Checklist for Starting a Business
Congratulations on beginning your journey of starting your own business. Business ownership can be a very rewarding endeavor. This page is to help you make accurate and timely decisions during the process and give you the best resources available to assist you along the way.
We go over the steps to take initially to start your business in Colorado:
Step 1. Decide on a Legal Structure
The most common legal structures for a small business are:
- sole proprietorship
- limited liability company (LLC)
You’ll want to consider which business entity structure offers the type of liability protection you want and the best tax, financing and financial benefits for your business.
Step 2. Choose a Name
You will need to check that your name is distinguishable from the names of other business entities already on file with the Colorado Secretary of State. You can check for available names by doing a business entity search on the Secretary of State’s website. You can reserve an available name for 120 days by filing a Statement of Reservation of Name.
If you plan on doing business online, you may want to register your business name as a domain name. In addition, to avoid trademark infringement issues, you should do a federal and state trademark check to make sure the name you want to use is not the same as or too similar to a name already in use.
Step 3. Create Your Business Entity
- Sole proprietorships and Partnerships: To establish either of these in Colorado, you don’t need to file any organizational documents with the state.
- LLCs: To create an LLC in Colorado, you must file Articles of Organization online with the Colorado Secretary of State. You will also need to appoint a registered agent in Colorado for service of process.
- Corporations: Similarly, to create a corporation in Colorado, you must file Articles of Incorporation online with the Colorado SOS. You will also need to appoint a registered agent in Colorado for service of process.
Step 4. Licenses and Permits
Tax Registration. If you will be selling goods in Colorado, you must register with the Department of Revenue to collect sales tax. If your business will have employees, you must register with the Department of Revenue for employer withholding taxes. You can register for both types of tax online.
EIN. If your business has employees or is taxed separately from you, you must obtain a federal Employer Identification Number (EIN) from the IRS. Even if you are not required to obtain an EIN, there are often business reasons for doing so. Banks often require an EIN to open an account in the business’s name and other companies you do business with may require an EIN to process payments. You can get an EIN by completing an online application on the IRS website. There is no filing fee.
Regulatory licenses and permits. These cover areas such as:
- health and safety
- the environment
- building and construction; and
- specific industries or services.
For information about local licenses and permits, check the websites for Mesa County and (if applicable) whichever City you will be operating in.
Professional and occupational licenses. In certain business-related fields of work additional licenses are required.
Step 5. Business Location and Zoning
You’ll need to pick a location for your business and check local zoning regulations. That includes if you work from home. You will want to find zoning regulations for the city in which you are operating in.
Step 6. Taxes and Reporting
Colorado taxes every kind of business. A breakdown of requirements is below.
Sole proprietorships. Pay state taxes on business income as part of their personal state income tax returns.
Partnerships. Partners pay state taxes on partnership income on personal tax returns.
LLCs. Members pay state taxes on their share of LLC income on personal tax returns. In addition, LLCs themselves have to file an additional state tax form — either a partnership return or a corporation return. The specific form used will depend on how the LLC is classified for federal tax purposes. Colorado LLCs are also required to file a periodic report with the Colorado Secretary of State.
Corporations. Shareholders must pay states taxes on their dividends from the corporation. A shareholder-employee with a salary also must pay state income tax on his or her personal state tax return. Additionally, the corporation itself is subject to Colorado corporation taxes. And, finally, corporations must file a periodic report with the Colorado Secretary of State.
If you have employees, you must also deal with state employer taxes.
And, apart from Colorado taxes, there are always federal income and employer taxes.
Step 7. Insurance
Insurance is a good idea for most kinds of business. Insurance is regulated at the state level and there are many types of business insurance available. Check with an insurance professional to find the coverage right for your business entity.
Business Incubator Center – Offers classes, business space, kitchen space, coaching and supports the grown and start-up of new business in our area.
State of Colorado – Includes a list of links for registering your name, obtaining EIN, Colorado Business Registration etc.
Colorado Small Business Development Center – Small Business Navigator: The Small Business Navigator is the first point of contact for new and existing business owners with questions about federal, state and local licensing requirements. The navigator also provides referrals to a variety of state and federal assistance programs and local small business training. Call the Small Business Navigator at 720-665-7439 with your start-up questions!