Step 1) Verify & Secure Your Brand Name
Before you can get going with your new business, you’ve got to secure a great brand name. This requires checking to see if the name you want is already registered, or too similar to another business in Colorado. Your name also must:
- Contain the term “Corporation”, “Incorporated”, “Company” or “Limited”, or the abbreviation “Corp.”, “Inc.”, “Co.”, or “Ltd.”
- Be “distinguishable”, which basically means it can’t too closely resemble an existing business name in the state.
What To Do:
First things first, you’ll need to do a business name search. Head over to the Colorado Secretary of State website to check your name’s availability before you go any further.
In addition to securing your business name, I also recommend reserving a domain name to serve as your business website. You can check if your ideal URL is available through GoDaddy!
Quick Note: Before you commit 100% to a name, you may also want to check that there’s a decent URL available for your business. Use WEEBLY to search your options. If there’s a quality domain name for purchase, we advise buying it right away. Even if launching a business website isn’t on your radar right now, it’s going to be soon, and you might as well nail down a domain name that’ll make it easy for customers to find you!
Step 2) Appoint a Registered Agent
Electing a Colorado registered agent is an essential part of starting your new corporation. This certified CO resident or registered business entity will act as the representative for your business and receive service of process notices, tax forms, and other legal documents on your behalf.
You are allowed to act as your own registered agent in Colorado, but if you choose to go this route keep in mind:
- You must be a permanent resident of Colorado.
- You’ll have to release the corporation’s address, so if you run the business from home your personal address will be on public record.
- You must maintain normal business hours (9-5, M-F) at your listed address.
- You’ll risk being served in front of friends, family or coworkers.
What To Do:
Read through our registered agent guide if you’re contemplating taking this task on yourself or handing the reigns to a business partner. That said, we highly recommend looking into hiring a professional registered agent. The best and cheapest way to go about this is through an incorporation service like IncFile. They offer a year of free registered agent services when you form your corporation with them!
Step 3) File Articles Of Incorporation
Once you’ve got your registered agent in tow, you should be ready to file your Articles of Incorporation with the Secretary of State. However, don’t do this until you know all the required information, including:
- The name and purpose of your entity
- Your registered agent’s name and street address
- The principal street address of the corporation
- The incorporator’s name and mailing address
- The number of shares the corporation is authorized to issue
Colorado requires you to file online through the Secretary of State website, which makes the process considerably easier. You’ll even take care of the $50.00 filing fee digitally!
What To Do:
Filing your Articles of Incorporation isn’t super complicated, but there can be repercussions if it isn’t done properly. For this reason, we encourage everyone to look into an online incorporation service for this step. Using a professional filing service is a mess-free way to ensure that your paperwork is filed correctly, leaving you more time to focus on other areas of your business.
Step 4) Obtain EIN
Next up, it’s time to apply for an EIN. An EIN, or Employer Identification Number, is a unique identifier for your corporation that will allow you to set up a business bank account, hire employees and file state/federal taxes.
You’ll also need an EIN to file many additional government forms, including Form 2553. This is the form you’ll file with the IRS if you’re hoping to apply for S-Corp status. Essentially all corporations are required to have EINs, so it’s a good idea to get it out of the way as soon as possible. The good news is it’s a fairly simple process -- you can apply free of charge through the IRS Website.
What To Do:
Obtaining an EIN is one of the easiest steps in this guide, so we recommend simply taking care of it yourself. If you apply via the IRS online application, you’ll receive your 9-digit EIN as soon as you’re finished.
If the online approach isn’t really your style, check out our EIN guide for additional ways to get an EIN for free.
Step 5) Meet With Directors And Establish Bylaws
If you haven’t already, it’s time to appoint at least 1 director who will oversee your corporation, at least until the first shareholder meeting takes place. Colorado’s business statutes don’t state a specific number of directors you’re required to appoint after that, but the standard is 3.
