Introduction – Why Colorado?

Colorado is a centrally located state that shares its borders with Wyoming, Nebraska, and Kansas among others. The real gross domestic product (GDP) of Colorado is $385.83 billion and it is home to over 600,000 small businesses as well as large enterprises. The state is also home to several top facilities run by the federal government including NORAD (North American Aerospace Defense Command). If you have been thinking of moving your business to Colorado then it would be a good decision as the state takes pride in its robust transportation infrastructure and logistics chain. Today, there is a rise in entity domestication in Colorado as it is home to innovation and growth oriented industries with focus on STEM-based advanced industries as well. Small business incentive programs as well as easy access to loans and grants make the state an obvious choice for entrepreneurs. Let us look at some of the top benefits this state offers.

Best workforce

Whether you are moving your business to Colorado or simply starting a new business, one of the foremost requirements of every company is the need for skilled employees. The type of employees your business requires will depend on the services or products being offered, the niche or the industry requirements. This is where the highly dedicated and talented workforce of Colorado comes into the picture. The state boasts of a high concentration of talent in knowledge-based areas like computer or IT, engineering, and life sciences. The state also has a strong STEM (Science, Technology, Engineering and Mathematics) workforce. There are top universities and educational institutions in the state like the University of Colorado Boulder, Colorado School of Mines, Colorado Mesa University, and Fort Lewis College among others.

Diverse and growing economy

One of the top benefits of moving a corporation to Colorado or an LLC is the diverse and growing economy. There are several factors that play a crucial role in the ever growing economy of the state but the most important of them are the diverse industries. There are 14 major industry sectors and these include 7 STEM-driven advanced industry sectors. The state has been ranked number 6 in terms of concentration of creative class occupations, number 4 for concentration of STEM Workers, and number 2 for Technology & Science (Milken Institute, 2020). If you are thinking of relocating a business to Colorado then you should check out the top industries, their markets, growth, innovation, and future. Some of the growing industries include advanced manufacturing sector, transportation and logistics industry, tourism & outdoor recreation (4 percent of the state’s GDP), and Technology & information (7.2% of the state’s GDP) among others.

Global market access

If you plan on moving your business to Colorado and if your business entails selling, manufacturing and distribution to international markets then yes, the state does have a robust system in place to support your goals. The transportation and logistics industry in Colorado, enabled by multimodal transportation elements are publicly and privately owned and operated. North America’s longest commercial runway located at the Denver international airport connects to more than 150 domestic as well as international destinations, which includes Asia, Europe, Mexico, Central America, and Canada. Colorado enjoys a central location with easy access to global markets while ensuring low transportation costs.

Collaborative and stable ecosystem

One of the advantages of moving an LLC to Colorado or any other entity is the collaborative and stable ecosystem. This ecosystem is made up of individuals, organizations, and professionals who share common goals and interests towards creating a shared value for their clients, the industry, and the communities at large. A stable collaborative ecosystem helps in creating a versatile and efficient workforce and helps entrepreneurs to scale faster. Colorado is also focusing on strengthening the existing entrepreneurial ecosystems while attracting and retaining growth oriented entrepreneurship.

Steps to move your corporation to Colorado

If you are thinking of relocating a business to Colorado then there are several benefits that the state offers, which can help you in achieving your short-term and long-term goals. You can leverage state sponsored research and development programs and also have access to various incentive programs initiated by government agencies and private organizations. You may have several questions like, does Colorado allow domestication? as well as the various processes applicable for moving a business to this state. Let us take a look at the various options in detail.

Register as a Foreign Corporation

The first option for moving your business to Colorado is to register it as a foreign entity. This option is favorable for those business owners who want to operate their corporation in their home state (state of incorporation) as well as Colorado. There is a process for moving a corporation to Colorado and is known as foreign qualification. The process is governed by 2022 Colorado Code, Title 7 – Corporations and Associations, Article 90 – Colorado Corporations and Associations Act, Part 8 – Foreign Entities. The process for foreign qualification is as follows:

• Designate a registered agent in Colorado for handling service of process pursuant to CO Code § 7-105-101 (2022)
• If your existing true name is not available then you will be required to register a trade name pursuant to CO Code § 7-71-103 (2022)
• File the Foreign Entity Authority Statement pursuant to the provisions of CO Code § 7-90-803 (2022) along with a fee of $100.

Do you want to start a foreign corporation in Colorado?

Convert a Foreign Corporation to Colorado entity

There are two types of conversion possible in Colorado and they are:

• Domestic entity to domestic entity
• Foreign entity to domestic entity

• You need to identify a true name or a trade name if the true name is not available. Conduct a name availability search and if the name is available then reserve it pursuant to §7-90-301, et seq. and §7-90-602 of the Colorado Revised Statutes (C.R.S.). There is a fee of $25.
• You need to hire and maintain a registered agent in the state for service of process
• You need to file the Statement of Conversion pursuant to CO Rev Stat § 7-90-201.7 (2018). There is a fee of $50

Want to domesticate your company in Colorado?

Dissolve home Corporation and establish a new Corporation in Colorado

The third and final option for relocating a business to Colorado is through dissolving the entity in your home state and registering a new entity as a domestic corporation in Colorado. You will be required to follow the laws and process of dissolution in your original state of incorporation. The process of dissolution will also vary from one state to another and may involve voluntary, judicial, or administrative dissolution. IncParadise, one of the most reputable registered agents in the USA offers dissolution services in all the states.

