Hey folks, Matt Horwitz, LLCUniversity.com.
I hope you are doing well.
We are on the topic of Colorado LLC's.
I'm going to read to you something that I wrote.
There is probably about eighteen, maybe seventeen, eighteen, FAQs here, so I'm going to go rather
quick, so that this video isn't too long.
This is going to break down everything, about forming an LLC, in Colorado.
All the steps, all the requirements, all the fees.
The what if's, et cetera.
Let’s start at the very top.
What is a Colorado LLC?
A Colorado LLC, is a type of business structure, formed by state law.
You can use an LLC to run a business, or you can use it to hold assets, like real estate,
cars, boats, vehicles, anything.
An LLC is a legal person, we are natural persons, so the LLC can do a lot of things that you
and I can do, like it can make money, it can own and lease property, enter into contracts
and agreements, open a bank account, it can sue, it can be sued.
An LLC can be formed by one person, called a single member LLC, or two or more people,
called a multi member LLC.
What are the advantages?
Question two, what are the advantages of forming an LLC, in Colorado?
There's two main advantages, to forming a Colorado LLC.
Personal liability protection, and to pass through taxation.
With an LLC, your personal assets are protected from the assets held by the business, and
that means your personal assets cannot be used to pay off any business debts, or liabilities,
in case your LLC gets sued.
An LLC avoids double taxation, which Corporations face.
Which means, you just pay any profits, or losses, from the LLC.
They flow through, to your personal 1040 federal tax return, and you're not paying taxes at
the corporate level, and at the personal level.
Next question, how can I start an LLC, in Colorado?
There is five simple steps.
First you choose your name, next you designate your Registered Agent.
Three, you file your articles of organization with the Colorado Secretary of State.
Four, draft, and sign, your operating agreement.
Five, obtain your EIN, also known as your federal tax I.D.
number, from the IRS.
The cost to form an LLC, in Colorado, is fifty dollars.
We have another video on that, that'll walk you through things, step by step.
Next question, do I need a lawyer, to form an LLC, in Colorado?
No.
It’s not a legal requirement to have a lawyer, or an attorney, form your LLC, in Colorado.
It’s really simple, you can do it yourself.
Again, we have a video on that.
However, we do recommend that you consult with a lawyer, if your business has industry
specific management, you have complex ownership agreements, you're raising a lot of capital,
or you have multiple investors to a large number of members, like nine members, seven
members, things like that.
Next question, how do I maintain an LLC, in Colorado?
There is two steps here, two things to do.
The first is filing your periodic report every year, which is ten dollars.
Then, the second is filing your Colorado state taxes, on form 104.
140 or 104, don't have it written down here, but anyway, it’s on our site.
You do that with the Colorado Department of Revenue, every year.
How long does it take to form an LLC, in Colorado, is the next question.
Filing your articles of organization can only be done online.
You do not file by mail, Colorado is very advanced.
What that means is by filing your articles of organizations online, once you do everything
correctly, they are instantly approved.
Literally, it takes ten, or fifteen, minutes to form an LLC, in Colorado.
It’s kind of ridiculous, compared to some states, that have two weeks wait time.
How many people do I need, to form an LLC, in Colorado?
Minimum of one.
One person is a single member LLC, two, or more, is called a multi member LLC.
There is no requirements, you can have one, or you can have one hundred and seventy five.
There is no limit.
How much does it cost to start an LLC, in Colorado?
Again, I mentioned this earlier.
Filing your articles of organization with the Secretary of State, is fifty dollars,
and then every year, you have to file your periodic report, which is ten dollars.
Colorado is such an awesome state, it’s so affordable.
The average filing fee in the United States, in one hundred and thirty six dollars, so
Colorado, at fifty, is very affordable.
How do I file my periodic report, for my Colorado LLC?
You can file your periodic report online at sos.state.co.us, link below this video, or
on our site.
Again, the filing fee is ten dollars, you pay it online, with a debit, or a credit card.
Basically, you get to file it in a five month window, around your periodic month.
Think of this as your anniversary month.
If you formed your LLC in June, June next year is your periodic month, and you can file
the report in June two months prior, or two months after.
You have a five month window.
If you missed the five month window, there is a fifty dollar late fee.
Is Colorado the best state to form my LLC?
Great question.
A lot of people make a lot of mistakes here, so yes, Colorado is the best state, if you
live there, and that's your home state.
Otherwise, a lot of people get misled into forming LLC's in Nevada, or Wyoming, or Delaware,
anything.
If you're forming your LLC outside of your home state, and you're doing business in your
home state, you're going to be required to file that out of state LLC as, what's known
as, a foreign LLC in your home state, and you will have to pay filing fees in both states.
You need a Registered Agent in the foreign state, you are paying annual fees in both
states, and you're not going to save any taxes, because taxes are paid where the money is
made.
Meaning even if you form an LLC outside of Colorado, you still have to pay Colorado taxes.
Please do not believe the hype.
If you live in Colorado, form your LLC there.
If you don't live in Colorado, not sure why you're watching this video, but you should
form your LLC in your home state.
Should I form an LLC for real estate investing?
A very popular question.
I would say, yes, why not.
I mean, heck, form a Corporation, form any type of entity, for your real estate investing.
Typically, an LLC is the most flexible, and the most popular, structure for real estate
investors.
Again, the reason here is it builds a wall of protection between your personal assets,
like your bank, your car.
Your banks accounts, your home, your car, vehicles, et cetera, from that of the business.
