Forming an LLC is an important part of setting up a new business. And, considering that there are roughly 12,000 new businesses in Colorado each year, a lot of people need to know how to get an LLC in Colorado.
Part of knowing how to create an LLC in Colorado involves creating a Colorado LLC operating agreement. Doing so will help you ensure that your new business is legally sound.
If you’re interested in learning how to start an LLC in Colorado, you can find out below. Let’s take a look at what you need to know about creating an LLC in Colorado and using a Colorado LLC operating agreement template.
Is an LLC Operating Agreement Required in Colorado?
An LLC operating agreement is not required in Colorado. However, just because it’s not required doesn’t mean it’s not a good idea.
With an operating agreement, you legally bind your LLC’s members to the terms of the contract. The agreement will then take precedence over default state LLC laws in court.
Colorado Operating Agreement Laws
If you’re going to implement a Colorado operating agreement, it helps to know about state LLC operating agreement laws. Colorado state operating agreement laws are outlined in § 7-80-108.
Some of the laws you should take note of include that the agreement can contain any provisions of the company’s business conduct as long as it adheres to Colorado law. The company is then bound by the agreement set forth by its members. Additionally, you can enter into an operating agreement at any time in the lifespan of your business.
You should note that operating agreements cannot unreasonably restrict members’ rights or eliminate the obligation of fair dealing. It’s also unable to restrict the rights of people who aren’t members of the organization.
You also need to ensure that when naming your LLC it contains any version of these phrases or abbreviations:
- Limited Liability Company
Another point to remember is that when nominating a registered agent in your articles of organization they will need to be one of three: (1)
- an individual who is a full-time resident of Colorado
- a Colorado business entity with its principal place of business in Colorado
- a foreign entity authorized to do business in Colorado and that has a usual place of business in the state.
How Much Does It Cost to Form an LLC in Colorado?
It costs $50 to file your articles of organization in Colorado.
It’s also wise to reserve a name for your LLC. You can do so by paying $25 to the Colorado Secretary of State.
How to Form an LLC in Colorado
Forming an LLC in Colorado is a fairly simple, four-step process that will have your business up and running in no time:
Step 1 – File Online
You can use the Colorado Secretary of State online portal to start setting up your LLC in Colorado. This makes it possible for individuals to quickly set up their LLCs using online filing systems.
To start an LLC in Colorado, you’ll need to begin by selecting your entity type. Once you’ve chosen the type of entity, you’ll need to fill out the appropriate online form.
Entities can either be domestic or foreign. The exact paperwork you’ll need to complete will depend on whether you’re opening a domestic or foreign LLC.
Step 2 – Pay a Filing Fee
Once you’ve filled out your form, you’ll need to pay a filing fee. The filing fee varies, once again, depending on whether or not you’re opening a domestic or foreign LLC.
Step 3 – Create an Operating Agreement
With your fees paid, you’re ready to create an operating agreement. Remember that this is not a required step, but is certainly recommended in order to have a successful business.
If you’re forming a single-member LLC you can use this document to prove your business structure is separate from yourself in court. This can be extremely helpful if you’re ever subject to a tax audit or other issue with the IRS.
Remember that your LLC operating agreement should outline the duties and rights of your company’s owners. It should also state the financial interest of each member in the LLC.
Step 4 – Get Your Employer Identification Number
The final stage of the process is to get an Employer Identification Number, sometimes called an EIN. EINs are used to help the IRS track business’s financial activity.
If you want to hire employees, open a bank account, take out a loan, or get a credit card, you’ll need to get an EIN. You can either apply for this form on the IRS website or by mailing a paper to the IRS.
Colorado LLC Operating Agreement Template
Are you ready to put your knowledge on how to form an LLC in Colorado to good use? Check out this Colorado LLC operating agreement template to get started!