How to Start a Business in Colorado

Starting a business in Colorado involves several key steps, including choosing a business structure, registering with the state, and obtaining necessary licenses and permits. Entrepreneurs should also consider market research and business planning to ensure a successful launch.

Colorado Economy Trends

Small Business Statistics: Colorado is home to approximately 715 thousand small businesses, which employ about 47.5% of the state's workforce. Notable industries include professional, scientific, and technical services, construction, and healthcare. U.S. Small Business Administration.

New Business Application Statistics: In Colorado, there were 138,867 new business applications.

Exports and GDP: Colorado's exports contribute significantly to its GDP, with key export products including machinery, electronics, and agricultural products. For detailed data, refer to the U.S. Census Bureau.

Economic Highlights: Colorado boasts a favorable tax climate and is home to major industry hubs such as Denver and Boulder. Large employers include Lockheed Martin and Ball Corporation. For more information, visit the Colorado Office of Economic Development and International Trade.

• Step 1: Perform Market Research
• Step 2: Write a Business Plan
• Step 3: Get Licenses and Permits
• Step 4: Acquire Funding
• Step 5: Choose a Business Entity
• Step 6: Select a Business Location
• Step 7: Register the Company

Step 1: What Kind of Business Should I Start in Colorado

Selecting a business type in Colorado depends on factors such as personal interests, market demand, and regional economic strengths. Colorado's economy is diverse, with dominant industries including:

• Aerospace
• Technology
• Agriculture
• Tourism

For more information, visit the Colorado Office of Economic Development and International Trade.

How to Do Market Research in Colorado

Market research in Colorado involves gathering information to understand consumer needs and market conditions. Primary research methods include surveys and interviews, while secondary research involves analyzing existing data. Key areas to analyze include consumer demographics, buying behavior, and market gaps. Conducting a competitive analysis is also recommended to understand other businesses in the area. Research helps entrepreneurs make data-driven decisions when launching a new business in Colorado.

Step 2: How to Write a Business Plan in Colorado

A business plan is essential for clarifying goals, attracting investors, securing funding, organizing operations, and evaluating progress. It is valuable for both new and scaling businesses and can evolve over time.

Executive Summary: This section provides a snapshot of the business, including its mission statement, product or service offerings, and basic information about the leadership team, employees, and location.

Company Description: This part details the business's purpose, target market, and competitive advantages. It should also include the business's legal structure and ownership.

Market Analysis: This section involves researching the industry, market size, expected growth, and competitive landscape. It should highlight the business's position within the market.

Organization and Management: This part outlines the business's organizational structure, detailing the ownership, management team, and board of directors if applicable.

Product/Service Line: This section describes the products or services offered, including their lifecycle, benefits, and any research and development activities.

Marketing Plan: This part outlines the marketing and sales strategies, including pricing, advertising, and promotional activities.

Financial Plan: This section includes financial projections, such as income statements, cash flow statements, and balance sheets. It should also detail funding requirements and potential return on investment.

Appendix: This optional section can include resumes, permits, lease agreements, legal documentation, and other relevant documents.

Step 3: Do I Need a Business License in Colorado?

Yes, in most cases, businesses in Colorado need a license, but there is no universal business license issued at the state level. Business licensing in Colorado is decentralized and depends on factors like the type of business, its physical location, whether the business is regulated, and the products or services offered. Common types of business licenses or permits include sales and use tax permits, local city or county business licenses, and regulatory or professional licenses.

Business owners can determine which licenses apply to them by using state government licensing search tools or portals, consulting the Colorado Department of Regulatory Agencies, or using centralized online checklists or systems.

How Much Does a Business License Cost in Colorado?

Business license costs in Colorado vary depending on factors such as business type, jurisdiction, and the type of license or permit required. Some licenses may be available at no cost, while others may range from $15 to $100 for a general business license. Certain groups, such as veterans or nonprofits, may qualify for exemptions or fee waivers. Business owners should check directly with the appropriate issuing agency for exact fee amounts and payment policies.

How to Register for a Seller’s Permit in Colorado

In Colorado, a seller’s permit is referred to as a sales tax license. It authorizes the sale of taxable goods or services and applies tax to sellers. The Colorado Department of Revenue issues the permit, and businesses can apply online through the Colorado Revenue Online portal or by submitting a paper form.

Applicants need to provide information such as the business's EIN, start date, address, ownership details, and expected sales. Temporary permits are available for short-term sales events. The cost of obtaining a sales tax license is generally minimal, and there are no annual renewal requirements. For further support, businesses can contact the Colorado Department of Revenue.

