How to Form a Corporation in Colorado
It is easy to form a corporation in Colorado but remember that Colorado corporation laws may vary depending on the type of business entity that is formed. It is therefore essential to make thorough research about the various entities that exist in Colorado and the conforming state laws and tax obligations. Hiring the services of a professional incorporation vendor such as Sun Document Filings is recommended as an incorporation vendor will assist you in the process of forming a corporation in Colorado.
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Things You'll Need
- Computer
- Internet connection
- Services of a professional incorporation vendor (optional)
- Money to pay for filing fees
- Attorney (recommended)
Instructions
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Choose a name that is unique and not being used by any similar entity before filing the necessary paperwork with the Colorado Secretary of State. You can reserve a name in advance and this will be valid for 120 days upon approval. For more information about choosing a name for a corporation in Colorado, visit the Colorado Secretary of State website.
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You could either choose to form a Colorado C corporation or a Colorado S corporation. A Colorado C corporation is formed by individuals who plan on publicly trading a corporation’s stock and are allowed to have 76 shareholders or more and can have multiple classes of stock (like common and preferred stock.) Colorado C corporations are also liable to be doubled taxed since the corporate entity and the owners have to file separate tax returns. A Colorado S corporation, however, can only be owned by citizens of the United States or registered aliens and can only issue one kind of stock. Colorado S corporations are also required to not have more than 75 shareholders.
It is important to remember that when deciding to form a Colorado S corporation, a sub-chapter S status must be filed with the IRS (Internal Revenue Service) as obtaining an S status for your corporation will eliminate double taxation and eliminates the need to file an income tax return. Obtaining a Colorado S corporation status is preferred as the corporation will be taxed like a partnership or LLC and enjoys the benefits of a pass through tax structure.
The articles of incorporation should conform to all Colorado corporate laws. The articles of incorporation may not indicate the type of business activity provided that the business ventures are legal and within the laws of the state. Applicable fees would have to be settled as the Colorado Secretary of State requires a $50 online fee for filing articles of incorporation and a $150 paper fee for document filing of business organizations.
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You must obtain an EIN or Taxpayer ID. This is required for a Colorado corporation to open a bank account, start a business credit, and hire employees. It would be good to know that the IRS now provides online applications for obtaining an EIN and feature an interview-style approach when filing for an EIN. You can easily download and save the confirmation notice and print the document to obtain a hard copy.
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Hire a professional incorporation vendor. This service is required for those not familiar with Colorado corporate laws but an online legal services provider may be contacted by those familiar with such laws. The service will be cheaper as no consultation service is required. These providers usually just charge for the cost of paperwork and additional documents. It is also advisable to hire a lawyer to file the paperwork for incorporation.
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References
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