How to start a Colorado corporation

It might seem like a lot at first, but once you understand the steps, it’s very doable. This guide will walk you through everything you need to know to start your Colorado corporation.

How to start a corporation in Colorado

Incorporating means registering your business as a corporation so the law sees it as its own entity, separate from you. Each state has its own rules for how to do this, so the process can seem confusing. Let’s go through each step: 

1. Choose a name for your Colorado corporation

Your corporation’s name should be unique and make a statement about your business. Make sure it complies with the following Colorado requirements:

• Include "Corporation," "Company," "Incorporated," or "Limited" in your business name. You may also use an abbreviation of one of these words.
• Your name cannot be the same as, or deceptively close to, any business name or trademark already filed or reserved with the Colorado Secretary of State.
• Do not use a name that suggests a business purpose that is different from what you do. For example, don't name your business "Fishing Supply World, Inc." if you sell office supplies.

Need help coming up with a business name for your corporation? Try the Rocket Copilot™ AI Business Name Generator, a free tool to help you brainstorm business names and get started registering your corporation.

2. Decide between a Colorado S-Corp and C-Corp tax designation

There are similarities between a Colorado S-Corp and a C-Corp regarding personal liability, management, structure, and compliance. The differences, however, come down to the following:

• Ownership rules: With a C-Corp, you can have unlimited shareholders and stock classes. An S-Corp is limited to one stock class and 100 shareholders. Shareholders in an S-Corp must be legal residents or citizens of the United States.
• Taxes: A C-Corp is taxed as a separate entity from shareholders. This means the C-Corp pays taxes on the corporation's income, and individual shareholders may also pay taxes on the dividends they receive. S-Corps are considered "pass-through" entities and do not pay corporate taxes. Instead, the owners pay taxes individually on their shares of the income.
• Documents: A C-Corp is the default corporate structure. In order to become an S-Corp, you need to file IRS Form 2553, Election by a Small Business S-Corporation.

3. Appoint directors and shareholders for your Colorado corporation

Each state has its own personnel requirements for incorporating. In Colorado, your corporation must have at least one director and directors in a Colorado corporation must be at least 18 years old. Colorado does not require state residency for directors.

You do not have to list your directors' names and addresses in your Articles of Incorporation, but you do need to list the name and address of your incorporator or incorporators.

4. Choose a Registered Agent

A Registered Agent is the person or business responsible for receiving tax, legal, and government documents during regular business hours. It's important that every business has one. You can either serve as your own registered agent (if you have a Colorado address) or choose one to do that service for you (if you are not located in Colorado or would like an extra layer of privacy).

5. File your Articles of Incorporation with the state of Colorado

Once you have a business name and registered agent, you can register your business as a Colorado corporation with the state by filing your Articles of Incorporation. This document may be referred to informally as a corporation's "Articles," or in other states, it may be called a "Certificate of Organization," "Certificate of Filing," or "Certificate of Formation."

6. Get an Employer Identification Number (EIN)

Before opening your doors for business, apply to the IRS for an employer identification number, or EIN. All corporations with employees in Colorado must have an EIN. An EIN is similar to your Social Security number, but it's for businesses. You'll also need an EIN to open your corporate bank account.

Congratulations! After you have completed all these steps, you have formed your Colorado corporation.

What to do after incorporating in Colorado

You will need to create additional corporate records for your Colorado corporation. Corporate Minutes document discussions, decisions, and actions taken at meetings held with shareholders or your board. Your corporation should designate at least one director to be responsible for recording the minutes. You must keep your minutes for three years. You must also record any actions taken by directors or shareholders, even if they occur outside of a meeting.

Colorado does not specifically require that you create Corporate Bylaws for your business, but it's a good idea. This document defines your business's operational structure and procedures. If you do create bylaws, they cannot conflict with your Articles of Incorporation. You do not have to file your bylaws. Just keep them with your other corporate documents. 

Still have questions? Learn more about how to start your own business with Rocket Lawyer and get started today!
 

Key takeaways Starting a corporation in Colorado means following state rules, like choosing a unique name, filling out paperwork, and paying fees to make it official. One important choice is deciding how your corporation will be taxed in Colorado, either as an S-Corp or a C-Corp. This affects how the business and owners pay taxes, and the differences between the two change from state to state. After forming the corporation, you have to keep records like bylaws and meeting notes to stay in good standing with the state and prove your business is real and operating correctly.

Additional resources

Learning how to enforce a contract is just one step. Explore these additional topics to learn more and take the next steps.

• What is a corporation?
• What is an S-corporation?
• How are corporations taxed?
• How to start a corporation
• How to register a corporation by state