After a little hiatus, we’re continuing with the series How to Start a Colorado LLC. Today, we will discuss opening a bank account. But first, a big announcement: You can now have Evolvitas start your new multi-member Colorado LLC for only $695!
We have gotten a lot of feedback about starting multi-member LLCs and the difficulty involved on the layman’s side. So, we’ve tried to standardize the process as much as possible while still giving entrepreneurs access to personalized advice and counsel. We’re trying to balance cost, personal advice, time, and effort considerations. Let us know if we’ve been successful.
Also, if you have stuck with us during this series, you have an idea of what’s involved in starting a single member LLC. If you need a single member LLC, but it seems like too much effort, we now offer that service for $295.
Now, on with the series. After you have picked a name for your Colorado LLC, filed your Articles of Organization with the Colorado Secretary of State, and obtained your new Federal Employer Identification Number, you will need to open a bank account. You must open a separate bank account for your business! Here’s why:
- You cannot not make personal purchases with your business account.
- You cannot mingle your business expenses and your personal expenses.
If you do these things, you run the risk of losing the limited liability protection that opening a Colorado LLC provides. That’s bad.
But before heading to the bank, here’s what you’ll need to gather:
- Signed Operating Agreement
- Articles of Organization
- Certificate of Good Standing
- FEIN Confirmation Letter (or for single member LLCs that never expect to have employees or other members, your Social Security Number)
- Government issued ID
- Checkbook or cash
All right, there are a few items in that list we haven’t discussed yet. An operating agreement is the essential document that governs how a Colorado LLC is run. It’s hugely important for multi-member LLCs, but for single member LLCs it’s not quite that big of a deal. If you’re operating a pretty small shop that really doesn’t hold much in the way of assets, a very simple operating agreement, like this, should suffice for you.
The Certificate of Good Standing is easily obtainable for free from the Colorado Secretary of State’s website. Just search for your entity and click the link. There is no charge to download an up-to-date copy.
Once you’ve gathered up all of your documents, head on over to a bank to get your account opened. Open your new business checking account with the balance required by your bank, usually $25-$100. You should record in your accounting program or records any money that you deposit into this new account as a “capital contribution.” All withdrawals should be labeled “wages” or “distributions.”
I recommend that you sign up for online banking, electronic statements, and a debit card. The debit card will allow you to make online and other purchases for the business without the hassle (and possible expense) of signing up a for a credit card or buying checks. Depending on your business, you may want to order checks or a stamp for making deposits, but most folks these days will not have a need for checks.
That’s all there is to it! Now that you have your new Colorado LLC set up and have your bank account opened, all you need to do is sell a product and make your millions. In the next post we’ll talk about some best practices for operating your Colorado LLC.