Forming a Limited Liability Company (LLC) in Colorado is a structured process governed by state laws. Here’s a comprehensive step-by-step guide to creating an LLC in Colorado:
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STEP 1: Choose a Name for Your Colorado LLC
Select a company name that complies with Colorado business naming requirements. It must end with “Limited Liability Company,” “Ltd. Liability Company,” “Limited Liability Co.,” “Ltd. Liability Co.,” “Limited,” “L.L.C.,” “LLC,” or “Ltd.”
The name must be distinguishable from any other registered Colorado business entity and any reserved names on record, subject to certain exceptions under state law.
You can perform a name search on the Colorado Secretary of State‘s business name database to check availability.
If desired, you can reserve the LLC name for 120 days by filing a Statement of Reservation of Name and paying the applicable fee.
Time it Takes to name a Colorado LLC
Researching and deciding on a name: 1-2 hours
If opting for a name reservation: The act of filing can take about 10-15 minutes.
If opting for a name reservation: Filing can take minutes, but approval might take a few days to a week.
STEP 2: Appoint a Registered Agent
Colorado requires you to appoint a registered agent for your LLC who will receive legal documents, correspondence, and official government notifications.
This agent can be an individual (either yourself or someone else) who resides in Colorado or a business entity authorized to do business in Colorado, provided they have a physical street address in the state.
Time it Takes to be a Registered Agent
Registered Agents MUST BE at the Business Address everyday during business hours. This is why Home Addresses Are Not Accepted.
If you already have someone in mind (like an attorney or a service), this can be quick. If you need to find and appoint a registered agent: 1-3 hours.
Why use Inc Authority vs Being your own Registered Agent?
Benefits of having Inc Authority serve as your Registered Agent include:
· Privacy: Keep your home address private
· Efficiency: Easily receive and promptly process state and legal documents
· Hassle-free: Reduction of junk and solicitation mail
· Legal Compliance: Avoid fines, penalties, and possible dissolution
· Convenience: Serves as your public & legal business address
Inc Authority offer you a FREE year of Registered Agent Service with the purchase of your LLC.
STEP 3: File Articles of Organization
File the Articles of Organization with the Colorado Secretary of State. This can be done online through the Secretary of State’s website.
Include necessary information such as the LLC’s name, the principal office address, the registered agent’s name and address, and whether the LLC will be managed by members or managers.
There is a filing fee, which must be paid at the time of filing. Check the current fee on the Colorado Secretary of State’s website as fees can change.
Time it takes to write the Articles of Organization
Preparing the document: 1-2 hours
Filing online: 30 minutes to 1 hour.
Waiting for confirmation/approval: This can range widely, but typically, online filings can be processed in a few days to a couple of weeks.
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STEP 4: Create an Operating Agreement
Although not legally required by the State of Colorado, it’s highly advisable to have an LLC Operating Agreement. This document sets out the LLC’s ownership, operation procedures, and member roles.
The operating agreement is an internal document and should be kept with the LLC’s records.
Time it takes to write an Operating Agreement
If using a template and making minimal changes: 1-3 hours
If drafting from scratch or having extensive negotiations among members: Several days to weeks.
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STEP 5: Obtain an Employer Identification Number (EIN)
Apply for an Employer Identification Number (EIN) from the Internal Revenue Service (IRS) for tax purposes.
You can apply for an EIN online at no cost through the IRS website: https://www.irs.gov/businesses/small-businesses-self-employed/apply-for-an-employer-identification-number-ein-online
The EIN will be used for tax filings, opening bank accounts, and hiring employees.
Time it takes to get an EIN / Tax ID
Filling out the online form and receiving the EIN: Approximately 0.5 to 1 hour (the online process is relatively quick if there are no complications).
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SO HOW MUCH TIME WILL IT TAKE TO FORM AN LLC MYSELF? DO IT MYSELF (DIY) an LLC?
Total Time Investment (Minimum): 5 hours (if you exclude the higher range estimates and name reservation)
Total Time Investment (Maximum): 11.5 hours (if you include the higher range estimates and name reservation)
This gives a ballpark range of 5 to 11.5 working hours for an individual, excluding all waiting times. It’s worth noting that these times can vary based on the person’s familiarity with the processes and any specific details or challenges related to the business being set up.