Thu 28 May 2015 | By:

Why You Should Incorporate in Colorado: 5 Solid Reasons

Why Incorporate a Business

To incorporate, or not to incorporate – that is the question. It’s your decision to officially register your business or not, but if you ask me, I’d say incorporate.

Incorporating your business has many benefits, it’ll shield you from liabilities and allow you to take advantage of tax deductions and other perks. Starting a business in Colorado? Might as well incorporate the business to avoid any legal repercussions in the future.

It takes time, effort, resources and patience to build a business, while you’re at it, it may be a good idea to go through every mandatory requirement set in the state of Colorado – complying with business licenses and permits, understanding tax regulations, and the most important part of the startup process – incorporation.

In this article, we’re going to discuss why you need to incorporate, after that, I’m going to introduce you to 3 great resources for incorporating a business in Colorado.

Quick Note: If you decide to incorporate in Colorado and want professionals to handle all legal paperwork, look into IncFile (for $49) or LegalZoom (for $149)Both are excellent services and have started over 50,000 businesses like yours.

1) Establish Perpetual Existence

Perpetual Existence is an easy term to understand. It basically means that your business lives on even when tragedies and unexpected circumstances happen. It may be the death of one of the founders/owners, transfer or selling of shares, or a shareholder decides to leave or end the company but other parties don’t.

By incorporating your Colorado startup, you’re ensuring its continuation – it will outlive shareholders, directors and officers even as they come and go. Investors will feel more secure knowing that your business is stable.


2) Personal Asset Protection

When you incorporate in Colorado, you will automatically be protected under state law as a business owner. If, for any reason your business encounters financial or legal issues in the future and creditors and financial institutions will come after you, they will not be able to do so because your business is considered a separate and independent entity.

As a separate and independent entity, your business is solely liable for its own debts. This means that creditors can only seek repercussions and payments based on the assets of your Colorado business.


3) Tax Flexibility and Benefits

Incorporated businesses have greater tax flexibility and benefits than unincorporated businesses. If you incorporate, you can also take advantage of tax deductions that are not available for individuals.

Usually, the Internal Revenue Service will give you tax deductions from operational costs such as employee salary and benefits, medical insurance, travel and automobile costs and a lot more. Circumstances may also vary so you have to consult and talk to a tax advisor for more information.


4) Builds Business Credibility

Business credibility is very hard to establish, especially when you’re still new in the market. Having an LLC, Co., or Inc, after your business name can really make a difference. Customers wants to deal with a business that is officially and legally recognized by the state of Colorado – and having this title connected to your business name will give you an added boost of credibility.


5) Prevents Misunderstandings Among Owners

Sometimes founders/partners fight over stocks and shares because of misunderstandings in equity and distribution. However, if you incorporate your Colorado small business, you’ll be able to issue stocks and divide equity fairly, so problems on this matter will be avoided and there’s harmony among founders/partners.


3 Resources for Incorporating a Business in Colorado

Startup Tools and ResourcesIncorporating in Colorado according to state guidelines is a process and you should understand the steps involved if you file the paperwork yourself. Whether you want to start an LLC or Corporation, there are always guides available to walk you through the steps.

You can do it yourself, but the chances of mistakes are quite high, and you don’t want to redo the process again. If you lack time and you don’t have much knowledge about the process, you can use an online incorporation service to do the work for you. Your mind might automatically think of LegalZoom, but there are many more options available:

1) IncFile: $49

IncFile ReviewIncFile is not only known for its affordability, it also has solid features that will efficiently complete your business’s incorporation. It was launched in 2004, and it has helped more than 50,000 entrepreneurs.

For just $49, you can use the online incorporation provider’s services and start your business. Check out more of IncFile by reading our complete review.

2) CorpNet: $79

CorpNet ReviewFounded by a husband-wife team from Southern California, CorpNet is a relatively new online incorporation service that understands the needs of small businesses. If offers quality services and affordable pricing.

CorpNet has a 100% satisfaction and money back guarantee in place, so you can use their services risk and worry free. Learn more about the online incorporation service by reading our review.

2) BizFilings: $99

BizFilings ReviewIf you want an incorporation service that takes care of everything for you, BizFilings is another great option. They’ve assisted thousands of entrepreneur since 1999, and their customer base continues to grow.

They handle all paperwork and give you a Registered Agent free of charge. You’ll avoid the stress and focus on more important aspects of your business by incorporating in Colorado with BizFilings. For more information, read our comprehensive BizFilings review.

Incorporation services have different features, for instance, IncFile provides you with a one year free Registered Agent service, while in BizFilings and CorpNet, you have to pay for the service. Another example is BizFilings having a tool called BizComply, a 24/7 business monitoring tool and document library – CorpNet and IncFile don’t have this feature.

Regardless of the differences in features, are 3 solid resources when it comes to incorporating a business – I highly suggest that you look into each one of them.


Wrapping Up and Incorporating a Business in Colorado

Wrapping Up and Starting a BusinessYou can still operate without incorporating in Colorado, but there are possible personal liabilities. Will you be able to handle it if something were to happen?

From the legal protection and credibility to the tax benefits, incorporating a business in Colorado should be something you look into. The question then remains, should you use an online incorporation service or handle the process yourself? I’ll leave that up for you to answer. Good luck!

About Ryan James

Half hardworking hermit, half avid adventurer, Ryan founded Startup Savant to simplify entrepreneurship and pay it forward by donating a portion of all revenue to support children's education via