How to Open a Small Business in Colorado

Open a small business in the Centennial State.

Small business is a significant contributor to Colorado's economy. According to the U.S. Department of Commerce, the 126,951 small business employers in Colorado in 2006 accounted for more than half of the state's private-sector jobs. There are almost 40,000 small businesses opened and closed each year in Colorado. These above-average statistics are often cited as an example of the supportive atmosphere for small business in the state, which helps makes Colorado an excellent location to start a small business.

Things You'll Need

• Computer with Internet connection
• Printer
• Telephone

Instructions

Find experts to help you get started correctly

1. Locate professionals to help you understand areas that are often unfamiliar to the small business owner. These can include an accountant, a lawyer skilled with business operations and legalities, a banker and an insurance agent.

2. Consult with your lawyer to determine what type of business structure your company should have. Ask about different options, their protections and their tax advantages. Some options include a sole proprietorship, a Limited Liability Company (LLC), and an S-Corp (Subchapter S Corporation).

3. Meet with an insurance agent who is experienced with writing policies for small businesses in Colorado. Understand the importance of having liability insurance. Add a worker's compensation policy if you're going to have employees.

4. Open a business checking account with your banker. A bank account separate from your personal account will allow for better recordkeeping and tax preparation.

5. Decide if you will use an accountant for all or a portion of your taxes. Taxes that small business owners in Colorado may be liable for include sales tax, payroll taxes, and state and federal income tax.

6. Contact the Colorado office of the Small Business Administration for additional information on starting or running a business in Colorado. The agency's goal is to support small companies with assistance and encouragement.

   Small Business Administration
   Colorado Division
   721 19th Street, Suite 426
   Denver, CO 80202-2599
   303-844-2607
   Fax: [phone]
   http://www.sba.gov/localresources/district/co/index.html

Choosing a business name

1. Select a name for your business. The most successful company names are easy to remember and simple to spell, which is essential for name recognition and word of mouth referrals.

2. Run a business search with the Secretary of State's office. This will enable you to check name availability and see if there are already names too similar to the one that you selected.

3. Register the name with the Secretary of State's office by filing a Statement of Trademark for the appropriate type of entity (e.g. an individual or an estate).

   Colorado Secretary of State
   Business Division
   Colorado Department of State, 1700 Broadway, Suite 200
   Denver, CO 80290
   303-894-2200, press 2
   http://www.sos.state.co.us
   [e-mail]

Obtain a Colorado business license

1. Register your company with the Colorado Department of Revenue by filing form CR 0100.

2. Open a Colorado sales tax account and a wage-withholding tax account if your business requires them using CR 0100. This can be done at the same time you register the business.

   Colorado Department of Revenue
   Denver Service Walk-In Center
   1375 Sherman St.
   Denver, CO 80261
   303-238-7378
   www.colorado.gov

3. Check with your city clerk's office to see what your city requires from small business owners. This varies from city to city in Colorado, but may include additional licenses.

4. Check to see what other licenses may be required for your industry by the Office of Economic Development and International Trade. Go online to access the Colorado Industry License Database and search for your business type.

Obtain a Federal Tax ID

1. Discuss with your accountant or lawyer whether you will need to open a tax account with the Internal Revenue Service. This is typically required for a company with employees.

2. Go online to the IRS website for Small Business. Select "Employer ID Numbers (EINs)" to open an account and get your Federal Employer Identification Number.

3. Use this number when filing federal withholding taxes and federal unemployment insurance taxes.

Tips & Warnings

• Carefully choose your business structure from the beginning, because it's difficult to change later.

• This information is not intended to replace the assistance of a tax professional or lawyer. Seek the council of a professional when in doubt about a tax or legal requirement.

References

• Start Your Own Business; Rieva Lesonsky; 2001
• Small Business Profile: Colorado

Resources

• State of Colorado Business Express to Open a Business
• Colorado Department of Regulatory Agencies
• Colorado Industry License Database
• IRS Small Business and Self-Employed Tax Center