Starting a Business in Colorado
A new business in Colorado can be within your reach. Have you been wondering: just how do I start a business in Colorado? And more importantly, can I do so no matter what the economic conditions are? Can I start a new business in Colorado during a recession?
A New Business in Colorado: Pros and Cons
First of all, Business Insider puts Colorado in its top twenty states when it comes to starting a new business, according to a 2016 article. And this is for the entire nation. Colorado has an above average per capita GDP. But there is also low availability and education level of possible employees to hire. Still, more businesses opened than closed in this state.
Good Recent Upsurge
In 2018, Fit Small Business named Colorado the eighth best state to start a business in. But keep in mind, the methodologies for Fit Small Business and Business Insider differ.
Why the change? It is one of the best states for accessing health care, but where it really shines is in its labor market. Coming in second overall, Colorado does extremely well in the venture capital and per capita income subsections. The addition and growth of the new cannabis industry has got to be helping, too.
Start a New Business in Colorado – Colorado Trade Names
If a business owner wants to avoid using their personal name as a business name, they can file for a trade name. Select the Register a Trade Name option on the Colorado Secretary of State website in order to begin the process. A business owner should also search through names of other businesses to ensure that the trade name they have in mind is available. Be sure to use the Records Search webpage in order to browse through existing business entity names.
Start a New Business in Colorado – Colorado Top Industries
Per Choose Colorado, the state’s biggest industries are aerospace; advanced manufacturing; and the creative industries. More Colorado top industries include bio science; defense and homeland security; and electronics. Colorado also has top industries in financial services; energy and natural resources.
Plus Colorado has top industries in health and wellness; and food and agriculture. More top industries in Colorado are infrastructure engineering; and technology and information. Finally, Colorado also has top industries in outdoor recreation; tourism; and transportation and logistics. Marijuana has also been legal in Colorado longer than anywhere else in the whole country.
Savvy business owners should be able to spot opportunities with these major industries. These could include trucking parts for any industry or supplying the health care industry. Or there can be opportunities in inventing and working on safety devices and equipment for agriculture. Plus there are more opportunities with food service and hospitality for the thriving tourism industry. There are also opportunities within the marijuana industry. However, a business in this industry may possibly be flagged by lenders as risky.
Here is how to start business in Colorado.
Start a New Business in Colorado – Colorado New Business Secretary of State Requirements
Register a Business Name
A business owner who wants to avoid using their personal name as a business name can file for a trade name. Select the Register a Trade Name option on the Colorado Secretary of State website to begin the process.
The business owner should also be sure to search through names of other businesses. This is to ensure that the trade name in mind is available. Use the Records Search webpage in order to browse through existing business entity names.
There are some rules just for corporations. The name of a Colorado corporation must include the word “corporation,” “incorporated,” “company,” “limited,” or “association”. Or it can have an abbreviation of one of these words. A business owner can learn more about the corporate naming policy in Colorado online at Colorado Corporation Name Requirements on the Colorado Secretary of State website.
Business Permits and Licenses
Check with the Colorado Department of Revenue. Learn about businesses needing special licenses.
Local Permits and Licenses
Check with your local municipality, city or county office or website. See if there may be any local licensing or permit requirements. E. g., in Colorado Springs, go to the Business Licensing page on the Colorado Springs city website.
Business Registration
Get forms or file online at the Colorado Secretary of State..
Tax Registration
Go to the Colorado Department of Revenue. In particular, head to the Colorado Department of Revenue Taxation page.
Start a New Business in Colorado – Virtual Offices
Alliance Virtual Offices offers several location choices for business owners looking for Colorado virtual business office addresses. They have offices in these cities:
- Aurora
- Boulder
- Broomfield
- Colorado Springs
- Denver
- Golden
- Greenwood Village
- Lakewood
- Littleton
- Lone Tree
- Louisville
In addition to the above cities, DaVinci has Colorado virtual business space in Castle Rock, Centennial, Fort Collins, Longmont, and Northglenn.
For other areas of the state, be sure to check with Regus. Or business owners might want to seek out local entrepreneurs. Or they could even speak with computer user groups in an effort to find help in this area.
Learn more here and get started toward opening a new business in Colorado.
Start a New Business in Colorado – Build Business Credit
Company credit is credit in a small business’s name. It doesn’t connect to a business owner’s personal credit, not even if the owner is a sole proprietor and the solitary employee of the small business.
