How to Form a Single-Member LLC in Colorado

Want to form a single-member LLC (SMLLC) in Colorado? Here's what you need to know.



These are the steps to form a single-member limited liability company (SMLLC) in Colorado.  Remember: For most formation purposes, a Colorado SMLLC is considered the same as a multi-member limited liability company (LLC).

1. Name Your SMLLC

The name of a Colorado SMLLC must contain one of the following phrases or abbreviations: “Limited Liability Company,” “Ltd. Liability Company,” “Limited Liability Co.,” “Ltd. Liability Co.,” “Limited,” “L.L.C.,” “LLC,” Or “Ltd.” The SMLLC’s name must be distinguishable on the records of the Colorado Secretary of State (SOS) from the names of all other business entities already registered or reserved with the state.

Check to make sure the name you want is available by doing a business name search on the SOS website. For a fee of $25 you can reserve a name for 120 days by filing a Statement of Reservation of Name. Reserving a name must be done online.

2. File Articles of Organization

You create a Colorado SMLLC by filing Articles of Organization with the Colorado Secretary of State. To complete the articles you'll need to provide:

  • the official name of your new SMLLC
  • the street and mailing addresses of your SMLLC's initial principal office
  • the name, street address, and mailing address of the SMLLC's registered agent
  • the address of the SMLLC's registered office
  • the name and mailing address of the person forming the SMLLC
  • an indication of whether the SMLLC will be member-managed or manager-managed
  • a statement that there is at least one member of the new SMLLC, and
  • a few other basic details.

The articles of organization must be filed electronically. You can, however, view and download a sample articles of organization form by going to the SOS website. The current filing fee is $50.

Every Colorado SMLLC must have a registered agent. A registered agent is an individual or business entity that agrees to accept legal papers on behalf of the SMLLC. The registered agent can be: (a) an individual Colorado resident who is at least eighteen years of age, (b) a domestic business entity with a usual place of business in Colorado, or (c) a foreign business entity authorized to do business, and with a usual place of business, in Colorado. The registered agent must have a physical street address in Colorado.

All of the paperwork and procedural steps to start a single-member limited liability company in Colorado can be done online using Nolo's Colorado Online LLC Formation application.

3. Prepare an Operating Agreement

Colorado does not require an SMLLC to have an operating agreement. However, even though an SMLLC has just one member, an operating agreement is highly recommended. An SMLLC operating agreement does not need to be filed with the state.

The operating agreement is usually made between the single member and the LLC itself. The agreement typically covers the member’s rights, duties, and obligations, as well as the SMLLC’s management structure. Having an agreement in place can help with liability protection by separating your business from you personally. It also can be useful with lenders and other businesses when entering into business transactions.

In most states, if you don’t state that your SMLLC will be manager-managed when you first register with the state, then your SMLLC will be treated by default as member-managed. The distinction between member-managed and manager-managed can be important so be sure to consider both options before you decide which type of management structure you want for your SMLLC.

For more information and help creating an SMLLC operating agreement, see Nolo's Guide to Single-Member LLCs, by David M. Steingold (Nolo), or use Nolo’s Online LLC.

4. Do You Need an EIN?

An SMLLC that keeps its default tax status of disregarded entity (same as a sole proprietorship) and does not have employees is not required to obtain a federal Employer Identification Number (EIN). Instead, owners of these SMLLCs can report their business profits and losses on their personal tax returns using their own Social Security number or tax identification number.

If your SMLLC has employees or if you choose to have your SMLLC taxed as a corporation rather than as a disregarded entity, you must obtain a federal Employer Identification Number (EIN) from the IRS. Even if you are not required to obtain an EIN for your SMLLC, there are often business reasons for doing so. Banks often require an EIN to open an account in the business’s name and other companies you do business with may require an EIN to process payments. In many cases it makes sense to obtain an EIN for your SMLLC even if it is not required for federal tax purposes.

You can get an EIN by completing an online application on the IRS website. There is no filing fee.

5. Register With the Department of Revenue

In some cases, for example if you will be selling goods and collecting sales tax or if you have employees, you’ll need to register with the Colorado Department of Revenue (DOR). For more information on state LLC tax registration, see Nolo's article LLC Annual Report and Tax Filing Requirements: A 50-State Guide.

6. Obtain Business Licenses

Depending on what kind of business you’re running and where it’s located, you may need to obtain local or state business licenses for your SMLLC. Among other possibilities, these might include licenses related to:

  • your profession or occupation
  • specific goods or services you’ll sell or provide
  • an assumed or fictitious name for your business, or
  • health and safety matters.

7. File Your Annual (Periodic) Report

The State of Colorado requires you to file a periodic report annually for your SMLLC. You must file the report online at the SOS website. The report is due during the three-month period beginning with the first day of the anniversary month of your SMLLC's formation. For example, if you formed your SMLLC on June 15, the report would be due each subsequent year between June 1 and August 31. You can also file the report up two months early. The current filing fee is $10. There is also a $50 penalty fee for reports filed late.

For more information on SMLLCs, see the Single-Member LLCs section of Nolo's website or Nolo's Guide to Single-Member LLCs, by David M. Steingold.

 

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