Colorado is a great choice for anyone looking to start a business, thanks to its booming economy (which grew by 2% in 2025), low startup costs, and business-friendly laws. If you’re looking to take advantage of the growing population drawn to the natural beauty of the Centennial State, now is the perfect time to start your business—or take your side gig to the next level.
Learn how to form a limited liability company (LLC) and next steps to help you succeed as a small business owner.
Before you file: Essential Colorado LLC requirements
Before starting an LLC in Colorado, it helps to familiarize yourself with the Secretary of State's requirements. This will make filing your Colorado articles of organization a smoother process and decreases the chances of having to reapply due to avoidable errors.
Colorado LLC name rules
The Colorado Secretary of State won't register a new business that doesn't meet Colorado business name rules.
These are some of the most important requirements for the name of your LLC:
- It must be unique and distinguishable from all other registered Colorado business entities.
- It must use an appropriate designator like "limited liability company,” “ltd.," “LLC,” or “limited liability co.”
- It can't use words that imply affiliation with any federal or state government agency.
- It can't use words such as bank, credit union, lawyer, trustee, or Olympic without approval or licenses from the appropriate authorities
The role of your registered agent
A registered agent is a person or entity that you have authorized to receive service of process and other official legal notices on behalf of your LLC. Colorado requires you to appoint a registered agent for your LLC or they won’t accept your formation documents.
In Colorado, a registered agent must meet the requirements outlined by the Secretary of State:
- A registered agent must be available during regular business hours, typically 9 a.m. to 5 p.m.
- If appointing an individual, they must be 18 or older with a Colorado ID or verified Colorado residency
- An entity providing professional services must be in good standing with a consistent place of business in Colorado (this includes foreign entities authorized to conduct business in the state).
- The registered agent must have a Colorado physical street address (no P.O. boxes) and agree to serve.
Business licenses and permits
Colorado has many licenses and permits both on the state and local level that your business may need to operate within the state or city/county. This includes a state tax license, tobacco, liquor, and marijuana license, and various occupational licenses.
Businesses that plan to register as a professional service company may need to take special considerations when filing their formation documents. For example, they may need to include a specific professional designator in their name and attach additional information to their filing.
Your step-by-step Colorado LLC formation roadmap
A limited liability company offers liability protection and tax advantages, among other benefits for small businesses. These steps have all the info you need to get your LLC up and running in Colorado.
Step 1: Name your Colorado LLC
Once you’ve found an LLC name that meets Colorado business naming requirements, you can use the Colorado Secretary of State Name Availability Search to see if it's available. However, this database doesn't list similar business names. You can use the state’s Business Database Search if you want to look up similar entity names to ensure your business name stands out and avoid unnecessary confusion.
If you aren't ready to form your LLC immediately but are concerned someone else might take your name, you can reserve it for a reservation filing fee of $25. In Colorado, you can reserve a business name for 120 days by paying and submitting a Statement of Reservation of Name online with the Colorado Secretary of State.
Step 2: Choose your registered agent
Your Colorado registered agent performs a variety of duties for your business. They're the official point of contact for all correspondence and legal messages from government agencies, such as the Colorado Secretary of State or Department of Revenue.
You can be your own registered agent or hire a professional service to handle the responsibility for you. Business owners who want more flexibility with their time may choose the latter, especially because Colorado registered agents must always be available at their office during regular business hours.
LegalZoom’s Registered Agent Services make it easy to satisfy this Colorado LLC formation requirement while providing privacy and security. Our registered agent service provides unlimited digital document storage, and we'll also notify you of any communication that needs your immediate attention.
Step 3: Prepare and file articles of organization
The articles of organization is a form you file with the Colorado Secretary of State. It officially establishes your single-member or multi-member LLC by laying out basic information about your business.
