Start a Business in Colorado Today

Is it time to make your business idea a reality in Colorado? Colorado has consistently been rated as one of the best places in America to start a business thanks to its strong economy, low unemployment and tax rates, and a highly educated population. Regardless of where you decide to settle in the state, there are plenty of opportunities to help your business thrive.

Starting a business in Colorado calls for you to work through several legal and financial requirements. Also, setting up your company incorrectly can cause regulation or tax issues later, which could cost you financially or cause you to pause business operations. If you’re ready to start a business, Colorado is a fantastic place for it.

Step 1: Create a business plan for your Colorado company

The first step to successfully launching any business, whether in Colorado or elsewhere, is to create a detailed business plan. Every enterprise starts with a business idea on how to serve a certain group of potential customers. It’s important to dive deeper and turn your idea into a business plan so you’re ready for any of the other necessary steps to get your Colorado business off on the right foot. If you’ve never put a business plan together and aren’t sure what to add to it, then read on.

What to add to your business plan

Regardless of your industry, consider including the following in your own business plan: 

• Details of your full idea and what problem you’re solving
• Objectives that include “SMART” goals
• Potential problems you’re aware of and how you’ll mitigate each
• Who your target customer is
• Financials and projections for the first three years, minimum

The Southern Colorado Small Business Development Center has put together business plan resources to help you get ready for the launch of your Colorado business. You can also do a bit of research of your own to find out what else to include in your business plan, especially if you’re in a niche industry or expect to have a lot of competition and want to plan out how you’ll stand apart from the crowd.

Need help creating a business plan for your Ohio business? We put together a comprehensive library of articles and guides on business planning.

Step 2: Choose a business structure/type

When you’re starting a Colorado business, you’ll need to choose a business entity type. Below are some of the more common options. Consider your situation and which benefits attract you most in order to properly decide which entity is right for you.

Sole Proprietorship in Colorado

As a business entity, a sole proprietorship is the quickest way to get your small business started. You won’t have to file paperwork with the state, and you can start selling your goods or services today. But sole proprietorships don’t have any personal liability protection, making them a riskier endeavor than LLCs or corporations. Someone suing the business can go after the personal assets of the owners.

Colorado General Partnership

A general partnership works like a sole proprietorship, but has multiple owners who split the profits, debts, and liabilities. General partnerships, sole proprietorships, and most LLCs also have “pass-through” taxation, meaning that the Internal Revenue Service only taxes the owners on their personal tax returns without first taxing the profits at the business level.

Colorado Limited Liability Company

A very popular business entity is the LLC. This business structure provides personal liability protection for the owners, as an LLC is a separate legal entity from them. With an LLC, your personal assets are usually safe from the liabilities and debts of the company. This is also true of a corporation, but corporations have stricter rules governing them and more paperwork.

LLCs also, by default, have the same pass-through taxation that a sole proprietorship or partnership have. In fact, they also have the option of being taxed as a corporation if that suits the LLC’s financial situation better.

Colorado Corporation

Corporations are popular for companies that are planning major growth and want to issue stocks to help raise capital. However, they’re subject to “double taxation,” meaning that profits are taxed twice, at the business level and the individual owner (shareholder) level.

As we mentioned, corporations also keep the personal assets of their shareholders safe from the liabilities and debts of the company. However, they have the most red tape and rigid management structure.

Colorado S Corporations

An S corporation isn’t a legal business entity type. Rather, it’s a tax classification available to LLCs and corporations, provided they meet the IRS’s qualifications. S corporations are gaining popularity because, for corporations, they’re a way to avoid double taxation. For LLCs, they’re a way to save on self-employment taxes.

Getting started with an LLC, corporation, or S corporation does take longer than just starting as a sole proprietorship. But if you have the right support, such as our business formation services, the process can be quick and easy.

Still not sure what business structure to choose for your business in Colorado? Get 100% certain by reading our business structures page.

Step 3: Determine your business costs

One of the most important parts of creating your business plan is to build out what your financials could look like as a new business. This means you’ll need to be very specific on what your business costs are and accurately calculate them so that you can prepare financially for the first several months. When calculating your business costs, keep in mind that there are one-time costs as well as ongoing costs. 

One-Time Business Costs

One-time costs are things like a downpayment on an office building or the purchase of equipment that typically lasts many years. You only have to come up with the financing for these items when, or before, you launch your business.

Ongoing Business Costs

Ongoing business costs can include monthly rent, marketing materials, or taxes that you’ll continue to pay regularly, often monthly or quarterly. Plan to cover one-time costs and ongoing costs to operate your small business for 6 to 12 months without any revenue. That way, it can survive the unexpected, and you’ll have the time it takes to build a customer base. 

Don’t get overwhelmed with the math, we are here to help with calculating your business start-up costs.

Step 4: Create a Colorado business name

The next step in your journey is to create a business name that works for you throughout Colorado. Choose a name no one else in the state is using to transact business and one you can easily own the brand identity for, both online and off. Settle on one that’s easy to understand so you can own both a strong domain and various social media profiles.

