Due to the Colorado Business Fee Relief Act and until further notice, LLC filing fees for Colorado are now 1$
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A Colorado limited liability company (LLC) is a pass-through entity for tax purposes. The owners (members) of an LLC report income from the LLC on their personal tax returns. They pay the Colorado flat-rate income tax of 4.63% (2022 rate) on their portion of taxable income.
Colorado does not require LLC members to be U.S. citizens or permanent residents. LLC ownership by foreigners, trusts, estates, and corporations is permissible.
In this guide we’ll cover how to form an LLC in ease, understanding all the necessary steps you’ll need to take alongside with unique Colorado state requirements.
Here are the steps you’ll need to take to establish your LLC in the state of Colorado.
Now, let’s get started, and we will help you with each step in the process.
Colorado has very specific name requirements for LLCs. The name chosen for the business must be distinguishable and include particular terms or abbreviations as an entity identifier. Use the state’s business database to search for registered business names and check for the availability of the name you want to use.
A business name is distinguishable by being unique, and yet it may be similar to others’ names. For example, “ABC Limited Liability Company” and “ABC LLC” may register as different entities. See the business names FAQ to learn more about making a name distinguishable from others.
The choices for a required identifier include “limited liability company,” “ltd. liability company,” “limited liability co.,” “ltd. liability co.,” “limited,” “l.l.c.,” “LLC,” and “ltd.” Capitalization is not critical; however, punctuation is important.
Professional LLCs should choose one of the following identifiers: “Professional company,” “P.l.l.c.,” or “Pllc.”
In Colorado, only certain professions must use one of these identifiers in a professional LLC name, which are:
You must use a street address for your LLC’s principal office, which then becomes part of the public record. You may use a P.O. box for the mailing address or the same address as the main office for mail and relevant communications.
A business name may be reserved to hold the name but not start the business. The name reservation lasts for 120 days and may be renewed for another 120 days.
“Doing business as” (DBA) is called a “trade name” in Colorado. A for-profit business not using its true name to conduct business must file for a trade name in Colorado. Trade names cannot be reserved. The same trade name may be useful for more than one business in the state, such as a chain of restaurants or franchise shops.
A trademark is a name, device, symbol, word, or combination of these items. A trademark identifies goods or services and distinguishes them from others.
A business name is not allowed to be registered as a trademark unless the company uses the business name for advertising or to be placed on goods or services for sale to describe the source of the goods or services.
Trademark registration in Colorado is under Article 70 of Title 7, C.R.S. A trademark in Colorado is good for 5 years. To continue to use it, you must renew it within 180 days before its expiration date.
In Colorado, registration for a trademark does not give the trademark any federal registration protection. If you wish to have federal trademark protection, file federal trademark registration with the U.S. Patent and Trademark Office.
Colorado has an easy-to-use electronic form to file articles of organization for a new LLC. It is a survey-style Q&A form, and you answer the questions to complete the screens and file the document.
The online fee to reserve a name is $25 for 180 days and $25 to renew a name reservation for another 180 days.
The online fee for filing articles of organization for an LLC is $50. Amendments are $25, and the dissolution of an LLC is $10.
An expedited business organization filing, which happens within 3 days, is an additional fee of $150.
A trade name statement filing is $20. The annual renewal is $5. Changes, corrections, and the withdrawal of a trade name are $10 each.
Trademark registration in Colorado is $30 for 5 years. Renewal of a trademark for another 5 years is $10. Changes, corrections, and the withdrawal of a trademark are $10 each.
Apostilles (official copies) of documents are $5 per document or $15 for expedited service.
Certificates of good standing are available online for free if the fees are paid and the required annual list is current.
Fees may be paid online by credit, debit, or prepaid account cards. You cannot pay with cash or check.
You must have a physical street address for your principal office within the state. This address is part of the public record. You have the option to sign up for email updates and reminders, such as when fees are due. You do this by giving an email address, or you may receive text messages by registering your mobile phone number.
An LLC must have at least one member who is the owner.
One or more people can form an LLC. The person forming the LLC must be 18 years old or older and is not required to be a member of the LLC after its formation.
There are two types of LLCs—manager-managed LLCs and member-managed LLCs.
