Incorporate in Colorado

Situated in the center of the United States, Colorado is often overlooked as a hub of business in America. It doesn't have the advantage of being on either coast like California or New York, and doesn't have the same history of driving the American economy that those larger states do.

However, Colorado is not without its charms for entrepreneurs. CNBC ranked Colorado 3rd on its list of "Top States for Business in 2010," and it continues to provide a strong foundation for businesses large and small. Here are a just a few reasons to consider incorporating a business in Colorado.

Benefits of incorporating in Colorado:

Affordable Filing Fees

The state of Colorado collects nominal fees in order to process paperwork for incorporation or the formation of an LLC. Whether you are organizing an LLC or incorporating your business, the cost is a flat fee of $50. Best of all, this process can be completed online and it doesn’t matter how many pages your Articles of Incorporation or Organization consists of, the total cost remains $50.

Even better, your annual fees for filing reports on your business are also low in the state of Colorado. If you incorporate or organize in Colorado, there is a $10 annual filing fee if you submit your reports online. Submitting your reports as paper copies will cost $100. The state incentivizes an eco-friendly approach that streamlines the process for all involved.

Ongoing Costs are Affordable Too!

When you incorporate in Colorado, you’ll enjoy relatively low taxes as a business. The state of Colorado has a corporate net income tax rate of 4.63%, which is applicable only to the net income of the business. If you choose to form as an S-corporation instead of a C-corp, which is an option in Colorado, you’ll pay the personal net income tax rate for your business instead. The personal income tax rate in the state is 4.6%.

Automatically upon filing for incorporation in Colorado, your business is considered a C-corp. However, as alluded to above, Colorado does allow businesses to elect to be treated as an S-corp by the IRS and state of Colorado. For LLCs formed in the state, the tax rate is the personal income tax rate of 4.6%.

One more benefit for incorporating in Colorado is the lack of franchise taxes applied to corporations and LLCs in the state, saving even more money on filings and taxes annually. Overall, Colorado is a relatively tax-friendly state for corporations, ranking 15th in the Tax State Business Tax Climate Index for 2011.

General Benefits of Incorporating in Colorado

As with any other state, it is a great idea to incorporate in Colorado in order to protect your personal assets from the business. Incorporation or the formation of an LLC allows you to shield your personal assets and property from the assets and liabilities of the business. In this manner, your personal financial well-being is protected in the event your business venture goes under.

There is no requirement that you reside in the state of Colorado in order to incorporate there. All you’ll need to file your incorporation or organization papers is a registered agent over the age of 18, with a legal address in the state who can represent the business in tax filings and other reports.

Finally, there is the benefit of lending credibility to your brand. The inclusion of Corporation, Inc. or LLC within your business name as a registered firm adds credibility to your brand, and the potential to open a US bank account for your business makes it easier to conduct commercial operations with clients and consumers, as well as secure credit for your company’s growth.

Requirements to Keep in Mind

Most states place restrictions on the naming conventions of businesses incorporating within their borders. In Colorado, your LLC must contain Limited Liability Company or LLC within the name, while corporations must use Company, Corporation, Incorporated, or Limited, as well as applicable abbreviations. If you’re going to use Bank, Trust, Credit Union, Savings and Loan, or other financial titles, the state must first approve that selection.

Requirements for forming an LLC in Colorado

When forming a Limited Liability Corporation certain steps must be taken to keep the business in compliance on an ongoing basis.

Name requirements for LLCs

In order to qualify under the Colorado law, LLC names must end with the term “Limited Liability Company” or the abbreviation “LLC”. The words “Bank”, “Trust”, “Credit Union” or any of their variations cannot be used in a Colorado-based LLC name.

LLC filing requirements

The formation document LLCs are required to file in Colorado, is called the Articles of Organization. Additionally, the state requires the filing of an annual report called the Periodic Report. The Periodic Report’s due date depends on the company’s formation date and costs $100.

Required information for the Articles of Organization

The Articles of Organization must contain the name and address of a registered agent who resides in Colorado, and who is available to manage legal and tax business official correspondence. For more help with the incorporation filing or for registered agent services feel free to contact Inc. Plan (USA).

LLC taxes and fees

Colorado LLCs are treated as partnerships for the state’s tax purposes. Therefore, the LLC will not be charged based on its income, but based on its members’ distributive share of LLC income. However, LLCs may choose to be treated as corporations for federal tax purposes.

Requirements for forming a C corporation in Colorado:

Each of the 50 American states has its requirements for incorporating. The essential requirements for C- corporations established in Colorado are as follow.

Name requirements for C corporations

Colorado-based companies are allowed to use name endings like “Company”, “Corporation”, “Incorporated” or “Limited”, along with their abbreviations. However, the name must not be likely to mislead the public and if it contains the terms “Bank”, “Banker”, “Banking”, “Credit Union”, “Savings and loans” or “Trust” the company needs an approval from the state’ authorities.

Filing requirements in Colorado

Firms seeking formation in Colorado are required to file Articles of Incorporation. Additionally, the state requires corporations to file an annual report called the Periodic Report. The Periodic Report’s due date depends on the company’s incorporation date and costs $100.

Required information for the Articles of Incorporation

The Articles of Incorporation require a listing of the company’s authorized shares and par value, as well as the name and address of a registered agent with a physical Colorado address. Inc. Plan (USA) can help you with the necessary filings and also with qualified registered agent service.

Taxes and fees requirements

Both domestic and foreign corporations are subjected to a corporate income tax at a rate of 4.63% of the Colorado net income. However, if your business’ activity consists only of sales, it doesn’t own or rent real estates in the state, and the annual gross sales don’t exceed $100 000 than you can qualify for an alternative tax.

If you are ready to get started you can fill out our application or call 1-302-428-1200 for a Free 30 Minute Live Consultation.

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