Starting a Business in Colorado

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Starting a business in Colorado takes 7 steps:

  1. Choose a name for your business
  2. Choose the right type of business entity
  3. Register your business with the CO Secretary of State
  4. Get your Federal Tax ID Number
  5. Open a bank account and get a debit/credit card
  6. Register with the Colorado Department of Revenue for taxes
  7. 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 Database to see if it’s available: http://www.sos.state.co.us/biz/BusinessEntityCriteriaExt.do

Bonus Tip on Searching for a Good Domain Name: Finding a good domain name nowadays is not that easy. To help you out, we recommend you use Lean Domain Search: http://www.leandomainsearch.com

You type in keywords relevant to your business, and the tool will come out with a list of suitable domain names.

(note: there’s more tips on domain names and websites at the bottom of this guide)

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 instructions on how to form an LLC in Colorado, check out our free videos.

If you want to form a Corporation in Colorado, you can file it yourself or you can hire a filing company like Northwest Registered Agent.

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:

http://www.sos.state.co.us/biz/FileDoc.do

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 also $50, but the document filed is the Articles of Organization.

For further questions, you can also contact the Colorado Secretary of State:

Phone: 303-894-2200 (Hours: M-F, 8:00am – 5:00pm MT)
Email: [email protected] (they reply fast)
Website: http://www.sos.state.co.us/pubs/business/businessHome.html

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:

https://www.irs.gov/businesses/small-businesses-self-employed/apply-for-an-employer-identification-number-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:

https://www.colorado.gov/pacific/sites/default/files/104Book.pdf

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:

https://www.colorado.gov/pacific/sites/default/files/112Book.pdf

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:

https://www.colorado.gov/pacific/revenue/contact-us-23

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:

• Colorado SBDC Consulting
• SCORE (offices in Colorado Springs, Pueblo, and Denver)

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
  • 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!

Matt Horwitz
Founder & Educator, LLC University®
Forming an LLC shouldn't be so complicated. Our step-by-step guide will make the process a breeze – and no complex legal jargon! LLC University® teaches people how to form an LLC for free in all 50 states. We hope you find our free guides and resources helpful in your business journey.
Leave a Comment (28) ↓
Disclaimer: Nothing on this page shall be interpreted as legal or tax advice. Rules and regulations vary by location. They also change over time and are specific to your situation. Furthermore, this comment section is provided so people can share their thoughts and experience. Please consult a licensed professional if you have legal or tax questions.

28 Comments

  1. Dale Misner November 13, 2017

    The info, links and recommendations are a great help in starting a new business. Much appreciated.

    reply
    • Matt Horwitz November 13, 2017

      You’re very welcome Dale! Thank you for your comment.

      reply
    • Ian November 26, 2018

      Hi, I’m thinking about pursuing my own business in Windshield replacement and repair. What would you recommend me to get as my entity? An LLC, sole proprietorship? Etc.. I want to make sure I get the right entity based on my particular avenue of business. Thanks! Ian

      reply
      • Matt Horwitz December 3, 2018

        Hi Ian, a Sole Proprietorship isn’t an entity. It’s simply you. An LLC offers personal asset and liability protection, while an Sole Proprietorship doesn’t. We have more info here: Sole Proprietorship vs LLC. Hope that helps!

        reply
  2. Ray Zeller January 10, 2018

    Matt,
    Thank you very much for taking most of the fear out of starting a busines, the many links are a huge help.
    Ray

    reply
    • Matt Horwitz January 15, 2018

      Hey Ray! Thanks for the awesome comment :) So glad this article was helpful!

      reply
  3. Guillermina July 6, 2018

    Thank you so much for sharing this. I was so lost and did not know where to start. This is a big help!!!

    reply
    • Matt Horwitz August 12, 2018

      You’re very welcome Guillermina! Thank you for the nice comment :)

      reply
  4. Andrea July 9, 2018

    I started the process of completing the online form to set up my business as an LLC.
    There is a section that asks to name the “registered agent”.
    What/who is this? I cannot find anywhere what that means and cannot proceed until I can figure out what that is.
    Pls respond ASAP. I have to file soon!
    Thx
    AT

    reply
    • Matt Horwitz July 10, 2018

      Hi Andrea, a Registered Agent is a person or company who agrees to accept Service of Process (legal mail, like a summons, compliant, or subpoena) in case your LLC is sued. The Secretary of State may also send other notifications to this address. You have 4 options for who can be your Registered Agent in Colorado. You can find the details here: Colorado LLC Registered Agent. Hope that helps!

      reply
      • Jennifer McCaleb August 23, 2018

        HI Matt!
        Can your bookkeeper/accountant be your Registered Agent? The one I am using just moved out of state, but will be doing everything online. Is that ok?
        Thanks for all the info! It is really helping!
        Jen McCaleb

        reply
        • Matt Horwitz August 31, 2018

          Hi Jen, you’re very welcome! The rules governing a Colorado Registered Agent are listed in the Colorado Revised Statutes (search “7-90-701”). It doesn’t matter if your Colorado Registered Agent is also your accountant/bookkeeper, they just need to be at least 18 years of age and be a resident of Colorado (or have Colorado as their usual place of business). Hope that helps!

