How to Form an LLC in Colorado 2026: Complete Guide

Colorado offers an entrepreneur-friendly environment with low LLC formation costs ($50), no franchise tax, outdoor lifestyle, thriving tech scene, and educated workforce. Forming an LLC in Colorado provides liability protection while benefiting from the state's simple compliance requirements and business-friendly climate. This guide covers everything from filing with the Secretary of State to understanding Colorado's periodic report and tax requirements.

Why Form an LLC in Colorado?

• Low Formation Cost: Only $50 filing fee (one of lowest in nation)
• No Franchise Tax: Colorado has no annual franchise tax
• Low Annual Report Fee: Only $10 periodic report fee
• Limited Liability Protection: Personal assets protected from business debts
• Pass-Through Federal Taxation: LLC profits taxed once at member level
• Flat Income Tax Rate: 4.40% flat rate (no complicated brackets)
• Flexible Management: Member-managed or manager-managed options
• Thriving Economy: Strong tech sector, aerospace, tourism, outdoor recreation
• Educated Workforce: High percentage of college-educated population
• Quality of Life: Outdoor recreation, healthy lifestyle, cultural amenities

Step-by-Step Formation Process

Step 1: Choose Your LLC Name

Your Colorado LLC name must comply with C.R.S. § 7-90-601:

• Be distinguishable from existing Colorado business names
• Include "Limited Liability Company," "LLC," or "L.L.C."
• Not contain restricted words ("bank," "trust," "insurance," "credit union") without proper licensing
• Cannot suggest affiliation with government agency
• Cannot include "Corporation," "Incorporated," or "Corp." (those are for corporations)

Name Search: Check Colorado Business Database

Name Reservation (Optional):

• Reserve name for 120 days
• File online or by mail
• Fee: $25
• Can be renewed

Step 2: Appoint a Registered Agent

Every Colorado LLC must have a registered agent (C.R.S. § 7-90-701):

• Has physical Colorado street address (no P.O. boxes)
• Available during normal business hours (9am-5pm MT)
• Can be an individual Colorado resident OR business entity authorized in Colorado
• Receives legal documents, state correspondence, and service of process

Options:

• Self-serve: You can be your own registered agent if Colorado resident
• Another Member: Designate another member with Colorado address
• Professional Service: Hire registered agent company ($100-$300/year)
• Benefits of professional: Privacy (your address not public), reliability, professional handling

Step 3: File Articles of Organization

Submit Articles of Organization to Colorado Secretary of State:

Filing Options:

• Online: Colorado Business Center (immediate to 2 business days) - $50
• By Mail: Send to Denver office (5-10 business days) - $50
• Processing Time: Online usually same-day to 2 business days, mail 5-10 business days

Mailing Address:

Colorado Secretary of State
Business Division
1700 Broadway, Suite 550
Denver, CO 80290

Required Information:

• LLC name
• Principal office address
• Registered agent name and Colorado street address
• Mailing address (if different from principal office)
• Purpose (optional - can state "any lawful business")
• Management structure (member-managed or manager-managed)
• Organizer name and signature
• Effective date (immediate or future date)

Step 4: Create an Operating Agreement

Not required by Colorado law, but strongly recommended:

• Defines ownership percentages and capital contributions
• Outlines management structure and decision-making authority
• Profit and loss distribution rules
• Voting rights and procedures
• Buy-sell provisions and transfer restrictions
• Dissolution and winding up procedures
• Helps establish LLC as separate legal entity for liability protection
• Required by banks for business accounts
• Prevents disputes among members

Step 5: Obtain an EIN

Get free Employer Identification Number from IRS:

• Online: IRS.gov (immediate) - recommended
• By Fax: Form SS-4 (4 business days)
• By Mail: Form SS-4 (4-6 weeks)

When Required:

• Multi-member LLCs (always required)
• Opening business bank account
• Hiring employees
• Filing federal tax returns

Step 6: Register for Colorado State Taxes

Register with Colorado Department of Revenue:

• Create account on Revenue Online
• Register for Colorado Withholding Tax Account (if hiring employees)
• Register for sales tax if selling goods or taxable services
• No fee to register

Complete Cost Breakdown

Ongoing Requirements

Periodic Report (Required)

Colorado requires annual periodic report filing (C.R.S. § 7-90-501):

• Fee: $10
• Due Date: By the end of the month of your LLC's anniversary date each year
• Anniversary Date: Month you filed Articles of Organization
• Example: If LLC formed January 15, 2026, periodic report due by January 31, 2027
• First Report: Due the year AFTER formation
• How to File: Online through Colorado Secretary of State website (strongly recommended)
• Information Required:
  • LLC name and ID number
  • Principal office address
  • Registered agent name and address
  • Mailing address
  • Names and addresses of managers (if manager-managed)
• Late Filing: $50 late fee if not filed by due date
• Delinquency: LLC can be administratively dissolved if 2+ years delinquent
• Reminder: Secretary of State sends email reminder if email on file

Update Changes

If your registered agent or principal office changes between periodic reports:

• File Statement of Change of Registered Agent online
• Fee: $5
• Update promptly when change occurs

Colorado Tax Requirements

Colorado Income Tax

Colorado has flat income tax rate:

