There are various types of business entities under the various state laws. In the case of a Colorado single member LLC, this business entity only has one member. Unless the business owner chooses to become a disregarded company for tax purposes, the IRS will treat your business like a corporation. The process and filing requirements are no different from the traditional LLC.
Knowing how to start an LLC in Colorado means more than simply filing with Secretary of State. About 28% of business owners find themselves personally liable for business actions because they don’t understand the rules. You have to avoid this peril at all cost.
A limited liability company (LLC) in Colorado is driven by Colorado LLC laws. If you are considering registering a single owner LLC in Colorado or not, it is important to know that the IRS looks at the LLC formation based on the number of members. The business will either be treated as a corporation or business partnership.
If you are registering a Colorado single member LLC, that has more than two members, the IRS would look at the corporate entity as a business organization unless you file a Form 8832. Failure to file an 8832 form would cause the IRS to treat the LLC as a corporation. Worse tax benefits may apply.
What is a Single Member LLC?
If you elect to register a single member Limited Liability Company as a disregarded business entity with no employees, then an EIC may not be necessary. You should register an LLC in Colorado and open up a new business account. Colorado LLC laws will dictate whether you need a Federal EIN Number.
As a general practice, all LLC companies should have a separate bank account and follow all Colorado LLC laws to maintain personal liability protection. See information about limited liability company operating agreement.
Your company is eligible to get potential tax benefits. However, when registering a single member LLC in Colorado, you should always seek legal advice about the applicable Colorado LLC laws. If you elect to form an LLC, you can choose for the IRS to treat your company as a sole proprietor or a corporation.
Colorado Single Member LLC Filing Requirements & Benefits
Registering as a Colorado single member LLC, you can maintain the level of control needed to operate the company. The LLC owner also avoids personal liability so long as the follow the letter of Colorado LLC laws.
The filing requirements for a single member LLC is Colorado is the same as for a non-single member LLC. Regardless of the type of filings, business owners must comply with the LLC statute or run the risk of personal liability.
Flow-through taxation is always a benefit to becoming a single member owner LLC limited liability company. This means that the business tax benefits also flow through to your personal taxes.
If you want to get professional help with how to start Colorado single member LLC, call our Denver, Colorado business lawyers at 720-941-7200 for a FREE Initial Consultation.