Dissolution in Home State

The process of moving a corporation to Colorado through dissolution of an entity in the home state will involve:

• You will need to file Certificate of Dissolution or Article of Dissolution as mandated by your home state
• You will need to notify the Internal Revenue Service (IRS) of dissolution
• You will need to close all accounts, credit lines, and cancel business licenses

Domestic Incorporation in Colorado

The incorporation of new entity or entity domestication in Colorado involves:

• Appointing a registered agent in Colorado for service of process
• Identify and reserve a business name using the Statement of Reservation of Name
• File Articles of Incorporation with the Colorado Secretary of State
• Prepare bylaws for your corporation
• Apply for business licenses and permits

Incorporate in Colorado with ease!

Steps to Move an LLC to Colorado

If you want to transfer an LLC to Colorado then you will be able to enjoy many benefits right from central location to robust transportation infrastructure and a business friendly environment. There are different processes by which relocating a business to Colorado becomes easier. Let’s study these processes in detail.

Register as a foreign LLC

If you are thinking of relocating a business to Colorado, and if it is a limited liability company, then the first option would be to register the LLC as a foreign entity. This process is also known as foreign qualification. This process to transfer an LLC to Colorado will be governed by 2022 Colorado Code, Title 7 – Corporations and Associations, Article 80 – Limited Liability Companies,
Part 9 – Foreign Limited Liability Companies. The process encompasses:

• You will need to conduct a true name search. If the true name is unavailable then conduct and register a DBA or trade name.
• You will need to hire and maintain a registered agent in Colorado for handling service of process pursuant to CO Code § 7-80-902 (2022)
• You will need to file the Statement of Foreign Entity Authority pursuant to CO Code § 7-80-901 (2022) along with a fee of $100
• You will also be required to apply for relevant business licenses and permits in the state.

Apply for LLC foreign qualification in Colorado

Convert a Foreign LLC to Colorado entity

One of the important processes for relocating a business to Colorado is to undergo entity conversion. Since your LLC is based outside Colorado or operational in another state; you can opt for converting foreign entity to a domestic entity. This process is also known as entity domestication in Colorado. The process involves the following:

• You need to identify a true name or a trade name if the true name is not available. Conduct a name availability search and if the name is available then reserve it. There is a fee of $25.
• You need to hire and maintain a registered agent in the state for service of process
• You need to file the Statement of Conversion filed pursuant to § 7-90-201.7 (3) of the Colorado Revised Statutes (C.R.S.). There is a fee of $50
• You will also need to file Articles of Organization for moving LLC to Colorado. This has to be filed pursuant to § 7-80-203 and § 7-80-204 of the Colorado Revised Statutes (C.R.S.)

Domesticate your foreign LLC in Colorado

Dissolve home LLC and form a new LLC in Colorado

One of the final ways by which moving your business to Colorado is possible is through dissolution of the entity in the home state and forming a new domestic entity in Colorado. A limited-liability company can be dissolved voluntarily or through judicial, or administrative dissolution. IncParadise, one of the most reputable registered agents in the USA offers dissolution services in all the states.

Dissolution in Home State

The process to transfer an LLC to Colorado through dissolution involves:

• Depending on the state, you will need to file a Certificate of Dissolution or Articles of Dissolution
• You may also be required to submit a certificate of cancellation
• You will need to inform the Internal Revenue Service (IRS) and obtain necessary tax clearances
• Clear all your pending claims towards customers, vendors etc
• Surrender your business licenses and permits

New LLC Formation in Colorado

The above process will be followed by domestic LLC formation in Colorado. This is essential for moving your business to Colorado.

• Identify and reserve a business name using 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.).
• Choose a colorado LLC registered agent pursuant to CO Code § 7-80-301 (2022).
• File Article of Organization with Colorado Secretary of State pursuant to CO Code § 7-80-204 (2022) along with a fee of $50
• Prepare an LLC operating agreement
• Open a business bank account
• Apply for and obtain necessary business licenses and permits in the state

Register your LLC in Colorado Today!

Move Your Business to Colorado with IncParadise

If you are wondering if Colorado allows domestication then the answer is yes. You can now move your business to this state following different processes including foreign qualification and entity conversion. We at IncParadise, one of the top registered agent services in Colorado can provide you with information pertaining to relocating a business to Colorado. We can also help you by facilitating paperwork necessary for dissolution in your home state and help you form a new business in Colorado.

Colorado Foreign Qualification

Most often than not, first time entrepreneurs get confused by the word “foreign” and think that it refers to a company that has to be formed outside the United States. In reality and from the perspective of state laws related to business entity compliance, “foreign” simply refers to any business that has been registered in any U.S. state other than an entity’s registration or domestic state. So if your entity is considered a domestic entity in New York and if you want to start a business in Colorado then you will need to undergo foreign qualification in Colorado. The process of Colorado foreign business registration will also ensure that such an entity has access to and benefits from various business incentives, grants, and tax credit programs.

What is a Colorado foreign qualification?

If you are planning to expand your corporation, LLC, limited partnerships (LPs), or limited liability partnerships (LLPs) to the state of Colorado from another state, then foreign qualification in Colorado becomes necessary. The registration of a foreign entity in the state is governed by the state laws or Colorado Code, Title 7 – Corporations and Associations. The registration process as well as requirements for foreign entities may vary according to the business structure. Hence, it is necessary to conduct Colorado foreign entity search prior to registering in this state. Let’s look at an example to understand this:

Example: You have formed a domestic LLC in Vermont by filing the Articles of Organization. Here, Vermont will be considered to be your home state or state of formation. Now, if you want to expand your business to Colorado then there are two options. One is to close your existing business and register a new domestic LLC in Colorado. The second option is to qualify for Colorado LLC foreign registration and this will essentially provide you with the authority to transact business in this state without the need to close your company in Vermont.

