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Start a Business in Colorado

Colorado, situated in the Mountain West subregion is home to the Southern Rocky Mountains as well as a high growth tourism industry. The state has a dynamic economy and seven STEM-based advanced industries. A business-friendly climate along with availability of a skilled workforce makes it favourable for entrepreneurs to start a business in Colorado. The state has become the first home for a generous amount of homegrown startups that share the industrial and business space with some of the largest U.S. businesses in terms of revenue. Some of the top industries that business owners prefer to incorporate in Colorado include biochemistry, aerospace, advanced technology manufacturing, clean energy, software development, and information technology.

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Entrepreneur’s guide to form a business in Colorado

There are several elements and key factors that make this a popular state amongst growing innovators, entrepreneurs, and corporations. The low cost of living in the state along with a highly educated workforce makes it an attractive place to expand an existing business or start a small business in Colorado. The state is home to several Fortune 500 companies that together have added approximately $156.2 billion in revenue. If you register a business in Colorado then you can leverage the central location, especially the city of Denver which facilitates transportation routes for industrial cargo and other shipments.

This is a guide that has been specifically created for entrepreneurs, startups, home-based businesses, and other new small business owners so that they are able to make an informed decision prior to forming their company in this state. The primary objective is to provide an insight into various state requirements, laws, and regulations. This guide will also help you to create a Colorado business checklist consisting of various stages of business formation right from preparing a business plan to obtaining an EIN, choosing the right location for your company, and applying for business licenses.

Why do companies prefer to register businesses in Colorado?

Colorado is home to 691,230 small businesses with some businesses listed in the highly prestigious Fortune 500 companies. Some of the top companies based in this state include Arrow Electronics, Ball, DISH Network, Liberty Media, DCP Midstream, Newmont, and DaVita among others. As an entrepreneur, you can start a business in Colorado as it is considered to be one of the economically growth oriented destinations for new businesses and startups. There are several advantages the state offers that you can leverage if you plan to register a Colorado business online. Some of the top advantages are:

  • Tax Climate – The state of Colorado is considered to have a good business tax climate and along with tax incentive programs, the burden on the taxpayers are reduced greatly. The individual income tax rate at a flat 4.40 percent is lower than that of several other economically strong states like California, New Jersey, and District of Columbia. If you register a business in Colorado then you will be able to leverage the best corporate tax system the state has according to the Tax Foundation. There are several federal and state tax credit programs that provide relief to small business owners.
  • Business Growth Climate – Colorado has been expanding in all directions with big businesses as well as small startups eyeing this state for its plentiful resources, including a young and committed workforce of engineers, developers and designers. Entrepreneurs and innovators believe that if you start a small business in Colorado then it will be good for your employees’ well-being as well as growth and expansion of the entity. The state has also been consistently named as one of the top destinations to live and work in. Undeniably, Colorado is also on its way to becoming the next major tech hub in the nation.
  • Grants and Other Funds – As a first time entrepreneur, if you register a business in Colorado, you will also be able to benefit from several types of business incentive programs and funding opportunities. These programs help in keeping the initial and annual costs of establishing and operating a company low. The Colorado Economic Development Commission (EDC) is responsible for providing funding opportunities, performance-based incentives, and debt and equity financing programs.

Steps to start a business in Colorado

You may have hundreds of great business ideas or an innovation that stands out in the market but to launch it in the form of a business can be quite a challenging task. There are several elements and factors that have to be taken into consideration right from the business formation to the operational stage. Hence, we have created a Colorado business checklist that will help you follow the right course in business development and operations.

1. Prepare a Colorado Business Plan

It is important to start a business in Colorado with a proper business plan in place. This plan is an extremely important and strategic tool for business owners as it helps an entity or entrepreneur to seek financing. A comprehensive business plan will help you identify various critical factors or elements including business objectives, short-term & long-term goals, marketing and branding plans, sales strategies and available resources. It will not only help you to define and focus on core business strategies but also enable allocation and management of human resources, technology, and value creation for your prospective customer. Some of the key elements to include in your business plan are:

  • Executive summary
  • General description of your business
  • Products and services
  • Projected start-up costs
  • Analysis of major competitors
  • Target market and competitive strategy
  • Marketing plan
  • Management and personnel
  • Financial projection

2. Attend Entrepreneurial Training or Development Programs in Colorado

One of the important aspects to consider before you incorporate in Colorado is the availability of small business resources. Entrepreneurship and development go hand-in-hand and most new business owners can benefit from programs focussing on these key areas. The state of Colorado offers entrepreneurial training and business development programs through the state, universities, and private bodies. The LEADING EDGE™ is one of the premier entrepreneur training and workshop programs in the state. You can also attend various entrepreneurial events in Colorado, which target different aspects of business like blockchain tech and startup mentorships.

