The process of launching an LLC in Colorado involves some costs that are worth considering when budgeting. To avoid any surprises when starting an LLC, let’s take a look at Colorado startup fees, including required state fees and possible additional expenses.
Do you have the perfect name for your future company, but you’re not ready to officially start the Colorado LLC formation process? Applying for a name reservation allows you to handle the preparation without worrying that someone will use your chosen name.
Although reserving a business name is optional, it is a good way to protect a name you like. For a reasonable additional $25 payment, the state will hold it for you for 120 days.
On the other hand, if you are ready to start an LLC right away, you can skip this step. The Secretary of State’s approval will register the company name automatically.
When creating an LLC in Colorado, it is important to have a digital presence.
You can brand your business and attract more customers by purchasing a domain name that corresponds to the name of your LLC. For $4.99, GoDaddy lets you quickly find the best option available.
To start your Colorado LLC and be recognized by the state, you must file the Articles of Organization with the Secretary of State. You can do this by filing online, paying a one-time fee of $50 by card.
Generally, to file the Articles of Organization, you will need to provide the following information:
If you don’t want to handle filing the Articles of Organization and opening an LLC on your own, then consider hiring a professional service. There are many LLC formation services available online that will quickly and efficiently incorporate a company on your behalf.
After registering a business with the Colorado Secretary of State, you will probably need to spend between $50 and $100 to obtain a business license to start operating. However, the number of licenses for your LLC and their prices will depend on the scope and location of your business.
Business licenses for Colorado LLCs can be:
Additionally, depending on the nature of the company, to legally operate in Colorado, you may need the following types of licenses and permits:
You can learn more about what licenses your LLC will need on the Colorado Department of Regulatory Agencies website.
If you want to save time, entrust your license research to a professional service. They do the legwork, including the processing of the right forms, at a reasonable price. For example, IncFile provides such services for $99.
The process of starting an LLC requires time and a number of formal requirements. However, you do not have to do it on your own. You can hire an LLC formation service that will take care of all the paperwork regarding the registration process.
Besides the basic LLC formation service, online companies provide useful additional services, such as:
From a variety of LLC formation services, the best options are:
To be compliant with Colorado business law, every company must have a registered agent. It is required not only during the LLC formation process but throughout the life of the business.
As a rule, appointing a registered agent costs $0-$125 per year. Their main functions are as follows:
The duties of a registered agent can be performed by an individual or a legal entity. Nevertheless, it is better to entrust the responsibility to a professional online company. Compared to other options, the registered agent service guarantees high-quality service and accurate documentation.
In addition, for $39-$79 some online companies are not only ready to handle LLC formation, but also provide a free registered agent for one year.
If you haven’t decided which service to choose yet, consider hiring Northwest Registered Agent. Their LLC registration package for $225 includes one year of free registered agent services. After that period, the price will be $125 per year, which is slightly higher than the market price, but their registered agent is recognized as the best in the industry.
If you need professional filing assistance or you have any doubts regarding the LLC formation process, consult an attorney or an experienced accountant. Of course, it costs some money, but a professional will help you to choose the best business structure, give essential business advice and answer all your questions.
Attorney’s services are expensive. Some of them charge $150- $350 per hour, while others have a flat rate for a comprehensive setting up of an LLC, which varies from $500 to $2,000 depending on their experience and qualifications. Sometimes there is also a one-time free consultation that lasts 30-60 minutes.
If you haven’t chosen the right professional yet, use the Colorado business attorneys website or try Avvo to compare available options according to price, location, etc.
If you own a foreign business entity that is expanding into Colorado, then you need to legalize your business in that state.
To obtain foreign qualification in Colorado, you must register with the CO SOS by filing the Statement of Foreign Entity Authority. A $100 filing fee applies, which is a little higher than the Articles of Organization fee, but it is a one-time payment.
If foreign LLCs try to do business in Colorado without foreign qualification, the state has the right to impose penalties.
To ensure that The Colorado Secretary of State always has up-to-date business records about your company, you must file Periodic Reports on time. It contains some basic information, including:
There is an annual reporting deadline. You can find it on your LLC page by doing a Business Database Search.
Periodic Reports cost only $10 per filing, but Colorado charges a $50 penalty if you miss the deadline, so you must file on time.
Since LLCs are “pass-through” entities by default, the requirement to pay federal and state income taxes does not apply to them. Instead, the company’s income and expenses are reported on the owners’ individual returns.
Nevertheless, members may indicate that the LLC is taxed as a corporation, having agreed on that with the IRS in advance. In this case, the company will pay the corporate income tax of 4.63% and file its own tax return.
Also, there are business-related taxes in Colorado, which depend not on the type of business entities, but on the specifics of the LLC. For example, sales tax. If your LLC operating in the state sells goods or services, you must pay this tax.
Colorado does not require you to pay special minimum annual LLC taxes, also known as the franchise tax. This distinguishes it from some other states. For example, LLCs in California are responsible for paying the highest minimum annual tax, which can be as high as $800. Meanwhile, the minimum tax is $100.
If a company fails to meet state requirements, it becomes “noncompliant” or “delinquent” and is subject to penalties. Usually, the reason for this is missing a periodic reporting month or violations related to the registered agent.
First, there are such consequences for failing to submit a regular periodic report as:
If your company continues to conduct business in the state and does not correct violations within 60 days, the consequences will be more serious. Such a business risks administrative dissolution by the state for not complying with the law.
The Colorado LLC formation process may seem expensive, but don’t worry. One-time fees make up the bulk of the costs, so you won’t have to go back to them in the future.
The exceptions are Annual Reports and registered agent fees. Keep this in mind when you incorporate an LLC in Colorado to avoid surprise costs and maintain a good reputation.
Whether you do everything yourself or hire an online company to handle the process on your behalf, the startup process involves the following steps: