Evolvitas Law LLC

After you have filed your Articles of Organization for your Colorado LLC, your next step is to obtain an Employer Identification Number (EIN) from the Internal Revenue Service.

The EIN, otherwise known as a FEIN (Federal Tax identification Number) and sometimes referred to generically as a TIN (Tax Identification Number), is a nine digit number beginning with two digits followed by a hyphen followed by seven digits, like this: 12-3456789. The EIN is used by the IRS to specifically identify your LLC as a separate entity from you, personally.

If you have formed a single member LLC — that is, if you are the only owner — and if you intend to remain the only member of the LLC, and if you will not be hiring employees, then you do not have to obtain a EIN. However, because business situations change and because it is so easy to get an EIN, it makes sense to go ahead and obtain a unique EIN for the LLC. Getting one later can be a little bit of a pain, and there is no real downside to obtaining the EIN now.

To get started, go to the IRS’ dedicated page for obtaining EINs. I have compiled a slideshow below that shows every screen that I went through to obtain an EIN for a particular new Colorado LLC. Before we get to the application process, a few notes are in order:

1. Your experience will vary a little based on the type of business you are starting. For the example below, I am starting a LLC for a vacation rental home. Also, the IRS updates and changes this site from time to time, so some screens could look different for you.
2. I will skip an explanation of some pages in this process that are self-explanatory.
3. You can see the slide number by hovering your cursor over the slide. I will refer to particular slide numbers below.
4. I will assume you are filling out the application for a new Colorado LLC of which you are a member. If you are not a member, then there are additional steps you need to take, which I will not be covering here.

Click APPLY ONLINE NOW on the slide 1 screen. Slide 2 shows you the scary pop up meant to make you take this seriously; go ahead and click OK.

On slide 4, be sure to tick “Limited Liability Company”. Slide 6 asks for how many members there are in your Colorado LLC. “Members” in the LLC context, are owners. They are equivalent to stockholders in the corporation context. Include yourself in the count of members, along with each of your business partners that has some ownership interest in the LLC. On slide 8, tick “Started a new business”.

Slide 9 presents a problem. It may be fixed by now, but when I tried to select “Existing business” a few months ago, I could then complete the remaining portions of the application, but at the very end I would get an error message. Ultimately, I had to make myself the responsible party in order to get the process to work.

Note that on slide 11, due to where I live (we do not get mail at physical addresses in my town), I usually check the box for a different mailing address than the LLC physical address. This may not be necessary for your situation. You may get a verification note as I usually do, as shown on slide 12.

On slide 14, be careful to enter the name of your Colorado LLC exactly as you registered it with the Colorado Secretary of State. If you put any commas or other nonstandard characters in the name of your LLC, you will not be able to input them here. This is why I avoid putting commas in company names. If you have such nonstandard characters, however, it is doubtful that you will run into problems with the IRS by leaving them out here.

Most Colorado LLCs will select “No” for each question on slide 15, except perhaps for the last one. It may take some searching on slide 16 to figure out how to classify your business; your best guess will be fine.

On slide 20, make sure you select “Receive letter online.” Double-check all of the information on the slide 21 summary. When you are on slide 22, go ahead and print this page using your browser’s print function (I always save to pdf instead of using paper). If you hit the buttons too hastily here, you can skip right over the part where you get your EIN and, more importantly, the EIN Confirmation Letter. Once you have saved this screen, go ahead and click to open your EIN Confirmation Letter, which should look something like this. Save the EIN letter on your computer. You may also want to print slide 23.

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That’s it! Now you have an EIN for your new Colorado LLC. In the next post we’ll address opening a bank account and perhaps a few other matters relating to getting your business established.

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This is another installment in our series, How to Start a Colorado LLC. Feel free to contact Evolvitas Law if you have any questions.

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.

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This is another installment in our series, How to Start a Colorado LLC. Feel free to contact Evolvitas Law if you have any questions.