3. Choose Business Structure for Colorado Business

The economy and industry of Colorado is diverse and unique and provides just the right platform for different types of businesses. If you are planning to register a business in Colorado then you can choose from different entity structures. Each structure has its own pros and cons but choosing a structure is dependent on purely business requirements or needs. If you want to raise capital then a C corporation would be beneficial and if you are looking for tax advantages then a Limited Liability Company will be the right choice. The different types of entity structures to choose from in Colorado are:

A top Colorado registered agent like IncParadise can help you form a new company in the state with ease

4. Naming Your Colorado Business

One of the most important facets of any company, startup, or enterprise is the business name. The company name plays a key role in marketing plans, branding strategies, sales and positioning of the company in new markets, and customer retention among others. The business name has to be mentioned in the formation documents to start a business in Colorado. The name will also be used towards opening a bank account, applying for a tax ID, and business licenses in the state. At the same time, you will need to follow some general and state rules and regulations when identifying a name. Your Colorado business checklist for a new name should take into account the following:

  • It is recommended to keep a name that is easy to spell and remember
  • Follow the Colorado state naming guidelines for the chosen entity
  • You need to include a term or abbreviation to the name like “LLC” or “Inc”
  • Choose a name that is distinguishable from other entity names pursuant to section 7-90-601, C.R.S.
  • Check for chosen business name availability by conducting an entity search
  • Ensure there is no trademark infringement
  • Ensure domain names are available

If the chosen name is available then you will need to reserve it using the Statement of Reservation of Name for domestic entities along with a fee of $25. You will be able to reserve a business name for a period of 120 days post which you will need to renew it.

5. Choose Your Location for a Colorado Business

The success or failure of a business is sometimes driven by the location factor and hence it is always recommended to choose the location in accordance with the needs of your company. As an example, opening a travel and tour company in an industrial area is not really the best place. If you have decided to register a business in Colorado then there are several factors to be taken into consideration. The location should help in:

  • Fostering customer engagement
  • Streamlining business operations
  • Attracting top talent
  • Creating high brand visibility
  • Reducing total cost of operation
  • Easing accessibility for customers and markets
  • Providing a competitive advantage

6. Register Your Colorado Business

The most important step to form a company or start a business in Colorado is the registration or incorporation process. The state has different laws, provisions, forms, fee structures, and requirements for different legal entity types. You will be required to file the business formation documents with the office of the Colorado Secretary of State. Let’s look at an example to understand this.

Example: If you want to form a Limited liability company in the state then you will be required to file Articles of Organization pursuant to CO Code § 7-80-204 (2022). You will need to file it with the Colorado Secretary of State along with a fee of $50. Similarly if you want to register a business in Colorado as a profit corporation then you will be required to file Articles of Incorporation pursuant to CO Code § 7-102-102 (2022). The filing fee for a domestic incorporation is the same as that of an LLC.

The process of new business formation or incorporation may seem challenging due to the various state requirements. A reputable Colorado registered agent like IncParadise can help you to register your company with the state.

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7. Get Your EIN

When you start a small business in Colorado, you will be required to file taxes and open a business bank account. The employer identification number (EIN) also known as a business tax ID will help in facilitating either process with ease. An EIN can also be used by entities for obtaining a business loan. Some of the smallest sole proprietorships to the largest corporations may require an EIN especially because it helps in separating your personal finances from that of your business. The Employer Identification Number is assigned by the Internal Revenue Service (IRS) and plays an important role in preventing identity theft.

8. Open a Business Bank Account for Colorado Business

Whether you register a Colorado business online or offline, one of the important areas often overlooked by first time business owners is transactions using a proper business account. This type of account is also known as a checking account and has many features that vary from one bank to another. The positive side of opening a business banking account is to ensure personal and business transactions are kept separate. This also makes accounting and tax filing much easier.

You can now experience the many benefits of an online dedicated business banking account through Cheqly. This is a neo-bank for startups that provide several advantages for small businesses as well as large enterprises like balance check and online transactions. This is a US bank account where you can transfer money locally and internationally quickly and with ease.