If a tenant slips and falls, or some issue with construction, you get sued, your personal
assets are protected, so a Colorado LLC is excellent for real estate investing.
What are the annual fees, for a Colorado LLC?
Mentioned this earlier, it’s the Periodic Report.
Ten dollars, then you have to file Colorado state taxes, I believe the personal tax rate
on LLC's right now is 4.6 percent.
Get your CPA, get your accountant to help you with that.
You're going to have to file taxes.
But, from just a raw kind of start up cost of forming the LLC, with the Corporation division,
it’s fifty dollars, and then ten dollars every year.
What other fees do I need to pay, to form an LLC in Colorado?
Again, besides the one time setup fee of fifty dollars, and then the ten dollars every year,
there is really no other fees to form the LLC.
If you consult with a lawyer, or an accountant, that's going to cost you extra.
If you don't have an address, or a friend, or family member, in the state that's going
to be a Registered Agent, and you need to hire a Registered Agent, that could cost one
hundred, to three hundred dollars, per year.
The company that we recommend is one hundred and twenty five dollars per year.
What taxes do I need to pay as an LLC in Colorado?
Let’s back up.
Taxes are paid on three levels, federal, state, and local.
Your LLC does not pay federal taxes on its own.
You personally do, and the profits, and losses, from the LLC are going to flow through there.
The state level taxes with Colorado, it’s called the personal net income rate, and again,
its 4.6 percent.
Get a local professional to help you with that.
I'm not going to walk you through how to file that, because form, what's the name of the
form?
Form 104 is pretty complicated, so anyway, Colorado taxes are due every year, April 15th.
There is a link below this video for more information there.
Then, you may need to pay additional taxes locally, at the county, or city level, but
there are sixty four counties in Colorado, and this video, I'm not going to go into all
the details.
Just hire a tax professional, that's our best tip there.
What's better, a Colorado LLC, or a Corporation?
An LLC is, usually, a better choice for the vast majority of people, because it offers
the liability protection, without the complexity of management, or double taxation.
Corporation, you have to have a board of directors, you have to elect corporate officers, you
have to have shares.
You issue shares to the owners, you have to have annual meetings.
They are complex.
You pay double taxes.
Most people don't need a Corporation, think of a Corporation for more of like your tech,
startup based companies.
Those are my thoughts there.
Yes, that's about it.
Another question, what's better, a Colorado LLC, or a Partnership?
A Partnership is two or more members.
In my opinion, a Colorado LLC is definitely better than a Partnership.
There is no benefits to a Partnership whatsoever, except that you don't need to do anything
to be a Partnership, you just start, you know, taking part in business.
But, your personal assets are completely exposed, both you, and your partner.
Same thing goes for the next question.
What's better, a Colorado LLC, or a sole proprietorship?
Both of these are stupid questions.
People that form Partnerships, or self proprietorship's, especially when Colorado is such an affordable
state, are either misinformed, or they are lied to.
They just don't know how easy it is, but it’s so easy to form an LLC in Colorado, that to
operate as a Partnership or sole proprietorship, is just really stupid, so please don't do
that.
You're leaving, basically you, and your business, are the exact same thing, in a Partnership,
or sole proprietorship.
When is the best time of the year to form an LLC, in Colorado?
Great question.
Generally, any time of the year is good.
The only caveat here, is if you're forming your LLC at the end of the year, like October,
November, December, but you don't actually need your business open in October, November,
December, it’s better to wait until January.
This is a little personal tip here, nothing major, but if you form your LLC, and its approved
in November, or October, and you don't really need it, you have to file a tax return for
that year, so it’s just an additional headache, and paperwork, so if you can wait until the
new year, wait until the new year.
But, if you need the business open, then just form it.
Just a small tip.
Next question, where can I get an operating group, for my Colorado LLC?
Check the link below this video, we have a free operating template on our website, you
just fill in the blanks, and you're good there.
Next question.
Who can be my Registered Agent, in Colorado?
Most states you have three options.
Colorado is super unique.
You have four options.
So, if you have a street address in Colorado, your options are, one, you can be the LLC's
Registered Agent.
Number two, the Colorado LLC can be its own Registered Agent.
This is a unique law, to the state of Colorado.
If you don't have a street address in Colorado, use a friend, or a family member, to be your
Registered Agent, so long as they agree to accept any legal documents, or subpoenas,
or lawsuits, that gets into your LLC.
If you don't have an address in the state, or you don't have a friend, or family member,
that does, you'll need to hire a commercial Registered Agent.
The fees usually range one hundred, to three hundred dollars, per year.
The company we recommend is one hundred and twenty five dollars per year.
They are called Northwest Registered Agent.
The info on them, is below this video.
Last question, why should I form an LLC, in Colorado?
If you're asking this question, at this point, and you don't know why, shame on you.
There's two main reasons, personal liability protection.
Protect your personal assets, in the event that your business gets sued, and pass through
taxation.
It’s such an easy legal business structure to run, and manage, as opposed to a Corporation.
So, those are the two main benefits, personal liability protection, protecting your personal
assets.
The ease of management, the low start up costs.
There's a lot of benefits, actually.
If you have any additional questions, if you're on YouTube, check out the information below
this video.
If you're on our website, we have links to everything.
We'll walk you through everything, step by step.
Forming a Colorado LLC is very affordable, it’s easy.
There is five steps to forming an LLC.
Its super cheap, it’s super fast.
It’s a no brainer in Colorado.
All right.
This is a long winded video, but I hope it’s been helpful for you.
Have a great day.