What is an LLC in Colorado? A Colorado Limited Liability LLC Company means a business structure allowed by Colorado statute. If you are forming a CO LLC you want to ensure that you consult with your state law or business lawyer to understand your responsibilities and legal obligations.
Limited Liability Company members must also provide a statement in the articles of organization as to whether they intend to manage the organization or hire or appoint managers who have no financial ownership of the LLC.
Forming a Colorado Limited Liability Company
Under the LLC definition, you must be at least 18 years old to become a member of Colorado Limited Liability Company. For registration and LLC organization purposes, you must also provide the name and address of a designated registered agent, a person or business that can accept important legal notices and government correspondence on behalf of the LLC. The agent must be physically located in Colorado.
- Understand the difference between a single member LLC and managed member LLC.
- You must have an adequate and sound LLC articles of organization.
Businesses Excluded from LLC Formation in Colorado? Certain Colorado businesses generally cannot form LLCs. examples include banks and insurance companies. Limited liability companies do not pay taxes on its income as a Colorado business entity. Instead, income or losses flow through to the Limited Liability Company’s owners – called members.
- LLC taxes are based upon the members’ proportionate interest in the company.
- Formation of a Colorado limited liability company starts with the filing of articles of organization at the Colorado Secretary of State.
- The Colorado Limited Liability Company is a legal entity that can conduct business in its own name; can sue or be sued.
- Your ownership interest can be based upon cash, services or property.
- The management of the Colorado limited liability company is typically vested in its members. This is set forth in the operating agreement. It is advisable to have the limited liability company operating agreement in writing an agreed-upon by all members. This avoids disputes in the future. See also Colorado Revised Statutes.
As a manager of the company, it is important to know that you have a fiduciary duty to the business just like corporate officers have to a corporation.
- The profits and losses in the company are shared per the terms of the LLC operating agreement.
- If you operate an LLC, the company can own property in its own name.
Can You Assign Your Interest in a Limited Liability Company? When you own an interest in an LLC that interest is personal property. However, when you think about assigning or transferring the right to participate in the business, you generally cannot transfer that right without the approval of the other members of the Limited Liability Company.
Why is this? The original members of the Limited Liability Company came together because they made a decision on the people and what they knew at the time. None of us would want to be forced to run a business with someone we don’t know when a member decides to transfer his or her ownership interest.
Deducting Expenses When Operating Colorado LLC: Understanding what is an LLC -owners sometimes create an LLC only to have a safe haven for spending funds. You must be aware of your limitations under the law.
Business expenses are the cost of carrying on a trade or business. When you operate a Colorado limited liability company, you are allowed to deduct certain expenses if the business is operated for a profit.
Business expenses must be both ordinary and necessary. Although the limited liability company is the most popular entity used, you want to be absolutely careful on what expenses you deduct.
You do not want to simply form your Colorado entity for the simple sake of “running” funds through it. If the expense is commonly used in your industry, then chances are they are deductible. You always want to seek that advice of a tax attorney of CPA. Learn more about the differences between a limited liability corporation vs limited liability companies.
For other partners in the LLC you should also learn about your obligations, issues related to articles of organization, obligations to each other and to the company itself.
Get started: Get the help of experienced Colorado limited liability company Act lawyers Call us at 1-866-601-5518.