Anyone can start a small business in Colorado. The city of Denver is a growing hub that is attracting many businesses, particularly since being recognized as a top place to work in 2021. In like manner, many startups and existing small businesses are relocating to the area to easily begin conducting operations in the state of Colorado.
That being said, a business owner will need more than just a business license to get started. There are still several federal, state, and local requirements that business operations must follow in order to comply with legal policies and regulations.
This simple guide will help you set up your small business in Colorado.
Step 1. Register Your New Business
The first step in setting up your small business in Colorado is to register your business with the Colorado Secretary of State. The office has online services that permit you to apply virtually even if you are not living in the state of Colorado.
When you register, make sure that you provide a contact phone number and email address that you can use to stay on top of correspondence that you may have with the Colorado Secretary of State office regarding your application. You will also need to keep a record of your business registration information so you can maintain it over time to avoid higher filing fees. Also, it is important to maintain your business registration information to avoid delinquency fees associated with your business. Depending on your business and industry, you might be required to file annual periodic reports. Check with the office of the Colorado Secretary of State for more information.
Step 2. Establish Your Business Plan
If you are not sure where to start with your own business plan, consider reaching out to the Colorado Small Business Development Center. The nonprofit institute can help you develop your business ideas and see them come to fruition.
Once you have started your business registration process, you avert your attention to creating your business plan. You will need to create financial plans for your small business to stay on top of cash flows, budgets, projections, and capital needs. Prepare to create a bookkeeping account to manage this financial information. Consider hiring a professional accountant to help you keep track of your business finances.
You will also need to open a business bank account and, possibly, a business credit card if you need it. Business credit cards are a great way to build business credit, which will be helpful if your business wants to expand and needs to apply for investment loans.
Taxes and the Internal Revenue Service (IRS)
While establishing your business finances, make sure you have a good understanding of tax implications within the state of Colorado. Tax policies for a business will vary from state to state, particularly when it comes to local taxes that are imposed. Check that you have tax information on federal and state unemployment, state withholding, state worker compensation, state tax and local sales tax, and federal withholding for the state of Colorado.
Additionally, make sure you apply for a federal tax identification number from the Internal Revenue Service (IRS). Your small business will also need a wage withholding account number from the Colorado Department of Revenue.
If you plan to apply for "S" corporation status on your tax license, you will need to contact the Internal Revenue Service (IRS). If you plan to register with your business as a sole proprietor, your income tax and personal assets may impact how your business operations are taxed. Determine if you will register your business as a limited liability company, sole proprietorship, or registered agent depending on the legal structure and business structure of your operations. This decision may also impact licensing requirements for your business later on. Contact the U.S. Small Business Administration for more information.
Advertising and Marketing Plans
You will also need to develop a marketing plan for your small business. This should include everything from digital marketing tactics to customer acquisition methods. Most importantly, make sure to establish your product, services, and market. This information should be reflected throughout your marketing plans. You will also need to create a distribution plan, whether that be virtually or at a retail store. Don't forget to also make plans to advertise your business.
Here are some ideas to help you get started on your Colorado business marketing plan:
- Design a website for your business
- Create social media accounts
- Design a logo and slogan
- Start advertising your business in the media
- Buy business cards and signage
Step 3. Prep Your Business Development Operations
Afterward, you should start preparing your business development plan. This will help you with your business formation. A good place to start is by conducting a director and shareholder meeting. If you do not have appointed directors or shareholders, now would be the time to establish them. To abide by bylaws, make sure to appoint directors who are authorized to sign checks for your business. Additionally, document any buy-and-sell agreements or operating agreements that are authorized between shareholders, if applicable.
Also, consider filing a trade name for your business entity. However, only proceed with this step if you know for sure that your business will not be operating under another business name in the future. If you are ready to file a trade name, visit your entity record that is registered with the Colorado Secretary of State. From there, you can file a trade name. You might also consider proceeding with trademark and copyright registration depending on your small business needs. To do this, contact the secretary of state and the U.S. Patent and Trademark Office for more information.
Prior to moving on to the next step, decide if and how your business will be selling stock.
Step 4. Obtain Business Insurance
Next, you will need to get business insurance. Most businesses are legally required to have insurance. There are different insurance plan options to choose from, but make sure that you have the basics covered.
Your business insurance should at least cover the following:
- Liability protection
- Liability insurance
- Auto coverage
- Crime coverage
- Fire and property coverage
- Product liability
Refer to the Colorado Department of Regulatory Agencies Division of Insurance for more information.
Step 5. Apply for a State Regulatory License
Last but not least, you should make sure that your small business is licensed to operate in the state of Colorado. This can be accomplished by registering your business entity with the Department of Regulatory Agencies (DORA) in the state. This license will render your business a state-regulated entity. In other words, your business will be able to legally operate within the state.
Step 6. Determine If You Need Other Regulatory Licenses or Permits
Depending on your small business industry, there may be other permits and regulations that you will need to be aware of. For example, if you are starting a small restaurant business, you will need to contact the local and state health departments to know the health and safety requirements for serving food. Public accommodations may vary by state, as well. If your small business plans on serving alcohol to consumers, you will need to apply for a liquor license, which can be applied and obtained from the Department of Revenue.
If your small business will be providing utility or transportation services of any kind, you will need to contact the Public Utilities Commission (PUC) to check local regulation policies. Check local zoning laws, as well, if your small business will operate at an on-site location.
Step 7. Build Your Small Business Team
This step will vary depending on the types of business being developed. Some companies operate as a one-woman or one-man team, whereas others function more efficiently with help from a bigger team. If you have not already hired employees and intend to do so, this will be the first part of this step. Make sure you apply for an employer identification number from the Small Business Administration (SBA) if you intend to hire employees.
Next, determine who will manage your business and how that person or group will do so. The general management of your small business team should help create standard contracts that will be used for the sale of your products or services, as well as for the purchase of needed equipment and supplies. Consider consulting with an attorney to get informed advice on contracting standards for your business.
Also, when hiring new team members, you will need to check to make sure that your employment policies comply with the Colorado Department of Labor and Employment. Employment Verification laws will vary depending on the state that your business operates in. Check with your attorney about tax and liability impact for your employees and independent contractors, as well. The more information you have, the better.
At this step in the process, you should also decide the type of employee benefits you are going to provide to your employees. Determine how the benefits packages will vary depending on whether an employee works full time, part time, or as an independent contractor. It is not uncommon for businesses to offer different benefits packages depending on the type of employment. Providing workers' compensation insurance is typically standard. Also, remember to draft nondisclosure agreements for employees (if applicable) for your small business, as well.
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Notice to the Reader
The content within this article is meant to be used as general guidelines or a business resource, and may not apply to your specific small business operation. Always consult with professional counsel for legal, business, and tax advice to ensure that you're meeting competent standards of legal business operations.