Think about your LLC a year from now: raking in profits and taking Colorado by storm. You have big plans, but before your business can officially take off, you’ll need to make a bit of an investment.
And we’re not talking about renting office space or paying employees – before you sell a single product, there are startup costs associated with launching an LLC in Colorado.
While you’re making plans and dreaming big, make sure that you consider all the possible costs associated with starting an LLC. To help you out, we’ve compiled the most common Colorado startup fees here.
Quick Note: If you’d like to keep your costs of starting an LLC as simple and low as possible, consider hiring ZenBusiness – a reliable business formation service. To get a better idea of the value they offer and how it works, we compared them to the two most well known services:
Bare Minimum Cost to Start an LLC in Colorado
Optional: LLC Name Reservation Fee
- $25 to file online
Required: Articles of Organization Fee
- $50 to file online
Overall Colorado LLC Formation Costs
LLC Name Reservation Fee
Reserving a business name isn’t a required part of Colorado LLC formation, but it can be a pretty useful service. If you spent time coming up with a great name you don’t want to lose, you can pay $25 to place a 120-day hold on it. Applying for a name reservation will give you peace of mind by protecting your unique name idea. And if you need more time, you can renew your reservation for an additional $25 payment per renewal.
Articles of Organization Fee
This is the big one, the most important form that you’ll file to start your Colorado LLC. Your business isn’t official or recognized by the state until you’ve successfully filed the Articles of Organization. You must submit this filing online, and it’ll cost a one-time fee of $50. As long as your Articles of Organization isn’t rejected, you won’t have to pay this fee again during the life of your business.
Licensure isn’t necessary for all businesses, but in Colorado, it’s required for most. However, the type and cost of the licenses your LLC needs are wholly dependants on two factors: type of business and location. Colorado issues some statewide licenses, and the rest are dictated by the city where your business resides. Visit the Colorado Department of Regulatory Agencies to see which ones you.
LLC Formation Service
Starting an LLC can be a complicated and time-consuming process. If you want to spend less time on paperwork and more time planning your business, you might opt for an LLC formation service. These services take care of the registration process for you, so you don’t have to spend the time on research, paperwork, and filings.
Most of these services (like ZenBusiness and Northwest) offer basic LLC formation service like Articles of Organization filing, tax consultations, and phone/email support for a flat rate, with options to pay more for premium packages with premium services like Employer Identification Numbers, Operating Agreements, and expedited filing.
Registered Agent Service
Appointing a registered agent is an important part of your LLC formation process. Your registered agent is responsible for handling sensitive legal and tax documents and keeping your business compliant with Colorado business law. In short, you need an agent you can trust.
While you can be the registered agent for your own LLC, this puts pressure on you to keep up with business filings and potential legal disputes. Sometimes it’s better to hand off that responsibility to a professional. A registered agent service ensures that your annual reports and other forms are filed efficiently and on-time, saving you from the penalties of delinquent filings and the stress of having to do it yourself.
Not all registered agent services are equal, so you’ll need to be careful in choosing one. Fortunately, we’ve done some research for you, and we recommend Northwest Registered Agent. In addition to registered agent services, Northwest also handles LLC formation — and they’ll include a registered agent free for one year when you form your business with them. We think they’re the most reliable choice, but if you’d like to evaluate all your options, check out our Best Registered Agent Services guide.
If you have questions or concerns about the LLC formation process or if it’s the best business structure for you, sometimes it’s best not to take chances and consult an attorney. They’re not cheap, but they can provide essential business advice, professional filing assistance, and peace of mind.
Some attorneys offer free consultations (usually 30-60 minutes) but will charge by the hour after that. On average, business attorneys charge between $150-350 per hour. Some will offer a flat rate for setting up an LLC, which can range from $500-2000.
Cost variations depend on the experience and location of the lawyer. Don’t just choose the first lawyer you see. Legal counsel is an investment in your business, so it’s important to do some research and find the best fit for your company. Certain websites offer databases of attorneys, sortable by areas of expertise, specialties, rates, and location. Try Avvo to compare and contact Colorado business attorneys.
Foreign Qualification Fee
This only applies if your LLC was formed in another state and is now expanding into Colorado. If your LLC falls into this category, you’ll file a “Statement of Foreign Entity Authority” instead of an Articles of Organization.
All foreign business entities are required to foreign qualify in Colorado, or they could incur some pretty severe penalties. At $100, the Statement of Foreign Entity Authority fee is slightly higher than the Articles of Organization fee. But like the Articles of Organization fee, as long as your form is accepted, you won’t have to file or pay it again.
LLC Annual Fees
The Colorado Secretary of State needs to make sure that it keeps its business records up-to-date. They do this by requiring all LLCs to submit annual Periodic Reports. You must file a report each year before your “periodic reporting month.” Find your reporting month by searching for your LLC in the “Business Database Search” and viewing the entity summary page. Periodic Reports might add one more thing to your to-do list, but the bright side is that they won’t break the bank: only $10 per filing.
For federal and state income taxes, LLCs are considered “pass-through” entities, which means that the company itself doesn’t need to file a return, its members simply file their own individual returns. So, unless you’ve set up your LLC to be taxed as a different entity type, you likely won’t have to file taxes for it. And, unlike some other states, Colorado doesn’t charge business entities with a “Franchise Tax” or “Privilege Tax” for operating in the state.
But there are certain circumstances that would require your LLC to pay business-related taxes in Colorado. For example, if you hire employees, your LLC will need to withhold and pay employee income taxes, and if your LLC sells merchandise, it will need to pay sales tax. Further, if you elect to have your LLC taxed as a corporation, it will need to pay the corporate income tax of 4.63%.
What If I Don’t Pay?
Looking at all these fees, you might be thinking: how can I pay less? While you might be tempted to look for loopholes or find a way around them, this could cause you bigger problems in the future.
There are a few reasons why your LLC might be classified as “Noncompliant” or “Delinquent,” but the most common are a failure to file Periodic Reports or maintain a registered agent. As outlined above, LLCs must file a Periodic Report every year before its “periodic reporting month.” Late filings are assessed a $50 penalty, but this is lenient compared to the effects of noncompliance or delinquency.
Noncompliant entities cannot obtain a “Certificate of Good Standing,” which is necessary to foreign qualify in other states, apply for loans, renew business licenses, and more. Remaining noncompliant for 60 days will earn your LLC “Delinquent” status. Delinquent businesses are not allowed to conduct business in the state until their delinquency has been reconciled. They also risk administrative dissolution by the state.
Planning Your Expenses
By now, your budget spreadsheet might be looking a little crowded, but have no fear! Most of these are one-time fees that you won’t have to worry about again. Plus, with all these on the books, there won’t be any surprise costs when you register an LLC in Colorado.
Soon, you’ll have these fees behind you and you’ll be forging ahead, growing your business and earning profits. As you do, make sure to keep up with the few recurring fees – like Periodic Reports and registered agent updates – so your business doesn’t fall out of good standing.