Doing business in Colorado

Every business whether an LLC or a corporation or any other entity is different in more ways than one! They differ in terms of formation, operations, and governing laws. One important aspect to consider is the need for Colorado foreign corporation registration or foreign qualification. The registration of an entity depends on whether such an entity is doing business in Colorado or simply conducting specific activities. The act of doing business is defined by the 2022 Colorado Code, Title 7 – Corporations and Associations, Article 90 – Colorado Corporations and Associations Act, Part 8 – Foreign Entities § 7-90-801, Authority to Transact Business or Conduct Activities Required.

• Maintaining bank accounts in this state
• Defending, settling, or maintaining any dispute or proceeding on its own behalf
• Holding any meetings of their managers or owners
• Carrying forward any activities concerning the internal affairs of such a company
• Selling products or services through independent contractors
• Owning real or personal property
• Securing or collecting debts or enforcing mortgages
• Maintaining offices for the transfer or exchange of owner’s interests or its own securities
• Conducting an isolated transaction, which is completed within 30 days

Colorado Foreign Qualification Process

If you have an existing business like an LLC or a corporation in any other state and are thinking of expanding your operations in the state of Colorado then it will be considered as a foreign entity in this state. You will be required to apply for foreign qualification in Colorado and the process will be governed by the 2022 Colorado Code, Title 7 – Corporations and Associations. Each entity based in any other state and which wishes to conduct their business in Colorado will need to apply for proper authority. There can be severe penalties of transacting business without the state authority. Let us look at the process of Colorado foreign business registration for LLCs and corporations.

Colorado Foreign Corporation Registration

If you have incorporated in another state and are currently operating in that state but have a desire to expand your operations in Colorado then you will need to apply for the process of foreign qualification. This involves applying for Colorado foreign corporation registration to get the necessary authority to transact business in this state. Let us understand in detail, what this process entails.

• Entity name or True Name – The entity name is also known as the true name in Colorado. If you are planning to transact business in this state then you will need to register a true name pursuant to CO Code § 7-90-604 (2022). You will need to conduct a Colorado foreign entity search or true name availability search. If the chosen true name is available then you can use the Statement of Registration of True Name form along with a fee of $25. If the true name is not available then you will need to file a DBA (Doing Business As) also known as an assumed name or a trade name.
• Registered Agent – Whether you are forming a domestic entity or applying for Colorado foreign corporation registration, there are certain state guidelines you have to follow. One such law is to continuously maintain a registered agent in the state pursuant to CO Code § 7-125-101 (2022). We at IncParadise are one of the top Colorado registered agents and have helped several domestic and foreign entities to incorporate in this state.
• Foreign Entity Authority Statement – The most important step towards Colorado foreign corporation registration is to get the necessary authorization to transact business in the state. You will need to file the Foreign Entity Authority Statement pursuant to the provisions of CO Code § 7-90-801 (2022). This application has to be submitted with the Office of the Colorado Secretary of State along with a fee of $100.

Do you want to register a foreign Corporation in Colorado?

Colorado Foreign LLC Registration

If you have formed a limited-liability company in another state and are contemplating the idea to expand your business operations in the state of Colorado then you have to undergo the process of foreign qualification. This process is also known as Colorado LLC foreign registration and will help you to transact business in the state without the need to register a new or domestic LLC. The Colorado foreign business registration for an LLC is governed by 2022 Colorado Code, Title 7 – Corporations and Associations, Article 80 – Limited Liability Companies, Part 9 – Foreign Limited Liability Companies. Let’s look at an example to understand this better.

• LLC Name or True Name – One of the foremost requirements of Colorado LLC foreign registration is identifying a business name. This is also known as a true name in this state and should be in accordance with the naming guidelines of the state. You will also need to conduct a Colorado foreign entity search or true name availability search to identify if your chosen name is available. If the chosen true name is available then you can use the Statement of Registration of True Name form along with a fee of $25. If the chosen LLC name is not available or doesn’t comply with state naming guidelines then you may be required to file a DBA (Doing Business As) or trade name in the state.
• Registered Agent – One of the important aspects of any new business formation including Colorado LLC foreign registration is the service of process and this is executed by a registered agent. A foreign limited liability company in Colorado will need to continuously maintain a registered agent in the state pursuant to CO Code § 7-80-902 (2022). Top registered agent services are offered by IncParadise in Colorado and this will not only help fulfill state requirements like service of process but also assist with other annual compliances.
• Foreign Entity Authority Statement – A foreign limited liability company that wishes to transact business in this state will need to go through the process of foreign qualification or Colorado foreign business registration. Foreign qualification requires an LLC to file the Foreign Entity Authority Statement pursuant to the provisions of CO Code § 7-80-901 (2022). This form has to be submitted with the Office of the Colorado Secretary of State along with a fee of $100.

Want to form a foreign LLC in Colorado?

Need Any Assistance in Applying for Colorado Foreign Qualification?

Colorado has much to offer to businesses right from a diverse industry to highly committed talent pool, pro-business climate, grants and other funding opportunities, and business incentive programs. If you are thinking of expanding your existing business to this state then you will have to undergo the process of foreign qualification in Colorado before you can begin operations. As one of the leading registered agents in Colorado, IncParadise can assist you with the process of foreign LLC registration or incorporation.

Doing Business in Colorado

When you have put a plan in place to launch your idea, product, or service, there are several aspects to consider that can be related to business formation and operations. Doing business in Colorado according to state laws and within your desired budget can be quite a tough proposition. This is where Colorado small business incentives can provide the necessary cushion. These incentive plans or programs administered by different government bodies, are targeted mostly at small businesses. Some of the other factors to consider when conducting business in the state include choosing a desirable location e.g., Denver and Fort Collins have been described by Forbes as the most conducive locations for small businesses in the state. Apart from this, you also need to check the various options for funding or financing available in the state like loans, grants, and private investors.

Why do businesses prefer doing business in Colorado?

