Business owners often use a limited liability company (LLC) business structure to protect their personal assets. However, to have an LLC, you have to register your company as one. Colorado has its own rules for registering a company as an LLC that you need to know about if you want to have an LLC in this state.
What Are the Requirements for a LLC?
To create a LLC in Colorado, you will first need to check to see if the name you want is available. The name that you choose must include “ltd.”, “ltd. liability co.,” “ltd. liability company,” “limited”, “l.l.c.”, “limited liability co.,” “llc”, or ”limited liability company.” You will also need to appoint a registered agent that either lives in Colorado or has a usual place of business in the state. The company must have at least one member, and you have to decide if the business will be run by said member(s) or by managers.
What Paperwork Do I Need to Form a LLC?
If the company is based in Colorado, a person may form an LLC by filing Articles of Organization for the LLC online at the Colorado Secretary of State website. When filling out the form, you will have to put down the name and address of the company, the name and address of the registered agent, the name and address of the person forming the LLC, and if members or managers will be running the company. You will also need to have your registered agent to confirm that they are willing to serve in this position for your LLC by consenting on the Articles of Organization paperwork.
Businesses located outside of Colorado who want to register in the state have to file a Statement of Foreign Entity Authority. The information required on the form is the Colorado Secretary of State ID number, where the company was formed, the address of the company, the name and address of the registered agent and the day the company will begin business in Colorado. A business will also be required to file a True Name form if they are required to pick a new name to do business in the state because their original name is unavailable.
What Benefits Does Colorado Give to a LLC?
Colorado allows anyone filing Articles of Organization the option to delay the effectiveness of the paperwork for up to 90 days. Thus, you can file your paperwork even if you are not quite ready for your LLC to be fully functional at that moment in time.
Having an LLC business structure provides a company with the benefit of reducing its owners’ personal liability if it is sued. This is because an owner’s personal assets are not included if the company has to pay out a settlement to someone.
There are also tax benefits with an LLC because it uses a “pass-through” tax system. Any profits are taxed only once through the member’s individual taxes. This is different from a corporation, which has a double tax for all profits in the through both the member’s personal information taxes and the corporation’s taxes.
What Disadvantages Does Colorado Give to a LLC?
In Colorado, an LLC needs to file a Periodic Report annually, or else it will be listed as “noncompliant”. After two months of being noncompliant, an LLC’s status will then be changed to “delinquent”. Once delinquent, an LLC in Colorado cannot sue anyone in court to collect on an unpaid debt.
Where Can I Find the Right Lawyer?
Having assistance from a Colorado business lawyer when forming a LLC can be very important. A business lawyer will make sure you are following the correct rules to setup your LLC, so that your business is protected.