How to Create a Colorado Professional Limited Liability Company

If you have a professional license and want to start a practice, consider forming a Colorado professional limited liability company. Here’s a step-by-step guide showing you what to do.

How to Create a Colorado Professional Limited Liability Company

Choose your structure

Colorado allows anyone whose profession requires a state license to form a professional limited liability company (PLLC). You can also form a limited liability partnership (LLP) or professional corporation (PC). A PC is governed by a board of directors and can issue stock. An LLP or PLLC is governed by its members and doesn’t have stock. To read more on this topic, see our PC vs PLLC page. If deciding between an LLC or PLLC, check out our comparisons page.

If you think a PLLC is right for you, read on!

Your company’s name is often the first thing potential clients know about you, so it’s important. Keep the following restrictions and guidelines in mind:

Select a name

• You cannot use the name of a business already in use. ZenBusiness can help you reserve the name you want here. And if you want to reserve a domain name, we can help you with that, too.
• Your business shouldn’t have any words in its name that implies it is a bank, a brokerage, or another financial institution.
• You cannot name your business something that causes customers to think you are something different. For instance, you cannot use the words “counseling” or “therapy” unless you are starting a counseling clinic.

You must properly identify your company type in the name. A dentist’s office might name itself Pearly Gates, PLLC, which identifies the business as a professional limited liability company. This is known as a designator and identifies your type of business.

Designate a registered agent

A registered agent is someone empowered and obligated to accept legal notices such as subpoenas on your business’s behalf. You may name yourself as a registered agent or ask someone else.

If you don’t wish to be the registered agent, ZenBusiness’s partners can act on your behalf as a registered agent. Many first-time business owners appreciate the reliability and support offered by a registered agent service. In addition, you aren’t required to always be in the office during regular business hours, as a registered agent must be.

File your Articles of Organization

Anyone can file Articles of Organization. The filing fee is $50, paid to the Secretary of State.

One important decision to make when filing is whether your company will be member-managed or manager-managed.

In a member-managed structure, you and the other members of the PLLC, assume responsibility for the day-to-day running of your business. Choose this option if you want more control over how your business is run. For instance, if you’re creating a law firm, you and the other members hire your own paralegals and assistants and manage your own budgets.

In a manager-managed structure, you and the other members hire someone to oversee general business functions. Choose this option if you prefer focusing on your profession over running a business. Veterinarians and doctors might appreciate having someone handle the business aspect, freeing them to focus on treating patients.

Create your operating agreement

An operating agreement performs several important functions. Firstly, it establishes who owns which portion of the company. Don’t forget to include what happens if a partial owner dies or wants to leave the practice. A good operating agreement details the rules and policies governing your business.

Handle tax obligations

As a business owner, you’re responsible for paying taxes on your income and possibly profits. If you hire employees, you’ll have to pay payroll tax. An Employer Identification Number, or EIN, enables you to do that. ZenBusiness can easily help you obtain your own EIN.

In addition to paying federal taxes, you may have a state or municipal tax bill. You’re also responsible for paying your transaction privilege tax. Consult with a tax attorney familiar with Colorado PLLCs to help you file.

Obtain all necessary licenses and permits

The State of Colorado expects the owners of PLLCs to know and comply with all regulations governing professional licensure and practice. An accounting practice, for example, must have a certain percentage of employees as certified public accountants. Ensure you are aware and fully compliant with the rules governing your industry. If you are unsure or want someone to double-check your company, consider hiring a consultant. You can also use the ZenBusiness business license report service to make things easier.

Get insurance

As with business licenses, the rules for insurance vary by field. A good rule of thumb, though, is to purchase general business insurance. Even though you’re forming a professional limited liability company, liability insurance can further protect your assets. If you plan to hire employees, workers’ comp insurance is a necessity, barring a few exceptions you can find here.

Medical care providers and attorneys shouldn’t open a practice without malpractice insurance.

Open a business bank account

To keep your personal assets protected, you shouldn’t mix them with company assets. A business account is the best way to protect yourself and the other members of the PLLC. Evaluate the banks in your area and find one offering an account that suits your needs. When you open the account, establish who can withdraw funds and for what purposes.

Looking/Ready to Kick Start Your Business?

At ZenBusiness, we are proud to support small businesses through a variety of different tools and services. Whether you need a registered agent service, want to reserve a business name, or looking to register a domain, our goal is to help you stay on the road to success. Check out our services, and contact us today to see how we can help you grow your company.