If you plan on doing business in Colorado then you will be happy to know that the state provides strong infrastructural support for small business and large enterprises. If you are forming a startup in this state then you can take advantage of the various Colorado small business grants that strengthen the initial financial requirements of starting and operating your business. Let us take a look at some of the advantages of conducting business in this state.

• Strong and Committed workforce – The state of Colorado has one of the best workforces in the country. The current talent pool has just the right motivation, skills, and knowledge that gears them to provide solutions to intricate problems and complex issues in various aspects of the different industries and sectors. According to various reports by US News & World, CNBC, and Forbes, the state leads in terms of STEM (science, technology, engineering and mathematics) growth and orientation. This goes a long way in ensuring that companies in the state enjoy an uninterrupted supply of talent and as a result, doing business in Colorado is easier.
• Advanced and diverse industries – The economy of the state of Colorado is highly growth oriented and this is driven by the diverse and dynamic portfolio of industries. There are the traditional sectors as well as the more advanced technology driven sectors. You can form a business in any of these sectors and also apply for Colorado small business incentives even in the evolving and dense cluster of high-tech sectors. Some of the top industries include aerospace, advanced manufacturing, electronics, bioscience, infrastructure engineering, energy, and information technology.
• Access to National and Global market – The state of Colorado enjoys a central location and one of the three states in the USA with straight lines of latitude and longitude. The state shares its borders with Wyoming, Nebraska, Kansas, New Mexico, and Oklahoma. Colorado is currently ranked 32 out of 50 states in terms of exports and has Foreign Trade Zone (FTZ) and FTZ’s offer several benefits for small businesses. Since Colorado follows the Mountain Time Zone, this enables same-day communication with both East Asia and Western Europe during the normal work hours. It is also home to the Denver International Airport (DIA) that is counted amongst the top five U.S. airports and makes doing business in Colorado effortless especially for export and import.

Enjoy Colorado state benefits by registering your company today!

Small Business Incentive Programs and Grants in Colorado

When you form a new LLC or a corporation in Colorado, there are multiple benefits that you can leverage right from Colorado small business grants to tax credits and incentive programs. These programs have been created specifically for helping small businesses and medium enterprises so that they can spend more time focusing on business operations. Here is a list of some of the most popular Colorado small business funding and incentive programs in the state.

Small Business Grants in Colorado

A small-business grant can be termed as a financial award that is provided by state governments, foundations, and other private entities to a small business or startup. The primary objective of these Colorado small business grants is to incentivize performance or facilitate achievement of business goals. Normally, a Colorado grant is considered a gift and hence doesn’t require companies to pay back. Let’s look at some of the most popular grant programs that can provide you with the necessary Colorado small business funding.

Advanced Industries Collaborative Infrastructure Grant

The Advanced Industries Collaborative Infrastructure Grant funds are one of the top Colorado small business grants that focuses on the advanced industries in the state. This grant program is considered to be an integral part of the Advanced Industries Accelerator (AIA) Program and is governed and administered by the Office of Economic Development and International Trade (OEDIT). The amount of Colorado small business funding that you can receive through this grant varies from $50,000 to $500,000 per project. The application period for this grant is between February and April each year.

Business Foundations Technical Assistance Program

The Business Foundations Technical Assistance Program has been created primarily to provide technical assistance as well as small grants to companies doing business in Colorado. This program is a little different from any other grant program as it includes 3 types of training paths that businesses are required to complete followed by a certification. Once this training is completed, businesses will be eligible to apply for grants of up to $1,200.

Employee Ownership Grant

This is one of the newest Colorado small business grants programs that has been launched by the Colorado Employee Ownership Office (EOO). This grant will be available to all small businesses headquartered in Colorado. Its primary objective is to reimburse professional technical services that are often required for the employee-ownership transition. The eligible professional services include legal services, accounting services, and business valuation services. This Colorado grant can also be used by companies for repayment of their Colorado Employee Ownership Loan.

Small Business Accelerated Growth

The small business accelerated growth program is being administered by the Colorado office of economic development (OED). The program entails the awarding of 326 grants distributing an amount of $1,785,000 in Colorado small business funding to companies across the state. The objective of this program is to provide business development support to those companies that have 19 or fewer employees.

State Trade Expansion Program Grant

The State Trade Expansion Program (STEP) Grant has been created specifically to help startups and small businesses in expanding internationally. This Colorado small business grants program provides funding necessary for activities related to international business development. The main purpose of this Colorado grant is to offset the cost of international expansion. The maximum amount of Colorado small business funding that a company can receive is $10,000 in a year. Some of the activities that can be funded through this program include:

• Holding business meetings internationally
• Compliance testing
• Attending international trade shows
• Researching of new markets globally
• Updating marketing materials for newer markets

Other Small Business Incentives and Programs in Colorado

Apart from grant programs, companies in the state can also apply for the wide variety of Colorado small business incentives offered by government bodies and private institutions. These programs can play a key role in helping you minimize the initial cost of doing business in Colorado. Let’s look at some of the popular programs.

Advanced Industry Investment Tax Credit

The top Colorado small business incentives program is the Colorado Advanced Industry Investment Tax Credit (AITC) program. The primary purpose of this program is to help those companies that are operating within the Colorado advanced industry sector. This program enables such companies to receive capital from diverse investors in the state. The legislation responsible for the creation of this program is House Bill 14-1012 and the qualifying industry sectors include Advanced Manufacturing, Infrastructure Engineering, Bioscience, Information Tech, Energy/Natural Resources/Cleantech, Electronics, and Aerospace. Investors and advanced industry businesses can benefit from a tax credit of 25 to 35 percent for every investment of $100,000.

