Knowing the cost to start a limited liability company in every state is a very important step in taking your business in the right direction. We will begin by looking at the Colorado LLC fees. If you are looking to form a business in Colorado, this article is going to be very helpful.
An LLC is a business structure formed to offer liability protection. It is always the most preferred entity particularly among small business owners due to its simplicity and tax flexibility. In addition to LLC cost, this article will also guide you through a step-by-step LLC formation in Colorado.
Filing Requirements & Overall Colorado LLC Costs
The overall Colorado LLC fees include the state fee and the amounts you will spend to keep your LLC in good standing. In essence, a lot of expenses may be involved during and after starting a business depending on your company requirement. Here are all the expenses you may incur when starting an LL in Colorado.
Colorado LLC Filing Fee
To form an LLC in Colorado, you need to file a certificate of formation with the secretary of state. The certificate of formation can be filed online during which you will have to pay some state filing fee. The Colorado secretary of state charges a one-time fee of $50 for this service.
Colorado LLC Annual Report
To keep its business records up to date, Colorado LLCs are required to submit yearly periodic reports. The state’s periodic report is due by a period of five months starting two months before and two months after the date your LLC was formed. The good news, you will only have to pay $10 per filing.
Registered Agent Fee
Colorado LLCs are also required to appoint registered agents. A registered agent can be a third-party individual, a business entity, a member of your company, or yourself.
However, it is prudent to delegate this responsibility to someone else so that you avoid putting up with business filing and potential legal disputes. Hiring a third party costs somewhere between $50- $300 to get this service in Colorado.
Application for Withdrawal (Foreign LLC)
To withdraw an LLC, simply file an article of dissolution with the Colorado secretary of state. This form is available online and you will only have to pay $10 processing fees. However, canceling a foreign LLC registration may cost you up to $125 online fees.
Some businesses require licenses and permits in order to operate in Colorado. Depending on your geographical location or your industry, your business might need either a local, state, or federal permit or license.
The cost of a business license or permit in Colorado will depend on your business requirements but it is somewhere below $100.
An LLC is considered a pass-through entity just like a sole proprietorship for tax purposes. With that said, an LLC in itself won’t pay federal tax unless you decide to have your LLC taxed as a corporation.
That being said, a Colorado LLC member pays self employment tax towards social security & medicare, income tax, and sales tax if your LLC sells merchandise. Thankfully, there are no franchise taxes on Colorado LLCs.
The Colorado tax rate for LLCs is 4.6% while self-employment and sales tax rates are 15.3% and 4.33% respectively.
Other LLC Filing Costs
In addition to the mandatory charges that have been discussed above, there are other optional fees associated with LLC formation in Colorado.
LLC Name Reservation Fee
You may have a nice name in mind but you are not ready to form your LLC just yet. In such a case, you can have the state of Colorado reserve that name for up to 120 days prior to your LLC formation. All you need to do is to fill a name reservation form and pay a $25 filing fee.
“Doing Business As” (DBA) Name
If you are planning to run your LLC with a different name from your official LLC business name, you’ll need to register a DBA. To get a fictitious name in Colorado, you have to register an assumed name certificate and pay filing fees of $20 only.
Business Domain Name & Website
A business domain name is the web address for your business website. You need to register a domain name for your Colorado business so that nobody else can use the same name. Buying a domain in Colorado costs between $9 to $14.9 per year. However, this may go high depending on domain extension and the domain registrar you choose.
Articles of Organization Fee
You cannot start and operate an LLC in Colorado without filing articles of organization. The articles of organization are filed with the secretary of state. The filing fees for Colorado articles of organization is only $50.
You do not want to take chances with the business formation process. If you don’t understand a concept, you should consult an attorney. Attorney charges vary, but you should expect something between $500 – $2,000 flat fee or $150 – $350 hourly fees.
Tax ID Number (EIN)
Federal Tax ID Number is also known as Employer Identification Number (EIN) is essentially a social security number for an organization. You will have to get an EIN to help you open an account, file and manage federal state taxes, and hire employees. You can get an EIN for free from the IRS by applying online or via email.
Top 2 Colorado LLC Services
For peace of mind, you should seek the help of a professional filing service to help you form your LLC. One of the best online services for LLC formation in Colorado is ZenBusiness.