Mailing Address: Colorado Department of Revenue
1375 Sherman St.
Denver, CO 80261

Step 4: How Much Does it Cost to Start a Business in Colorado?

The cost of starting a business in Colorado varies depending on factors such as business type and structure, industry, location, and scale of operation. According to the U.S. Small Business Administration, startup costs can range from a few thousand dollars for home-based businesses to significantly higher amounts for larger enterprises.

Common startup expenses include registration and incorporation fees, licensing and permits, equipment, supplies, office space, insurance, professional services, employee-related expenses, and marketing. Filing fees for LLC formation or corporation registration typically range from $50 to $150.

How to Get Business Funding in Colorado

Startups in Colorado have access to multiple funding options. Business owners should start by estimating how much capital they’ll need and then choose the most suitable funding option(s) based on their goals and eligibility. Common funding sources include:

• Self-funding (bootstrapping)
• Loans
• Grants
• Investors
• Crowdfunding

How to Self-Fund a Business in Colorado

Self-funding, or bootstrapping, involves using personal financial resources to start or run a business. Common methods include using savings or retirement accounts, selling personal assets, earning supplemental income, pre-ordering or advance customer sales, and borrowing money from friends or family. Advantages of self-funding include full ownership and control, while risks include limited available capital and personal financial exposure. Entrepreneurs are encouraged to budget carefully and optimize resources. For additional support, the Colorado Chamber of Commerce and Small Business Administration tools can be helpful.

How to Find Investors in Colorado

An investor provides capital and may offer mentorship, networking, or strategic guidance. Compensation may involve equity, dividends, or board positions. Business owners in Colorado can connect with potential investors by attending business or industry events, using local investment networks, contacting state-level organizations like the Colorado Office of Economic Development and International Trade, and preparing a compelling pitch. Types of investors include angel investors, venture capitalists, friends and family, local private investors, and crowdfunding investors.

How to Get a Loan to Start a Business in Colorado

Business loans are a common funding method for new businesses in Colorado. Applicants may choose from traditional bank loans, SBA-backed loans, and non-traditional options like peer-to-peer lending, microloans from nonprofit lenders, supplier or vendor financing, and family or friend loans. Steps to obtain a business loan include choosing the right loan type, meeting eligibility criteria, providing required collateral, and preparing key documentation such as financial statements, business plans, proof of income, and tax returns. Required documents usually include:

• Financial statements
• Business plan
• Proof of income
• Tax returns

Prospective business owners should consult with financial professionals and compare different loan offers to find the best terms.

How to Find Colorado Business Grants

Business grants are funding sources from government, private, or nonprofit organizations that do not require repayment. Each grant program has different eligibility requirements, application processes, and post-award obligations. Business owners in Colorado can find relevant grants through the Colorado Office of Economic Development and International Trade, local economic development offices, state agencies, and dedicated state grant portals. Entrepreneurs are encouraged to use grant search tools and consult local business support centers for help identifying suitable programs.

Can I Start a Business with No Money in Colorado?

Starting a business with absolutely no money in Colorado is not possible, as some capital is required for essentials like registration or filing fees, licenses or permits, equipment or software, and marketing or operations. However, it is possible to launch a low-cost business or reduce upfront expenses by starting from home, choosing a service-based business, using free planning resources, applying for grants or microloans, and networking locally or building an online presence. Colorado offers free or low-cost business tools, such as no-cost online registration, which can be accessed through the Colorado Secretary of State’s website.

Step 5: Choosing a Business Structure in Colorado

Choosing a business structure is important in Colorado as it affects taxation, liability, management, and registration requirements. Available business structures in Colorado include sole proprietorships, partnerships, corporations, and limited liability companies (LLCs). Each structure has implications for taxation, liability, operations, ownership, and funding. Entrepreneurs are encouraged to consult a tax accountant, attorney, or business consultant for guidance. For more information, visit the U.S. Small Business Administration.

How to Start a Sole Proprietorship in Colorado

A sole proprietorship is a business owned and operated by one individual, offering full control and simple tax treatment but with personal liability for business debts.

Starting a Sole Proprietorship in Colorado:

• Step 1: Choose a business name. You can use your legal name or a trade name.
• Step 2: File a DBA (“Doing Business As”) with the local county clerk's office if using a trade name. Information typically required includes the business name, owner's name, and address.
• Step 3: Obtain necessary licenses and permits. Requirements vary by business type and location. An EIN is required if the business has employees.

Sole proprietorships do not need to be formally registered with the Colorado Secretary of State.

How to Start a Corporation in Colorado

A corporation is a legal entity separate from its owners, capable of being sued, taxed, and entering contracts independently. It generally protects shareholders from personal liability. Different corporation types include C-Corp, S-Corp, and possibly B-Corp or nonprofit, with varying tax treatments.

