How to Register a Corporation in Colorado

Colorado Corporation

Colorado, the eighth-largest state, is diverse in terms of geography as well as industry. It is home to natural resources, which play a key role in driving the mining, agriculture and tourism industries. The state is home to precious minerals like coal, molybdenum, petroleum, and gold among others. The hospitality industry is one of the largest employers with the tourism industry attracting entrepreneurs to form a corporation in Colorado. The state is also the 33rd largest exporter of goods and is home to several Foreign Trade Zones (FTZs) thus making import processes much easier. There are several benefits of incorporating in Colorado including the state run Opportunity Zone Program.

What is a Colorado Corporation?

The C Corporation is also known as a standard, traditional, or default corporation by the Internal Revenue Service (IRS). It is a legal structure where the shareholders, or owners are taxed separately from this type of business entity. If you are planning to register a corporation in Colorado then there are several types of entities you can form under this category. They are:

• Business Corporations (C-Corp)
• Business Corporation (S-Corp)
• Foreign Corporations
• Domestic & Foreign Nonprofit Corporations
• Professional Service Corporations
• Business Development Corporations

What are the benefits of incorporating in Colorado?

There are many benefits of incorporating in Colorado as you will be able to enjoy the best of both worlds as in the advantages of this type of entity structure and state benefits. Some of the advantages of organizing a C Corporation in this state are:

• A C Corp is considered to be a separate legal identity from its owners
• You can choose to change the tax status of a C Corp to that of an S Corporation
• This type of entity structure offers Limited liability to its owners
• If you incorporate in Colorado then the entity will enjoy perpetual existence or can exist even after the death of its owner
• When you choose a C corp, it is easier to deduct certain fringe benefits like dental or vision, as taxes from overall business expenses
• From the standpoint of taxes, a C Corporation is less susceptible to IRS audits as compared to other structures
• One of the benefits of incorporating in Colorado is that you will be able to issue shares of stock
• C Corporations offer can easily avail of 401(k) business financing
• This type of legal structure enjoys more flexibility when it comes to determining its fiscal year and this allows shareholders to shift income with ease

Starting a Colorado Corporation

The state of Colorado is one of the best places for a startup as it is an emerging leader in innovation and technology. When you form a corporation in Colorado, you will also be able to leverage from the business grants and economic incentives implemented by different state agencies for small businesses. If you want to start a new business and are wondering how to form a corporation in Colorado then there are several important processes to focus on.

1. Name a Colorado Corporation

If you are planning to register a corporation in Colorado then one of the first steps is to identify a proper business name. The company name is crucial towards incorporation as well. You will not be able to file your new business registration documents without a business name. Secondly, the name is the identity of the company and will help prospective customers and partners to associate the said name with the brand, product or service. There are certain state naming guidelines that a corporation has to follow and will be governed by 2022 Colorado Code, Title 7 – Corporations and Associations, Article 90 – Colorado Corporations and Associations Act, Part 6 – Entity Names.

• A chosen name for Colorado corporation should contain words like “corporation”, “incorporated”, or abbreviations like “inc.” or “co.” pursuant to CO Code § 7-90-601 (2022).
• The chosen name should be distinguishable from any other name in the state database. According to section 7-90-601, C.R.S., SRD Inc is the same as srd inc and hence they are not distinguishable.
• In order to maintain distinguishability, it is important to conduct a name availability search, which is also known as Business Database Search in Colorado.
• Once the chosen name is available, you will need to file the Statement of Reservation of Name pursuant to §7-90-301, et seq. and §7-90-602 of the Colorado Revised Statutes (C.R.S.). The fee for reservation of name is $25 and you can reserve it for a period of 120 days.

2. Appoint a Colorado registered agent

You can form a domestic or a foreign corporation in the state of Colorado as the state offers a lot of flexibility and ease in terms of new business registration as well as moving your business to this state. One of the important areas pertaining to moving a business or registration of a new entity is a registered agent service. The main objective of RA services is to provide “Service of Process”.

3. File Articles of Incorporation with the Colorado Secretary of State

This is the most important step regarding how to form a corporation in Colorado and is also the next stage post reservation of a business name. There is a specific process for incorporation and will involve preparation and submission of the Articles of Incorporation for a Profit Corporation pursuant to CO Code § 7-102-102 (2022). You can register a corporation in Colorado online only, along with a fee of $50. Alternatively, IncParadise can assist with the filing of your Articles of Incorporation. We are incorporation specialists and with our help, you will be able to ensure compliance with Colorado state regulations and thus save valuable time

Are you thinking of starting a Colorado Corporation?

4. Prepare bylaws for Colorado Corporation

In order to form a corporation in Colorado, one of the pre-requisites is corporate bylaws. The corporate bylaws for a Colorado corporation constitute all important rules that will be governing the operations of the said corporation. These bylaws are also essential for creating an organizational structure for the company. If you are thinking of how to form a corporation in Colorado and operate it successfully then these bylaws will be of paramount importance as they will also outline policies for the appointment of directors and officers, and provide details related to board or shareholder meetings. The bylaws will also incorporate various issues of a company including how to best handle conflicts of interest.

5. Appoint initial Directors and hold an organizational meeting

Initial Directors play a key role in any corporation and refer to individuals who are initially appointed as the directors of the said corporation. Generally speaking, most corporations are managed by directors and officers and are often known as board of directors. When you incorporate in Colorado, it is necessary to appoint a board of directors or initial directors and hold the first organizational meeting. The organization of a corporation aided by initial directors is governed by CO Code § 7-102-105 (2022).