ZenBusiness is fairly new in the business formation industry but it is already one of the most sought-after services. This is mainly due to their pricing. They offer one of the most affordable packages parked with the best features you will find in the market.
Their basic package is very cheap yet includes a 1-year free registered agent service to new subscribers. The two higher tiers add more features including a customized operating agreement, accounting assessment, and worry-free compliance.
ZenBusiness’s other biggest win is its reliable customer support service. As a result, the company boasts the best customer feedback .
Just like ZenBusiness, Better Legal is equally new in the industry but one of the leading LLC formation providers to this day. Better Legal offers affordable flat fees with no hidden charges.
Their flat fee will offer you all the services necessary to form an LLC including preparation and filing of the articles of organization, operating agreement, EIN, a banking resolution among many other services. Even though they don’t offer the registered agent service, they can hook you up with a registered agent at a discounted fee.
In addition to the business formation services, Better Legal also offers additional services at no additional cost. These include free website domain, free checking account, and free tax analysis. As a result, they boast one of the best customer feedback  in the industry
How to Start an LLC in Colorado
Step 1: Name Your Colorado LLC
Choose an LLC name that is available for use in the state of Colorado, available as a web domain, and meets other Colorado state requirements. To achieve that, you will have to conduct a thorough name search online and on a business database to ensure the name you choose is suitable.
Step 2: Choose Your Registered Agent
Colorado requires an LLC to appoint a registered agent to receive important documents on behalf of the company. The agent can be an entity, a third-party individual, a member of your company, or yourself.
Step 3: File Articles of Organization
To start an LLC in Colorado, you must file articles of organization with the Colorado secretary of state. During LLC registration you will need to pay state filing fees.
The articles of the organization will ask you to include some information including principal office address, street address, contact info, true name, among others.
Step 4: Prepare an Operating Agreement
An LLC operating agreement is not a mandatory requirement when forming an LLC but it is very important as it lists down how your business is managed and the members of your company. In essence, an operating agreement for your LLC is equivalent to the board of directors in a corporation.
Step 5: Obtain an EIN
Tax ID number, also known as EIN, is like your company’s social security and it is very important. You will need an, and hire employees in Texas.
Step 6: File Annual Reports
The Colorado secretary of state has to keep up-to-date business records. They do this by ensuring LLCs submit periodic reports. With that said, you have to file and submit the yearly reports to the Colorado secretary of state so that they keep up-to-date business records.
Colorado is one of the most business-friendly states to start a business entity. Despite being among the top states with the cheapest filing fees, it also occupies somewhere in the middle of the table in the latest State Business Tax Index . It is one of the few states that don’t impose franchise and “privilege” taxes on entities. For that reason, a small business owner looking for an LLC in Colorado should not hesitate.
Frequently Asked Auestions
You will need to pay annual fees to keep your LLC in compliance with the state. Some of the fees you will incur are the yearly franchise tax, registered agent services among others.
The main cost of forming an LLC in Colorado is the $50 state fee. However, there are other optional expenses you may incur, including name reservation. You can also decide to be your own registered agent or hire a professional agent.
The cheapest way to form an LLC is by undertaking the registration process by yourself. Filing an LLC certificate of formation on your own and being your own agent will leave you with only state fees to cater for.
It will take around 20 days for the Colorado secretary of state to process your application. However, you may have your application filed faster should you use a professional service with expedited processing.
+ 4 sources
- State.co.us. (2019). Fee Schedule. [online] Available at: https://www.sos.state.co.us/pubs/info_center/fees/business.html [Accessed 15 Jun. 2021].
- Trustpilot. (2021). ZenBusiness. [online] Available at: https://www.trustpilot.com/review/www.zenbusiness.com [Accessed 15 Jun. 2021].
- Trustpilot. (2021). BetterLegal. [online] Available at: https://www.trustpilot.com/review/betterlegal.com [Accessed 15 Jun. 2021].
- Walczak, J. and Cammenga, J. (2020). 2021 State Business Tax Climate Index. [online] Tax Foundation. Available at: https://taxfoundation.org/2021-state-business-tax-climate-index/ [Accessed 15 Jun. 2021].