          reply
  5. Chelsea July 26, 2018

    Hi Matt, I truly appreciate this article– it helped me get on track with my soon-to-be launched business! I do have some questions about the whole sales tax aspect of owning a (very!) small business. I almost completed registering with the Colorado Dept of Revenue but as I got to the end I am seeing that I now owe a Sales Tax Deposit of $50.00 and a Sales Tax License Fee of $12.00. Is this still something I need to file now as I haven’t started sales yet? I’m trying to budget properly and save money when I can, but is this something I need to file immediately upon launching my small business? I suppose it’s the “deposit” part that I’m wondering where this goes… I really appreciate in advance any help you can give me on this subject! Thanks!!

    reply
    • Matt Horwitz August 13, 2018

      Hi Chelsea, thanks for the kind words! Yes, if you will collect sales tax, this needs to be filed. For the $50, it’s a one-time deposit required by Colorado for any new LLC that needs to collect sales tax. The $50 is refunded to you once you pay an equivalent amount in your sales tax return. If you don’t pay any sales tax, then you won’t get the deposit back. We understand that taxes can feel complicated. For this reason, we recommend you work with an accountant and a sales tax filing company if needed (like TaxJar). We also recommend reading the Colorado Sales and Use Tax Guide. Hope that helps!

      reply
  6. Toni October 5, 2018

    I dont know if this is the right outlet but this has helped me all the way thorough taxes. I do quarterly taxes now… What about federal taxes? Or taxes at end of year? You have anything on that? May be a dumb question but I am still getting use to the taxes

    reply
    • Matt Horwitz October 25, 2018

      Hey Toni, glad to hear we could help. We recommend reading how are LLCs taxed. We also recommend speaking with an accountant. We don’t have step-by-step tax information (like we do LLCs) since how taxes are filed and paid varies widely among business owners. Thanks for your understanding and hope that helps.

      reply
  7. Spark December 2, 2018

    I have a very small ETSY shop that has made zero profits this year. It is more of a hobby thing. Do I need to register my business here in Colorado? All the fees will be more than I make in a year. I’m just not sure this is worth it as a hobby. Any input is appreciated.

    reply
    • Matt Horwitz December 3, 2018

      Hey Spark, you’re not required to form an LLC for your business. Does your business (currently a Sole Proprietorship by default) have a name (other than your own)?

      reply
      • Spark December 6, 2018

        I have been using a different name on ETSY and on a card but it is not registered (I have made sure it is available for my use however). Should I file all this under my personal taxes?

        reply
        • Matt Horwitz December 6, 2018

          Hey Spark, yup, the business income/loss would be reported on a Schedule C as a part of your personal Form 1040 tax return. If you want to register your Trade Name, you can do so at the Colorado Secretary of State website. We don’t have info on Trade Names in Colorado, but you can read the state’s FAQs here: Colorado Trade Name FAQs. Hope that helps.

          reply
          • Spark January 18, 2019

            Thank you for all the information!

            reply
            • Matt Horwitz January 22, 2019

              You’re welcome Spark!

              reply
  8. Christin Whitener January 18, 2019

    This is so helpful! Getting up and running can be daunting and it’s awesome to have all of this info in one place. Thank you so much!

    reply
    • Matt Horwitz January 22, 2019

      Hey Christin, you’re very welcome! Happy to hear that :)

      reply
  9. Nancy Spelgatti February 12, 2019

    THANK YOU SO MUCH for this wonderful link! It’s been extremely helpful and has helped me figure out all the steps needed in this huge task!!! You are amazing!!

    reply
    • Matt Horwitz February 15, 2019

      Hi Nancy, you are very welcome! Thank you so much for the lovely comment :-)

      reply
  10. Scott February 12, 2019

    I have an LLC in Colorado and it has a DBA of Scott Wilson Images, LLC. I would like to add an additional DBA to the existing LLC so they are under the same tax ID since they basically are both photography businesses aimed at different markets and different web sites. I searched the Secretary of State website but could only find a way to change the DBA or create a new one but that would appear to be under my name and not the LLC, that I’m not sure of but it appeared that way. I don’t want to look like I have 2 businesses and have to file sales tax for 2 businesses when they are doing the same thing. Does this make sense and do you think it is possible to do in Colorado? Your article was very informative and I did note that you mentioned that this may not be the best route for an LLC to do but since they are so similar I felt like it would be the simpler (maybe that means not necessarily the right way) way of doing it.
    Thanks,
    Scott

    reply
    • Matt Horwitz February 15, 2019

      Hi Scott, when you say “my LLC has a DBA of Scott Wilson Images, LLC“, that doesn’t make any sense. A DBA name wouldn’t (and can’t) have “LLC” in its name. So I’m not sure if the foundation of your question is correct. In Colorado, a DBA name is called a Trade Name. A Colorado Statement of Trade Name is filed online. Visit this page: Colorado Secretary of State: File a Form. Click “Trade name”. Then click “a Reporting Entity”. Enter your LLC name (or LLC SOS ID Number), click search, click on your LLC in the results. Then click confirm and on the next page select “Statement of Trade Name of a Reporting Entity” to begin. Hope that helps.

      reply

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