Why Colorado for LLCs?
Colorado offers fully online filings, a low $50 formation fee, and modern statutes that prioritize contractual freedom. Article 80 integrates directly with Article 90 for registered agents, periodic reports, and status, making the compliance path predictable.
✅ Best-fit scenarios
- Founders and real estate investors who want a “home-state” LLC with easy online filing.
- Professionals operating in Colorado who need a fast entity before licensing approval.
- CA/NY owners who hold Colorado assets and need clean documentation.
⚠️ When Colorado isn’t magic
- Trying to avoid home-state income/franchise taxes—you still owe them if you operate there.
- Series LLC structures—Colorado does not allow domestic series LLCs and blocked the Uniform Protected Series Act in 2020.
- Anonymous ownership—Colorado public records list the registered agent and periodic reports, and CTA exemptions could change again.
Statutory Foundation: Article 80 + Article 90
Colorado’s LLC Act (C.R.S. 7-80-101 et seq.) supplies definitions, formation mechanics, management rules, and creditor remedies, while Article 90 overlays naming, registered agents, periodic reports, and delinquency status.
| Article 80 Part | Summary |
|---|---|
| Part 1 (General) | Short title (§7-80-101), definitions, effect of operating agreement (§7-80-108), interplay with Article 90. |
| Part 2 (Formation) | Formation requirements (§7-80-203), Articles content (§7-80-204), amendment and restatement (§7-80-205). |
| Part 3 (Registered Agent & Reports) | Incorporates Article 90 Part 7—registered agent rules and service of process; Part 5—periodic reports (§7-80-301). |
| Part 4 (Management) | Member/manager management (§§401–404), duties, indemnification, records access (§7-80-408). |
| Part 5–7 | Capital contributions, allocations, distributions, membership interests, assignments, charging orders, derivative actions (§§7-80-501–719). |
| Part 8–9 | Dissolution, winding up, conversion, and foreign LLC registration (§7-80-901). |
Articles of Organization (C.R.S. 7-80-204)
- LLC name complying with Article 90 Part 6.
- Principal office address.
- Registered agent name & street address (Colorado location).
- Organizers’ names and addresses.
- Management structure (member vs manager-managed).
- Statement confirming at least one member.
- Optional clauses (limitations on authority, transfer restrictions, special allocations).
Operating Agreement Primacy (C.R.S. 7-80-108)
Colorado recognizes the operating agreement as the primary contract among members, but certain provisions are non-waivable (e.g., the duty of good faith and fair dealing, rights of third parties, registered agent requirements). Draft with intent and track statutory carve-outs.
Formation Checklist & Costs
Colorado LLCs are formed entirely online through the Secretary of State portal. Here is the workflow I use for clients.
- Name search: Confirm distinguishability under Article 90 Part 6 and reserve if needed.
- Registered agent: Appoint a Colorado street-address agent (commercial or individual); Article 90 Part 7 governs duties/service.
- Draft Articles: Include required clauses (see earlier table) and optional governance language if you want it on public record.
- File online: Pay the $50 Articles fee via the SOS portal (no paper filings).
- Obtain EIN: File IRS Form SS-4 or use the IRS online system immediately after the Articles are accepted.
- Operating agreement & organization: Adopt OA, admit members, appoint managers/officers, approve bank authority, and document capital contributions.
| Colorado LLC Filing Costs | Amount |
|---|---|
| Articles of Organization | $50 |
| Periodic Report | $25 annually |
| Late Periodic Report Penalty | $50 |
| Statement Curing Delinquency | $100 |
Fees are current as of 2025—always confirm on the Colorado SOS fee schedule before filing.
Operating Agreement & Governance
Colorado’s LLC Act expects your operating agreement to handle management, contributions, allocations, and dissociation. Article 80 supplies default rules you can override.
Management & Duties
- Member-managed vs manager-managed (§§7-80-401–402). Document the choice clearly.
- Duties of loyalty and care (§7-80-404) can be tailored but not eliminated; use the OA to define “gross negligence” or safe harbors.
- Indemnification and expense reimbursement (§7-80-407).
- Information rights (§7-80-408) – consider confidentiality clauses when sharing data with members.
Operating Agreement Must-Knows
- Adopt before significant capital commits; banks often request it with the EIN letter.
- Include capital contribution schedules (cash, IP, services) and consequences for failure to fund.
- Build deadlock and buy-sell mechanisms that comply with §7-80-706 (withdrawal, dissociation, expulsion).
- For multi-state owners, address tax distributions (4.4% Colorado rate currently) and withholding for CA/NY members.
Ownership Interests & Creditor Protection
Article 80 treats membership interests as personal property that can be assigned, but transferees become members only with consent. Charging orders remain the exclusive creditor remedy.
Capital & Distributions
- §7-80-501 accepts “anything of value” as contributions (cash, property, services).
- Default profit/loss allocation equals contributions unless the OA provides otherwise (§7-80-503).
- Distributions follow §7-80-504; keep solvency tests (ability to pay debts) in mind.
Transfers & Charging Orders
- Assignments convey economic rights only; admission as a member requires unanimous or specified consent (§7-80-702).
- Charging order (§7-80-703) is the exclusive remedy of a judgment creditor—no foreclosure or forced sale absent additional facts.
- Derivative suits (§§7-80-713–719) require demand or a showing of futility; the OA can set procedures but cannot eliminate the right entirely.
Periodic Reports, Status & CTA
Colorado’s periodic report regime keeps your LLC in good standing. Missing one report pushes status to “noncompliant,” then “delinquent” with $100 reinstatement fees. On the federal side, domestic Colorado LLCs are currently exempt from CTA BOI filing.
Periodic Report Essentials
- Due annually during a 3-month window centered on the anniversary month (opens one month before, closes one month after). SOS allows filing up to two months early—use calendar reminders.
- Fee $25; $50 late penalty if filed after the window.
- Failure to file leads to “noncompliant” status, then “delinquent,” requiring a $100 Statement Curing Delinquency.
- Delinquent entities lose name protection and can’t obtain Certificates of Good Standing—bad for financing or closings.
Corporate Transparency Act Update (March 2025)
- FinCEN’s interim final rule removed domestic reporting companies from CTA BOI obligations. Colorado LLCs formed under state law no longer file BOI reports.
- Foreign entities formed abroad but registered in Colorado remain “reporting companies” in theory, but FinCEN now exempts U.S. persons from the BOI requirement as well.
- Expect further rulemaking or litigation—build the ability to produce ownership info on request in case filing returns.
Work With Me on Your Colorado LLC
I draft Colorado LLC packages at $240/hour. Most single-LLC matters take 3–5 hours depending on ownership complexity, financing, and tax coordination.
Deliverables
- Articles of Organization (customized clauses if needed) + filing.
- Operating agreement tailored to your members/investors.
- Initial resolutions, EIN guidance, minute book, and banking letters.
- Periodic report reminders and CTA monitoring.