Thus, a business owner’s business and personal credit scores can be very different.
The Benefits
Considering that business credit is independent from personal, it helps to secure an entrepreneur’s personal assets, in the event of litigation or business insolvency.
Also, with two separate credit scores, an entrepreneur can get two different cards from the same vendor. This effectively doubles buying power.
Another benefit is that even startup companies can do this. Heading to a bank for a business loan can be a formula for frustration. But building business credit, when done right, is a plan for success.
Personal credit scores are dependent on payments but also additional considerations like credit use percentages.
But for small business credit, the scores really merely depend on if a company pays its bills timely.
Building small business credit is a process, and it does not occur without effort.
Start a New Business in Colorado – Small Business Fundability™
A business has to be Fundable to credit issuers and merchants.
For that reason, a small business will need a professional-looking website and email address. And it needs to have site hosting from a hosting provider.
Plus, business telephone numbers should have a listing on ListYourself.net.
Likewise, the company telephone number should be toll-free (800 exchange or similar).
A company will also need a bank account dedicated only to it, and it needs to have every one of the licenses essential for operation.
Start a New Business in Colorado – Working with the IRS
Visit the Internal Revenue Service web site and get an EIN for the small business. They’re totally free. Choose a business entity such as corporation, LLC, etc.
A small business can start off as a sole proprietor. But they will more than likely want to change to a form of corporation or an LLC.
This is in order to reduce risk. And it will maximize tax benefits.
A business entity will matter when it pertains to taxes and liability in the event of a lawsuit. A sole proprietorship means the owner is it when it comes to liability and taxes. No one else is responsible.
Vendor Credit
First you should establish trade lines that report. This is also called vendor credit. Then you’ll have an established credit profile, and you’ll get a business credit score.
And with an established business credit profile and score you can start to get more credit.
These kinds of accounts tend to be for the things bought all the time, like shipping boxes, outdoor work wear, ink and toner, and office furniture.
But first of all, what is trade credit? These trade lines are credit issuers who will give you preliminary credit when you have none now. Terms are typically Net 30, versus revolving.
Therefore, if you get an approval for $1,000 in vendor credit and use all of it, you need to pay that money back in a set term, such as within 30 days on a Net 30 account.
Start a New Business in Colorado – Monitor Your Business Credit
Know what is happening with your credit. Make sure it is being reported and attend to any errors ASAP. Get in the practice of checking credit reports and digging into the specifics, and not just the scores.
We can help you monitor business credit at Experian, Equifax, and D&B for 90% less than it would cost you at the CRAs.
Start a New Business in Colorado – Fix Your Business Credit
So, what’s all this monitoring for? It’s to dispute any errors in your records. Mistakes in your credit report(s) can be fixed.
A Word about Building Business Credit
Always use credit sensibly! Never borrow beyond what you can pay back. Keep track of balances and deadlines for repayments. Paying on time and in full will do more to elevate business credit scores than pretty much anything else.
Building small business credit pays off. Excellent business credit scores help a small business get loans. Your loan provider knows the company can pay its debts. They recognize the business is for real.
The business’s EIN links to high scores and lending institutions won’t feel the need to demand a personal guarantee.
Business credit is an asset which can help your small business in years to come.
Want to start a new business someplace else in America? Then check out our handy guide to starting a business in any state in the country.
Colorado’s Response to COVID-19
Colorado is working on helping its citizens cope with COVID-19. For example, the Pikes Peak SBDC is the lead for statewide disaster preparedness efforts in response to COVID-19. Also, the Colorado government offers work sharing as an alternative to laying off employees.
Requirements and qualifications for employers include reduced normal weekly work hours by at least 10%. But the reduction can be by no more than 40%. The reduction must affect at least two out of all employees in the business. Or a minimum of two employees in a certain unit. You must have paid as much in premiums as Colorado paid your former employees in unemployment insurance benefits.
On April 6, 2020, the Colorado law firm Godfrey Johnson asked a federal judge to halt the Small Business Administration from enforcing a provision of the US CARES Act that would “cause an economic disaster.” The motion had to do with whether independent contractors can be considered to be employers under the Act.
On April 11, the Vail Daily provided more detailed information on the CARES Act.
