business as an LLC within the name itself. 

To finalize your LLC name:

1. Conduct a name search to make sure your business name is unique.

Swyft Filings can help you with this instantly and for free at this link. You can also consult the Colorado business database, which shows you available trade names and trademarks. 

2. Include “LLC” or one of its abbreviations.

Colorado specifies the following abbreviations as acceptable.^[5] You have to pick one and use it in your LLC name. Note that capitalization doesn’t matter, but punctuation does.[6]

1. Limited Liability Company 

2. Ltd. Liability Company

3. Limited Liability Co. 

4. Ltd. Liability Co.

5. Limited 

6. L.L.C. 

7. LLC

8. Ltd. [7]

Colorado has a name availability search that allows you to confirm your exact business name once you’ve decided on the one you want.

Additional Factors to Consider When Naming Your LLC

Trademarking

Once you’re sure of your name availability, consider trademarking your name or other phrases that distinguish your brand through the US Patent and Trademark Office. Several affordable services can help you with this process. We recommend Trademark Engine.

Website/Domain Name

You’ll need a website to publicize your business and help people contact you. While searching for a unique business name, check that you can find a suitable website domain that’s also available.

Trade Name

A trade name is also known as an assumed name or DBA (“doing business as”). This is a helpful workaround if you can’t find the perfect official name for your LLC; register a trade name, and you’re free to use that, even if it’s taken by someone else in the public record.[8]

Once you find the perfect name for your LLC and confirm its availability, you can fill out a reservation of name form at the Colorado Secretary of State website to keep the name on hold for 120 days while you finalize the remaining details of your LLC.[9] This costs $25 and is renewable.[10]

Step 2: Fill Out Colorado Articles of Organization

LLCs often have few regulations. But to begin operations, every business owner must file Articles of Organization with the Colorado Secretary of State. The state makes this relatively easy; instead of producing a document yourself, you provide the Secretary of State with the relevant information through a web form. And as of this writing, the process costs precisely $1.

Here’s the info you’ll need to fill out the form and make your Colorado LLC legal and a matter of public record.

1. The name of your LLC

To help select the ideal name for your small business, see the section above.

2. Your principal office address

This has to be a street address and will be visible to the public. So think carefully about if you want to use your home, which poses liability and privacy risks. Post offices and logistics firms like UPS offer real addresses similar to PO boxes.

3. Your LLC’s mailing address

This could be the same as your principal office address, or it can be a PO box. But you’re going to want to be able to check these addresses regularly.

4. The name of your registered agent

Your registered agent is a contact for your business that maintains regular office hours in a Colorado location. We’ll cover registered agents in the next section and explain why you should have one.

5. Your registered agent’s address

This will be a Colorado street address and doesn’t have to be near your business or your home.

6. Your registered agent’s mailing address

Your registered agent will inform you where their physical location is and, if the addresses are different, where they receive mail.

7. Registered agent consent

You will check a box confirming that your stated registered agent has agreed to be your registered agent.

8. Management

Is your LLC manager-managed or member-managed? This box-checking question will tell the Colorado Secretary of State how your LLC formation will operate.

1. If you select the “manager-managed” box, it means that members—what we can think of as the business owners—won’t oversee operations or make business decisions. Instead, a hired manager will do the work. A member of the LLC can be a manager.

2. All its members manage a “member-managed” LLC. If you’re a single-member LLC and the only person involved in the business, definitely click this box.

9. Confirmation of at least one member

Check the box affirming that the LLC has at least one member.

10. Name and addresses of the person or persons forming the LLC

This person or number of people don’t need to be members of the LLC, but they do need to be at least 18 years old. A business entity, trust, or estate can also form an LLC. This information will be publicly available.

11. Start Date

When do you want your LLC to be effective? You can delay the formation of your LLC if you want to by up to 90 days.