Enterprise Zone Program

Enterprise zones (EZs) are geographically marked areas in each state including Colorado. If a company is located within such a zone then they can qualify for different types of subsidies and Colorado small business incentives. The purpose of the Colorado Enterprise Zone (EZ) program is to encourage small businesses to stay, locate, or expand in such zones to revitalize local communities. Companies can benefit from income tax credits, property tax abatements, as well as other tax incentives for locating in this zone. There are 16 designated enterprise zones in the state and if you locate in any of the designated zones then you can be eligible for sales and use tax exemptions as well as state income tax credits for specific investments.

Rural Jump-Start Program

There are different types of incentive programs available for doing business in Colorado and one such program is the Rural Jump-Start Program. This program is a collaborative effort between the local and state governments, economic development organizations (EDO), and Institutes of Higher Education (IHE). The purpose is to incentivize new businesses for starting a business in or moving their company to rural and economically distressed counties within Colorado. This is a tax credit and grant program under which companies can derive relief from:

• State income taxes for new businesses
• County personal property tax
• State sales and use tax
• State income tax for qualified new hires
• Municipal personal property tax

Colorado Opportunity Zone Program

Opportunity Zones have been created under the Tax Cuts and Jobs Act of 2017. They have been created on the lines of promoting economic development through investment by businesses in distressed areas of the state. This will not only spur economic growth but also lead to job creation in Colorado low-income communities while ensuring investors or companies enjoy Colorado small business incentives and other tax benefits. Colorado is home to 126 designated Opportunity Zones and if you operate your business in such a zone then you will benefit from elimination and deferral of federal and state capital gains taxes.

Venture Capital Authority

The Venture Capital Authority (VCA) has been created to provide the much needed access to venture capital for startups and entrepreneurs in the state. The VCA program is a Colorado small business funding program that specializes in providing funding for early-stage or seed startups. The funding distribution available is 50 percent for statewide businesses; 25 percent for rural businesses and 25 percent to startups situated in distressed urban communities. The maximum amount of investment available can vary from $50,000 to $3.25 million.

Ready to Start a Business in Colorado?

Whether you are a small business or a startup planning to locate within a distressed zone in Colorado, the state offers several types of financial assistance. You can choose from Colorado small business incentives to applying for grants and other forms of funding. Some areas like opportunity zones also offer tax credit programs. If you are thinking of starting a new business and post registration or incorporation in this state, you will be able to take advantage of these Colorado small business funding opportunities and programs.

Colorado Business Tax

Individuals in Colorado or any other state may be required to file federal as well as state income taxes but it is not the same case with business owners. If you form an entity in Colorado then you may have to file different forms of taxes depending on the entity structure and the state of formation. These may include income taxes, corporate taxes, franchise taxes, self-employment taxes, sales taxes and even local city or county taxes. It is important to understand that just like in any other state, state taxes like Colorado business tax is an integral part of the annual maintenance requirements. Hence all entity structures whether domestic or foreign will be required to file business taxes as applicable using a Colorado business tax Calculator and according to the tax rate in this state.

What taxes do businesses pay in Colorado?

As an entrepreneur, you will be required to take several decisions when starting a new business including identifying the tax structure and choosing a state that has a conducive tax environment. It is important to derive a clear understanding of the Colorado business tax landscape as this will impact your overall cash flow, profitability, and competitiveness in the said market. The 2024 State Business Tax Climate Index Report states that Colorado has a better tax climate as compared to several other states like New Jersey (11.5 percent), Illinois (9.50 percent), and Pennsylvania (8.99 percent). Whether you form a limited-liability company, C Corporation, a sole proprietorship, or a general partnership, the overall tax burden will be certainly lower due to the various tax credit programs offered by the state. Let’s try to understand the different types of Colorado LLC taxes or corporate taxes applicable to new and existing businesses in this state.

Colorado income tax

If you have decided to start your company in the state of Colorado then you will be pleased to know that this type of Colorado business tax is lower as compared to several other states and the state also has several tax credit programs to support small companies and large enterprises. There are two types of state income taxes, so let’s take a look at them.

• Individual Income Tax – The individual income tax in the state has a flat rate of 4.40 percent. It is important to note that the state income tax is different from that of the federal income tax. There are certain types of entities that are required to file this type of tax. You will need to use a Colorado business tax calculator to help you file the correct return within the due date, which is April 15, 2024.
• Corporate Income Tax – This is also known as the Colorado Corporation taxes and is levied on both foreign and domestic entities. Any business entity that has chosen to be taxed as a corporation, will be required to file this return. The three elements taken into consideration for determining the Colorado corporate income tax are property, payroll, and sales. There is also a threshold for establishing a substantial nexus in this state.

Sales and use tax

The Sales and Use Tax in the state is considered to be an important form of Colorado business tax and is applicable for a variety of entities. The state imposes sales tax on the retail sales of tangible personal property and is not applicable on services, except those that are specifically taxed by state law. The Colorado Department of Revenue administers this type of Colorado LLC taxes and it will also be applicable to restaurants, cafes, lunch counters, etc., or on the sale of food and drink being served at dining establishments and places of business. The state sales tax rate is a flat 2.9%.

Example: If your business is located in the city of Ault (Weld County) then the City Sales Tax Rate will be 3 percent and the use tax rate would also be the same. The city of Fleming in Logan County has a sales tax rate of 2% but there is no use tax. Similarly, the city of Superior in Boulder County has a sales tax of 3.46% and use tax rate of 3.3 percent.

Employer taxes

If you hire employees after starting a company in Colorado then you may be required to file employer taxes. They are also known as Colorado Wage Withholding Tax. This type of Colorado business tax requires a business to register with the Colorado Department of Revenue. As an employer, you will be required to withhold Colorado income tax from the wages of your employees. The filing of the returns is possible on a monthly, quarterly, and weekly basis depending on the total annual Colorado wage withholding liability of the employer. Every qualified employer will have to prepare the W-2 form for each of their employees for reporting this form of Colorado LLC taxes.

