How to Form a Corporation in Colorado

What is a corporation, and why incorporate in Colorado?

A corporation is a legal entity separate from its owners (also called shareholders) that can conduct business, enter contracts, own property, and be held liable for its actions. In Colorado, corporations are governed by Title 7, Article 90, of the Colorado Revised Statutes.

Benefits of incorporating in Colorado

Colorado offers several advantages for business incorporation:

• Limited liability protection. Shareholders are not personally responsible for the corporation's debts and financial obligations, protecting personal assets from business liabilities.
• Tax advantages. Colorado corporations benefit from the state's relatively business-friendly tax environment, including a flat 4.4% corporate income tax rate as of 2024.
• Credibility and permanence. A corporate structure enhances business credibility with customers, vendors, and financial institutions while providing continuity beyond the involvement of any individual owner.
• Access to capital. Corporations can raise funds through the sale of stock and have easier access to business loans and investment opportunities.
• Colorado-specific benefits. The state offers streamlined online filing processes, reasonable filing fees, and efficient processing times through the Colorado Secretary of State's office.

Benefits of incorporating in Colorado vs. forming an LLC

While both corporations and limited liability companies (LLCs) provide limited liability protection, they differ significantly in structure and taxation:

• Taxation. Colorado corporations face double taxation (corporate and individual shareholder levels), while LLCs typically enjoy pass-through taxation. However, corporations can elect S corporation status to avoid double taxation. (LLCs can also elect S corporation designation if it makes sense for their business.)
• Management structure. Corporations require a formal structure, with directors, officers, and shareholders, while LLCs offer more flexible management arrangements.
• Growth and investment. Corporations are better suited for raising capital through stock sales and attracting investors, while LLCs are ideal for smaller, closely held businesses.
• Compliance requirements. Colorado corporations must maintain more corporate formalities, while LLCs have fewer ongoing requirements.

How do I incorporate in Colorado?

The Colorado Secretary of State provides a streamlined process for forming corporations. Here's the step-by-step procedure.

Step 1: Choose and reserve your corporate name

Before filing, verify your desired corporate name is available through the Colorado Secretary of State's Name Availability Search database. In addition to being distinguishable from other business entity names registered or reserved in the state, your corporation name will fulfill the naming regulations:

• Must contain the words "corporation," "incorporated," "company," or "limited," or the abbreviations "corp.," "inc.," "co.," or "ltd."
• Should typically avoid terms that are associated with government agencies or use words like “bank” or “trust” unless authorized to do so

If you’re not ready to file but you want to secure your corporate name, file a Statement of Reservation of Name online through the Colorado Secretary of State’s website. Name reservations cost $25 and last 120 days.

Step 2: Designate a Colorado registered agent

Every Colorado corporation must maintain a registered agent with a Colorado address. The registered agent receives official correspondence, legal documents, and notices on behalf of the corporation. The registered agent can be one of three things:

• An individual who is at least 18 years old with a primary residence or business address in Colorado
• A business entity formed or authorized to do business in Colorado with a usual place of business in Colorado
• The corporation itself, if it has a Colorado address

You’ll need to obtain consent from your designated registered agent to be able to list them on your articles of incorporation.

Step 3: Prepare and file your articles of incorporation

To form a corporation in Colorado, you’ll need to submit articles of incorporation online through the Colorado Secretary of State's website. Articles of incorporation must include the following information:

• Corporate name
• Address of the corporation's principal office and mailing address
• Registered agent name, Colorado address (not a P.O. box), and consent
• Stock structure, including total number of authorized shares and classes; the distinguishing designation for each class (if there are multiple classes); and relative rights, limitations, and preferences of each class of shares
• Names and addresses of incorporators
• Incorporator’s signature (signers must be at least 18 years old)

Once all the information is filled out, pay the $50 filing fee through credit, debit, or a prepaid account (no cash or checks are accepted).

Step 4: Create corporate bylaws (optional, but recommended)

While Colorado doesn't require corporations to adopt bylaws, they are highly recommended. Corporate bylaws should establish routine regulations and procedures that your corporation may need:

• The number of directors and their selection process
• Officer roles and responsibilities
• Shareholder meeting procedures
• Voting requirements and procedures
• Stock transfer restrictions
• Amendment procedures

LegalZoom can assist with creating corporate bylaws for your business.