Deal alert! Northwest will form your LLC for $39 (60% discount). See details.
What is a Colorado LLC?
A Colorado LLC is a type of business structure formed by state law. It can be used to run a business, or it can be used to hold assets like real estate, boats, and planes.
A Colorado LLC can:
- make money
- own/lease property
- enter into contracts
- open a bank account
- sue and be sued
It can be formed by one person or by several people.
An LLC with one owner is a called a Single-Member LLC. An LLC with many owners is called a Multi-Member LLC.
What are the advantages of forming an LLC in Colorado?
There are 2 main advantages to forming a Colorado LLC: personal liability protection and pass-through taxation.
With an LLC, your personal assets are protected from the assets held by your business. This means your personal assets cannot be used to pay off your business’s debts or liabilities in case your LLC gets sued.
An LLC also avoids double taxation. Unlike a Corporation, an LLC does not have to file a separate federal tax return with the IRS.
Instead, your Colorado LLC profits/losses pass through directly to your personal income tax return.
How to start an LLC in Colorado?
There are 5 steps to forming an LLC in Colorado. They are:
- Choose a Name for your LLC
- Select your LLC’s Registered Agent
- File your LLC’s Articles of Organization
- Complete and sign your LLC’s Operating Agreement
- Get your LLC’s EIN (Employer Identification Number)
You’ll also need to do the following every year to keep your LLC in good standing with Colorado:
- File your LLC’s Periodic Report
- File and pay your Colorado Taxes
Forming an LLC in Colorado can only be done online. You can file your Colorado LLC’s Articles of Organization here: Colorado Secretary of State: File a Form
If you need help forming your LLC in Colorado, follow our step-by-step guides.
Do I need a lawyer to form an LLC in Colorado?
No, it’s not a legal requirement to use a lawyer to form your LLC. Forming an LLC in Colorado is simple. You can read our free guides, which will walk you through all the steps.
We’ll teach you how to:
- Choose your LLC name
- Select your LLC’s Registered Agent
- File your LLC Articles of Organization directly with the Secretary of State
You’re also not required to use a lawyer to:
- Draft/complete your LLC’s Operating Agreement
- Get your Employer Identification Number (EIN)
- File a Periodic Report with Colorado
We do recommend consulting with a lawyer if your LLC:
- Requires industry-specific management
- Has complex ownership agreements
- Has many investors or a large amount of members
How do I maintain an LLC in Colorado?
You need to do two things to keep your LLC in Good Standing with Colorado:
- File your Periodic Report
- File and pay any Colorado Taxes
You will be penalized an extra $50 on top of the $10 annual filing fee if you submit your Periodic Report late. Your Colorado LLC will also be marked “Non-compliant”.
You will then be given another 3 months to submit your Periodic Report. If you still fail, your Colorado LLC will be marked “Delinquent”.
If this happens, you will no longer be able to do business in Colorado.
To avoid this, we highly recommend you put a repeating reminder on your calendar.
As for taxes, you will have to register your LLC with the Colorado Department of Revenue after it is approved.
We recommend getting a qualified CPA/accountant to help you file your taxes correctly.
How long does it take to form an LLC in Colorado?
Filling out your Articles of Organization takes about 10 minutes. It is done completely online.
Your Colorado LLC officially exists upon processing and approval of your Articles of Organization. Approval is usually instant.
How many people do I need to form an LLC in Colorado?
You only need 1 person to form an LLC in Colorado, and there is no limit to the number of members your LLC can have.
An LLC with 1 member is called a Single-Member LLC.
An LLC with 2 or more members is called a Multi-Member LLC.
How much does it cost to start an LLC in Colorado?
You’ll need to pay the Secretary of State a one-time filing fee of $50. The fee is submitted together with your Colorado LLC’s Articles of Organization.
Only the following debit or credit cards are accepted:
- Visa
- Mastercard
- American Express
How do I file a Periodic Report for my Colorado LLC?
You can file your Periodic Report online here:
Colorado Secretary of State: Record Identification or ID Search
The filing fee is $10.