• Rate: 4.40% flat rate (2026)
• Applies to: Individual income, pass-through entity income
• LLC Taxation: LLCs taxed as partnerships or disregarded entities pass income to members
• Members pay: Colorado income tax on their LLC profits on personal returns
• No Franchise Tax: Colorado has NO annual franchise tax or privilege tax
• No Gross Receipts Tax: Colorado does not tax gross receipts

Sales and Use Tax

If selling goods or taxable services:

• State rate: 2.9%
• Local rates: Vary widely (0% - 8.3%+ depending on jurisdiction)
• Combined rates: Typically 4% - 11.2%
• Denver rate: 8.81% (2026)
• Home-Rule Cities: Some cities administer their own sales tax (separate registration)
• Registration: Free through Colorado Department of Revenue
• Filing: Monthly, quarterly, or annually based on volume

Employer Taxes (If You Have Employees)

• Colorado unemployment insurance (SUTA)
• Colorado income tax withholding (4.40% flat rate)
• Workers' compensation insurance
• Paid Family and Medical Leave Insurance (FAMLI) - beginning 2024

Business Licenses and Permits

State Business License

• No general state business license required for most businesses
• Industry-specific licenses may be needed
• Check Colorado Department of Regulatory Agencies (DORA)

Local Business Licenses

• City/County license: Most Colorado cities require business license
• Cost: Varies by locality ($25-$500+ annually)
• Denver: Business license required, fee based on number of employees
• Boulder: Separate business license requirement
• Contact: City/county clerk's office for specific requirements

Professional Licenses

• Contractors: Department of Regulatory Agencies (DORA)
• Healthcare providers: Colorado Medical Board, Nursing Board, etc.
• Real estate: Colorado Real Estate Commission
• Food service: Local health department permits
• Marijuana businesses: Marijuana Enforcement Division (MED) license

Professional LLCs

Colorado allows certain licensed professionals to form PLLCs (C.R.S. § 7-90-101):

Who Can Form Professional LLC

• Attorneys
• Physicians and healthcare providers
• Dentists
• Veterinarians
• Architects
• Engineers
• Accountants
• Other licensed professionals

Additional Requirements

• All members must be licensed in same profession (or compatible professions)
• Name should identify professional service provided
• Does not shield from professional malpractice liability
• Same filing fee ($50) and periodic report ($10)

Operating an Out-of-State LLC in Colorado

If formed in another state but doing business in Colorado, must register as foreign LLC:

When Required

• Maintaining an office in Colorado
• Regularly conducting business in Colorado
• Owning or leasing real property in Colorado
• Hiring employees in Colorado

Foreign LLC Registration

• File Statement of Foreign Entity Authority online
• Fee: $100
• Designate Colorado registered agent
• Submit Certificate of Good Standing from home state
• Periodic report: $10 annually (same as domestic LLCs)

Dissolving a Colorado LLC

To officially close your Colorado LLC:

1. Vote to Dissolve: Members approve per operating agreement or statute
2. Wind Up Business: Pay debts, settle obligations, distribute assets
3. File Articles of Dissolution: Online with Secretary of State
4. Fee: $10
5. File Final Tax Returns:
   • Federal (Form 1065 or Schedule C)
   • Colorado income tax returns (mark "final return")
   • Sales tax final return (if applicable)
6. Cancel Revenue Online Account: With Department of Revenue
7. Cancel Business Licenses: State and local
8. Close Bank Accounts: After all obligations settled

Frequently Asked Questions

How much does it cost to form an LLC in Colorado?

The filing fee is only $50, making Colorado one of the most affordable states for LLC formation. First-year total costs are approximately $60 including the $10 periodic report due the following year. If you hire a registered agent, add $100-$300/year. Colorado has no franchise tax, making ongoing costs very low.

Does Colorado require an annual report for LLCs?

Yes. Colorado requires a Periodic Report due annually by the end of the month of your LLC's anniversary date (month you formed). The fee is only $10, one of the lowest in the nation. You must update your LLC's registered agent, principal office, and manager information. The Secretary of State sends email reminders.

Does Colorado have income tax for LLCs?

Colorado has a flat 4.40% income tax rate on individual income. LLC members pay Colorado income tax on their LLC profits on their personal tax returns. However, Colorado has NO franchise tax or gross receipts tax - you only pay income tax on actual profits. This makes Colorado very tax-competitive compared to states with franchise taxes.

How long does it take to form an LLC in Colorado?

Online filings through the Colorado Secretary of State typically process same-day to 2 business days. Mail filings take 5-10 business days. Colorado's online system is fast and efficient. Most LLCs are approved within 24 hours when filing online.

Do I need a Colorado address to form a Colorado LLC?

Yes, you need a Colorado registered agent with a physical Colorado street address. However, your principal office can be anywhere. If you're out of state, hire a Colorado registered agent service to provide the required Colorado address (typically $100-$300/year).

Can one person form an LLC in Colorado?

Yes. Colorado allows single-member LLCs. The process is identical to multi-member LLCs, and you still receive full liability protection. Single-member LLCs are taxed as disregarded entities (sole proprietorships) for federal tax purposes unless you elect corporate taxation.

What is Colorado's sales tax rate?

Colorado's state sales tax rate is 2.9%. However, local jurisdictions add their own sales taxes, so combined rates typically range from 4% to 11.2% depending on location. Denver's combined rate is 8.81%. Some home-rule cities administer their own sales tax separately from the state. If selling goods or taxable services, you must collect and remit sales tax.