By: Samantha Pederslie

Are you thinking about incorporating in Colorado? In this guide, we’ll go over the eight general steps that apply to most business types and industries.

1. Choose a Corporate Name

Of course, the first thing you should do is think of a name for your corporation. This will be key for all paperwork filed thereafter. Colorado’s naming laws state that your corporation name should include one of the following words:

• Incorporated
• Corporation
• Limited
• Company

An abbreviation of one of these words (for example, “inc.”) would be valid as well. The name that you choose shouldn’t imply that your business has other purposes that fall outside of state law or its articles of incorporation.

The Colorado Secretary of State website is the main resource for corporate naming. Your chosen name should be different from other existing business entities; you can check for availability through the business name availability search on the website. If you’d like to reserve a name, you can do so for up to 120 days by completing a Statement of Reservation of Name form (which is conveniently available online.) 

‍

2. File Articles of Incorporation

With the same website, you can file the Articles of Incorporation for a Profit Corporation form online. This action will legally create your corporation -- It should include a few things:

• Your corporation’s name and street address
• The agent for service of process’s name and street address
• Affirmed consent of the registered agent
• Name(s) and address(es) of incorporator(s)
• Number of shares that corporation is allowed to issue

‍

3. Appoint a Registered Agent

As mentioned in the previous section, every corporation in Colorado needs to have an agent for service of process that resides within the state (this can be an individual or a corporation.) If the corporation gets sued, the agent is the one to receive the legal papers. However, your corporation cannot act as its own agent. Additionally, before identifying the agent, the individual should first agree to accept service of process on the corporation’s behalf. 

A registered agent for a corporation in Colorado can fall under one of these categories:

• Full-time Colorado resident
• Colorado business entity that operates principally in Colorado
• Authorized foreign business entity that has a place of business in Colorado

To prove Colorado residency or business operation status, the agent should have a street address in Colorado (not a post office box.) Usually, if you have a small business, it’s common practice to choose an officer or director to be the first agent of the corporation (you can always change the agent at a later date.) Of course, you need to obtain the agent’s consent to appointment.

‍

4. Prepare Corporate Bylaws

What exactly are bylaws? You can consider them to be the initial “ground rules” for running your corporation; it’s an internal document. You don’t need to file anything with the state, and they’re not mandatory by law. However, they’re extremely important as they lend your corporation a proof of legitimacy when it comes to interacting with banks, creditors, the IRS, and other agencies.

Ideally, you should organize all of your corporate papers into one record book. This can include the bylaws, meeting minutes (which are required for S corporations), and more. Usually, the record book is stored at the corporation’s main office. 

‍

5. Appoint Directors and Hold First Board Meeting

If you are the incorporator, you now need to assign individuals who will be the first to serve on your corporation’s board of directors. They’ll hold the position until the first yearly shareholder meeting is held, at which the shareholders will elect the directors to serve for the next term. 

What should happen at the first meeting of the board of directors? There are a few key items that should be accomplished:

• Appoint corporate officers
• Create bylaws
• Choose a corporate bank
• Authorize share issuance
• Set the fiscal year
• Adopt an official stock certificate form
• Adopt a corporate seal
• Approve of an S corporate status election (if applicable)

As with any corporate meeting, the tasks completed by the board of directors should be recorded in corporate minutes and then stored in the record book mentioned earlier. The incorporator or any one of the directors can record these minutes.

‍

6. Issue Stock

Since your shareholders are contributing capital in the form of cash, services, and/or property, you must issue stock in return. It’s common for smaller corporations to issue paper stock certificates. To keep your records up to date, you should keep track of each shareholder’s name and contact information in the corporate stock transfer ledger.

In the state of Colorado, corporate stock has no par value as a default. However, you can choose to set a par value (which can be defined in the articles, but it isn’t mandatory.)

There are state and federal securities laws that impose rules on the offering and selling of corporate stock. “Private offerings” are an exception and they are exempt; they are classified as a non-advertised sale to a small group of people (usually 35 or less.)

In Colorado, all nonpublic offerings are exempted from registration. Essentially, any offering you make to investors that isn’t advertised can fall under this category. Private sales to up to 10 Colorado residents over the period of a year are also considered exempt.  Therefore, these situations won’t require any filings to the state or payment of fees. 

‍

7. File Periodic Reports

In Colorado, corporations must file a periodic report annually. As with before, this report is filed to the Colorado Secretary of State. The periodic report is required to be filed at each year anniversary of your corporation’s formation, and you have 3 months to do so. Colorado’s Business Division has a convenient email notification service that you can sign up for, so that you don’t miss the 3 month filing window. 

‍

‍

8. Other Tax and Regulatory Requirements

There are some other tax and regulatory requirements that your corporation will have to adhere to:

S Corporation Filing: If you want to identify your company as an S corporation for tax purposes, you’ll have to get all shareholders to sign Form 2553 Election by a Small Business Corporation. The window to file this election is approximately two and a half months after your corporation’s first tax year has begun. The IRS has more information on S corporations here.

EIN: This an employer identification number. Your company must have an EIN to adhere to federal laws, and you can get one by completing an application on the IRS website (there’s no fee to file this form.)

Business Licenses: We briefly discussed business licenses earlier; they depend on the type of business you’re operating and can be for the local or state level. Contact the county and city clerk in order to find out what local licenses you’ll need to obtain. For state licenses, you will need to check the Colorado Department of Regulatory Agencies as well as the Colorado Office of Economic Development License Database.

Department of Revenue: For some instances, such as if your business involves selling goods and collecting sales tax, you will have to register with Colorado’s Department of Revenue (DOR.) 

Whatever state you’re wanting to incorporate in, MassLight can assist your startup in all its technical needs. Our build-for-equity development program delivers customized software tailored to your needs in exchange for equity. Contact us to learn more about our program, or to pitch us your next amazing business idea. 

‍