Are you ready to make your Colorado business idea a reality? Colorado is consistently rated one of America’s best places to start a company because of its strong economy and low unemployment rates. There are many opportunities for your business to thrive, regardless of where you choose to set up shop in Colorado.

Colorado Business Ownership: Considerations

Colorado has many legal and financial requirements that you must meet before starting a business. Incorrectly setting up your company can lead to tax or regulation issues that could affect your finances. This could result in you having to stop business operations or even lose your money. Colorado is an ideal place to start a company.

Colorado business opportunities

Colorado offers favorable tax laws for businesses, government friendliness to emerging industries, and diverse geography. Colorado has seen success for both startups looking for venture capital and small, one-person companies. These are the same reasons why it’s the best place to start green businesses.

The state does not have the same requirements for business licensing as other states, making it easier and more cost-effective to get started.

How to open a Colorado business

Without a few helpful steps, starting a Colorado business, regardless of whether it is a limited liability corporation (LLC), or a corporation can be difficult. Although each city may have its own requirements, it’s possible to do business in the entire state if you follow the six steps we’ve listed below. The Colorado Secretary of State website has more information about this process.

1. Create a business plan for your Colorado company

A detailed business plan is the first step to launching a business in Colorado. Each business starts with a business plan that describes how it will serve a specific group of customers. You need to dig deeper to turn your idea into an actual business plan. This will allow you to take on any other steps necessary to get your Colorado company off to a good start.

What to include in your business plan

No matter what industry you are in, it is worth considering the following:

  • Information about your complete idea and the problem you are solving
  • “SMART” goals are included in the objectives
  • You need to be aware of potential problems and know how to mitigate them
  • Who is your target customer ?
  • Minimum three-year projections and financials

Southern Colorado Small Business Development Center offers resources for business plans to help you launch your Colorado business. If you are in a niche or anticipate having a lot of competitors, you can do some research on your own to determine what to include in your business plans.

2. Select a type of business structure

You have the option of choosing a business entity when you start a Colorado company. Here are some of the most common choices.

Sole Proprietorship in Colorado

A sole proprietorship can be a great way to start a small business. The state won’t require you to file paperwork and you can begin selling your products or services immediately. Sole proprietorships are not subject to personal liability protection. This makes them more risky than corporations or LLCs. The personal assets of the owners can be pursued by someone suing the business.

Colorado General Partnership

General partnerships work like sole proprietorships but have multiple owners who share the profits, liabilities, and debts. The Internal Revenue Service does not tax the profits at the business level, but only the owners of general partnerships, sole proprietorships and most LLCs.

Colorado Limited Liability Company

The LLC is a very popular business entity. The LLC, a separate legal entity, provides protection for owners and personal liability. An LLC protects your personal assets from company liabilities and debts. The same applies to corporations, although they have more paperwork and stricter rules.

By default, LLCs have the same pass through taxation as a sole proprietorship, partnership, or corporation. They can also be taxed like a corporation if this suits their financial situation better.

Colorado Corporation

Corporations can be a popular choice for companies planning major growth or who want to issue stock to raise capital. They are subject to double taxation, which means that profits are taxed twice at the individual and business levels.

Corporations also protect the personal assets of shareholders from company liabilities and debts, as we have already mentioned. They have the most bureaucratic and rigid management structures.

Colorado S Corporations

An Scorp is not a type of legal business entity. It’s an IRS-approved tax classification that is available to corporations and LLCs. S corporations are becoming more popular because they allow corporations to avoid double taxation. They’re an option to reduce self-employment taxes.

It takes longer to get started with an LLC, corporation or S corporation than it does for a sole proprietorship. The process can be made quick and simple if you have the right support such as our Business Formation Services.

3. Calculate your business’s costs

When creating your business plan, one of the most important aspects is to create a financial model of your new business. To be able to prepare your finances for the next few months, you will need to know what your business expenses are. Keep in mind that your business costs include both one-time and ongoing costs.

Only one-time business costs

One-time expenses are things such as a downpayment for an office building or the purchase of equipment which typically lasts many decades. These items can be funded at the time your business is launched, or earlier.

For ongoing business costs

Monthly rent, marketing materials and taxes are some of the ongoing business costs. These expenses will continue to be paid regularly, sometimes monthly or quarterly. You should budget for both one-time and ongoing expenses to run your small business for six to twelve months without any revenue. This will ensure that your business can withstand the unexpected and allow you to build a customer base.

4. Create a Colorado business name

Next, create a company name that you can use throughout Colorado. You can choose a name that no one in Colorado is using to transact business. It will also be one that you own the brand identity for both online and offline. Choose one that is easy to comprehend so you can have both a strong URL as well as various social media profiles.

