Are you planning to start a new business in Colorado? The first steps can be overwhelming, but it doesn’t have to be complicated. In this article, you will find everything you need to start your own business in Colorado. In this step-by-step guide, you will learn how to successfully start your business, from choosing a business idea to marketing the business.
Step 1: Choose Your Idea
Every business starts with a good business idea. Your business idea doesn’t need to be overly complicated. But coming up with a business idea in the first place can be daunting. How do you know if it will work? To land on a good business idea, you should play around with different ideas and do your research.
Ask yourself these questions to formulate a business idea:
- What are my hobbies?
- What am I passionate about?
- How can I turn these interests into a profitable business?
- Will this business be something I can see myself doing every day?
- What are the current needs in the market?
- Is there room in the market for my business?
- What gap in the Colorado market does my business fill?
Use these questions as a guide for choosing a business idea.
Step 2: Pick a Name
The name you choose for the business is more important than you may think. Your business name is often the first thing people hear and see. They will base their first impressions of your business based on your name. Therefore, when deciding on a business name, you must make sure that it is related to your business, is clear to read, and is easy to spell and pronounce. The name should also be unique from other companies in the state.
There are also some state guidelines that you have to follow when choosing a name. One of the most important rules is that you cannot select the same name as a business already registered with the state of Colorado. You can search the online database found on the Colorado Secretary of State’s website to see if your chosen name is taken or not.
If you’re still having trouble picking a name, use these techniques to create a name:
- Create a word dump. Don’t think too hard on the words; just jot down the first words that pop into your head.
- Brainstorm with friends and family.
- Use an online name generator. You can easily find some free ones with a simple Google search.
Step 3: Write Your Business Plan
Your business plan is like the blueprint of a building. This plan usually includes all the relevant information about the business, including financial predictions and all pertinent research.
A business plan can be used as a sales pitch to potential investors or grant applications. Therefore, you want to ensure your business plan is well structured and contains all the essential information.
A business plan should include, but is not limited to, the following:
- A description of your business
- What problem is your business out to solve
- Your target audience
- How you intend to convert the target audience into paying customers
- The marketing strategies you are planning on using
- What roles in the business will you need to fill
- All financial information, such as how much you need to make to break even
- Startup business costs
There is so much information on how to write a business plan available on the internet. You can even download a free template if you aren’t sure where to begin.
Step 4: Get Funding
Starting a business can be costly, depending on your business and personal finances. If you cannot afford to fund the business yourself, there are other ways of getting money, for example, through grants, loans, and investments.
Grants are the ideal way of acquiring funds for your business as this money does not need to be paid back. Unfortunately, this tends to make them a lot harder to get; many grant programs have a set of strict requirements you need to meet to qualify.
You can find more information about Colorado Government grant programs on their site or through a government affiliate site.
If you don’t qualify for a grant, you could consider taking out a loan with the Colorado national banks. Before taking out the loan, you should ensure you are happy with the interest rate and repayment terms.
Investors are a great way of getting funding if you are willing to share a percentage of your business ownership. Often, investors want shares in your business or more say in the company’s day-to-day running, but this isn’t always the case. So read the fine print when bringing an investor into your business.
Investors can even come in the form of friends and family. Always have a written agreement and contract, even with friends and family. You want to make sure you can avoid any unnecessary misunderstandings that may come up.
Step 5: Choose a Business Structure
Starting a business is a big decision, and you want to ensure it will succeed. One way of ensuring this is to choose the correct business structure for your needs. There are four main business structures: sole proprietorship, partnership, limited liability company, and corporation.
A sole proprietorship is the simplest business structure and the best choice for single business owners with small businesses. There is no separation of business and personal assets in a sole proprietorship. Instead, the single owner is responsible for the business and its assets.
A partnership is a similar business structure to a sole proprietorship in that there is no separation between personal and business assets. However, one significant difference between the two business structures is that more than one owner owns equal shares of the business.
Limited Liability Company
One of the most popular business structures for small businesses is a limited liability company, also known as an LLC. An LLC is a formal business structure that offers the flexibility and simplicity of a sole proprietorship or partnership and the liability protection of a corporation. LLCs have separate business and personal assets.
