Truth be told, only a few states in the U.S. offer a better environment for starting a brand new business than Colorado. As a matter of fact, according to a report by Colorado Futures Center, Colorado’s economy is expected to grow by 6.45% annual rate by April 2022, as federal reserve figures show that there was as much economic activity in Colorado in September 2021 as there was at the pre-pandemic economic height of February 2020, meaning the state’s economy has fully recovered.
The only thing that remains is to choose a good state. For instance opening an LLC in South Carolina is quite popular in this current economic climate.
And with Colorado’s economy booming, now’s the perfect time for you to start your own business in colorful Colorado and take full advantage of the favorable business environment for entrepreneurs. To make things easier for you, this brief guide will walk you through the four most important stages of starting a business in the Centennial State, from composing your business plan to registering your business, acquiring business insurance, and obtaining the necessary licenses and permits.
Draft Your Business Plan
Once you have an idea of what your new business should be and conduct thorough market research to acknowledge how well your business idea sits in Colorado, it’s time to write the blueprint of your future business—your business plan. A solid business plan should chart the path of your business from infancy to success, all while being able to attract prospective investors and secure financing from banks and institutions.
In a nutshell, your business plan ought to include the following sections: an executive summary, description of the business, proper market research, organization and staff, product or service description, marketing plan, fundraising, financial forecast, and appendix.
Decide On A Legal Business Entity
The next stage is to decide on the form of your legal business entity, as it can affect many aspects moving forward. In short, there are three main options to select from:
- Sole proprietorship and partnership. These are the options if you want to run your business by yourself. Legally, you and your business are the same, with no separate entity for your business. A partnership is legally identical to a sole proprietorship, except that it includes two or more people.
- Corporation. This is a more complicated legal structure that is separate from the owner and comprises officers, directors, and shareholders.
- LLC. A limited liability company is a hybrid between the first two options that possesses the advantages of both. For instance, it provides the liability protection of a corporation yet isn’t subject to double taxation as the profits go through your personal tax return.
Get Your Business Insured
Furthermore, regardless of what type of business you form, getting your company insured to protect yourself in the case of legal action or property damage is always a good idea. As a matter of fact, businesses with employees are demanded by the federal government to have two types of insurance: Colorado workers’ compensation insurance which covers medical costs and disability benefits if an employee gets injured or becomes ill on the job, and unemployment insurance which provides benefits to employees after a loss of employment through no personal fault.
In addition, it would be a smart move to obtain commercial property insurance if you have a real estate property and protect it from various damages that may result from fire, theft, storm, etc. Home-based businesses may also want to consider getting business insurance as personal home and vehicle policies may not cover in the event of a business loss.
Apply For Permits And Business Licenses
Finally, in order for you to operate your business in Colorado, you’ll need to apply and obtain some business permits and licenses that can vary depending on the business’s activities and location. However, some standard registrations include:
- Business licenses. While there’s no general state of Colorado business license, many cities and towns require businesses to have a general business license in order to operate.
- Sales tax licenses. Companies selling products and particular services will need to register for a Sales Tax Permit with the Colorado Department of Revenue.
- Professional licensing. Some services like massage therapists, cosmetologists, plumbers, and more, mandate licensing in Colorado. While this isn’t a license on the company, licensing is required in order to operate.
- Zoning permits. To use some physical locations in Colorado for the needs of your business, you’ll need to acquire zoning permits from the metropolis or county before you can open the business.
The above content regarding how to start a business in the Centennial State is by no means a comprehensive guide or legal advice; it’s for basic informational purposes and nothing more. However, the four stages above can serve you as a fantastic starting point when you want to establish a new business in Colorado, as going through each of them is essential for your business to start operations.