If you’re an entrepreneur or running a small business or startup, forming a limited liability company (LLC) in Colorado is usually an excellent idea. You’ll enjoy tax benefits, personal liability protection, and owner and management flexibility that other business entities can’t provide. Unfortunately, starting an LLC isn’t free, and people who benefit from forming one are often intimidated by the paperwork and fees.
You shouldn’t be.
In this post, we’ll cover the main LLC fees Colorado businesses have to pay and when and some additional forms and documents you should consider filing. We’ll cover:
Are you ready to become an LLC? Let’s get started:
Colorado Business Name Reservation Fees
Colorado is known for supporting local small businesses. In fact, of the 655,000+ companies operating in Colorado, 99.5% are small businesses. The downside: any one of them could already be using the name you want to call your company, so before you do anything more, check Colorado’s business database search to ensure your name is available.
Also, because it’s an LLC, your organization must include “Limited Liability Company,” “LLC,” “L.L.C.,” “LC,” or “L.C.” in its name. There are also a few words you can’t include, such as:
Once you select a business name, you can reserve it for 120 days while you get the rest of your documents together to form your LLC. Doing this ensures that no one can take your name while you’re becoming an LLC. If they do, you’ll have to start the whole process over again.
Thanks to the Colorado Business Fee Relief Act, reserving your business name costs a whopping $1 until June 30, 2023, when they estimate they’ll run through their reserves. $1 is definitely worth the peace of mind.
If you’re reserving your name after the reserves expire, it costs $20.
Before your file, you should also consider:
Colorado State LLC Filing Fees
Once you’ve cross-checked your business name to ensure it’s distinguishable and available, it’s time to file your articles of organization. While they’re as important as they sound, don’t be intimidated by them. These are simply the legal documents that outline your LLC’s basic information, including your:
Review this document carefully before submitting. Any errors can cause you problems later on.
Your articles of organization cost $250 to file.
Once again, thanks to the Colorado Business Fee Relief Act, filing your articles of organization only costs $1 until funds run out. After, the filing fee is $50.
Colorado LLC Fees For Your Operating Agreement
Your operating agreement is a crucial document that outlines your LLC’s rules, regulations, and liabilities. It’s sort of like your organization’s constitution.
While Colorado doesn’t mandate it, we strongly recommend having an operating agreement, regardless of your business entity. Even if you’re a single-member LLC with no employees, it’s good practice to have this document as a reference point. A signed agreement can help address important questions and protect your business during legal and financial disputes. Without one, the courts may be left to make decisions for your LLC, which may not be in your or your organization’s best interests.
Here are a few key elements you should include in your operating agreement:
Drafting an operating agreement is free, but you should hire an attorney to draft one for you or look over your current one. There are also some websites available that’ll do the work for you for $50 - $200, but we recommend doing your research beforehand.
LLC In Colorado Fees For Registered Agents
Your registered agent is a person or business entity that receives legal documents and state notices on behalf of your LLC. In Colorado, your registered agent must have a physical address, not just a P.O. Box. This address will become public knowledge once your organization officially becomes an LLC.
If you don’t want that information out there, or if you reside out of state, you may want to consider working with a commercial registered agent service. However, if you want to hire a service, you can expect to pay $100 to $300 per year.
If you want to be your own registered agent, you can do so for free.
Business License Fees For Colorado Organizations
There’s no set cost for a standard business license in Colorado. Typically, the fee varies from city to city. If you’re a small enough business, some cities may not charge you anything! Otherwise, you can expect to pay anywhere from $15 to $30 to hundreds of dollars.
You’re also required to renew your license either every year or every other year, depending on where you’re doing business.
Sales Tax Registration Fees
In the state of Colorado, you don’t have to collect sales tax on services. Depending on your business, you may be required to purchase a standard retail license (also called a sales tax license), a wholesale license, or a single or multiple special event license.
If you’re applying for a sales tax license between January and June of 2023, a sales tax license will cost you $8. If you’re applying sometime between July and December of 2023, it’ll cost you $4. Typically, you’ll need to renew your license every year ending in an odd number.Colorado LLC Annual Fees
Now that we’ve covered all of the basic fees you’ll encounter as you’re getting your Colorado LLC up and coming, let’s discuss how your business stays in good standing with the local, state, and federal government.
Don’t worry, it’s much easier than you may think.
Aside from paying your taxes, your main responsibility is to file a periodic report (also known as an annual report). This report is very similar to your articles of organization and requires you to keep your organization’s information up to date.
It will cost you $10 to file your periodic report, which is affordable compared to other states. Arkansas LLC fees cost $150 each year, Tennessee LLC fees are $300 plus an additional $50 for each partner or owner, and California LLC fees are $800+ each year!
Total Cost Of Colorado LLC Fees
Here’s a complete list of the LLC fees we’ve covered and how often they’re due:
Fee Type | Cost | HOW OFTEN |
|---|---|---|
Business name reservation | $20 ($1 until June 30, 2023) | One time |
DBA name designation | $20 ($1 until June 30, 2023) | One time |
Articles of organization filing fee | $50 ($1 until June 30, 2023) | One time |
Operating agreement costs | $0, or $50 - $200 or more | One time |
Registered agent fees | $0, or $100 - $300 | Annually |
Business license fee | $0, $15 - $30, or more | Annually or biennially |
Sales tax registration fees | $8 from January 1 - June 30, 2023 $4 from July 1 - December 31, 2023 | Biennially |
Periodic report fees | $10 | Annually |
Additional FAQs
Do you still have more questions about Colorado LLC fees or more questions about LLCs in general? We’ve got answers:
If you have to amend your articles of organization for whatever reason, it will cost you $25. It also costs you $25 to amend and restate them if need be.
You can realistically start a Colorado LLC for a little more than $100, depending on the business license(s) you may need. If you file while the Colorado Business Fee Relief Act still has a budget, you can get started for $1.
That’s an incredible value, especially for the tax benefits that come with it. Unless you opt to be taxed as a corporation, the IRS will consider your LLC a disregarded entity, which basically means that you’ll enjoy many of the tax benefits of a sole proprietor. However, if it’s more advantageous for you, you can be taxed as an S corp or C corp. In order words, LLCs can choose which business entity’s tax advantages best benefit them.
Paying yourself from an LLC is pretty straightforward. All you need to do is transfer a portion of your organization’s cash reserves from your business account to your personal account. If you’re allocating funds among other LLC members, do so based on what you’ve agreed on in your operating agreement.
It costs $10 to dissolve your Colorado LLC. Before you do, make sure you get all your affairs in order. Pay off any remaining debts, let your vendors and creditors know, and allocate the remaining funds to the other owners or partners based on what’s outlined in your operating agreement or comparable document.
Conclusion: Everything You Need To Know About Colorado LLC Fees
Are you ready to form your LLC in Colorado and enjoy the fantastic benefits you’ll have as a business owner? By identifying and understanding how much it will cost to start and maintain your LLC, you’re on your way to running a successful business!
Ready to capitalize on that success? Check out The Lazy Man’s Guide to Living The Good Life, and discover how you can make the most of your thriving business!