Core Features:

• Legal separation of owners and business
• Limited liability for shareholders
• Centralized management
• Transferable ownership through stock
• Taxation of profits (double or pass-through depending on type)

Steps to Form a Corporation in Colorado:

• Step 1: Choose a Corporation Name. It must include words like “Corporation” or “Inc.” and be unique.
• Step 2: Appoint a Registered Agent and Registered Office. This can be an individual or company with a physical address in Colorado.
• Step 3: File the Articles of Incorporation with the Colorado Secretary of State. Accepted filing methods include online, mail, and in-person. Required information includes the corporation's name, shares, incorporators, address, and agent. Filing fees apply.
• Step 4 (Optional): Foreign Corporations must file a Certificate of Good Standing and a Statement of Foreign Corporation.
• Step 5 (Optional): IRS Tax Classification. File Form 2553 for S-Corp election after formation is complete.

How to Start an LLC in Colorado

An LLC (Limited Liability Company) is a hybrid business structure combining elements of corporations and partnerships. It offers benefits like limited liability, pass-through taxation, fewer formalities, and a flexible ownership or management structure. LLC owners are referred to as "members."

Steps to Form an LLC in Colorado:

• Step 1: Name Search/Selection. Use the Colorado Secretary of State’s website to search for or reserve a business name. Fees apply, and name reservation is optional.
• Step 2: File Articles of Organization with the Colorado Secretary of State. Filing methods include online, mail, and in-person. Fees apply, and expedited service options are available.

Further steps, such as publishing notice, obtaining an EIN, or appointing a registered agent, may be required based on specific circumstances.

How to Start a Business Partnership in Colorado

A business partnership is a business owned by two or more individuals. Types of partnerships include general partnerships, limited partnerships, and limited liability partnerships.

In Colorado, partnerships do not require formal registration with the state, but partners may choose to file a Statement of Partnership Authority or register a trade name. Partnerships are generally recorded at the county recorder’s office. A partnership agreement typically outlines the terms of the partnership, including profit sharing, decision-making processes, and dispute resolution.

How to Start a Limited Partnership in Colorado

A Limited Partnership (LP) must include at least one general partner with full liability and management control and one or more limited partners with limited liability and reduced management control. Other partnership types include:

• Limited Liability Partnership (LLP) — all partners have limited liability.
• Limited Liability Limited Partnership (LLLP) — general and limited partners are shielded from debts.

Starting a partnership in Colorado requires filing documents with the Colorado Secretary of State. Required forms include the Certificate of Limited Partnership or LLP Registration. Filing methods include online, mail, or in-person.

How to Start a General Partnership in Colorado

A general partnership (GP) is a business jointly owned and managed by two or more individuals who share profits, losses, and liability. Partners can contribute different resources, such as money, labor, or skills.

Registration is optional in Colorado, but partners may file a Statement of Partnership Authority or register a trade name. Partnerships are generally recorded at the county recorder’s office. A partnership agreement typically outlines the terms of the partnership.

How to Start a Nonprofit in Colorado

A nonprofit is a corporation formed for purposes other than profit, such as charity, education, social welfare, or public benefit. Nonprofits must comply with state-specific incorporation procedures.

The Colorado Secretary of State is responsible for filing and oversight. Incorporating a nonprofit involves filing Articles of Incorporation, appointing directors and officers, and drafting bylaws. To obtain tax-exempt status, nonprofits must file with the IRS (Form 1023 or 1023-EZ) for 501(c)(3) status and possibly a state tax exemption form. Filing fees and processing options vary.

Step 6: Choosing a Business Location in Colorado

Choosing a business location is a critical decision, especially for customer-facing or retail businesses. A business's location can impact its success, visibility, operations, and compliance.

Common types of business location setups in Colorado include brick-and-mortar, online, home-based, and mobile. Key factors to consider when selecting a location include proximity to the target market, accessibility for customers and suppliers, local competition, cost of rent and utilities, zoning laws, safety standards, and brand visibility.

Relevant state or local agencies that regulate location requirements include zoning boards and safety inspection offices.

What Kind of Business Can I Run From Home in Colorado?

The ability to run a home-based business in Colorado is influenced by local regulations such as zoning ordinances, homeowner association rules, and lease or deed restrictions. Some types of businesses are typically allowed as long as they do not negatively affect the neighborhood’s residential character. However, certain businesses may be prohibited due to noise, traffic, safety, or environmental concerns.

Individuals should always check with local zoning or planning departments, review HOA rules, and examine lease agreements or deeds.