Local Colorado taxes

The company or the owner of a business in the state of Colorado may be subjected to several types of local taxes. This type of Colorado corporate income tax or business tax will vary from one city or county to another. Some of the most commonly applicable taxes include:

• Property Taxes
• Occupational Taxes
• Use tax
• Construction Use Tax
• Public Accommodations and Short-Term Rental Tax

Are you thinking of starting a small business in Colorado?

How are Colorado Businesses Taxed?

Once you form a business entity in the state of Colorado, it will be necessary to maintain compliance with all annual state requirements. One such annual requirement is that of filing federal and state taxes. Colorado business tax type and rate will vary according to the type of entity structure, business activity and even the local jurisdiction. Your company may be required to file multiple state or local business taxes. Let us look at the different types of entities and their tax obligations in this state.

Taxes for an LLC

If you are planning to register a limited liability company in Colorado then one of the important annual requirements will be filing of federal taxes as well as Colorado LLC taxes. A limited-liability company is known as a pass-through entity. This refers to the fact that the owner will have to file state income tax on all their profits, minus any deductions or state allowances. Colorado has a flat individual income tax rate of 4.4%. This form of Colorado business tax is due on April 15 each year and you can always leverage the state’s automatic six-month tax extension.

Taxes for a C Corporation

If you are planning to organize a C Corporation then you will be required to file different types of Colorado corporation taxes as a part of the state’s annual maintenance requirements. The most important amongst these is the Colorado corporate income tax. This tax is levied on all corporations, domestic and foreign. The current tax rate is a flat 4.40 percent. It is important to note that if the net Colorado tax liability for the tax year exceeds $5,000 then such a C corporation will have to file Colorado estimated tax payments.

• Property – $50,000
• Payroll – $50,000
• Sales – $500,000

Taxes for S Corporation

If you have started a C Corporation or a limited-liability company then you can always elect S Corporation status. This is nothing but a type of tax status or tax designation that is issued by the Internal Revenue Service (IRS). You will first have to form an LLC or a corporation and then file Form 2553 for the said entity to be treated as an S-Corp. If looked from the Colorado corporate income tax perspective, the state will treat your S corporation in the same way as the federal government would, which is that instead of the company, the owners have to file state income taxes.

Taxes for a Sole Proprietorship

If you are thinking of forming a sole proprietorship in Colorado then the most important form of Colorado business tax will be the income tax. As the name suggests, a sole proprietorship is a single owner run company and hence the owner will have to file an individual income tax return. You will be required to file the Form 1040.

Taxes for Partnerships

A partnership like a limited-liability company is also considered to be a pass-through entity. As a result, the owners of such an entity will have to file Colorado LLC taxes like the individual income tax. The income tax requirements are quite similar to that of a sole proprietorship as well as single-member LLC’s. The individual income tax returns that have to be filed using Form 1040. Partnerships will also be filed alongside Colorado K-1 (DR 0106K) as part of their return for each of their partners. This has to be filed with the Colorado Department of Revenue and the due date is April 15, each year. Another type of Colorado business tax that may be applicable is the sales tax and the use tax depending on the business activity of such a company. A partnership may also be required to file withholding tax if it has employees on wages.

Ready to incorporate your Colorado Company?

Colorado is one of the top states when it comes to providing just the right business environment. The state boasts of a pro-business environment and this includes low taxes and several forms of tax credit programs. You can choose to form a C corporation, partnership firm, sole proprietorship, Limited Liability Company, and even elect for S Corporation tax status. Once you form a new business in this state, it is important to maintain compliance with all annual requirements including filing Colorado corporate income tax returns. IncParadise can provide information and assistance pertaining to filing of state taxes.

Doing Business As or DBA in Colorado

Colorado is home to over 600,000 small businesses and this includes startups, small and medium enterprises (SME’s), home-based firms, general partnerships, sole proprietorships, large corporations, and LLCs among others. Some of these companies are operating using a business name while some apply for a Colorado DBA online to operate. There are several top brands operating from this state with several companies headquartered in Denver. The list of top companies in the state is quite long and a few names include Arrow Electronics, DISH Network, DCP Midstream, Ball, Qurate Retail, DaVita, and Ovintiv among others. If you are planning to start a new company in this state then you can choose to use the legal name of the owners, use a business name (e.g., Aspen Tours), or file a Colorado DBA online application.

What is DBA in Colorado?

If you are thinking of starting a small business then you will need to first choose a company name. The DBA name would more often than not be the first thing your customers will see, and it will further set the tone for every interaction you have going forward with the customers. The type of name to be chosen will also vary according to the type of entity. For example, a corporation name may be different from that of a sole proprietorship, limited liability company, or a partnership. Business names are normally classified in the following ways:

• Name of the business owner like Paul Faith LLC.
• Traditional business name like Colorado Springs Treks
• File a trade name in Colorado like Jason’s Plumbing

When do you need a DBA?

If you are thinking of filing a DBA in Colorado then you will be able to file it irrespective of your company structure. Of course there are certain state regulations for trade names that you will need to be compliant with. There are numerous situations or circumstances in which any company may need to choose a trade name and this is essentially the first step towards looking up a DBA in Colorado! Let’s look at some of the important factors:

• Expansion of business – If you are already operating a business and want to explore a new area in the same or another industry then this is where a DBA name can be quite effective. When you file a trade name in Colorado for this new aspect, which could be a new product or service, then your customers would be able to differentiate the two based on the business name and the trade name. Let us look at an example to get a clear picture:

  Example: You currently own a robotics company that specializes in designing, construction, and operation of robots. The name of this company is El Paso Robotics Corp. Now, you want to diversify into Artificial Intelligence (AI). Now, robotics and artificial intelligence are different areas due to their objectives and application. In such a scenario, you can conduct a Colorado trade name search and register a DBA name for the division that is focusing on AI.