C or S Corporation
Corporations take much more work to start, but large companies favor this business structure with multiple shareholders. In addition, as a corporation, your business has more liability protection and even some tax benefits.
Step 6: Register Your Business
In Colorado, businesses must be registered to manage taxes and remain compliant.
A sole proprietorship is not a formal business structure, so it does not need to be registered as an LLC or corporation should. All you need to do is file a Statement of Trade Name of an Individual with the Colorado Secretary of State. Then, once you have filed and paid your $20 fee, start earning!
Like a sole proprietorship, you must first register your chosen business name with the Colorado Secretary of State in a partnership. But for most general partnerships, the state does encourage business owners to complete a Statement of Partnership Authority form. To file this with the Secretary of State, you must also pay a fee of $150.
Limited Liability Company
To start an LLC in Colorado, you must submit the Articles of Organization to the Secretary of State. The Articles of Organization is a form with all the basic information about your business, including the business name and the company’s purpose.
You can find a copy of the form on their website. There is a $50 filing fee.
C or S Corporation
To register your corporation with the Colorado government, you must complete and submit the Articles of Incorporation. The registration process can be completed online. The online application will prompt you to enter your business name to start the process.
The fee to register your corporation is $50.
Step 7: Set Up Your Finances & Accounting
Before you start doing business, it is highly recommended that you set up your business’s finances and accounts first. Setting up your finances involves opening business bank accounts, getting credit cards, setting up a payroll, and setting up a payment method for customers.
If you are overwhelmed with the financial aspects of starting a business, consider hiring an accountant. A professional look after your books is a great way to ensure your taxes are filed on time and correctly.
Step 8: Get Business Insurance
You wouldn’t drive a car without insurance, so why run a business without insurance? Business insurance is strongly recommended to all business owners, no matter how small your business is. There are many different policies to choose from. Still, you should consider getting general liability insurance.
General liability insurance is a broad insurance policy that covers all the basic needs of a business, including property damage and injury.
Other insurance policies you can get:
- Professional liability insurance
- Workers compensation insurance
- Commercial auto insurance
- Commercial property insurance
- Business owner’s policy
If you aren’t sure what policy best suits your business, consult a business attorney or a broker.
Step 9: Obtain Any Permits or Licenses Needed
While the State of Colorado does not legally require all businesses to have a business license, some counties and cities in the state may. You can visit the Department of Regulatory Agencies to see if your business may need one.
You will, however, have to apply for a seller’s permit, or tax license, if your business sells taxable tangible goods. You can apply for the permit online at the Colorado Department of Revenue.
Step 10: Build a Website
Building a website for the business is not as complicated as you may think. Gone are the days of using complex coding. Instead, you can use a website-building platform to do it for you. Many of these platforms can either be hosted or self-hosted, depending on how involved you want to be on the back end of the site.
When building the website, make sure that the font is easy to read, your business name is easily visible, the interface is simple, and it provides all the different ways customers can contact you.
Step 11: Hire Employees (If Any)
If you are overwhelmed by the number of responsibilities you have, and they are more than you can handle, it may be time to hire new employees. To hire employees, you will need an Employer Identification Number, EIN, which you can obtain for free from the IRS.
Hiring new employees is more than checking qualifications and experience. In Colorado, all new hires need to be reported to the Colorado New Hire Reporting Center within 20 days from their first day of work. Failure to do so will result in penalties and legal action.
Reporting new hires is a simple process. To get started, you must create an account on their departments on the portal and follow the prompts.
Step 12: Market Your Business
The final step in starting a successful business is to market your business. Marketing your business is such an easy task nowadays; thanks to technology, there are many ways to do so. But remember that marketing needs to be consistent to build brand recognition.
Here are different ways to market your business to get you started:
- Use your business website
- Use social media like Facebook and Instagram
- Make use of pay-per-click adverts
- Create monthly newsletters
- Use local newspapers
- Attend business expos
Have questions? Drop us a line.