The Periodic Report can be submitted during a 5-month window:
- 2 months before the Periodic Report Month (the month your LLC is formed)
- During the Periodic Report Month itself
- Within 2 months after the Periodic Report Month
You can still file your Periodic Report within 2 months after the lapse of the 5-month window. However, you will be charged an extra $50 for late submission. Your LLC will also be marked “Non-compliant”.
Tip: You can find your Periodic Report Month by looking at your Articles of Organization’s approval date. If you need help filing your Periodic Report correctly, please see our free guide.
Is Colorado the best state to form my LLC?
Yes, but only if Colorado happens to be your home state. Otherwise, you’d just be doubling your expenses if you form your LLC in a state other than your home state.
A lot of people are misled into forming an LLC out of state, in such places as Wyoming, Nevada, and Delaware.
This is bad advice because if you formed an LLC out of state, you’d then be required to register that out-of-state LLC as a “Foreign LLC” in Colorado.
This means you’ll have to pay:
- 2 State filing fees
- 2 Annual Report fees
- 2 Registered Agents
- 2 State Taxes
Again, forming an LLC in Colorado is good if you happen to live there. For those who don’t live there, we recommend you form your LLC in your own state. This way, you’ll avoid the headache of having to pay for and manage 2 LLCs. For more information on which state is best, please read What’s the Best State to Form Your LLC in.
Should I form a Colorado LLC for real estate investing?
Forming an LLC is a very popular choice for real estate investors. A Colorado LLC builds a “wall of protection” between your personal assets and your real estate investments.
In case your real estate LLC gets sued, only its assets can be used to pay off its debt or liabilities. Your personal assets (like your home, cars, bank accounts, etc) remain safe.
What are the annual fees for a Colorado LLC?
The annual fee for a Colorado LLC is $10. You will pay this each year by filing what’s called a Periodic Report. Here is the link to file the Periodic Report:
Colorado Secretary of State: Record Identification or ID Search
What other fees do I need to pay to form an LLC in Colorado?
Besides Colorado’s one-time filing fee of $50 and the $10 per year for your Periodic Report, there are no other fees. Colorado is a very affordable state!
However, consulting with a lawyer and/or accountant will cost extra.
And if you need to hire a Commercial Registered Agent for your LLC, that will cost an additional $100-$300 per year.
What taxes do I need to pay as an LLC in Colorado?
Taxes are paid on 3 levels: Federal, State and Local.
Your LLC does not file its own tax return with the IRS. Instead, profits and losses “flow through” to your personal tax return (Form 1040). The LLC’s profits or losses are listed on a Schedule C inside of your personal 1040 tax return.
Your LLC will also need to file and pay taxes at the state level with Colorado. A Colorado LLC pays its taxes at the Personal Net Income Rate of 4.6% (not at the Corporate Net Income Rate).
You will need to file the Colorado Individual Income Tax Form 104 with the state by April 15th each year. Here is a link to instructions as well as forms:
Colorado Department of Revenue: Individual Income Tax Forms & Instructions
You will also likely need to pay taxes at the local/county level. However, you’ll need to speak with a professional in your area since Colorado has 64 counties. This article is just an overview.
Also, calculating your tax obligations can be complicated. It can negatively impact your LLC if done incorrectly.
For this reason, we recommend getting a qualified CPA/accountant to help you. Check out LLC Taxes for tips on finding a good tax professional.
Here are some more tax resources:
- Colorado Department of Revenue
- Get Ahead Colorado (free tax preparation for certain families)
- Tax Help Colorado (free tax preparation for certain persons)
What’s better: a Colorado LLC or a Corporation?
A Colorado LLC is usually a better choice for most people since it offers you personal liability protection – (just like a Corporation) – without having the complexity of management and without double taxation.
Personal liability protection means your personal assets won’t be used to pay off the debts/liabilities if your LLC gets sued.
And avoiding double taxation means your LLC’s profits/losses will “flow through” directly to your personal income tax return (rather than paying taxes at the corporate and personal level).
A Colorado LLC is also simpler to run and manage as you’re not required to hold annual board meetings or record meeting notes.
What’s better: a Colorado LLC or a Partnership?
A Colorado LLC is definitely better than a Partnership.
