Starting a business in Colorado takes 7 steps:
- Choose a name for your business
- Choose the right type of business entity
- Register your business with the CO Secretary of State
- Get your Federal Tax ID Number
- Open a bank account and get a debit/credit card
- Register with the Colorado Department of Revenue for taxes
- Get any necessary licenses or permits
We’ll show you how to complete each step. We will also give you some tips to make starting your business in Colorado easier.
Step 1: Choose a Name for Your Business
Choosing a name for your business is not something you want to breeze through. In fact, rushing the process of choosing your business name is a huge mistake.
You should take some time to choose a name people will remember and associate with your business.
To make sure your business is worth remembering, you should choose a name that:
- rhymes or contains alliteration (ex: Piggly Wiggly, Dunkin’ Donuts)
- speaks about your business’s unique value proposition
- you can say with pride
- is easy to pronounce
- has a positive connotation for your audience
- is available as a .com domain name
By the way, the first bullet point above refers to the phonological loop. Your brain can better remember words that rhyme and sound similar.
After you’ve chosen your business name, search it on the Colorado Business Database to see if it’s available.
Bonus Tip on Searching for a Good Domain Name: Check out TRUIC’s Business Name Generator. You type in keywords relevant to your business, and the tool will come out with a list of suitable domain names.
Check out our Business Domain Name Guide for tips on picking a domain name and a step-by-step guide to buying the domain name through GoDaddy.
Step 2: Choose the Right Type of Business Entity
Next, you’ll need to decide the best type of business entity.
You can choose a Sole Proprietorship, Partnership, Corporation or Limited Liability Company (LLC).
A Sole Proprietorship happens when you operate your business as yourself. There is no separate legal entity created; the law treats you and your business as one person.
A Partnership is the same as a Sole Proprietorship, just with 2 or more people. Like a Sole Proprietorship, a Partnership does not create a separate legal entity.
A Corporation is a more complex legal structure usually created to run large businesses. (Think of technology and startup companies.)
Unlike a Sole Proprietorship, a Corporation is a separate legal entity. It provides liability protection for its owners (called shareholders).
An LLC is a hybrid entity that combines the benefits of a Corporation and a Sole Proprietorship.
An LLC is a separate legal entity under the law. It provides personal liability protection (like a Corporation). An LLC also has pass-through taxation (like a Sole Proprietorship).
An LLC is a good choice for people who want to run a business for two reasons:
- Personal Liability Protection
- Exempt from Double Taxation
Unlike a Sole Proprietorship, your LLC’s assets are separate and distinct from your personal assets. In the event your LLC gets sued, your personal assets are protected.
Unlike a Corporation, your LLC is not subject to double taxation. Instead, your LLC’s profits will “flow through” to your personal tax return.
If you want to learn more about LLC vs. Corporation, check out this video.
If you want to form a Corporation in Colorado, you can file it yourself or you can hire a filing company.
Step 3: Register Your Business Entity with the CO Secretary of State
You’ll need to file your business’s formation documents with the Colorado Secretary of State:
Colorado Secretary of State: File a Form
Filing can only be done online. Filing by mail is not allowed.
To register a Sole Proprietorship, submit a Statement of Trade Name of an Individual. The filing fee is $20.
To register a Partnership, the document is the same as above, but the filing fee is $25.
To form a Corporation, you submit the Articles of Incorporation and the filing fee of $50.
To form an LLC, the filing fee is $1 until June 2023 (then it goes back to $50), but the document filed is the Articles of Organization. Please see Colorado LLC fees for more details.
For further questions, you can also contact the Colorado Secretary of State:
Phone: 303-894-2200 (Hours: M-F, 8:00am – 5:00pm MT)
Website: Colorado Secretary of State: Business Organizations
Step 4: Get your Federal Tax ID Number
A Federal Tax ID Number, also known as an Employer Identification Number (EIN), is used by the IRS to identify your business.
Your EIN is used to open a business bank account, file taxes, get financing, and handle employee payroll (if applicable).
Think of your EIN as your business’s “social security number”.
You can get your EIN by mail, by fax, or online. Getting your EIN online is the fastest option.
You can access the online application here:
IRS: Apply for an EIN Online
For step-by-step instructions on how to complete the questionnaire, watch this video.
Step 5: Open a Bank Account, Get a Debit/Credit Card
A separate bank account and debit/credit card for your business is important because:
- your personal assets are separate from your business assets
- accounting and finances will be easier to manage
One of the main reasons courts are able to “pierce the corporate veil” is due to commingling of assets. This is when business and personal finances are mixed together.
