How to form an LLC in Colorado.
If you're interested in starting an LLC
in the Centennial state,
you're in good company.
Colorado has one of the top economic climates
in the country,
with a strong culture of entrepreneurship
and access to venture capital.
Every state has slightly different requirements
for forming an LLC.
Follow along closely to learn the required steps
for creating your own limited liability company
in the state of Colorado.
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There are two ways to form an LLC in Colorado.
You can form one yourself
or you can hire a service to do it for you.
Let's start by looking at the five basic requirements
to form an LLC in Colorado on your own.
You can also find these steps and more detail
on our website, linked in the description below.
One, name your LLC.
Every state has it's own rules
about what kind of names are allowed for LLCs.
In general, you will need to observe
these naming guidelines.
Your name must include the phrase,
"limited liability company."
Or one of it's abbreviations,
LLC or L-L-C with a period following each letter.
Restricted words such as, "bank," "attorney,"
"law office" et cetera, may require additional paperwork
and may also need a licensed professional
to be part of the LLC.
Your name cannot include words
that could confuse your LLC with a government agency,
such as FBI, Treasury, State Department et cetera.
You cannot use a name that has already been registered.
To see if your name is available in your state,
you'll need to do a name search.
This free service is available
on your state's Secretary of State website.
Check out our free guide
for finding the direct link to your state.
We also recommend that you check to see
if your business name is available as a web domain.
Even if you don't plan to make a business website today,
you may want to buy the URL
in order to prevent others from acquiring it.
Two, choose a registered agent.
Colorado requires that you nominate a registered agent
for your LLC,
who is your business's point of contact with the state.
The registered agent can be an individual within the company
including yourself,
or you can hire a professional service
authorized to do business in Colorado.
They will send and receive legal papers on your behalf.
These documents include official correspondence,
like legal summons and document filings,
which your registered agent will receive and forward to you.
Your registered agent will help remind you
to file the necessary reports.
Failure to properly maintain your LLC
can result in fines and dissolution.
So this assistance is valuable.
Three, file the articles of organization.
To register your LLC you will need
to file the articles of organization
with the state of Colorado.
This can be done at the Secretary of State website.
You will need to state whether your LLC
will be member-managed or manager-managed.
Member-managed means all members of the LLC
manage the company.
This is good for small organizations
where everyone is involved in day-to-day operations.
The second option is manager-managed
where individuals are appointed to manage the LLC.
This is appropriate for larger organizations
where not everyone is involved
in the day-to-day affairs of the business.
Four, create an operating agreement.
Although not every state requires it,
you should always create an operating agreement
to establish ownership terms and member roles for your LLC.
This foundational document is the core of your LLC
and will help you maintain your organization,
as well as further establish your LLC
as a separate legal entity.
There are six main sections of an operating agreement.
Organization outlines when
and where the company was created,
who the members are,
and how the ownership is structured.
Management and voting,
addresses how the company is managed,
as well as how the members vote.
Capital contributions
covers which members financially support the LLC
and how more funds will be raised in the future.
Distributions outlines how the company's profits and losses
are shared among members.
Membership changes describes the process
for adding or removing members,
as well as if and when,
members can transfer their ownership shares.
And dissolution, which explains the circumstances
in which the LLC may be dissolved.
An operating agreement is an internal document.
It does not need to be filed with the state.
However, it should be updated every time
there's a change in membership or management at the company.
You can download a free sample operating agreement
or create a custom one
using our free operating agreement tool
at https://howtostartanllc.com.
Five, obtain an EIN.
Lastly, you'll need to get
an Employer Identification Number,
or EIN from the IRS.
Also known as a federal tax identification number,
your EIN is like a social security number,
for your LLC and is how the IRS tracks your business
for tax purposes.
An EIN is also necessary to open a business banking account
and legally hire employees.
EINs are free of charge
and can be obtained from the IRS online or through the mail.
And with that, you have formed a Colorado LLC on your own.
Option two, hire a professional service.
The second way to create a Colorado LLC
is to hire a professional service
to create your LLC for you.
Hiring a professional service to file your forms
and act as your registered agent for the LLC,
will cost you an additional $50 to $150.
However, there are several benefits to working with a pro.
A hired registered agent helps
with getting your reports filed on time,
helps you stay organized
by keeping your business mail separate,
and is available at all regular business hours
to accept official mail and legal papers
on your LLC's behalf.
A final and important additional benefit of using a service
is privacy.
A professional service will provide a level of privacy
by withholding your personal name and home address
from the LLC's contact information.
There are many reasons you might not want
your personal information easily accessible
and associated with your business.
Hiring a professional LLC formation service
is an easy way to accomplish this.
Now that you've seen the different requirements
and ways you can form an LLC in Colorado,
visit our site and take some time to research your options
and establish a solid foundation
for your business activities.
Click on the links in the description below
to research the top five professional formation services
or get more information
on how to form a Colorado LLC on your own.
Now you know all the steps to form an LLC in your state.
For a more detailed guide,
go to https://howtostartanllc.com.
You can also create an operating agreement
and use our business plan tool free of charge.
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And if you have questions or encounter any roadblocks,
leave a comment below.
Good luck in starting your small business.
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