In a Partnership, you and your partner(s) are personally liable for your company’s debts.
Forming an LLC in Colorado offers personal liability protection to you and all the members of the LLC. That means your personal assets are going to be protected if your business gets sued.
What’s better: a Colorado LLC or a Sole Proprietorship?
A Colorado LLC is definitely better than a Sole Proprietorship for the same reason as above.
You will be held personally responsible for your business’s debts and liabilities.
With a Sole Proprietorship, there is no distinction between you personally and your business. Essentially, you ARE your business.
Many Sole Proprietors usually don’t know how simple it is to form an LLC (or they were given poor advice).
When is the best time of year to form an LLC in CO?
Generally, any time of the year is the best time to form a Colorado LLC.
For tax purposes however, we recommend you avoid forming your Colorado LLC in October, November, and December (if you don’t need your business open those months and can wait until January).
It’s not a huge deal, but rather a helpful tip.
For example, if you form your LLC in November, it will then be in existence for 2 months during the tax year. This means you’ll need to file a tax return for that year. So, if you don’t actually need the business open before January, waiting until January will save you the annoyance of filing a tax return for that year.
However, if you can’t wait until January, then it’s more important to form your LLC and disregard the small annoyance.
Where can I get an Operating Agreement for my CO LLC?
We’ve provided free Operating Agreement templates you can download and fill in the blanks:
Download your free LLC Operating Agreement:
Free LLC Operating Agreement (PDF)
Free LLC Operating Agreement (Google Docs)
Free LLC Operating Agreement (Microsoft Word)
You can also read our free step-by-step guide on completing your LLC Operating Agreement.
Who can be my Registered Agent in Colorado?
If you have a street address in Colorado, your options are:
- You can be your LLC’s Registered Agent
- Your LLC can serve as its own Registered Agent (this is a unique law in Colorado)
If you don’t have a street address in Colorado:
- A friend or family member can be your LLC’s Registered Agent
- Hire a Commercial Registered Agent
If you want to hire a Commercial Registered Agent, we recommend Northwest Registered Agent ($125 per year).
Northwest Registered Agent has been in the business for 20 years. They offer excellent services at affordable rates.
Why form an LLC in Colorado?
You should form a Colorado LLC to protect your personal assets.
A Colorado LLC offers you personal liability protection if your business gets sued. Your personal assets cannot be used to pay off your business’s debts or liabilities.
Where can I learn more about LLCs?
Please check out our Learning Center for more videos and helpful articles on:
- What an LLC is
- What its advantages are
- What the best state is to form one
Ready to Form your Colorado LLC?
Visit LLC University’s free step-by-step guides on how to form your LLC in Colorado.
Matt holds a Bachelor's Degree in business from Drexel University with a concentration in business law. He performs extensive research and analysis to convert state laws into simple instructions anyone can follow to form their LLC - all for free! Read more about Matt Horwitz and LLC University.
Hi Mike, My wife and I formed a 2 person LLC in 2002. My wife Passed in December 2020.
We put our Real Estate Property under our LLC ownership. Do I need to file paperwork with the Colorado Secretary of State to change ownership so that I can sell or transfer ownership to my son and daughter? Thanks
Hi Domingo, sorry to hear about your loss. You’ll actually need to speak with an estate planning attorney to figure out what happens – or what you can do – regarding your wife’s LLC Membership Interest. It might pass automatically to you or it might need to be probated.
Hello,
I’ve been thinking of forming an LLC for some rental properties. However I want to be able to still stay in the rental property myself on occasion. What are the rules for owning property through an LLC and using it for personal use at times? Thank you so much!
Lachlan
From a legal standpoint, no, there are no issues. There may be some minor tax consequences, such as not maximizing write offs, however, we recommend speaking to an accountant on that.
Awesome, will do! Thank you so much for the help!
Hey Matt,
I filed my LLC a week ago but need to add my spouse as a member. I thought that was all just on the operating agreement so I sort of messed this up. When I log into the secretary of state website to amend it to add my other half, it’s requiring me to change the name of my LLC instead of adding a member. How do I amend My CO LLC to add my spouse?
