When Colorado entrepreneurs are considering launching a new vneture, they may be looking for structure options that allow them to protect themselves and prepare for future expansion. A limited liability company is one type of legal entity that is allowed in Colorado. Limited liability companies take their name from the concept that the liability of their owners is limited with respect to the company’s debts and judgments. However, this business structure also allows for more flexible filing and record-keeping options.
All Colorado LLCs must contain text as part of their names that reveal the type of entity that they are. The business name can include “LLC”, “limited liability company”, or other phrases that reflect the structure. In addition, the name of the company must be unique and separate from that of other businesses registered in the state. The owners of an LLC are referred to as the members. Members can be individual owners, but they can also be other LLCs, corporations or even foreign businesses.
LLCs can be treated differently for tax purposes depending on the number of members and some other factors. For example, an LLC with one member can be handled as a “disregarded entity” for income tax purposes, part of the sole owner’s tax return. It will be considered separately for employment taxes and some types of excise taxes, however. LLCs with two or more members may be automatically classified as partnerships. However, LLCs that wish to be treated as a corporation when handling their taxes can file Form 8832 with the IRS.
Entrepreneurs who want to pursue their goals can find that choosing the right business structure can come with significant advantages. A business law attorney can provide guidance and draw up the necessary documents to register an LLC or another form of legal entity.
