Having settled on a name for your Colorado LLC, you will need to legally create it by filing Articles of Organization with the Colorado Secretary of State. Here’s how.
Hold on a second, though. First, you’ll need to…
Buy a domain name.
There’s nothing worse than settling on a name for your new Colorado LLC and coming back a few minutes later to find that someone just purchased the domain name. So while you’re on GoDaddy.com or some other domain registrar site, go ahead buy the domain name for your business.
Note: Even though buying a domain name is a business expense, you don’t have a business yet. So, just buy the domain name using your personal name as the owner and paying with your personal credit card. After you have set up your Colorado LLC, opened a business bank account, and obtained a business debit card, then you can come back to your domain registrar and transfer ownership from you, personally, to your new Colorado LLC.
And now it’s time to…
File your Articles of Organization.
Go to the Colorado Secretary of State’s site. It will look like this:
Under “Form a new…” click on “Limited liability company (LLC)”. That will bring up this page:
Enter your new Colorado LLC name, making sure to include “LLC” or one of the other required terms or abbreviations in the name and being careful to spell everything just as you want it. (I have seen several LLCs established with accidentally misspelled names.) Press “Continue”. The next screen should look like this:
This page is actually pretty long, so the screenshot above doesn’t quite cover all of it. But here are the key points:
Enter a street address. The system will (currently) allow you to enter a PO Box here and not a physical address, but I recommend that you enter a physical address. It’s ok if this is just your home address.
Note: The law requires that you enter a “principal office address” but does not clearly state whether that means a physical address or a mailing address. Given this lack of clarity, it makes sense to interpret “principal office address” as a physical address and to include a separate mailing address if you need to.
If you have a different mailing address, enter that.
Enter your Colorado LLC as its own registered agent.
Note: A registered agent is the person or entity designated to receive service of process (documents letting you know the LLC is being sued). In Colorado, an entity can act as its own registered agent. You can use the same address that you entered above.
Enter your name as the true name of the person forming the limited liability company, and enter your mailing address. Again, this address can be the same as what you’ve already entered. If you already own another business entity, you can name that business entity as the true name of the person forming the new Colorado LLC. When I form new LLCs for clients, I enter “Evolvitas Law LLC” in this section as the entity forming the new Colorado LLC.
I always keep the default selection (“No”) next to “The limited liability company has one or more additional persons forming the limited liability company and the name and mailing address of each such person are stated in an attachment.”
Under “The management of the limited liability company is vested in…”, as a general rule I recommend that you select “one or more managers”.
Important Note: If a Colorado LLC is managed by the members (the owners) of the LLC, then — in the absence of an operating agreement stating to the contrary — any member can act on behalf of the LLC. They can take out debts, spend money, enter into contracts, anything. Normally, most LLCs do not want all members to be able to do all of these things. Also, there can be tax consequences to having all members able to act on behalf of the LLC. When we get to a discussion about operating agreements (the agreement that governs the operations of the LLCs — things like voting, payouts, tax elections, etc.) we will talk about how, even if you designate the LLC to be managed by managers, you can still have it managed by the members, if you like. Bottom line: The safest route is to designate that managers — and not members — manage your Colorado LLC.
Next to “This document contains additional information as provided by law…”, as a general rule leave the default selection (“No”).
Note: There are some exceptions to this mysterious little statement, but for most situations, the correct answer is No. The CO SecState uses very similar forms no matter what kind of entity you are starting up, and this section applies most commonly to nonprofit corporations. (Nonprofit corporations have to include a statement about what happens to their assets upon dissolution, and this is where you would include an attachment explaining that.) There are some other situations where you might want to include something here as well (dentists, take note!), but they tend to be unusual. If you have any questions about this, it might be a good time to inquire with legal counsel.
Do not enter anything in the box relating to delayed effectiveness.
Important! Be sure to sign up for email notifications! If you fail to do this, you will not know when your periodic (which almost always means “annual”) report is due, nor will you get other notices from the Colorado SecState’s office. To keep your LLC in good standing, you must file a periodic report every period. This is the easiest bit of governmental compliance out there, but plenty of people fail to do it. The current filing fee for a periodic report is $10.
Under “The true name and mailing address of the individual causing this document to be delivered for filing are…” enter your personal, individual name and your mailing address. Click “Submit” to go to the next page:
On the Transaction preview page, make sure you review the auto-generated pdf for misspellings or errors, then click “Accept”. The following page will look like this:
Go ahead and enter your credit card number. Once you click “Pay Now” your payment will be processed. You will be charged a $50 filing fee.
Congratulations! You now have your very own Colorado LLC! In the next post we’ll talk about some more practical steps you need to take to get your business established.