To start a business in Colorado, you file formation documents with the Secretary of State for a $50 online fee, get a federal Employer Identification Number from the IRS, register with the Colorado Department of Revenue for tax accounts, add workers’ compensation and unemployment insurance if you plan to hire, and pick up any professional or local licenses your specific work requires. The order matters. Filing in the wrong sequence, or skipping a step, creates problems that are harder to fix later than to handle upfront.
Pick an Entity Type First
Your legal structure shapes your taxes, your personal liability, and every piece of paperwork that follows. Three options cover most new Colorado businesses.
- A limited liability company separates your personal assets from business debts and offers flexible tax treatment. Formation is simpler and ongoing requirements are lighter than a corporation, which is why most small businesses start here.
- A corporation creates a separate legal entity with shareholders, directors, and officers. It fits businesses planning to raise outside investment. Colorado allows both C and S corporations, though the S election is made with the IRS, not the state.
- A partnership can be general or limited. A general partnership is the simplest multi-owner structure but provides no liability protection. A limited partnership separates general partners, who manage and bear liability, from limited partners, who invest without managing.
Sole proprietorships require no state formation filing, but they also give you zero liability shield. If a customer sues, your personal bank accounts, car, and home are exposed. That alone pushes most founders toward an LLC or corporation.
Clear a Business Name
Every Colorado entity name must be distinguishable from all other names already on file with the Secretary of State under C.R.S. § 7-90-601, and the standard is stricter than people expect: minor variations from an existing name will get your filing rejected.1Justia. Colorado Revised Statutes Title 7-90-601 – Entity Name Search the Secretary of State’s business database before you file to confirm your name is available.2Colorado Secretary of State. Business Entity Search
Your name also has to carry the right identifier. An LLC must include “Limited Liability Company” or an abbreviation like “LLC” or “L.L.C.” A corporation must include “Corporation,” “Incorporated,” “Corp.,” or “Inc.”3Colorado Secretary of State. Business FAQs – Entity Names These aren’t optional; they signal to the public what kind of entity they’re dealing with.
Want to operate under a different name than your legal entity? File a trade name statement with the Secretary of State. This is Colorado’s version of a DBA. For individuals, the fee is $20.4Colorado Secretary of State. Statement of Trade Name of an Individual Example: you form “Smith Holdings LLC” but run a restaurant called “Blue Mountain Grill.” The trade name filing ties the public name back to the legal entity.
File Your Formation Documents
LLCs file Articles of Organization. Corporations file Articles of Incorporation.5Justia Law. Colorado Code Title 7-80-203 – Formation6Justia. Colorado Code 7-102-102 – Articles of Incorporation Both require similar core information: the entity’s principal office address (a physical location, not a P.O. box), the name and address of the organizer, and, for LLCs, whether the company will be member-managed (owners run it) or manager-managed (designated managers run it while other members stay passive).
Everything happens through the Secretary of State’s online portal, which runs around the clock except for brief overnight maintenance.7Colorado Secretary of State. Filing Documents You fill out the form, pay by credit card or pre-funded account, and the system issues a confirmation and entity ID number as soon as payment clears. Allow under 20 minutes if your information is ready.
The online formation fee is $50.8Colorado Secretary of State. Business Organizations Fee Schedule Expedited processing (prioritizing your filing within three business days) adds $150. Download the filed articles when the portal offers them. Banks require this document to open a business account, and you’ll pull it out any time you need to prove the entity exists.
Name a Registered Agent
Every Colorado entity must designate a registered agent under C.R.S. § 7-90-701 to accept legal documents and government notices.9Justia. Colorado Revised Statutes Title 7-90-701 – Registered Agent – Definition The agent must be at least 18 with a physical Colorado address, or be a business entity authorized to operate in the state. You can serve as your own agent, but someone has to be available at the listed address during business hours. Many owners hire a commercial registered agent service rather than take on that burden.
Write an Operating Agreement or Bylaws
Formation documents create the entity. Governance documents tell it how to run. Colorado doesn’t require you to file either, and skipping them is one of the most common mistakes new owners make.