Also, since “members are not listed” on the Colorado Articles of Organization, is it even necessary to amend our LLC to a multiple member LLC? Or is this information ok on just our Operating Agreement?
I formed a Colorado Single Member LLC without any operating agreement, and have been operating for the last three years. I want to transfer ownership (I assume that means transfer membership – me as the single member) to my wife. How do I accomplish that? Thank you!
Hi Mike, you are correct. Transferring ownership is the same thing as transferring LLC membership interest. However, we don’t recommend doing this yourself as it can be a little complicated. There could also be tax consequences, so you’ll want to speak to an accountant too. Having said that, here is the overview. First, via an Assignment of LLC Membership Interest, you can sell/transfer 100% of your ownership to your wife. You’ll also need to put an Operating Agreement in place and then amend the Operating Agreement to reflect the transfer of ownership. You don’t need to amend the Colorado Articles of Organization, since Members are not listed. However, you’ll need to update the IRS by changing the EIN responsible party for LLC. You don’t need to file Form 8832 with the IRS, since the tax classification of the LLC isn’t changing (it’ll remain an LLC taxed as a Sole Proprietorship). You’ll also need to update the bank and the Colorado Department of Revenue. Hope that helps.
Hi Matt,
Thank you so much for all the information here. I’d like to launch my tech startup in the United States. I am not a u.s citizen and do not live in the United States yet but I am planning on moving to the u.s in a few months. What I wanted to ask is whether for now, I could form my llc in Colorado for these few months just to avoid all California taxes and then once I move to the u.s, relocate my llc to California (I know this can be done). Would this be a good idea? I don’t mind the additional paperwork (if there is any). It’s just that am not backed by some venture firm and do not have much money, so Colorado seems really like a good idea for now… Anyway I appreciate any advice you can give me.
Kind regards,
Sulejman Ljimaj
Hi Sulejman, you’re very welcome. There are usually three ways to “move” an LLC. In some states there are only two ways. From Colorado to California, there are three ways. First, you can register your Colorado LLC as a foreign LLC in California. However, you would need to maintain both the Colorado LLC and the California LLC. That means you would need to have a Registered Agent in both states and file both states’ annual requirements. The second option is to dissolve (shut down) the Colorado LLC and then form a new LLC in California. However, this doesn’t keep any of the company history as you are now creating a new legal entity. The third option is to file a conversion (also called “domestication”). This would convert your Colorado LLC into a California LLC. You need to file an “Articles of Organization – Conversion” in California to accomplish this. And after the conversion is completed, you would dissolve the Colorado LLC. The first and the third option keep the company history, like EIN and bank account. The second option does not. However, having said all that, if this is your first time dealing with LLCs, all three ways can be complicated to do on your own, will cost extra money, could be stressful, and there could be errors made. It might just be easier to form an LLC in California when you are ready since “moving” an LLC is not an easy process. Once you decide where you want to form your LLC, and after your LLC is approved, we have articles for non-US residents: how to get an EIN without SSN, LLC bank account for non-US resident, and Form 5472 for foreign-owned Single-Member LLCs. Hope that helps.
Hi Matt,
Thank you so much for the additional info. I guess I’ll just launch my LLC in the state where I’ll be living. I think I can avoid unnecessary headache by doing that. And the only surprise here is form 5472. Didn’t know about that one, so that goes on my to do list :). Thank you so much again, your website is a blessing to all starters, especially ones who live a few thousand miles away. Have a great weekend.
Kind regards
Sulejman Ljimaj
Hi Sulejman, thank you for all the kind words! You’re very welcome :)
Every where I look online to start my LLC for a consulting business gives me a higher price than what you talked about to form the LLC. Is their a better place i should be going to so it is only $50?
Hey Angelo, the $50 is the Colorado state filing fee. If you’re looking to hire a company to file for you, they charge more on top of that. If you want to file yourself, we have instructions here: how to form an LLC in Colorado. Just go through the “detailed lessons” in order. Hope that helps.
When started my LLC/Limited Corp in Colorado I thought I was going to start making a profit in 2-3 years. It does not seem that is what is going to happen. How many years does Colorado law give the llc to start making a profit.
