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Colorado LLC Cost

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.

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.

Bare Minimum Cost to Start an LLC in Colorado

Optional: LLC Name Reservation Fee

    • $25 to file online

Optional: LLC Formation Service

    • $39 for an LLC service like ZenBusiness and $99 for LegalZoom

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.

To clarify, most states don’t require name reservations, and they’re rarely necessary. If you’re concerned about someone else registering the name you want, you could opt to simply form your LLC instead of reserving the name.

 

Business Domain Name & Website

To properly brand your business, you’ll want to acquire the domain name so nobody else can use it. Search for and find the perfect one through GoDaddy for just $4.99.

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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.

This document requires the following information: your LLC’s official business name, your LLC’s principal office address (and mailing address, if different), the name and address of your LLC’s registered agent, a statement indicating the registered agent’s consent to serve your LLC, the name and address of your LLC organizer, an indication that your LLC will be managed either by its members or by a manager, the effective date of your LLC’s formation, your name, your title, and your signature.

If you would rather get some help for this step, you’re in luck! There are plenty of reputable LLC formation services that will prepare and file your Articles of Organization on your behalf. You have plenty of options for this service, but we prefer ZenBusiness. They offer great low rates and well-rounded services, and with our exclusive discount code, you can get 20% off!

 

Business Licenses

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 dependent 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 require for your LLC.

What are some of the most commonly required business licenses for Colorado LLCs? If your business operates in a regulated industry, you will probably need some sort of professional license to operate in compliance with state law. On the municipal level, things like alarm permits, building permits, and zoning permits are all very common.

 

LLC 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 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 (which are often frequently used LegalZoom alternatives) offer LLC registration 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.

There are many different companies offering LLC formation services these days, and it can be tricky to tell which one is the right choice for your needs. We think ZenBusiness and IncFile are the two best LLC formation companies, and we wouldn’t hesitate to recommend either of them to our families and friends.

 

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, 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 Agent Services guide.

 

Attorney Fees

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 $500-2,000.

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.

If you don’t want to go digging for your own attorney, we compiled the following list of highly rated business lawyers in Colorado. All of these attorneys are primarily focused on the business world, they all receive five-star ratings from clients, and they all have excellent Avvo ratings.

 

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.

This filing only requires some basic information about your business, including your Colorado business entity ID number, your LLC’s official business name, the jurisdiction where you formed your LLC, your LLC’s principal business address (and mailing address, if different), the name and address of your LLC’s registered agent, your name, and your address.

For more information about these important annual filings, take a look at our comprehensive guide to Colorado Periodic Reports.

 

Taxes

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.

 

Key Steps for Starting a Colorado LLC

  1. The first step to forming a Colorado LLC is to come up with a good name for your business. You’ll want to make sure the name you want is still available and hasn’t already been claimed by another business, so you’ll need to search the state’s business database to verify its availability.
  2. Next, you’ll need to choose your registered agent. While you can legally serve as your own registered agent in Colorado, this role can actually be more of a hassle than you might expect. That’s why we always recommend hiring a reputable registered agent service that can handle the responsibility of this position on your behalf.
  3. The third step involves the preparation and filing of your Articles of Organization. You’ll need to fill out the paperwork and pay a $50 fee. Once the state processes this document, your LLC will be officially open for business!
  4. That’s not the end of the road for the startup process though, as you’ll also need to create an operating agreement for your LLC. There is no legal requirement for Colorado LLCs to have written operating agreements, but it’s still an extremely important element of any LLC. The operating agreement is an internal document that outlines how your LLC will operate, and there are several aspects of this document that can prevent messy ownership disputes down the line.
  5. You will also need to acquire a federal tax ID number (also known as an EIN, or employer identification number). This is essentially a Social Security number for your business, as it is a nine-digit code used to file taxes, hire employees, open business banking accounts, and more.
  6. Next, you’ll need to register for any relevant taxes with the Colorado Department of Revenue’s Taxation Division, and also obtain all licenses and permits that apply to your business type. Keep in mind that, depending on the nature of your business, you might require licenses from the federal, state, county, and municipal governments.

Once you’ve finished all of these steps, you’re ready to operate a compliant business entity with the state of Colorado!

Key Steps for Maintaining a Colorado LLC

After you’ve completed all of the items in the previous section, you’ll need to focus on maintaining your LLC. The first step in this process is to open a business bank account. This will help you keep your business and personal expenses entirely separate, and it will also help immensely with your accounting and taxation responsibilities.

You should also keep detailed records of every financial transaction that takes place with your LLC. This means maintaining a file of invoices for every purchase and sale you make, along with information regarding your employees or contractors and the work they perform for your business.

As we already mentioned, Periodic Reports are a key component of LLC maintenance in this state, and there are harsh financial penalties for delinquent reports. Additionally, you might want to hold an annual meeting to discuss goals and priorities for your LLC, although this is an optional step.

The Top 3 Colorado LLC Services

If you want to hire a reputable LLC formation service to handle the heavy lifting on your behalf, these are the three companies we trust and rely on the most.

  • ZenBusiness ($39) – ZenBusiness offers a well-rounded LLC formation package at a great low rate. Their standard LLC package includes a full year of registered agent service, an accounting assessment, and a customizable operating agreement. ZenBusiness also receives stellar customer feedback.
  • IncFile (FREE) – That’s not a typo! IncFile really does form LLCs for free. Even better, they include 12 months of registered agent service in their free package. IncFile has a ton of experience and more than 500,000 satisfied customers, so they’re always a reliable choice.
  • Northwest Registered Agent ($225) – Northwest offers a bit more of a premium service, but if you have the money, we think it’s worth it. Like ZenBusiness and IncFile, Northwest also includes a year of registered agent service with the purchase of any LLC formation package. They also offer the best customer support in this industry, with knowledgeable representatives who are familiar with the details of business formation processes in every state.

Frequently Asked Questions

Before we wrap things up, let’s take a look at some of the most common questions we hear from readers regarding the LLC formation process in Colorado.

What are the state business tax rates in Colorado?

All LLCs in Colorado pay 4.63% tax on all business income. LLCs taxed as sole proprietorships or general partnerships must pay the state’s personal income tax rate of 4.63%. If your LLC is taxed as a corporation, you will pay the state’s corporate income tax rate (which is also 4.63%).

How quickly does Colorado process LLC formations?

It can take Colorado 7-10 business days to process your LLC formation filing.

How many small businesses are there in Colorado today?

The state of Colorado is home to more than 600,000 small businesses. Entrepreneurs of all backgrounds and business types find that Colorado is a great place to own and operate a small business.

What are the top small business resources and websites in Colorado?

The Colorado chapter of the Small Business Development Center is a great place to start, as they provide many tools and resources for Colorado LLCs. The Colorado District Office of the U.S. Small Business Administration also has a wealth of information for entrepreneurs. Finally, the state’s Office of the State Controller has a “Doing Business With the State of Colorado” webpage that’s packed with valuable info.

Should I form my LLC in Colorado, or choose a state like Delaware or Wyoming?

Some people like to form their LLCs in states with favorable legal settings. For instance, Delaware is often seen as the most business-friendly state, as it has an entire court system that’s dedicated solely to business matters. As for Wyoming, this state has some of the most generous anonymity laws for LLC ownership.

However, for most people, your best option is to simply form your business in your home state. Forming in a different state can be a tremendous hassle, and it can add some unnecessary complexity to tax issues as well.