When starting and naming a new Colorado LLC, consider whether the new business’ name is a registrable trademark. There are other considerations, too, but this one is a bit more complex.

First, a bit about trademarks. A trademark is a distinctive word, phrase, or image that you use in commerce. It is established by actual use; that is, you don’t create it by registering it with the state or with the feds. For example, if you have a new toy called the frrrrshink! (derived from the sound it makes when dropped), the way to get to keep other people from creating and selling a similar product with the name frrrrshink! is to sell yours first. This applies not only to product names but also to the names of services and businesses. After you’ve established the mark, then you can register it. (There are exceptions, but discussing them would take us off track.)

Also, keep in mind that you need something distinctive. Pulling from our example above, if you named your new toy “toy”, you have not created a trademark because that’s just a generic description of the product. There’s a whole scale of distinctiveness that you need to consider in this regard. The key point is this: It’s not hard to come up with a fanciful (or as I like to say, mutant) name for your new business, and fanciful names are easy enough to establish as trademarks.

Trademarks can be registered with either the State of Colorado via the Secretary of State’s website or can be registered with the United States Patent and Trademark Office (the USPTO) or both. Generally speaking, registration with the State isn’t all that valuable, so I’ll keep my discussion limited to searching the federal registry. Keep in mind, though, that you can perform a similar search of the State’s registry on the Colorado SecState’s Records Search page.

Important note: Even if you plan never to register the name of your Colorado LLC in a trademark registry, it is still a good idea to perform at least a basic search. You may have no interest in protecting your potential mark, but someone else may have an interest in protecting theirs. Failing to make sure you do not infringe on someone else’s mark can be costly.

I have discussed elsewhere how you should go about establishing and keeping track of your trademark, but here’s how you use the database at the USPTO to make sure the name of your new Colorado LLC is a registrable one:

1. Search the USPTO Database.

This can be time-consuming, especially if you have not come up with an abstract or “mutant” name for your new Colorado LLC. Here’s how you do it.

Go to the USPTO’s Trademark Electronic Search System (TESS) page (navigate to the middle of the linked page and click “TESS”). It will look something like this:

Click on “Basic Word Mark Search (New User)”. The new screen will look like this:

Leave the default selections as they are and type in your prospective company name. Press “Submit Query”.

If you’re lucky, you’ll get a result that says, “No TESS records were found to match the criteria of your query.” That means that your Colorado LLC name does not conflict with any registered trademark. Be careful, however, to search several variants and alternative spellings of your name just to make sure.

If you get a response with several results, you have two options. First, you could go through every one of them to make sure that the owners of those marks sell goods or services in a different class than what you plan to sell. Second, you could change your prospective company name. Here are the (partial) returns for a basic search for the word “dual” which could be part of your LLC name:

Searching through 1500 records can be a pain, but it might be worth it to you, depending on what you plan to sell. Determining whether another mark is valid for the same class of goods or services for which you plan to use your mark is a tricky business. If you’ve got a prospective name that (A) matters to you quite a bit and (B) conflicts or might conflict with someone else’s mark, this is an area where you might want to engage legal counsel for some assistance.

2. Search the web (and elsewhere).

After you’ve cleared your Colorado LLC’s name through the TESS database, perform the same kind of search on the web, generally. Do not settle for a cursory glance through Google. Instead, put some time in here, trying several variants of your prospective company name to see if there is anything similar at all out there. You might also try different search engines or even looking through phone directories and advertisements if you want to be extra thorough.

Remember, a trademark can be established by someone else and not be registered anywhere, and it is your responsibility to make sure that you are not infringing on someone else’s mark, regardless of whether it is registered.

3. Settle on a name.

All right! You have found your domain name, cleared your prospective Colorado LLC name through the SecState’s site, made sure your name is memorable, and you have cleared it through the TESS database. It is time to settle on your name and to take the next steps, and we will address those in our next post.

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This is another installment in our series, How to Start a Colorado LLC. Feel free to contact Evolvitas Law if you have any questions.