9. Obtain a Business License and Permits

Once you register a business in Colorado, the next step will be to ensure you are able to start operations in this state. This is made possible by obtaining the necessary or relevant business licenses and permits. The licensing regulations not only vary from one state to another but also from one city or county to another. Hence it is important to create a Colorado business checklist for licenses and permits based on the business activity and location of the company. You may also be required to apply for multiple permits in the state along with professional licenses. Business licensing in Colorado can be categorized as under:

  • Regulatory Licenses – The state of Colorado doesn’t have a generic operating license for businesses but it does have what is called a regulatory license. This refers to the fact that some industries, professions, and occupations are regulated by the Colorado Department of Regulatory Agencies (DORA). DORA is responsible for the issuance of business or professional licenses as well as other licenses like those for life care institutions, commercial banks, and trust companies. They also issue transportation permits for household goods, hazardous materials, and property carriers among others.
  • Sales tax license – If you start a business in Colorado where the primary activity is selling tangible personal property then you will need to apply for a sales tax license. This type of license is also known as vendor’s license or reseller’s license. The different types of sales tax licenses issued by the Colorado Department of Revenue are:
    • Standard Retail License
    • Wholesale License
    • Single Special Event License
    • Multiple Special Event License
    • Mobile Vendors License
  • City or County licenses – Once you have registered with the Colorado Secretary of State, you will need to apply for licenses locally. This is different from regulatory licenses and is issued by a local authority. The issuing authority will depend on the city or county your business is operating from.

    Example: You start a business in Colorado with expertise in excavation services and is based in Colorado Springs. Now, if you want to fill any or make any excavation in any public place within the city then you will need to apply for an Excavation License with the office of the City Clerk.

If you want to know more about what type of licenses may be required by your company once you incorporate in Colorado then you can opt for our “Business License Research Report” service. This is a specialized service that will provide you with a detailed list of filing instructions, and supporting document requirements for business licenses and permits in the state.

10. Register for Taxes

The state of Colorado has one of the best corporate tax systems in the nation. The state also boasts of a favourable tax climate and this is one of the reasons why entrepreneurs prefer to register a business in Colorado. The type of tax your company will be required to file can vary according to the type of entity structure. If you register a Colorado business online as an LLC then you will be subjected to a flat income tax rate of 4.63 percent on the profits. Apart from corporate income and personal income taxes, you may be required to file the following:

  • Sales and Use tax
  • Withholding tax
  • Excise and fuel tax
  • Severance tax
  • Property tax
  • Miscellaneous taxes

11. Obtain a Business Insurance

Whether you start a small business in Colorado or a large corporation, risks never come with a calling card. You may have identified and addressed potential risks in your business plan but even then, certain risks remain unforeseen. Hence, a proper business insurance is required as it can help your company to navigate through such risks and difficult times. Broadly speaking, a business insurance is sometimes referred to as a business owner’s policy (BOP) or even commercial insurance. The objective of this insurance is to provide a company with adequate financial protection especially in unfortunate scenarios. You can apply for business insurance before or after you register a business in Colorado. Some of the common types of insurance for business are:

  • General liability insurance (GLI)
  • Commercial property insurance
  • Professional liability insurance
  • Business income insurance
  • Workers’ Compensation Insurance
  • Product liability insurance
  • Data Breach Insurance
  • Business interruption insurance
  • Commercial Umbrella Insurance
  • Home-based business insurance

12. Annual and Ongoing Requirements

Once you establish or start a business in Colorado, there are certain annual requirements that you or your company has to be compliant with in order to maintain a good standing with the state. The annual requirements will vary from one state to another and also according to the type of business structure you form. The various annual requirements according to the Colorado Secretary of State are:

  • Annual Report – Most states in the USA require businesses to submit some form of report annually and are most commonly known as the annual report. In Colorado, however, this type of report is known as a periodic report. If you register a business in Colorado as an LLC or a corporation then it will be considered as a reporting entity. Such a company, including foreign entities, will be required by law (CO Code § 7-90-501 -2022) to submit a Periodic Report to the Colorado Secretary of State. This report has to be filed each year by the end of the month of initial registration.
  • Renewals – Once you incorporate in Colorado, one of the important annual filing requirements will be that of different types of renewals. You will be required to renew the following each year:
    • Business licenses and permits
    • Renewal of a trade name

Some Important Quick Resources for Colorado Businesses

Different types of entities have different requirements and sometimes the need of one company might be different from the need of another business. When you start a business in Colorado or are in the planning stage, you will need a wide variety of resources. These resources can vary from information regarding various aspects of company formation, planning, operations, and finance among others. Hence, we have compiled a list of agencies where you can find relevant information and guidance to help start a small business in Colorado.

Colorado Secretary of State

The Colorado Secretary of State is the “go to” place for all information pertaining to any area of new business formation and operations. You can find resources and guides on how to start a business in Colorado and detailed instructions on filing trademarks, trade names, business registration forms, and online payment among others. You will also be able to leverage a host of services including certificate of good standing, data requests, validation of certificates, and information on protecting your business from identity theft.