For LLCs, that document is the operating agreement. Colorado recognizes its binding effect under C.R.S. § 7-80-108, and while the statute doesn’t technically mandate one, operating without an agreement means the state’s generic default rules govern your business.10Justia. Colorado Revised Statutes Title 7-80-108 – Effect of Operating Agreement Those defaults rarely match what the owners actually intended. A workable operating agreement covers ownership percentages, how profits and losses are split, voting rights, what happens when a member leaves, and how the business is dissolved. Without it, a co-owner dispute has no roadmap other than litigation.
Corporations use bylaws for the same purpose: how the board operates, how officers are appointed, how shareholder meetings run, and what votes are needed for major decisions. Sign them, date them, and keep them with your entity records.
Get a Federal EIN
An Employer Identification Number from the IRS is required for any business that plans to hire, operates as a corporation or partnership, or files certain tax returns. Think of it as a Social Security number for the business.11Internal Revenue Service. Get an Employer Identification Number The IRS recommends forming your entity with the state first, then applying. The online application issues your number immediately at no cost. You’ll need it before opening a business bank account, hiring, or filing state tax returns.
Register for Colorado Tax Accounts
Once your EIN is in hand, register with the Colorado Department of Revenue using Form CR 0100. This single form opens your accounts for state sales tax collection and employee withholding.12Department of Revenue – Taxation. CR 0100 – Colorado Sales Tax and Withholding Account Application If you sell tangible goods, Colorado requires a sales tax license, and CR 0100 is how you get one.13Colorado Department of Revenue. How to Apply for a Colorado Sales Tax License
Here’s the catch that trips people up: the state sales tax license only covers state-level and state-administered local taxes. If you operate in a home-rule city (Denver, Boulder, Aurora, and many others), you have to contact that city directly for a separate municipal sales tax license. Home-rule cities set their own rates and run their own collections. A single state registration will not cover you there.
If You’re Hiring: Insurance and Employer Accounts
Hiring even one employee triggers additional requirements before that first paycheck.
Workers’ Compensation
Colorado requires workers’ compensation coverage for any employer with one or more employees, full-time or part-time. Family members on the payroll count. True independent contractors are the main exception, but Colorado applies a strict test to decide who actually qualifies versus who has been misclassified.14Colorado Department of Labor and Employment. Employers – Division of Workers’ Compensation Operating without coverage when you need it exposes you to significant fines and personal liability for workplace injuries.
Unemployment Insurance
Any employer paying wages to a Colorado employee must register for an unemployment insurance account. You can do this online through MyBizColorado or the MyUI Employer+ portal. After registering, you file quarterly wage reports and pay UI premiums at your assigned tax rate.15Colorado Department of Labor and Employment. Starting a Business New employers get a standard starting rate that adjusts over time based on claims history.
Professional and Local Licensing
The Colorado Department of Regulatory Agencies (DORA) oversees licensing for dozens of professions: healthcare providers, accountants, architects, barbers and cosmetologists, electricians, plumbers, real estate agents, insurance agents, engineers, and many others.16Colorado Department of Regulatory Agencies. Apply for/Renew a License or Permit Check DORA’s licensing directory before you open if your business provides professional services. Operating without a required license can bring fines, injunctions, and the inability to enforce contracts with your clients.
Most Colorado cities and counties also require their own general business license or specific permits, particularly for a physical location. Fees and requirements vary. Denver’s rules differ from Colorado Springs or Fort Collins. Contact the city or county clerk where you’ll operate to find out what applies. Zoning is a local matter too: your landlord’s building might allow retail but not food service, and that’s enforced at the local level, not the state.
Keep the Entity Alive: Periodic Report
Filing formation documents isn’t the end of your obligations to the Secretary of State. Every active Colorado entity must file a periodic report to keep its information current, confirming or updating the principal address, registered agent, and names of members or officers.
The fee is $25 online. Miss the deadline and the late penalty is an additional $50.8Colorado Secretary of State. Business Organizations Fee Schedule Ignore the report long enough and the Secretary of State will administratively dissolve or terminate your entity. Once that happens, you lose authority to conduct business under that name, and reinstating takes additional filings and fees. Set a calendar reminder: the report is due during the anniversary month of your entity’s formation, and Colorado emails reminders if your contact information is current.