Once you’ve decided on your initial director(s), you’ll all meet to do the following:
- Appoint corporate officers
- Discuss/adopt bylaws
- Issue stock certificates and shares
- Establish a fiscal year
- Agree on corporate seal and official stock certificate form
- Write a banking resolution
- Record your first meeting minutes
What To Do:
This organizational meeting is a huge step in the life of your corporation, so it’s important to go in prepared. I recommend taking advantage of meeting minute and bylaw templates if you’re unfamiliar with these types of documents. Also, it’s always a good idea to read up on any corporation requirements you’re not sure about by reviewing Colorado’s revised business statutes.
Step 6) Start A Corporate Records Book
By now you’ve acquired a decent handful of important documents, so it’s the perfect time to start a corporate records book. This is pretty much exactly what you would think -- a place to store all of your corporation’s records. This includes things like your:
- Articles of Incorporation
- Licenses and permits (see step 8)
- Corporate bylaws
- Meeting minutes
- Banking resolution
… and any other essential forms you’d be kicking yourself if you lost.
What To Do:
There are a few ways to go about crafting a records book for your corporation. We’re huge fans of corporate kits, which include some special extra pieces like a custom corporate seal and printed bylaws to convey the legitimacy of your company. These are also great because you can simply tack them onto your incorporation package if you’re planning on using their services anyway.
However, if you’re not concerned about having any customized pieces and you’re just looking for something sleek and simple, you could easily find a nice leather binder at your local office supply store. The most important thing here is to keep everything well-organized.
Step 7) Open A Business Bank Account
Opening a business bank account is one of the most important steps you can take to establish your corporation as an entity separate from yourself. Mixing personal and professional finances never ends well, so don’t make the mistake of running your business out of your own bank account.
Because this is such an important step, I strongly recommend you do a considerable amount of research before deciding on a bank. While you’re mulling over this decision, you should consider local and national options, including:
- Local banks, like Alpine or Bank of Colorado
- Local credit unions like Public Service Credit Union
- National banks, like Wells Fargo or Chase
Each of these options offers something unique for new businesses, so take some time to look into their offerings to find out which one best suits your needs. That being said, it’s still important to make this decision fairly quickly as it’s the first step to building a solid financial foundation.
What To Do:
Do some digging and find out exactly what features you prefer in terms of rates, customer service, small business perks, ATM accessibility, and so on. If you’re considering a national bank, check out our reviews of Wells Fargo or Chase to start your research.
Once you’ve settled on a bank, it’s worth investing in some solid accounting software, especially if you’re not quite ready to bring in an accountant. We’ve ranked and reviewed our favorite accounting software tools, so when you’re ready, read up!
Step 8) Handle Taxes & Licensing Requirements
As a Colorado-based corporation, you won’t need to acquire a general business license. However, you may need to take care of specific permits, licenses or taxes at the local, state or federal level. Here are a few resources for each:
- Federal: The Small Business Association website has a bunch of helpful information on federal tax requirements and federal licenses and permits. The business taxes page on the IRS website is also an excellent resource.
- State: You can apply for state-specific permits and licenses via the CO Department of Regulatory Agencies. They provide a list of all professions that require specific licensing and will also direct you to the correct application and additional relevant resources.
- Local: For municipal tax and licensing requirements, contact your local chamber of commerce.
Keep in mind that as a corporation, your business will be subject to corporate income tax, unlike LLCs which are considered pass-through entities. The corporate tax rate in Colorado is 4.63%.
What To Do:
If you're feeling a bit apprehensive about this step, leveraging a business license service is a great solution. They’ll find out exactly what permits and licenses are required of your business on a federal, state and local level, as well as provide all the applications!
Need Help Incorporating?
Starting a corporation in Colorado is quite a task, and it’s easy to let things slip through the cracks. That said, it’ll be well-worth it in the end if you spend the time and money now to make sure that everything is done correctly.
While it’s definitely possible to form your corporation independently, there are a handful of ways to lighten your load during this process. We’ve mentioned a ton of resources throughout the course of this guide, but here are the two we’d most recommend:
- IncFile ($49 + state fee) = Best Price & Overall Value
- LegalZoom ($149 + state fee) = Most Popular Service
– Harbor Compliance ($499 + state fees) = Better Customer Service