Hi Patrick, there is no law that an LLC must make a profit. You can leave the LLC open for as long as you’d like. The state will not impose any rules – again, they don’t exist – regarding profitability. Hope that helps.
Matt, our current property is located in Colorado, and we will look to be adding property in both Colorado and Texas.
Thanks John. And will you want all your properties under 1 LLC or will you be dividing them among multiple LLCs?
I had originally planned on one LLC, and I had frankly not considered doing multiple due to the additional issues they bring.
Thanks for the info John. Yea, there are many ways to “slice the pie” regarding real estate LLCs. In this scenario, you’ll be doing business in both Texas and Colorado, since that’s where the rental properties are located. You can either form a Domestic LLC in Colorado and register it as a Foreign LLC in Texas or you can form a Domestic LLC in Texas and register it as a Foreign LLC in Colorado. A Domestic LLC in CO is $50 and Domestic LLC in TX is $300, however, a Foreign LLC in CO is $100 and a Foreign LLC in TX is $750. So it’ll be cheaper to make the “base” LLC in Texas and then register that LLC to do business in Colorado. However, that’s just the 1-LLC-setup. Something to consider. You could form 1 parent LLC (the holding company) in Wyoming (stronger asset protection) and have that Wyoming LLC own the child LLC(s). The child LLCs are domestic LLCs formed in the states where the property is located. I also recommend speaking with a few real estate attorneys regarding the pros and cons to the various ways to hold real property and structure your entities. Hope that helps.
Matt, my wife and I are looking to create an LLC within the state of Colorado for our rental properties, but recently have found that we will be moving to Texas in about a years time. In your opinion, would it be better to create an LLC in Texas and registered it in Colorado or vice versa?
Hi John, where are your properties located? Will you be adding future properties to this LLC? If so, what state will they be located in? Thanks.
We are in Colorado and retired. My husband is opening a consulting LLC and I will be doing all his clerical, tax, etc. I have also done a little clerical consulting for another company. Should we each open our own LLC as a sole proprietorship and I bill his company for the work I do or should we try to open one LLC as a partnership and run both consulting thru it. This will not be a high dollar LLC. We expect it to gross under $25,000 per year. We are just supplementing Social security and staying busy.
Hi Susan, I’m not 100% sure which is best. This type of question is better posed to an accountant since it could be done either way and there may be some tax advantages (or disadvantages) one way versus the other. One thing to keep in mind is that Colorado’s LLC filing fee (and Annual Report fee) are very low (when compared to other states), so separating the businesses into 2 Colorado LLC will not be expensive and it might make your reporting, documentation, and organization easier. Again though, please speak with a few accountants about the details. Hope that helps :)
Hello Matt, Thank you for the response. We have 6 properties…. I would not want one tenant to be able to go after other properties. Do you think this would be beneficial and worth setting up?
I form the LLC and then Quit Claim Deed the properties at the Clerk/Recorders office, correct?
Your videos and website are super helpful, Thank you.
Hey Mike, you’re welcome. One LLC per property for 6 properties isn’t uncommon. Yup, Quit Claim Deed is the route to go. I don’t know the ins and outs of transferring title in CO, so you could also use a title company as well. Hope that helps. Let me know if you need anything else.
I have multiple rental properties in Colorado. Should I form one LLC to cover all of them? or should I form an LLC for each individual property to limit the Liability? So one tenant might not be able to go after other property assets……
Hi Mike, there isn’t really a black and white answer to this one. It depends on the value of your investments and your personal preference. Having said that, having separate LLCs will provide more asset protection. Can I ask how many properties you’re talking about? If you have 40-50+ properties, the “one-LLC-per-property” could become unorganized and difficult to manage.
I own several rental properties in colorado but I live in Nebraska. I am thinking of forming an LLC but not sure what state to form it in. Should I form the LLC in Colorado where the rental property exists? or Should I form it in Nebraska where I reside? or Should I form it in Wyoming where it is less expensive?
Hi George, you are supposed to form an LLC in the state where you are doing business, so in this case, that would be Colorado. You could also form a Wyoming LLC and have it own your Colorado LLC (or multiple Colorado LLCs, depending on how you set it up). Hope that helps!