Keeping your business assets separate from your personal assets helps keep clean records.
To learn how to open a bank account for your LLC, read this lesson:
Opening a Business Bank Account for an LLC
Your bank will provide a debit card after the account is open. For additional credit and to earn cash back (or other rewards), you can also get a business credit card.
Step 6: Register with the Colorado Department of Revenue
After your business is formed, register with the Colorado Department of Revenue.
Colorado has a flat tax rate of 4.63% for both corporate and personal income tax.
If your business is a Sole Proprietorship, Partnership, or LLC, file Colorado Form 104. You can find the instructions as well as the download link to the form here:
Colorado Form 104: Instructions and Download
If your business is a Corporation, then you’ll need to file Colorado Form 112. You can find the instructions as well as the download link to the form here:
Colorado Form 112: Instructions and Download
Calculating your taxes is complicated and if done incorrectly can negatively affect your business. We recommend hiring a qualified CPA/accountant to calculate your tax obligations.
For further questions, you can also contact the Colorado Department of Revenue.
Step 7: Get any Necessary Licenses or Permits
After registering your business for tax purposes, get any necessary licenses or permits.
The Division of Professions and Occupations provides information on the different licensing requirements relevant to certain businesses.
Don’t know where to start on your license or permit? Contact the Colorado Small Business Navigator at 303-592-5920.
Need to save time? If you don’t want to make the calls and determine your licensing requirements, we recommend using IncFile.
After Your Business is Formed…
1. Meet with a Local Colorado Expert for Free Consulting
Getting advice from others who’ve been there can be helpful in your entrepreneurial journey.
Here are 2 great organizations in Colorado:
2. Start a Website
Having a website these days is almost a prerequisite to success.
It gives your company a professional feel and allows people to learn about your products and services.
Building a website can seem like a complicated process… and it will be if you don’t have the right information.
I’ve built over 130 websites and used to teach people how to use WordPress to build websites.
There are 4 components to your website:
- Domain registrar
- Website Hosting
- WordPress theme
Let’s use a house analogy…
The domain registrar is where you purchase your domain name. Think of this as the label on the mailbox, or your street address.
A website hosting company is where all the code, images, graphics, and text are stored that gets provided to the world. Think of this as the foundation of your home. It gives you the ability to build on top of it and display information to others.
WordPress is a CMS (content management system) which makes it easy to build a website. Rather than constructing your home from scratch, think of WordPress as a pre-fabricated home where you can easily resize rooms, move walls, and have complete flexibility in design and customization.
A WordPress theme is a skin that sits “on top of” the WordPress CMS. If the WordPress CMS is the pre-fabricated home, think of the theme as all the interior decoration and painting. There are free WordPress themes, but I recommend against them for various technical reasons. Instead, I recommend using a premium WordPress theme. The difference between a free WordPress theme and a premium one is the difference between an amatuer designer and a world-class professional.
Here are some links and prices to get you started.
Domain registrar: I recommend NameSilo.com which is $10 per year (per domain). This is the service we use as it includes domain privacy for free to keep your address and phone number off those pesky public record websites.
Website hosting: SiteGround.com ($10 per month)
WordPress: Call SiteGround to help you install it. It’s free!
WordPress theme: ThemeForest.net (one-time fee of $40 to $60)
Note 1: make sure you’re using the “wordpress.org” self-hosted version. Not the “wordpress.com” stripped down version with limited customization.
Note 2: if you need help selecting a theme from ThemeForest, check out this video I made:
3. Design a Logo and Get Business Cards
Designing a logo doesn’t have to be too complicated.
We recommend starting off with a “words only” logo to keep things simple. You can choose the font family and color yourself, or get help from 99Designs.
For some great tips on using a tagline with your logo, check out Neville Medhora’s article.
And for business cards, I like using Moo.com.
4. Get a Business Phone Number
Instead of giving out your actual cell phone number or home telephone number, we recommend getting a “virtual phone number” for your Colorado business. You’ll be able to customize the number so it forwards to your cell phone.
Our favorite company is Phone.com. They have the cheapest plans and they have the customer support.
You can get a local Colorado telephone number or a 1-800 number for your business. Phone.com lets you easily setup call forwarding to any number you like, create pre-recorded messages, and you can get your voicemails sent right to your email.
Getting a separate phone number for your Colorado business is also a good idea if you’d like to keep your actual phone number off of those annoying “public record” websites (and stop all those spam phone calls).
I hope this guide has been helpful for you!