In a manager-managed LLC, the LLC has one or more managers who make all the business decisions. The members (owners) as a group do not manage the LLC. A manager may be a member (owner) or an outsider with no ownership. A single-member LLC may have a manager who is an outsider if the owner is not the manager.
In a member-managed LLC, all the members (owners) participate in business decisions, which are decided by the majority if there is a dispute.
All filing must be done online at the state’s website, www.coloradosos.gov. The physical office is closed, and all staff work remotely. The telephone number for assistance is 303-894-2200.
The mailing address is:
Denver, CO 80290
A registered agent may be an individual or an entity, such as a business. We offer registered agency service. We will accept any legally served documents or mail on your behalf and then notify you and forward them to you.
An LLC may serve as its own registered agent and accept legal service at its physical location in Colorado by a person who is at least 18 years old.
If you choose to use our registered agent service, we provide a physical address to meet state requirements. Many of our clients appreciate this resident agent service as being more economical than paying rent for a physical office they may not need.
Having an operating agreement is helpful to set up the structure of the business as a manager or member-managed LLC, identify each individual’s participation in the management, give check-signing abilities, and create permissions to obligate the LLC, enter into contracts, and authorize opening bank accounts on behalf of the LLC.
It is important to cover everything in the operating agreement, especially for a multi-member LLC.
Common questions answered by the operating agreement include:
Colorado has no requirements for LLCs to have operating agreements. Nevertheless, it is highly recommended to have, except for single-member LLCs.
Adding extra information beyond the basic filing documents to the organizational documents is not common. However, as an option, it is possible to file additional documents with the LLC organization filing process that become part of the public record.
It is possible to delay the effective date of an organization’s start by up to 90 days from the filing date. This procedure is most frequently used toward the end of a calendar year. Delaying the effective date may affect other document filings and the ability to open a bank account in the name of the LLC.
The name, address, and signature (under penalty of perjury) of the individual(s) filing documents must be given and become part of the public record. Each individual filing documents must have an address listed, but it may be the same address used for all filers, repeated on the online forms.
Every new business needs to have an employee identification number (EIN). The Internal Revenue Service (IRS) uses the EIN to track tax information about a business. If you use our services, we will get an EIN for your new LLC.
An EIN is like a Social Security number for individuals to use for IRS tax filings, except an EIN is only used for business. An EIN is nine numbers like a Social Security number, but it uses only one dash after the first two numbers in the format of “xx-xxxxxxx.”
You can apply for an EIN and get one issued immediately online if you use the IRS EIN application website during business hours, from Monday to Friday, 7 a.m. to 10 p.m. (Eastern Standard Time).
To apply for an EIN yourself, go to this IRS webpage to get one.
An LLC is a pass-through entity for both federal and state income taxes. If the LLC has a single owner, it is classified as a disregarded entity by the IRS. If it has multiple owners, it is classified as a partnership, in which each LLC member is taxed on their share of the LLC’s profits, according to the percentage of the LLC they own.
Each owner’s portion of the LLC’s net taxable income is reported for federal and state income taxes on their individual tax returns.
For example, if one member of the LLC is an owner of 50% of the LLC, then on that person’s federal and state tax returns, 50% of the net taxable income of the LLC is reported as individual income.
For LLCs doing business in more than one state, the portion of income from business activities in Colorado is subject to Colorado state income tax.
Under the standard classification, as either a disregarded entity or a partnership, the LLC itself does not pay any income taxes. Only its members (owners) pay income tax.
Each tax year, the LLC files an information-only federal tax return, and it shows distributions of the portions of the profits (or losses) to each owner using an IRS Schedule K-1 form 1065.
For Colorado state income tax, form 104 is the personal income tax form used by residents of the state. Each member (owner) of a Colorado LLC reports their taxable earnings from the LLC on their Colorado personal tax return. Each then pays their proportional share of the state income taxes due for the LLC’s earnings from business done in Colorado state.
Form 106 is used to pay state taxes for non-residents who are members (owners) of a Colorado LLC.
Special corporations: LLC members (owners) can have their LLC classified as either an S- or C-corporation for IRS tax purposes. When the owners choose this option by filing a request for it, any LLC that has to file a federal corporate tax return must also file a Colorado state income tax return.
You will not pay any federal income tax for the LLC itself. However, you will pay federal income tax on your portion of the taxable net income on your individual federal tax return.