You'll usually need the following information to prepare articles of organization and file them with the Colorado Secretary of State:
- LLC’s name and principal business address (must be a street address)
- LLC’s mailing address (if different from the business address)
- Registered agent's name, address, and consent
- Management structure (manager-managed or member-managed)
- A statement that the LLC will be run by at least one member
- The name and address of the person filing the LLC the articles
- The effective date for the formation of the LLC (if different than the filing date)
Keep in mind, Colorado only accepts online filings, which you can process through MyBizColorado. The state's filing fee of $50 must be paid via credit card, debit card, or a prepaid account.
The LLC becomes a legal business entity after the Colorado Secretary of State approves your articles of organization and gives you a business ID number. This number is not the same as your federal employer identification number (FEIN).
Step 4: Create an operating agreement
Although the state doesn't require you to file one, having a Colorado LLC operating agreement is a wise choice. A written agreement lays out the blueprint for your business operations and can help settle disputes that may arise over financial agreements and other potential litigation. Without an operating agreement, the Colorado courts will make determinations on legal disputes based on state law, and not necessarily what is in the best interest of the LLC and its members.
Here are some common elements to include in your LLC operating agreement:
- LLC's name and principal address
- Duration of the LLC (if it has a specific end date)
- Name and address of the statutory agent
- Copy of the articles of organization
- Purpose of the business
- Ownership structure
- Members and their contributions
- The way profits and losses will be divided
- Procedures for new members and outgoing members
- Voting rights and procedures
- Management structure
- Indemnification and liability clauses
You can develop your own operating agreement, use a Colorado LLC operating agreement template, or use an operating agreement service. Whatever you choose, it’s a good idea to have a legal review of your agreement to ensure you’ve covered all the essential elements. LegalZoom can connect you with an attorney who can tailor an operating agreement to your specific needs.
Building a business is enough work as it is. We'll help you start your LLC with confidence.
Step 5: Get an employer identification number (EIN) and open a business bank account
The employer identification number (EIN) is a federal tax identification number that the Internal Revenue Service (IRS) uses to identify businesses for tax purposes. An EIN also allows your LLC to open a business bank account and hire employees. While LLC owners can use their Social Security number (SSN) for business tax purposes (since LLCs are pass-through entities), an EIN allows you to separate business debts and help protect your personal assets.
When you open a business bank account for your Colorado LLC, you strengthen the distinction between you and your business. This is an essential step to maintain your personal liability protection. Additionally, an account dedicated to your business entity makes tracking sales and expenses, claiming deductions, and making financial projections a whole lot simpler. Investors and other funders also look more favorably upon businesses that don’t intermingle their personal and business finances.
LegalZoom’s EIN service can save you from filing and tracking one more form as you set up your Colorado LLC. We guarantee 100% accurate filing and will notify you as soon as we have your EIN with official documentation.
Navigating Colorado's compliance obligations
You've made it through the registration process! But, there's still more to do. After starting an LLC in Colorado, compliance is an ongoing requirement.
The Colorado periodic report
Annual reports—called periodic reports in Colorado—update the state on basic information on your business, similar to your initial articles of organization. All LLCs in Colorado need to file this report and pay a $25 filing fee to remain in good standing with the Colorado Secretary of State. You must file the periodic report online through the Secretary of State website.
Periodic reports are due during the three-month period beginning on the first day of the anniversary month when the LLC was formed. If you miss filing this periodic report, you face a $50 late fee and your Colorado LLC may lose its active status.
If you're worried about missing the due date, LegalZoom can file the annual report on behalf of your LLC each year so you can focus on what you do best—getting customers and driving business.
Colorado business licenses and permits
There are no general business licensing requirements in Colorado, however, depending on the nature of your business and its location, you may need local or specialized permits or licenses to legally operate. Common Colorado business licenses and permits include the following.
On the state level:
- Sales tax license. Sometimes also called a reseller’s permit or vendor's license, your LLC needs this license if you'll pay sales and use tax. You can apply for the sales tax license online and the registration is valid for two years.
- Regulated goods licenses. The Liquor and Tobacco Enforcement Division issues state tobacco and liquor licenses, but you’d also need a license from your local government. The Marijuana Enforcement Division issues marijuana business licenses.