Colorado Department of Revenue

The Colorado Department of Revenue (DOR) is a premier state agency that is responsible for collecting different forms of taxes. It also plays a key role in enforcing Colorado laws related to liquor, gaming, racing, tobacco, marijuana, and auto dealers. If you are planning to register a business in Colorado then you can find information pertaining to business or state taxes, filing of taxes, tax service centers, driver licenses, and state identification cards. They have a dedicated customer center to answer your queries and you can call them before or after you incorporate in Colorado.

Colorado Department of Treasury

The Colorado Department of Treasury is another important state agency that deals with several aspects of finance and business finance. They have four main divisions, which are the investment division, cash management division, accounting and administrative division, and unclaimed property division. You will find several different and valuable programs that can benefit your business in the short as well as long-term. The interest free loan program is one such program that will enable you to start a small business in Colorado without worrying about finances. They also have property tax deferral programs and can provide critical information related to debt management and financial security.

  • Colorado Department of Treasury
    200 East Colfax Avenue
    State Capitol, Suite 140
    Denver, CO 80203-1722
    Phone: 303-866-2441
    Website – https://treasury.colorado.gov/

Colorado Department of Regulatory Agencies

If you have decided to start a business in Colorado then the Colorado Department of Regulatory Agencies (DORA) is one place where you will find important resources and vital information related to business licensing and operations. DORA is considered as an umbrella regulatory agency with the objective of managing licensing as well as registration of various businesses and professions. It also aids with implementation of balanced regulation for different Colorado industries thus protecting consumers. You can conduct a search on their website to check an existing business or professional license or apply for a new one. Renewals of licenses and permits are also facilitated by this agency.

  • Colorado Department of Regulatory Agencies (DORA)
    1560 Broadway #1545,
    Denver, CO 80202
    Phone: 303-894-7855
    Website – https://dora.colorado.gov/

Colorado Department of Labor and Employment

The Colorado Department of Labor and Employment (CDLE) is one of the principal departments of the Colorado state government. The department plays an important role in connecting job seekers with good employers while ensuring fair labor practices in this state. Once you register a Colorado business online, you can visit their website to learn about the labor laws, rules, and regulations in the state. They have several programs related to labor and employment as well as workforce partners resources.

Colorado Small Business Administration Office

The Colorado Small Business Administration Office is an independent agency with the primary objective of providing relevant business related training programs and counseling to entrepreneurs. You can find plenty of useful resources and information that will assist you to start a business in Colorado, grow and expand your company. They also provide several different services including entrepreneurship education, credit risk management, funding programs, disaster recovery, and federal contracting certification.

  • Colorado Small Business Administration Office
    721 19th St, Room 426,
    Denver, CO 80202
    Phone – 303-844-2607
    Fax: (303) 844-6490
    Office Email – ColoradoDO@sba.gov
    Website – http://www.sba.gov/co

Colorado Chamber of Commerce

The Colorado Chamber of Commerce is considered to be the unifying voice for businesses, both new and existing. It creates programs that are targeted towards creating a healthy economic climate in the state and drive the future of the state and businesses. It is a private, non-profit organization that provides resources on various aspects of the prevailing business climate in the state. One aspect of the Chamber of Commerce functioning that should be on your Colorado business checklist is the employer training workshops that impart training and knowledge of existing Colorado laws, equity training, and help create an understanding of various state-run small business programs.

Colorado Small Business Development Center

The Colorado Small Business Development Center network (SBDC) is a partnership between the Colorado Office of Economic Development and International Trade, State of Colorado, institutions of higher education, Small Business Administration (SBA), local chambers of commerce, and local economic development organizations. If you have already started a business or are planning to register a business in Colorado, the SBDC provides valuable information and resources in the form of small business consulting, low-cost training workshops, Small Business Accelerated Growth programs, disaster loan, insurance navigation, and business preparedness training.

Ready to Start a Business in Colorado

Colorado is quite popular for its business climate and low tax environment. If you want to start a business in Colorado and want to ensure compliance with all state laws and regulations, a top Colorado registered agent like IncParadise can assist you with this. We provide guidance for new as well as existing business owners. Our team of incorporation experts and dedicated professionals will assist you with every aspect of new business formation.

IncParadise is an expert registered agent and incorporation service provider in Colorado and has already helped thousands of businesses to start their LLC or corporation in the state. We also offer several additional services like EIN assistance, and foreign qualification among others.

IncParadise can help you to start a small business in Colorado!

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