Description of a Limited Liability Company: A Limited Liability Company, or LLC, in Colorado, is owned by its owners, which are referred to as members. A Limited Liability Company in Colorado can consist of 1 or more members. Members can consist of individual people, other LLC’s, and/or corporations. Limited Liability Companies provide much flexibility and can easily add and remove members as the company changes ownership structure.
Formation of a Limited Liability Company: In Colorado, a Limited Liability Company, often referred to as an LLC, is simple and inexpensive to create. In Colorado, the person creating the Limited Liability Company can do so online at the Colorado Secretary of State, or SOS, website. On the SOS website, a person can search their desired business name to see if the desired name is available. Once verified the desired name is available, it is a good idea to look for similar names to prevent any misidentification or customer confusion. Members should consider not using a name that is too similar to other company names to avoid any confusion or inherit a negative reputation that another LLC has. The Colorado Secretary of State provides a fill in the blank form called the Articles of Organization, which is the form used to incorporate and establish the LLC. The form asks some basic questions like name of the Limited Liability Company, mailing address, physical location, person who is forming the LLC, and who the registered agent is. After filling in the form and submitting it to the Colorado Secretary of State with payment, the LLC is created.
Operating Agreement for a Limited Liability Company: The Operating Agreement is, perhaps, the most important document for a LLC. The Operating Agreement is basically the rules and regulations by which the members of a Limited Liability Company will follow. It should cover the individual members, voting, how ordinary and extraordinary transactions may occur (for example, you may want a higher vote percentage requirement for extraordinary transactions). It is also wise to indicate how members will receive revenues. This could consist of hourly rates, salary, profit sharing, etc., or some combination. More detailed Operating Agreements will have provisions dealing with the transfer of membership (ownership) interest, whether other members have first right of refusal to purchase those shares, covenants against competition, or what happens if a member becomes prohibited as an owner in a certain industry.
Limited Liability Taxes: Limited Liability Companies are generally not federally taxed on the profits at the corporate or business level. The federal income profits flow (pass through) to the individual owners who then pay taxes based on the individuals’ tax rates.
The Law Offices of Clifton Black, PC can help you with the legal aspects of setting up a Limited Liability Company (LLC) in Colorado. Our experienced attorneys are well-versed in the state laws and regulations governing LLCs and can help ensure that your business is properly established, registered, and in compliance with all applicable laws. We will guide you through the entire process, from filing the necessary paperwork to preparing an Operating Agreement. With our expertise and knowledge, you can be sure that your LLC will be established correctly and in a timely manner. Contact us today at (719) 328-1616 to schedule a comprehensive consultation with an experienced business attorney.