- Professional licenses. You can check the The Division of Professions and Occupations' page on license types to see if your business needs a specific professional license. The Colorado Department of Regulatory Agencies (DORA) is another good resource for this information.
On the local level:
- Sales tax license. Some cities and counties, such as Denver, Colorado Springs, and Centennial, require a separate sales tax or retail license.
- Regulated goods licenses. Cities and counties like Boulder, Glendale, and Johnstown have adopted "dual" licensing, which allows you to obtain both a local and state liquor license. But, you need to go through the local licensing division first and they'll forward it to the state division.
- Professional licenses. Denver's license directory is a great resource for local professional licenses. Check your local municipality's website to see if your profession requires a local license.
Other common licenses and permits range from zoning permits and health permits to signage and environmental licenses. You can also get all the information in one place by using an online Business License Lookup Service.
Federal & state taxes for your Colorado LLC
Every Colorado LLC has tax obligations. After your formation documents receive approval, go to the Colorado Department of Revenue (DOR) and apply for the appropriate taxes.
Below are some of the taxes your business may be subjected to.
Federal income tax
By default, an LLC files federal income taxes as a “pass-through” entity. That means a single-member LLC files as a sole proprietorship and a multi-member LLC files as a partnership. However, your LLC can elect to file as a corporation instead by filing Form 8832.
In addition to federal income taxes, your LLC may need to file self-employment taxes and employer taxes based on how you file and whether or not you hire employees.
State income tax
- Who files: All Colorado business entities.
- How much: A flat rate of 4.4% for both individual and corporate income tax.
- When to file: By April 15, or by the 15th day of the fourth month after your financial year ends (for LLCs that file as corporations).
- How to file: Online with the Department of Revenue. Pass-through LLC owners file on their personal income tax returns. LLCs that elect to file as a corporation report it on a separate business income tax return.
Sales and use tax
- Who files: Businesses that sell, rent, or lease tangible (physical) personal property. Some Colorado cities may also charge sales tax on select services.
- How much: 2.9%, plus your city’s sales tax if there is one.
- When to file: Depends on the amount of sales tax your business collects monthly. Check the filing frequencies for your business' due date.
- How to file: Apply online with the DOR.
Wage withholding tax
- Who files: Businesses that hire employees, issue 1099s, or are a gaming establishment
- How much: Differs based on an annual review of your account from July 1 to June 30.
- When to file: Quarterly, monthly, or weekly depending on your withholding amount. Check the DOR’s wage withholding guide for filing frequencies.
- How to file: Register for wage withholding tax with the Colorado Department of Revenue.
Here are a few other taxes your business may need to register for:
- Local taxes: Certain cities or counties impose special taxes. Contact your local authority to find your local tax obligations.
- Industry-specific taxes: Some regulated industries have additional tax requirements. In Colorado, the Retail Marijuana Sales Tax is 15%, while the Tobacco Product Excise Tax is 56%.
Key benefits of a Colorado LLC (and what to watch out for)
Every state has its own pros and cons when it comes to forming a business and specifically an LLC. Here are Colorado's.
Advantages
- Low state filing fees
- Simple, streamlined state filing systems
- No franchise tax
- Relatively low, flat-rate income tax
- No estate tax or inheritance tax
- Diverse tax credits
- Limited liability (asset protection)
- Flexible management structure
- Flexible tax options
Disadvantages
- Annual periodic report (though the fee is low)
- The cost of doing business in big cities is higher than some other states
- LLCs that file as corporations risk being taxed on the same income twice
- More complex filing requirements compared to a sole proprietorship
- Less investment opportunities compared to a corporation
Considering another state for your LLC?
You can always form your LLC in another state, even if you live in Colorado, you’ll just need to hire a registered agent with a physical address in the state where you’re registering. However, if you plan to do business in CO, you may be better off registering here at home rather than having to get your foreign qualification.