How Do I Start a Small Business From Home in Colorado

Home-based businesses in Colorado are subject to most of the same legal requirements as other businesses, including business formation, registration, licensing, and zoning compliance. Local governments typically enforce zoning laws that govern whether and how a business may be run from a residential property.

Applicants may need to obtain a Home Occupation Permit or similar authorization to assess the suitability of the business in a residential setting. The best way to ensure compliance is to contact the local governing agency, such as city hall, zoning board, or county office.

Starting a Business Online in Colorado

An online business is any business conducted over the internet. The legal requirements for starting an online business are the same as those for other businesses in Colorado. Business owners must follow typical steps such as choosing a business name, selecting a legal structure, filing formation documents, obtaining an EIN, and acquiring relevant licenses or permits.

Additional regulations may apply to online businesses, such as consumer protection laws and internet-specific sales restrictions.

Step 7: Legal Requirements for Starting a Business in Colorado

Colorado does not limit who can start a business, but all new businesses must follow state laws and local ordinances. Applicable legal requirements are typically based on factors like business structure, industry type, location, and products or services offered.

Nearly all businesses will need to file formation documents or other registrations, obtain business licenses and/or permits, comply with tax obligations, and designate a registered agent and business address. For more information, visit the Colorado Secretary of State’s website.

How to Get an EIN Number in Colorado

An EIN (Employer Identification Number) is a unique nine-digit number issued by the IRS for tax identification purposes. It is also known as a Federal Employer Identification Number (FEIN) or Federal Tax ID Number. The EIN is used to identify businesses for tax filings and is required for hiring employees, opening business bank accounts, filing federal and state taxes, and changing business structures.

Businesses can apply for an EIN through the IRS in the following ways:

• Online using the IRS EIN Assistant (issued immediately if eligible)
• Mail or Fax using Form SS-4
• Phone, but only for international applicants

U.S. entities can mail or fax applications to:

Internal Revenue Service
Attn: EIN Operation
Cincinnati, OH 45999

Foreign applicants with no U.S. office or place of business can fax applications to:

855-215-1627

The person applying must have a valid Taxpayer Identification Number (SSN, ITIN, or another EIN), and the responsible party must be a natural person unless the applicant is a government agency.

How to Get a Colorado Registered Agent

A registered agent is someone designated to receive legal documents on behalf of a business. In Colorado, they are sometimes referred to as a statutory agent. LLCs, corporations, and limited partnerships are legally required to appoint a registered agent.

A registered agent can be an individual who is at least 18 and has a physical address in Colorado, or a domestic or foreign business entity authorized to operate in Colorado. Registered agent services typically cost between $99 to $350 per year.

The appointment is made in the formation paperwork, and a Statement of Acceptance may be required. The process may differ for online vs. paper filings. There are no fees associated with appointing a registered agent, but optional fees for expedited processing may apply.

Patents, Trademarks, and Copyrights in Colorado

Patents, trademarks, and copyrights are forms of intellectual property (IP) protection granted to inventors and creators.

Patents: Patents provide inventors exclusive rights to prevent others from using, making, selling, or importing their invention. They are governed federally by the U.S. Patent and Trademark Office (USPTO) under Title 35 of the U.S. Code. Patent terms generally last 20 years from the filing date.

Trademarks: Trademarks are words, phrases, symbols, or designs that distinguish the source of goods or services. Federal trademarks are handled by the USPTO, while state trademarks are managed by the Colorado Secretary of State. Trademarks last for 10 years and are renewable.

Copyrights: Copyrights protect original creative works and give exclusive rights to reproduce, distribute, display, and perform the work. They are overseen by the U.S. Copyright Office under Title 17 of the U.S. Code. Copyrights typically last for the life of the author plus 70 years.

Colorado Business Tax

The Colorado Department of Revenue oversees business taxation in the state. Tax obligations vary depending on business structure, industry, and business activity. Common types of taxes applicable to businesses in Colorado include:

• Income or Corporate/Franchise Tax: Tax on business profits.
• Sales and Use Tax: Tax on the sale of goods and services.
• Employment or Payroll Taxes: Taxes related to employee wages.
• Property Tax: Tax on business property.
• Specialty/Excise Taxes: Taxes on specific goods or activities, such as alcohol or tobacco.

For more information, visit the Colorado Department of Revenue.

Are Business Records Public in Colorado?

Yes, business records maintained by state or local government agencies in Colorado are generally public and can be inspected or copied by request, unless exempted by law. The Colorado Open Records Act governs public access to records. Agencies that typically maintain such records include the Secretary of State, Department of Revenue, and County Recorder. Some business information, such as Social Security Numbers, bank or financial account info, trade secrets, and personally identifiable information, is exempt from public access.