Legal Documents Required
If you’re establishing a sole proprietorship, there are no legal documents necessary to file with the Secretary of State (SOS). However, if you use a name for your business other than your personal name, Colorado requires you to file a statement of trade name with the SOS.
A partnership requires a partnership agreement, the terms of which will vary depending on whether you’re establishing a general partnership, a limited partnership, or a limited liability partnership. Though the agreement is not required by law, it will serve to prevent and resolve disputes, if crafted carefully. You can also optionally file a Statement of Partnership Authority with the SOS.
To create an LLC, you must file articles of organization with the Secretary of State, and you are also required to appoint a registered agent for service of process. You should also consider drafting and signing an operating agreement much like a partnership agreement to forestall disputes and disruptions.
For a corporation, you must file articles of incorporation with the state and appoint a registered agent. You should also publish bylaws to establish your corporation’s internal operating procedures. If you wish to obtain S status for tax liability purposes, you must file for that with the IRS.
Why You Need an Attorney
Note that all these documents take the form of contracts, binding all parties who agree to them. It is important that these be composed and implemented in a legal and binding way. You don’t want to just jot down some notes and shake hands, though some partners do exactly that. Protect your future and your personal liability by involving an experienced business formation attorney in creating these documents.
You may also want to consider binding documents for intellectual property/trade secret protection, non-compete and non-disclosure agreements, and manager, employee, and independent contractor agreements.
Number & State Licensing
Regardless of the type of business you’re opening, you must apply for an Employer Identification Number (EIN) from the IRS if you are going to have employees. Even without employees, you should probably obtain one anyway, as banks will often require an EIN to open a business banking account. You must also register with the Colorado Department of Revenue for sales and withholding taxes.
Depending on your industry or type of business endeavor, you will no doubt also be required to obtain various licenses and permits. The Colorado Department of Regulatory Agencies can help with identifying which licenses and permits that your business may need to acquire.
Put a Skilled Legal Team In Your Corner
Though there are certainly significant enterprises that started out in someone’s garage, and the people involved had only joint inspiration and aspirations — no documents in hand, which is not the preferred or safest route.
Businesses might still grow from garages, but the best route is to put in place the business format and legal agreements that will survive the test of time, not lead to endless disputes and possible dissolution of the entire enterprise before it gets a chance to succeed.
On top of that, if you want the full protection of the law when it comes to liability, you need to form your business according to accepted legal standards and requirements.