You can use Colorado’s online tool to check if the name you want is available. When that’s done, you can use the domain name search tool at ZenBusiness to help secure your domain name. 

Register a Colorado Trade Name

If your new business is a sole proprietorship or partnership using a name that’s different than the legal names of the business owners, you’ll need to apply for a Colorado trade name with the Colorado Secretary of State. This is commonly known as a “doing business as“ (DBA) name in most states and is a requirement for all Colorado businesses that do business under a name other than their official, legal business name.

Step 5: Register your Colorado business and open business banking accounts

After choosing your business name, it’s time to register the business structure you chose, if it’s one that requires state registration, such as a Colorado LLC or corporation. An LLC will need to complete Articles of Organization and file them with the Colorado Secretary of State. A corporation will need to do the same, but with Articles of Incorporation.

Registered business entities like this will have other steps to complete, such as choosing a registered agent, creating an operating agreement or corporate bylaws, and applying for an Employer Identification Number (EIN) from the IRS.

Apply for an Employer Identification Number (EIN)

In addition to the paperwork an LLC or corporation must file to register with the state of Colorado, many businesses are required to get an Employer Identification Number (EIN), which is your federal tax ID that you also use to hire employees. Note: If you’re a sole proprietor with no employees, you may be able to use your Social Security number as your tax ID, though many experts recommend obtaining an EIN to help avoid identity theft.

Business Bank Account and Licensing

Once your Colorado paperwork is done, you’ll be able to set up a business bank account, get any permits or licenses you need, and get the necessary business insurance. You’ll need a business bank account to keep your business and personal finances separate. Mixing your business and personal finances can create a nightmare at tax time.

Luckily, in Colorado, you won’t need a state-issued business license, but check with the local governments where you’ll do business to see what licenses and permits they require.

Business licenses and permits can be needed on the federal, state, and local levels. Because there’s no central place to confirm whether your business has every license and permit needed to operate legally, you’ll have to do some research. Our business license report can do the work for you.

Business Insurance

General liability insurance is the main coverage most small businesses use. It can help shield your business from lawsuits due to accidents or mistakes by you, your business partners, and your employees. For example, if a customer slips and falls in your restaurant, general liability coverage can help mitigate the financial loss. Talk to a qualified agent about what other business insurance your company could benefit from.

Step 6: Market your business in Colorado

Now that you’re legally ready to start transacting business in Colorado, it’s important to figure out how to market it to reach your target customers. Coloradans are online just like residents of other states, including in smaller towns away from the bigger cities of Denver, Boulder, Colorado Springs, or Fort Collins. However, word of mouth and referrals are sometimes the best marketing options in small populations. 

Depending on your industry, online ads have plenty of marketing opportunities. Keep company pages on social media platforms where your customers hang out most, whether that’s Facebook, Instagram, LinkedIn, or any other.

If you have a physical location, make sure your Google My Business is up to date and optimized to show up at the top of business listings in your area. Don’t forget Yelp and local business registrations as well as advertising in local papers. Connect with a Colorado marketing partner if you need more help.

Put yourself in your customer’s shoes, and you’ll be much more successful than with blind paid advertising. Check out the Colorado Small Business Development Center’s marketing resources to learn more.

Marketing a new business takes time and planning here are some great actionable ideas for marketing your business.

Examples of Good Businesses to Start in Colorado

Colorado has a good mix of populated places with large and growing cities, well-traveled suburban areas, and small towns. This makes it a nice fit for most types of businesses, including tech companies, restaurants, and rural-focused enterprises. Here’s a list of the types of businesses that can work well throughout the state: 

• Environmental or energy-focused businesses
• Restaurants
• Tour guide
• Rafting tours or equipment sales
• Photography
• Party planner
• Ski equipment sales or rentals
• Travel-related business
• Business-to-business (B2B) services
• Pet products

For more ideas, read our guide on the Best Businesses to Start in Colorado.

Top Colorado Cities to Form Businesses

Denver: Capital city with a vibrant economy. Strong in telecommunications, aerospace, and technology. Major hub for startups and financial services. Benefits from strategic location and large airport for connectivity.

Boulder: High quality of life and strong startup culture. Focus on technology, scientific research, and outdoor recreation. Home to the University of Colorado, providing a talented workforce.

Colorado Springs: Significant military presence enhancing defense and technology sectors. Noted for space research and cybersecurity. Offers affordable real estate and a supportive business environment.

Fort Collins: Close to Colorado State University, fostering research in clean energy and biotech. Thriving craft brewing industry and a culture supportive of innovation. Attracts businesses with its vibrant local community and academic connections.

Aurora: Diverse economy with strengths in healthcare, aerospace, and renewable energy. Proximity to Denver with somewhat lower real estate costs. Strategic choice for businesses using regional advantages.

These cities provide a mix of industrial strengths, proximity to research institutions, and supportive business environments, making them attractive locations for various types of business ventures in Colorado.

We can help

Overall, Colorado is one of the best states in the country to start a business because of its natural geography, business-friendly government, and strong economic climate. Starting your business is manageable in Colorado if you take the right steps to plan ahead and set up your company correctly. You can find more information on the Small Business Administration website, or you can have us help you.