The best state for an LLC depends on its specific business needs. Here are how some other states compare.
When to consider a California LLC
Despite its high income tax rates and annual franchise tax, there are a lot of reasons to start a California LLC. In addition to having the 4th largest GDP in the world, California offers unparalleled access to venture capital investors, diverse, cutting-edge industry opportunities, and a vast pool of skilled talent across sectors.
When to consider a Texas LLC
Texas is also popular with entrepreneurs looking to scale their business. The Lone Star State boasts several big, business-friendly cities and a strong economy without the high cost of living that comes with states like New York or California. Despite the higher formation fees, Texas LLCs can save on operating costs and benefit from the lack of corporate and individual state income tax.
Other popular states for LLC formation
Here's a quick look at other popular states for LLC formation.
- Florida doesn't impose a state income tax on pass-through entities, offers access to a growing venture capital sector, and supports local businesses with various tax incentives.
- Ohio has no annual reports, no franchise tax, and a graduated individual income tax rate that’s generally around 3%.
- Delaware is known for its highly-evolved corporate legal system, which makes it a popular state for investors.
- New York imposes some of the highest taxes in the country, but offers incentives to eligible startups near universities and other tax credits.
Start an LLC in Any State
LegalZoom can help you file your state's formation paperwork for as little as $0 + state filing fees.
Start your Colorado LLC with LegalZoom
There's a reason more than 4 million businesses get off the ground. Our LLC registration services offer a fast, easy, and affordable way to form your LLC.
Here are some of the perks:
- Streamlined process. LegalZoom combines technology and expertise to take the guesswork (and paperwork) out of business formation. Our online process can help you start your LLC in minutes.
- Expert support. We’re committed to the highest quality and accuracy. If your filing is rejected or incorrect due to our error, we’ll correct it with the government agency at no additional cost to you.
- A full suite of services. Beyond just LLC formation services, LegalZoom supports all your business filing needs. We provide year-round compliance services, bookkeeping tools, access to attorneys, registered agent services, and trademark registration.
FAQs about forming an LLC in Colorado
How much does it cost to start an LLC in Colorado?
The minimum cost of forming an LLC in Colorado is $50—your articles of organization filing fee. However, there could be other expenses that can raise this number to $200–$300.
- Filing fees. Colorado articles of organization cost $50 for a domestic LLC. The filing fees for a foreign llc in Colorado is $100.
- Registered agent services. A registered agent service can cost between $50–$300, depending on additional services they provide (such as sorting documents and sending reminders for compliance paperwork).
- Business licenses. The state's sales tax license is between $4–$16. The cost of other business licenses vary by city, business size, and number of employees. In the city of Colorado Springs, most business licenses are around $110. Other cities, such as Durango, have licenses starting at $30.
- Business insurance. Insurance cost again depends on policy purchased (general, professional, or product liability), coverage required, business size, and industry.
How long does it take to form a Colorado LLC?
It can take a few business days to a few weeks for the Colorado Secretary of State to process your articles of organization.
Do I need a Colorado business license?
No, you don't need a general business license to operate in Colorado. However, you may need to obtain certain licenses and permits depending on the nature of your business and where it's located in the state.
Can a non-resident form a Colorado LLC?
Yes, a non-resident can form an LLC in the state However, they'll need a registered agent with an office address in Colorado.
Is an operating agreement required in Colorado?
No, the Colorado Secretary of State doesn't require you to file an operating agreement, but it's an important document that every business should have to outline their business operations and inform potential legal disputes.
What is the Colorado periodic report?
The Colorado periodic report is what Colorado calls its annual report. Like annual reports in other states, it updates the Secretary of State on basic information about your business. This is a mandatory report that all registered businesses must file once a year.
Can I renew a business name reservation in Colorado?
Yes, you can extend a name reservation for another 120 days by filing the Statement of Renewal of Reservation of Name.
Swara Ahluwalia and Rudri Bhatt Patel contributed to this article.
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