5 Reasons You Should Consider Incorporating Your Business in Colorado
If you’re living and working in Colorado, there are many reasons to incorporate your business there. However, there are benefits to forming your startup business in Colorado no matter where you live. For example, your business is now operating in one of the most-business friendly climates in the United States. Here are five reasons you should consider incorporating your business in Colorado. We’ll also address how this could be done by non-residents.
The Simple Setup
Forming an LLC is quite simple in Colorado. The first step is choosing a name for the LLC. However, know that all companies incorporated in Colorado will need a registered agent in Colorado. This person will be responsible for relaying important documents over to you. And while you may decide to work as your own agent, it’s not always recommended, if only for privacy reasons.
You’ll then need to file articles of organization and sign the LLC’s operating agreement. Obtain an Employer Identification Number or EIN for the business. Then you can open business bank accounts and hire employees. It also makes you eligible for government loans and grants.
The Low Up-Front Costs
The state of Colorado made it very cheap to establish and maintain a limited liability corporation or LLC. The typical new LLC pays a one-time filing fee of fifty dollars. Then they have to file an annual Periodic Report, which only costs ten dollars to file. This is much cheaper than forming and maintaining a corporation. There is also much less work for business owners and managers. For example, one of the benefits of forming an LLC in Colorado is that you don’t have to maintain minutes of meetings or resolutions.
Limited Liability
A Colorado C Corporation or Limited Liability Corporation has limited liability. If your business is sued, it won’t affect your personal assets. This is invaluable protection if you’re entering into contracts or working in a field where you’re prone to be sued. If the business goes bankrupt, you aren’t personally liable for it. Yet your business can sue those who fail to deliver on their contracts while holding real property in its name.
The Tax Benefits
The goal of any business is to earn money, but it is what you keep that matters most. A Colorado business pays a relatively low tax rate. It can also take advantage of a number of state-level incentives and tax breaks, as well. The state has a microloan program intended to provide small loans to startups and small businesses. The Work Opportunity Tax Credit could generate a 2,400 to 9,600 federal tax credit if you hire from people in targeted groups. There are transferable tax credits, enterprise zone tax credits, and others you may qualify for, too.
The Flexibility It Affords
In general, you want to choose the right business structure when you establish your business. However, Colorado C Corporation can be converted to an S Corporation later, and this is an almost seamless process. Then you can enjoy the benefits of flow-through taxation.
The Colorado public benefit corporation is an unusual type of corporation that combines aspects of for-profit and non-profits. It is a business entity that allows you to earn a profit and improve society. And it extends the same liability umbrella that comes with incorporating in Colorado.
If you form an LLC in Colorado, you have a variety of options when it comes time to distribute the profits. However, only a corporation can raise capital by selling stock.
Conclusion
Colorado has made the process of incorporating easy, and the state is also supportive of startups and small businesses. This is chief among the reasons to legally start your new business there.
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