Register a Colorado Trade Name

You will need to apply for a Colorado Trade Name if your new business is a sole proprietorship, partnership or other entity that uses a different name than the business owners. This is known in Colorado as a doing Business as (DBA), and it is required for any Colorado business that does business under another name than their legal business name.

5. Register your Colorado company and open a bank account

Once you have chosen your business name, it is time to register it with the state. An LLC must complete Articles of Organization, and file them with Colorado Secretary of State. The same will be required for a corporation, except that it must file Articles of Organization.

These registered business entities will need to take additional steps, including choosing a registered agents, creating an operating arrangement or corporate Bylaws, and applying at the IRS for a federal employer identification (EIN).

Apply for an Employer Identification Number

A federal employer identification number ( EIN) is required for many Colorado businesses. This federal tax ID can be used to hire employees and it comes along with the paperwork that an LLC or corporation must file in order to register with Colorado. You may be able use your Social Security number to identify your tax ID if you are a sole proprietor without employees. However, many experts recommend that you obtain an EIN to avoid identity theft.

Business Bank Account and Licensing

After all of your Colorado paperwork has been completed, you can open a bank account and obtain any required permits or licenses. You will also be able get the required business insurance. To keep your personal and business finances separate, you will need a business account. Tax time can be a nightmare if you mix your personal and business finances.

Colorado doesn’t require a state-issued license for business, but you should check with your local government to find out what permits and licenses they require.

Permits and business licenses can be required at the local, state, or federal levels. You will need to research to verify that your business is legally licensed and permitted. You can use our business license report to do the research.

Business Insurance

Small businesses typically use general liability insurance as their main coverage. This insurance can protect your business against lawsuits arising from accidents or errors by you, your business partners and your employees. General liability coverage is a way to protect your business from financial losses caused by customers falling in restaurants. Ask a qualified agent for information about other types of business insurance that your company might be eligible for.

6. Colorado is a great place to market your business

Once you are legally authorized to transact business in Colorado, it is important to plan how to market it. Coloradans can be found online in the same way as residents of other states. This includes smaller towns outside of larger cities like Denver, Boulder and Colorado Springs. In small towns, referrals and word of mouth are often the best marketing options.

Online ads offer many marketing possibilities, depending on the industry. Make sure your company page is visible on the social media platforms where your customers are most active, such as Facebook, Instagram and LinkedIn.

If your business is located in a specific area, ensure that your Google My Business profile is current and optimized for search engines to help you rank high in local listings. Make sure to check Yelp, local business registrations, and advertising in local newspapers. If you need additional help, connect with a Colorado marketing partner.

You’ll be more successful with paid advertising if you put yourself in the shoes of your customer. To learn more, visit the Colorado Small Business Development Center’s Marketing Resources.

Good Businesses to Start in Colorado

Colorado is home to a mix of densely populated areas with growing cities and well-traveled suburbs, as well as small towns. It is a great place to start a business, whether you’re looking for tech companies or rural-focused businesses. Here is a list of types of businesses that work well in the state.

  • Businesses that are energy- or environmental-oriented
  • Restaurants
  • Guide for the tour
  • Rafting trips or equipment sales
  • Photography
  • Planner for parties
  • Rentals and sales of ski equipment
  • Travel-related businesses
  • Services for business-to-business (B2B).
  • Pet products


Colorado Start a Business FAQs

  1. Where is the best place to start a Colorado business? Colorado’s entire state is a good place to start a small business. However, your industry will determine which city you should choose. Colorado Springs, Boulder, and Denver consistently rank among the best places to start a new business in America.
  2. What is the cost of opening an LLC in Colorado? Colorado LLC opening costs start at $1 for Articles of Organization and $1 to Reserve your Business Name. The Colorado Secretary of State website has the most current information on fees.
  3. Are there major corporations with headquarters in Colorado? Colorado is home to over 170 companies.
  4. What tax and business regulations must be followed by an LLC in Colorado? Colorado is a state that offers small business owners a tax and legal friendly environment. For information on taxes and other business issues, you can visit the Colorado Secretary-of-State website.
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Brian Wilson Writer and Editor
Brian Wilson is the content manager and founder of LLC Radar. Brian grew up in North Texas, just outside of Dallas, and has a bachelor's degree in business from Southern Methodist University. Since graduating from SMU, Brian has gained over 10 years of experience in business writing for several online publications. Brian resides in Plano, Texas and he can be reached by email: Phone: 972-776-4050
  Information provided on this website is for general information and educational purposes only. It is not intended to offer legal advice specific to your business needs. If you need legal advice, you should consult with an attorney. Rankings and reviews are the personal opinions of the authors and/or editors. For questions, while starting a business, we recommend consulting with an attorney or accountant.