12. Name and address of the individuals filing the Articles of Organization

Usually, this is the person or persons filling out the form. Keep in mind that these names and addresses will be public.[9]

If you have all that information ready and can pay the filing fee, you’re all ready to sign the Articles of Organization for your Colorado LLC. When you finish, you’ll receive an ID number from the state that you can use to pay state fees, apply for state permits and licenses, and submit periodic reports.

Step 3: Hire a Colorado Registered Agent

Your Colorado LLC needs a registered agent to operate in good standing and perform essential business functions. You’ll want to choose yours carefully, so read on for all the information you need.

Who Can Be a Colorado Registered Agent?

People

• 18 years old or older

• Living in Colorado

• Can be an officer or owner of the LLC, but doesn’t have to be

Entities

• With a physical address in Colorado with regular business hours

• If a foreign entity (based outside of Colorado), must be able to do business in Colorado legally

• An entity can be its own registered agent, though it doesn’t have to[10]

Why does every Colorado business need a registered agent?

The state requires your business to have a registered agent because they need a reliable Colorado address to contact you if something serious happens with your small business. 

Let’s say your business receives a service of process — known as “getting served” — with a lawsuit or some other legal summons. Who do you want to receive those documents for you? You might be thinking:

• It’s undesirable to get served at your home or business for professional and personal reasons

• Whoever receives those documents must be relied on to notify you immediately

• Your agent receives sensitive information about your business and must be secure

Registered agents also receive all other legal and government communications related to your business and its compliance with laws and tax regulations, including subsequent legal documents or notices in any lawsuit.

You will want a Colorado registered agent that has seen all kinds of businesses and maintains high ratings for reliability, security, and convenience. Swyft Filings provides comprehensive registered agent services for a reasonable price. We’ve made a business out of supporting Colorado LLCs just like yours. 

As your Colorado registered agent, Swyft Filings will:

Be proactive

We know what your business needs to stay in good standing, and we’ll send you reminders of deadlines and compliance forms.

Keep your information secure and accessible

Your documents will be available online 24/7 via a secure login dashboard, so you won’t have to email an office back and forth requesting documents and information. 

Be discrete and dependable

Your registered agent gets listed in the public record, so you’ll want an experienced and trusted agent that makes a business of helping businesses just like yours.

Make sure you never miss an important document

By saving you time and providing peace of mind, a professional registered agent service is worth the cost. 

You must name a registered agent in your LLC Articles of Organization. If you change registered agents, notify the state in your periodic report or by filing a Statement of Change with the Colorado Secretary of State.

Step 4: Create an LLC Operating Agreement

A written operating agreement isn’t strictly required for your LLC, but it is highly advisable to draft and sign one, especially if you manage your LLC with one or more members. An LLC operating agreement is a legal document signed by the LLC members that answer questions like:[11]

• Who is responsible for managing the LLC?

• Who are the LLC members? How much of the LLC’s value does each LLC member own? 

• What is the process for taking on additional LLC owners or transferring membership?

• How will owners and managers be compensated?

• How will decisions be made?

• How long will the LLC stay in business?

• Under what circumstances will it dissolve, and if these circumstances arise, how will the dissolution get carried out?

• What is the purpose of the LLC?

• Will members or owners meet to discuss the business regularly? If so, when and how?

• How will the LLC elect to be taxed?

The framework for your LLC operating agreement will depend on whether you are building a member-managed or manager-managed LLC. Members are essentially the LLC owners. They can be individuals or entities and may or may not be involved in the operations of your LLC. 

Most startups and single-member LLCs will be member-managed because the LLC owner will manage its operations.

Developing an explicit LLC operating agreement is especially wise if you’re building a manager-managed LLC. It lets everyone be on the same page about the inner workings of the business and processes for communication and decision-making.

Operating agreements are important but don’t have to be complicated. Answer a few simple questions about your business, and Swyft Filings will prepare you a customizable, personally-tailored LLC operating agreement at a starting rate of $35.