• Banking Requirements – If you are planning to conduct business in any name other than your legal name, especially a sole proprietorship, then most banks require you to submit a DBA or trade name certificate for opening a business banking account.
• Operate Multiple Businesses – You need to apply for a Colorado DBA online if you plan to operate multiple businesses in the same industry or different sectors. The benefit is that when you apply for a trade name or file an assumed name, you can operate several businesses without creating or registering separate legal entities for each type of business.

Filing DBA in Colorado for LLC and Corporation

Every business being formed in Colorado will have some form of a legal name. This may be dependent on the entity structure and can be the name of the owner. It can even be a traditional company name, which appears in the new business registration documents. You can also choose to operate your company under a DBA also known as a trade name in Colorado. There is a specific process to follow when it comes to choosing a trade name. You will also be required to conduct a Colorado trade name search prior to registering the name. The rules and regulation, the process as well as registration fee will be different from that of business name reservation.

Doing Colorado Trade Name Search

If you have chosen a trade name for your Colorado Company then the first step would be to ensure that the chosen name is compliant with state trade name laws, which are governed by 2022 Colorado Code, Title 7 – Corporations and Associations, Article 71 – Trade Names. According to the laws, Colorado trade name search is one of essential processes that every business owner needs to go through as it will help you identify whether your chosen name is available or not. This is because your trade name might not be unique and several other businesses may be using the same name. If the name is available or not in use then you can go ahead and file a trade name in Colorado.

Basic business database search

The process of Colorado trade name search is similar to that of the business name search. You can conduct the business database search using business name, ID, trade name, trademark, or document number. This search will allow new businesses, both domestic and foreign entities to check if their chosen DBA name is available. Let’s look at an example to under this:

Register Your Colorado DBA

The process of entity search is the answer to the query of how do I look up a DBA in Colorado? which is one of the most common questions that business owners have. If your chosen name is available then filing a DBA in Colorado is necessary. You will be required to complete and file the Statement of Trade Name pursuant to CO Code § 7-71-101 (2022). This application has to be filed online along with a fee of $20. You have an option wherein you can request the filing to take effect immediately or you can delay it for a maximum period of 90 days. Alternatively, we can help you to register a trade name or DBA in Colorado through a process which is easier and faster.

Do you want to file a trade name in Colorado?

Managing Colorado DBA

Once you file a Colorado DBA online application, you can choose when the trade name becomes active. Once it is active, you will be able to use this as the entity name for conducting business within this state. There are certain rules and regulations pertaining to a Colorado trade name or DBA including that of renewal of a DBA, changing, or canceling of the trade name in the jurisdiction where the business is operating from. Let’s look at the various processes applicable to managing a trade name.

How to renew a Colorado DBA?

Once you file a trade name in Colorado, you will have to renew it annually to ensure it remains effective. According to the Colorado Secretary of State, trade name of a non-reporting entity, dissolved or delinquent entity as well as an individual will be effective for a period of one year pursuant to CO Code § 7-71-105 (2022). Similarly, the trade name for a reporting entity (corporation or LLC) will remain effective as long as the said company files its annual reports on time or maintains a registered agent in the state.

How to change Colorado DBA?

After filing a DBA in Colorado, if you want to change the trade name at any given point in time, is it possible? Yes, it is possible. You will be required to file the Trade Name Change or Business Entity Name Change Form as applicable in the city or county that your business is operating from.

Example: If your company is based in Boulder, Colorado then you will need to file “Permit Application and Report of Changes” form, which has a dedicated section for Change of Trade Name or Corporation Name.

How to cancel Colorado DBA?

Once you have filed a Colorado DBA online application, if you decide after some time that you want to cancel the said trade name then is it possible? Yes, it is possible and you will be required to submit a Statement of Withdrawal of Trade Name with the secretary of state pursuant to CO Code § 7-71-106 (2022). There is a fee of $10 for this.

Need Any Assistance in Filing Colorado DBA?

The process to apply for a Colorado DBA online will require you to provide accurate information pertaining to your business and also ensure total compliance with state trade name rules and regulations as well as federal trademark laws. The process of conducting a Colorado trade name search and adhering to all DBA guidelines can be quite a challenging exercise. IncParadise can gladly assist you with this process. We have expertise and knowledge regarding the Colorado state DBA laws and Federal Trademark regulations.

Sole Proprietorship in Colorado

A report by the Small Business Administration (SBA) reveals that Colorado is home to more than 600,000 small businesses and a large number of these entities are sole proprietorships. This is because a first time business owner finds a sole proprietorship in Colorado as a comfortable to operate entity because it lacks the extensive paperwork of a corporation or the multiple decision makers in a limited liability company. If you search for a sole proprietorship in Colorado, you will find this type of entity exists and operates in almost all industries right from home based bakeries to larger food establishments and tour operators. Sole proprietorships can be easily formed and operated within some of the top industries in the state including scientific, construction, retail trade, and technical services industry.

What is a sole proprietorship in Colorado?

It is important to inform oneself on how to start a sole proprietorship in Colorado before you actually start investing in your startup. This type of business entity constitutes several areas that most first time business owners are unaware of. A sole proprietorship is known as an unincorporated entity, which is owned as well as operated by a single person. This type of entity is also known as a sole tradership or individual entrepreneurship. Some of the examples of such an entity are graphic designers, software designers, programmers, photographers, travel journalists, bakery, dental clinic, and pharmacy among others. It is easy to form a sole proprietorship in Colorado as this type of entity has salient advantages over various other types of entities with respect to formation, finances, taxes, and documentation.

