FORM A PLLC IN COLORADO

What Is a Professional LLC?

A professional LLC is a type of limited liability company that is organized to perform specific licensed services, such as health care, law, or social work, among others.

What’s the difference between an LLC and
a professional LLC in Colorado?

Traditional Colorado LLCs can be organized for any legal purpose, but professional LLCs can only be organized to provide a professional service. Title 12 of the Colorado Revised Statutes lists the types of professional services that may form a professional LLC (or other professional entity). The Colorado Secretary of State recommends reviewing Title 12 and contacting your profession’s regulatory agency if you’re interested in forming a PLLC.

Depending on your profession, your PLLC may be required to be majority-owned by a member (or members) licensed to provide the services of the PLLC. For example, in an accounting firm, a simple majority of ownership must belong to certified public accountant(s). While a traditional LLC shields its members from being held personally liable for lawsuits or debts against the LLC, in a professional LLC, members can be held liable for malpractice suits against them or their employees. For this reason, professional LLCs are usually required to have professional liability insurance.

How to Form a Professional LLC
in Colorado

If you prefer to form your professional LLC on your own, we’ll show you how. Here’s how to start a Colorado PLLC in eight steps:

1. Name your Colorado PLLC

When choosing a name for your professional LLC, there are a couple requirements to keep in mind. First your PLLC may need to include a professional term or abbreviation, such as “professional limited liability company” or “prof. LLC.” Consult Title 12 to see if there are specific naming requirements for your profession. Otherwise, your PLLC name should include “limited liability company” or an abbreviation thereof, such as “LLC.”

Also, your name must be distinct from any other registered business name in Colorado. Colorado has two search tools for finding out if a business name is available:

• Name Availability Search (Tells you whether a name is available, meaning no one else has registered the exact name.)
• Business Database Search (Shows similar business names that are already registered.)

Note: You may be able to make your name distinct from a similar name by using a different entity designator (such as “LLC” instead of “limited liability company”) or an article like “a” or “the.” For example, Lost Flower Shop Limited Liability Company would not be considered the same as The Lost Flower Shop, LLC. However, the Secretary of State website makes clear that simply using different punctuation or differences in uppercase and lowercase letters do not make a business name distinct.

2. Appoint a Colorado registered agent

All professional LLCs in Colorado are required to have a Colorado registered agent. Your registered agent must:

• Have a physical street address in Colorado, which will go on the public record.
• Be present at this address during regular business hours to accept service of process for your business.
• Forward all state and legal mail to your business ASAP.

Those are the bare minimum requirements of a registered agent, but when you hire us, you get much more. We let you use our business address on state forms in all applicable fields, helping you protect your privacy. You’ll also get access to our entire forms library—hundreds of state forms and document templates equipping you to do business in any state.

Get Registered Agent Service for $35/Year

3. File Colorado Articles of Organization for Your Professional LLC

To officially form your PLLC, you’ll file Articles of Organization with the Colorado Secretary of State. This is the same application used for traditional LLCs, and it can only be filed online. Here’s the information you’ll need to have on hand:

• Entity name (May need a professional designator, like “Professional Limited Liability Company”)
• Principal office street address
• Principal office mailing address (optional)
• Registered agent name
• Registered agent street address (must be in Colorado)
• Registered agent mailing address (optional)
• Name and mailing address of person forming the PLLC
• Whether the PLLC will be managed by the members (owners) or managers hired by the members

Note: Depending on your profession, you may need to attach additional documents. For example, you might be required to attach a statement that only PLLC members who are licensed in the profession will perform professional services. To find out the specific requirements for your profession, consult Title 12.

Submit Your Articles of Organization

You must submit your Articles of Organization online, through the Colorado Secretary of State website. There is a $50 filing fee. Your filing will be processed immediately after the state receives your application.

4. Create an Operating Agreement

Having an operating agreement is essential for professional LLCs, since this document formalizes the structure and policies of your LLC, including each member’s percentage of ownership, voting rights, liability, the process to add or remove a member, and how to dissolve the company. Your operating agreement is an internal document, so you don’t need to submit it to the Secretary of State, but it is legally binding. You should keep your operating agreement with your permanent business records and consult it before making important decisions.

5. Obtain business licenses and permits

It’s important to stay up-to-date with the licensing requirements for your profession. For example, in a medical practice PLLC in Colorado, a majority of ownership must belong to licensed physicians. In addition to having the necessary professional licenses, contact your local government to see if they require additional business licenses or permits.

6. Get insurance

Depending on your profession, your PLLC may be required to have professional liability insurance. Without liability insurance, PLLC members may be held personally liable for malpractice claims. If you have employees, you’ll most likely need to purchase workers’ compensation insurance as well.

7. Open a business bank account

In order to maintain your PLLC’s liability protection, it’s important to keep business finances separate from the owners’ personal finances. If the PLLC is sued and a court finds that you’ve been mixing business and personal assets, they may rule that the members’ personal assets can be used to pay for damages against the business.

Before you go to the bank to open your account, call ahead to find out what documentation you need. You’ll most likely need a copy of your Articles of Organization, an LLC Resolution to Open a Bank Account (for multi-member PLLCs), and your company’s tax identification number (EIN).

8. Prepare for Colorado taxes and periodic report

By default, PLLCs in Colorado are taxed as pass-through entities, meaning that instead of the business paying taxes, the profits and losses pass through the PLLC to the members, who pay individual income tax on their share. Colorado has a flat 4.4% individual income tax.

If your PLLC has multiple members or employees, you need to get an EIN from the IRS. This is the number your PLLC will use for identification on tax forms, sort of like a social security number for businesses. You can apply for an EIN for free on the IRS website. If all LLC members are international and don’t have a social security number, you’ll need to apply using the paper form or by calling the IRS.

Colorado Periodic Report

PLLCs need to file the Colorado Periodic Report with the Secretary of State every year. The purpose of the Periodic Report is to update the public information about your PLLC, such as your business address and registered agent information.

To file your report, look up your business in the Business Database Search, select “File a Form” and then “Colorado Periodic Report.” The Database Search is also where you can look up the month that your Periodic Report is due. The filing fee for the Periodic Report is $10.