Setting up a Colorado Limited Liability Company

How do I set up a Colorado LLC?

You’ve decided to form an LLC for your new business. The LLC provides a great vehicle for separating the operations of the business from the members of the LLC, provided that the members have taken steps to actually separate the business from the members, but without the administrative overhead of a corporation. So what now? How do I set up my LLC? You can fill out the simple forms provided and HLGGC will create your LLC, draft your operating agreement, help you file for the necessary licenses and permits and advise you on how to protect your interests; or you can follow the steps below and do it yourself.

Follow these steps to setup your LLC:

1. Name your company. – Your LLC's name must be unique and it must comply with the Colorado Revised Statutes. The business division of the website maintained Colorado Secretary of State allows a user to perform a search of registered names. The United States Patent and Trademark Office ("USPTO") allows users to perform searches via the Trademark Electronic Search System ("TESS"). Your LLC must also contain one of the following terms or abbreviations, "limited liability company", "ltd. liability company", "limited liability co.", "ltd. liability co.", "limited", "l.l.c.", "llc", or "ltd.". If you choose to have HLGGC complete and file your articles of organization, HLGGC will search the state records to determine the name availability of the new LLC and perform a basic search of TESS maintained by the USPTO.
2. File the Articles of Organization. – You must complete and file the articles of organization for the LLC. The LLC will be formed when the Colorado Secretary of State accepts the articles of organization. The articles of organization must state the following items: the name of the LLC, the principal place of business, the registered agent name and address, name and mailing address of the parties forming the LLC, whether the management of the company will be vested in the members or managers, and that there is at least one member of the LLC. Colorado Secretary of State allows, and requires, you to use the Colorado Secretary of State website to complete and file the articles of organization.
3. Prepare the LLC's Operating Agreement. – Colorado does not require that an LLC draft and adopt an operating agreement. Colorado does not require that an LLC's operating agreement be in writing, except for single member LLC. However, many financial institutions, many distributors, many other business and good practical sense do require an operating agreement. An operating agreement should spell out the operating principals of the business and the rules of ownership. It is far easier to determine the rules and spell them out before those rules are tested by circumstances.
4. File for Identification, Licenses and Permits. – The United States and the State of Colorado will be interested in your business and you will want to file for an EIN, Employer Identification Number or Federal Tax Identification Number. This can be issued through the filing of an IRS FORM SS-4 or through the website maintained by the IRS. You will also need to file your Colorado Business Registration, Form CR 0100, and then update your filing when you receive your EIN. You may also need to file for a sales tax license, unemployment insurance account and many municipalities throughout Colorado also require that a business file for a business license.

You may be ready to conduct business once you have created your LLC and obtained the necessary licenses and permits. Prior to beginning, you must understand how to protect the status of your new company. Many businesses make mistakes in the early phases of the businesses lifecycle with regards to operating procedures. These procedures get imbedded into the daily activities and are continued as the normal way of doing things. The problems arise when these processes erode at the legal separation between the members of the company and the company itself. If enough erosion is allowed to continue, the members may find themselves personally liable for the actions of the company.