You will pay 4.63% (2022 rate) of the taxable income due to earnings made from business done in Colorado state. You must make regular quarterly deposits of estimated tax payments if your state tax liability exceeds $1,000 per year.
Colorado’s state sales & use tax is 2.9% (2022 rate). However, depending on where business is conducted in the state, additional county and possible municipal sales taxes can bring the total sales taxes up to as much as 15%.
There is a federal self-employment tax for those who get profit-sharing distributions from an LLC. The self-employment tax rate is 15.3%. The rate has two components: 12.4% for social security and 2.9% for Medicare insurance.
The 2022 federal payroll tax (FICA) is 15.3%. These payroll taxes are paid half (7.65%) by the employee and half (7.65%) by the employer. The employer deducts the employee’s contribution from the employee’s paycheck, and then, the employer deposits this withheld amount along with the employer’s contribution. Deposits are made each quarter by the due dates to pay federal payroll taxes.
The Colorado Wage Withholding Tax Guide (December 2021 edition) details what wage (earned) income is used to calculate withholding and exempt income types.
The Colorado Department of Revenue offers withholding forms and instructions, including the income tax withholding worksheet for employers. The Colorado withholding rate is 4.55% (December 2021 rate).
Employers in Colorado must pay for Unemployment Insurance (UI). The beginning rate is based on the business category for a new business. Then, the rate adjusts each year to a computed rate. The computed rate depends on the total amount of premiums paid by the company and the amount of unemployment insurance claims made.
The operating agreement should state who is authorized to open bank accounts in the name of the LLC. As soon as the LLC is registered, it is highly recommended to open a separate bank account. It is prudent not to mix personal monies with LLC monies and instead open a separate bank account for all the LLC’s transactions.
This bank account can help preserve the liability limit of the LLC’s owner(s) to the amount of money they invest in the LLC unless they agree to give a personal guarantee for some purpose, such as a bank loan.
Colorado requires an annual periodic report to be filed online. The filing fee is $10, with a $50 penalty fee for late filing. See the full list of fees for more information.
If you use our registered agent services, you should renew and pay your fees for that service each year.
LLC is a very useful and flexible structure for your new business. It costs less to create an LLC than a corporation, and the record-keeping is less cumbersome.
Consult with a CPA and a tax lawyer to get the most tax benefits available using the LLC structure according to your needs and circumstances.
Ensure your business is allowed under local zoning rules and restrictions.
Business permits are obtained from the relevant country clerk if the business is not within city limits. A business permit comes from the applicable municipal government if the business is within city limits.
Some businesses require a special license to operate, such as a liquor license to sell liquor.
Professionals with a professional LLC must also be licensed for certain professional activities.
You will need approval from local and state health departments if your business will serve food or provide accommodation. Establishments serving liquor need to contact the Department of Revenue.
Get a sales tax exemption from the Department of Revenue if your business buys or sells wholesale goods.
If your business is a state-regulated entity, apply for a license on the Department of Regulatory Agencies (DORA) website.
For businesses that are utilities or transportation services, the Public Utilities Commission (PUC) is the regulatory authority.
If your business has an environmental impact, you must follow Colorado’s Department of Health & Environment regulations.
You will need a permit from the local fire department for a business involved with the use or sale of fireworks or explosives.
You must comply with minimum wage laws (state and federal).
You must not violate Equal Employment Opportunity law and comply with Americans with Disabilities Act (ADA) accessibility rules.
You may need a permit from the federal Bureau of Alcohol, Tobacco, and Firearms if your business involves using or selling alcohol, tobacco products, or firearms.
All businesses must follow Occupational Safety and Health Administration (OSHA) regulations.
The Department of Regulatory Agencies (DORA) offers a guide for small business insurance covering the topics listed below:
This guide contains current information as of April 2022. However, this information is subject to change.
This portion of our website is for informational purposes only. Tailor Brands is not a law firm, and none of the information on this website constitutes or is intended to convey legal advice. All statements, opinions, recommendations, and conclusions are solely the expression of the author and provided on an as-is basis. Accordingly, Tailor Brands is not responsible for the information and/or its accuracy or completeness.
Due to the Colorado Business Fee Relief Act and until further notice, LLC filing fees for Colorado are now 1$