Step 5: File for an Employer Identification Number

Many entrepreneurs refer to their business as their “baby.” There’s much truth to the metaphor; just like every baby gets a social security number, your Colorado business needs an Employer Identification Number, or EIN, to interface with the Internal Revenue Service (IRS). An EIN can also be referred to as a tax identification number or tax ID.

You need an EIN to collect sales tax, open a business bank account and credit card, apply for loans, pay federal tax, and fulfill other LLC tax obligations. Apply for an EIN on the IRS website and receive yours in minutes. It’s a critical step for business owners to build the legal and financial infrastructure every business needs.

Let Us Handle Your LLC Paperwork

Starting a Colorado LLC comes with a substantial to-do list, and the paperwork and formalities are the last things an entrepreneur wants to focus on. To get your filing done quickly and set your business up for long-term success, Swyft Filings is here to help.

Our straightforward and affordable LLC formation service can help verify your business name, assist with your articles of organization, and integrate perfectly into the process as your registered agent. Our business experts are available for personalized customer support every step of the way.

Business owners quickly learn when they can save time and money doing things themselves and when outsourcing is the sound business decision. When it comes to paperwork like LLC formation, letting the experts take care of it for you to avoid headaches and costly mistakes is a no-brainer. Make a low investment in a long-term, supportive partnership with Swyft Filings.

FAQs:

How much does it cost to set up an LLC in Colorado?

Thanks to a unique program by the Colorado government, the filing fee for Colorado LLCs has been reduced to $1 while funds last. In a typical year, and likely after June of 2023, the standard cost of $50 will apply.

How is an LLC taxed in Colorado?

LLC members notify the IRS how they would like to be taxed for a given year. They can be taxed like an S Corp, C Corp, or as “pass-through” entities, directing the LLC tax obligations through the individual owners and their personal income taxes. State taxes follow the Federal classification, and LLC business activities are subject to the relevant business and sales taxes.

What are the benefits of a Colorado LLC?

A Colorado LLC marries the management and tax flexibility of partnerships and sole proprietorships with the liability protections of a corporation. 

How do you dissolve an LLC in Colorado?

Your LLC operating agreement should detail the procedures for dissolving your LLC. Once you carry this out internally, file a Statement of Dissolution with the Colorado Secretary of State. Then file a tax return with the IRS, click the “Final” box in the top right of the first page, and make sure all your debts are paid down before closing business.

Bibliography:

1. Denver Business Journal, “How Colorado’s quality of life fuels business growth.” Accessed November 30, 2022. 

2. Colorado Secretary of State Jena Griswold. “Fee Schedule.” Accessed November 30, 2022.

3. Meghan Lopez, “Dozens of new laws take effect July 1. Here’s how they’ll impact you and your wallet.” Accessed November 30, 2022.

4. Colorado Secretary of State Jena Griswold. “Secretary of State’s Office Announces Reduction of Fees to $1 For Filings Required to Open a New Business.” Accessed on November 30, 2022.

5. Colorado Secretary of State Jena Griswold. “What you need to file Articles of Organization for a Limited Liability Company (LLC).” Accessed on November 30, 2022. 

6. Colorado Secretary of State Jena Griswold. “Business FAQs - Trade Names.” Accessed on November 30, 2022. 

7. Colorado Secretary of State Jena Griswold. “C.R.S. Title 7 Corporations and Associations.” Accessed on November 30, 2022. 

8. Colorado Secretary of State Jena Griswold. “Fee Schedule.” Accessed on November 30, 2022.

9. Colorado Secretary of State Jena Griswold. “Checklist for Filing a Limited Liability Company Procedure.” Accessed on November 30, 2022

10. Colorado Secretary of State Jena Griswold. “Business FAQs - Registered Agent.” Accessed on November 30, 2022

11. Small Business Administration. “Basic Information About Operating Agreements.” Accessed on November 30, 2022