Important features of sole proprietorship in Colorado

If you are planning to start a sole proprietorship in Colorado then this is the most basic of all types of entity structures. It is also the oldest type of entity formed and operated in the world and is owned, managed, as well as controlled by an individual or a single person. When you search sole proprietorship in Colorado, you will gain insight on the fact that this type of entity has several remarkable features. Let’s look at some of them

• Ease of formation and Closure – One of the most important features of a sole proprietorship is that it is easy to form. All you have to do is file a Colorado trade name and obtain the necessary licenses. You are not even required to register this type of entity with the State of Colorado. Similarly, it is easy to close a sole tradership business. If you want to dissolve your business at any point in time then unlike corporations and LLC’s, you will not be required to file any articles of dissolution or closure.
• Liability – When you form a sole proprietorship in Colorado, you will be responsible for all debts. Whether you have taken a loan for the business or a personal loan, either ways, you will be responsible for paying off the loan. This can be an advantage as well as a disadvantage.
• Profit or loss – One of the key aspects of a sole proprietorship business is that profit and loss will not be shared. If your company earns a profit then that will belong to the owner and the same rule stands for losses incurred by the company.

Do you want to start a sole proprietorship in Colorado?

Steps to Start Sole Proprietorship in Colorado

If you are wondering how to start a sole proprietorship in Colorado then there are several processes that you need to focus on. These processes are associated with the formation of a new business as well as making it operational. This also includes fulfilling state annual maintenance requirements, which every new company in the state has to be compliant with. Let’s look at the various important processes and steps involved.

1. Prepare a business plan

Whether you start a small business or a large company, one of the very first requirements is that of a comprehensive business plan. It needs to be a carefully thought-out plan as it will lay the foundation for how to start a sole proprietorship in Colorado while ensuring key business objectives are also well laid out. A good business plan will incorporate strategic actions regarding current and future goals while creating a roadmap. It will also take into account various factors that play a key role towards making your sole proprietorship growth oriented and profitable.

• Executive Summary
• Company Description
• Long and short-term Objectives
• Competition Analysis
• Market analysis
• Product and Services
• Target audience
• Operating plan
• Marketing Plan
• Financial Plan

2. Choose a Colorado business name

If you want to form a sole proprietorship in Colorado then it is one of the simplest business structures. However, you will not be able to establish a company without a proper business name. You can always start by using your legal name as the business name or trade name. The importance of the name not only lies with forming a company but also plays a key role in other aspects like sales, marketing, branding, domain name for website, and opening a bank account among others.

• Try to choose a name that is easy to spell and remember
• Identify a name that is not similar to that of your competition
• Follow the Colorado naming rules and guidelines
• Take help from online business name generators like Namelix, BrandCrowd etc.
• You can use your legal name (e.g. – Susan White Cafe)
• You can choose to file a Colorado trade name
• Try to secure trademark protection for your chosen business name

3. File a trade name

If you have taken a decision to not use your legal name then the option is to file a Colorado trade name. A trade name is also known as a fictitious name or a DBA (doing business as) name. It is any name other than the legal name of the owner. When you choose such a name, you are not required to include any additional words, phrases, or abbreviations like corporation, LLC etc. Let’s look at an example to understand this.

4. Get an EIN

If you are wondering how to start a sole proprietorship in Colorado then one of the important steps would be to apply for and obtain a proper tax ID. Tax ID’s are mostly required by new and existing businesses for filing of federal and state taxes. Generally, a sole proprietorship in Colorado can file individual income taxes using the Social Security Number (SSN) of the owner. You may need to apply for an Employer Identification Number (EIN) with the IRS (Internal Revenue Service) by filing form SS-4, if you meet any of the following requirements:

• If your company starts hiring employees
• If you open a business bank account
• When the owner has a Keogh plan
• The state of formation requires filing of excise tax returns
• When you change the entity structure from a sole proprietorship to a limited-liability company
• Filing of Chapter 7 (liquidation) or Chapter 11 (reorganization) bankruptcy

5. Obtain the necessary licenses and permits

If you are wondering how to start a sole proprietorship in Colorado then one of the key areas related to operating your company is the type of licenses that you may need. The licensing regulations for a sole proprietorship business will be quite similar to that of any other form of entity including corporations and LLCs. The type of license required when you start a sole proprietorship in Colorado will vary according to the profession, location, and the business activity. The most common licenses applicable would be:

• Professional or occupational License
• Sales tax license
• Regulatory licenses
• Municipal or county licenses
• Zoning permits

6. Open a bank account for your Colorado business

If you form a sole proprietorship in Colorado then it becomes necessary to separate your personal income from the income you derive from your business. This is where opening a business bank account can be quite beneficial. One of the top advantages of a separate bank account for the company is that it will help create a distinction between personal and business-related expenses especially when it comes to filing taxes. It will aid accurate bookkeeping and analytics while boosting your business credibility.

7. Report and pay taxes

When you search a sole proprietorship in Colorado for taxes, the most important would be the individual income tax. Since, this type of entity is a single owner entity, all profits and losses for the company will be included in the individual tax return of the owner. The state individual income tax rate is a flat 4.40 percent in Colorado. Apart from this, you may be required to file sales and use tax depending on the primary business activity. If you hire employees then you will have to file withholding taxes as well.

Ready to Start a Sole Proprietorship Business in Colorado

If you have already decided to form a sole proprietorship in Colorado then there are several advantages of this type of entity. You can enjoy numerous state benefits including participating in income tax credit programs. You will not be required to register your company with the Secretary of State unlike for LLCs and corporations. However, you will be required to maintain compliance as far as state annual requirements are concerned as this will help you to enjoy a good standing with the state.