Starting an LLC: An LLC is a legal business entity that has the benefits of both a corporation and a partnership. It has the pass-through taxation of a partnership, but provides personal liability protection like a corporation.
The Limited Liability Company (LLC) is the most flexible types of entities for business owners in Colorado. A Colorado LLC provides you with personal liability protection and keeps your profits “passed through” to your individual tax return, which means you can take any deductions that are available to individual taxpayers.
What are the Benefits of Starting an LLC?
The benefits of starting an LLC are numerous. LLCs help you protect your personal assets from business liabilities. They also provide the flexibility to adjust your business operations without having to file complicated paperwork.
In addition, LLC members can choose how they want the business to pay taxes. For tax purposes, they can be as a sole proprietor, a partnership, an S-Corporation or a C-Corporation.
An LLC also allows you to maintain your privacy and is one of the easiest types of businesses to maintain.
Step-by-Step Guide for Starting a Colorado LLC
1) Articles of Organization:
The first step is to file articles of organization with the Colorado Secretary of State. You’ll need to file online, CLICK HERE for the Business Organizations page. Before you file; Do a SEARCH. Your business name must be unique. Until July 2023, the filing fee for a new business in Colorado is only $1.
2) Operating Agreement:
After filing your articles of organization, you’ll need to create an operating agreement. This is an important document that sets out the rules and responsibilities of the company members. It’s worth investing some time and money in this document before going any further. Although it’s not necessary to hire an attorney to draft your operating agreement, the time and money it’ll save you in the long run is worth it.
3) EIN Number:
Go to this web page: CLICK HERE It’s free to get an EIN#. There are many websites and businesses who will do it for a fee. You’re giving them your personal information and paying them for the privilege. I believe it’s safer to give the IRS your information than a 3rd party. The IRS website is: https://www.irs.gov/. Don’t be fooled!
4) Bank Account:
My recommendation is to choose a reputable bank that’s close to your business. Even if you have a home office. Get one close to your home. Even if your business doesn’t handle cash, driving across town to go to a bank is not the best use of anyone’s time. You never know when you’ll need a document notarized or actually have to go to the bank for some reason. Thank me later.
5) First members’ meeting:
You’ll also need to hold your first members meeting as soon as possible after establishing your bank account. An important item to cover in the first meeting is to have the member(s) accept the operating agreement.
You’re probably going to need some type of insurance; you’re going to need someone to do your taxes; and you’re most likely sooner or later are going to need an attorney. I always ask folks, what is the probability you’ll be sued for something during your normal business day? If there is a low probability, such as a web designer working from home, then you may be able to do-it-yourself. If your business activity has a medium or high probability of causing harm; or is one which is highly regulated; I recommend seeing an attorney before you begin.