Colorado is a great place to start a small business. Not only is the weather great (pleasant summers and ski-fun winters), but the business climate is appealing too.
Once you start a business in Colorado, you’ll need to think about the business structure you want for your company. If you do nothing, it will be a sole proprietorship. And while that’s the easiest business structure to have, it leaves your personal assets vulnerable.
Better options include incorporating or forming an LLC in Colorado. We’ll cover corporations in another post; for this one, we’ll talk about Limited Liability Companies (LLCs). Before we talk about what it costs to form an LLC in Colorado, let’s go over some general information.
What Does a Colorado LLC Look Like?
An LLC has similarities to both corporations and partnerships: it’s got the limited liability features of a corporation with the flexibility and tax benefits of a partnership within the state of Colorado.
Benefits to Forming an LLC in Colorado
I mentioned personal liability as a concern with the sole proprietorship. What I mean by that is: if your company were to be sued, you would personally be responsible for paying whatever you owe. That means if you don’t have the funds, your personal assets, like your home or car, could be seized to pay your business debt. With an LLC (as well as corporation) your business becomes separate from you, and your personal assets are protected. Other assets of the LLC include:
- You can transfer ownership of the company at some point
- The business can continue beyond your lifetime
- Has fewer corporate formalities than corporations, like annual meetings and record keeping
- Owners do not need to be US citizens or have permanent residences in Colorado
- You save on your taxes through pass through taxation
What You Need to Form a Colorado Limited Liability Company
I mentioned that the LLC has fewer formalities than the corporation. You do, however need to file your Articles of Organization with the Colorado Secretary of State, Corporations Division, or let a business filing service like CorpNet do it on your behalf.
Your Articles of Organization should include: your business name and address, the name and address of your LLC’s registered agent if it’s an entity other than you, the name and address of the person forming the LLC (likely you), and whether the LLC will be run by a manager or members.
The fee for filing your Colorado Articles of Organization is $50. If you elect to have a business filing service handle it on your behalf, you’ll pay an additional fee, but you won’t have that to-do looming, and can focus on something else.
Once your Colorado LLC is established, you will need to file your Periodic Report annually with the Colorado Secretary of State. The fee for your annual Periodic Report is $10. If you do not file your report by the anniversary of the month you filed your LLC in Colorado, you may be considered noncompliant with the state and have to pay a fee to reinstate your business.
CorpNet has experience forming LLCs in Colorado. Contact us to get the help you need to get your business protected today.
Looking to set up your corporation in the state of Colorado? Incorporate your business in Colorado today for as little as $79 plus state fees.