6. Get EIN

Every corporation in Colorado, new or existing, has to file taxes as a part of their annual state and federal requirements. This is where the Employer Identification Number (EIN) comes into existence. It is basically a unique identification assigned by the Internal Revenue Service (IRS) to a corporation. You can apply for the EIN before or after you register a corporation in Colorado. The EIN is also known as a Federal Employer Identification Number (FEIN) and can also be used for opening a business bank account in the state of Colorado.

7. Open a bank account

Once you form a corporation in Colorado, you will need to ensure your business operations are smooth. One important factor that plays a key role in business operations is enabling financial transactions in the state like receiving funds or making payments. All types of financial transactions will be facilitated through your banking account and hence it is essential to ensure you have a proper business bank account for the same. The business account is also known as a checking account and makes it easier to prepare your annual corporate or business tax returns.

8. Comply with other tax and regulatory requirements

Once you register a Colorado corporation online, you will be required to comply with state annual maintenance and other regulatory requirements. The annual requirements are divided into three categories, which are:

• Taxes – One of the benefits of incorporating in Colorado is that the state has a comparatively lower tax rate as compared to some of the other top states for doing business. You will be required to file Corporate Income Tax, which is levied on any C Corporation doing business in Colorado. The corporate income tax rate is 4.40 percent and your company will be required to make quarterly estimated payments. Your company may also be required to file certain other taxes like the Colorado income tax return, sales and use tax, and withholding taxes among others.
• Annual Report – Once you incorporate in Colorado, one of the important requirements is that of an annual report. This report is required by C Corporations in most of the US states and in Colorado, this is also known as the Periodic Report. This report has to be filed by the end of the month of initial registration or incorporation also known as the periodic month. A periodic report is filed annually with the Colorado Secretary of State along with a fee of $10.
• Business Licenses – When you form a corporation in Colorado, getting a business license is critical to ensure the operations can run smoothly. Your company may need different licenses depending on the location of the company and the primary business activity. The most common licenses are Professional licenses, Regulatory licenses, Sales and Use Tax licenses, and City or County licenses. These licenses will need to be renewed annually as well.

Know more about starting a Colorado Corporation

Now that you have made a decision to register a corporation in Colorado, there is a possibility that you may be faced with several questions pertaining to various aspects of new business formation like the starting costs, incorporation process, dissolution, and foreign corporation among others. Hence, we have created a special section of “Frequently Asked Questions” for addressing some of the queries that you may have as a first time entrepreneur.

How do I form a “C” corporation and an “S” corporation in Colorado?

If you are facing doubts on how to form a corporation in Colorado or an S Corporation then it is important to understand that an S Corp is not a company but a tax designation. Hence, you will be required to first organize a corporation in the state of Colorado in accordance with the requirements of the state. You will then need to check eligibility for an S corporation election like having less than 100 shareholders. If your corporation meets all eligibility criteria then you can fill and submit Form 2553 (Election by a Small Business Corporation) with the Internal Revenue Service (IRS)

How much does it cost to start a corporation in Colorado?

When you incorporate in Colorado, certain costs will be attached to the entire process of formation and operations. The costs can be divided into two categories, one being the initial incorporation stage and the other being the annual maintenance or compliance stage. Some of the formation costs are fixed while others are variable costs. The various initial cost components for a new corporation would be:

• Business Name – The reservation of a corporate name along with a reservation fee is $25
• Cost of Incorporation – There is a filing fee of $50 for filing Articles of Incorporation with the Colorado Secretary of State
• Business Licenses – This is a variable cost and will depend on the location of the company and business activity. Your company may require a single or multiple business licenses and permits.

How do I look up a corporation in Colorado?

In order to register a Colorado corporation online, you will need to reserve a business name first. It is important to ensure that the chosen name follows the state naming guidelines and is also different from any other name on the state database. Hence, it is essential to conduct Business Database Search also known as a name availability search. This process will reveal whether the chosen name is in use or not. If it is not in use then you can go ahead and reserve it.

Do I need a business license for my Colorado Corporation?

Yes. Once you form a corporation in Colorado, the said company will not be able to operate freely unless you have applied for the right licenses. There are different types of business licenses and permits that may be applicable in the state as well as county or city level. If you conduct your business without proper permits or licenses then this could lead to severe penalties.

Can I register a foreign Corporation in Colorado?

Yes. If you have already formed a corporation in any other state and want to expand or move your business to Colorado then you will need to apply for foreign qualification. There is a process to establish a foreign corporation. You will be required to file the Statement of Foreign Entity pursuant to CO Code § 7-90-803 (2022). This will provide you with the authority to conduct activities or transact business in this state

How do I dissolve a corporation in Colorado?

You will need to submit the Articles of Dissolution pursuant to 2022 Colorado Code, Title 7 – Corporations and Associations, Article 114 – Dissolution. A corporation can be voluntarily dissolved, administratively dissolved, and judicially dissolved. There is a $10 filing fee for dissolution.

Ready to Start a Colorado Corporation?

There are many benefits of incorporating in Colorado right from robust infrastructure to state programs for helping first time business owners. Once you form a company, you can even apply for small business incentive programs as well as local grant programs. Whether you want to register a corporation in Colorado or file an annual report, IncParadise can help you with these while ensuring you can benefit from our other services aimed at addressing other requirements necessary for managing your business.