Cash Conversion Cycle Formula: How to Calculate & Improve
Learn the cash conversion cycle formula and how to use it to improve your business’s cash flow and financial health.
If you plan to operate in Colorado, the limited liability corporation (LLC) you formed in your home state must be registered as a foreign LLC. Colorado foreign LLC registration is not complicated or expensive, but the penalties for not doing it can be costly to your company.
This article explains how to do a Colorado Secretary of State foreign LLC registration and outlines the fees and penalties associated with this action.
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A “foreign LLC” in Colorado is a limited liability corporation formed in another state or country. Foreign LLCs must qualify as such and register with the Colorado Secretary of State before they can legally conduct business in the state. Failing to do this can incur financial penalties and limit your business and legal activities.
Before beginning this process, watch the Colorado Secretary of State’s tutorial on filing a Statement of Foreign Entity Authority. It will familiarize you with the terminology you need to know. Pay close attention to the section on “entity formation type.” There are several differences between LLCs and other types of corporations.
To qualify as a foreign LLC, you must have a physical location in the state where you conduct taxable business transactions. Read the “Business FAQs” page of the Secretary of State’s website to learn more about that. Continue reading this article to learn more about registering your foreign LLC to conduct business in Colorado.
🔍 Not what you were looking for? You might find our guide on opening an LLC as a non-resident more helpful! |
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This foreign LLC registration requirement applies to businesses setting up a physical location in Colorado, not LLCs doing mail-order or e-commerce sales to state residents. You may not need to register as a foreign LLC if you’re based out of state and shipping products into Colorado. Review the list in this section to see if you qualify for any of these exclusions.
Colorado is a beautiful state that attracts several conferences each year from various industries. If you’re “just visiting” by attending one of these, you aren't considered a foreign entity, even if you sell merchandise at your table. You may, however, need a Sales Tax License if you’re processing cash or credit card transactions.
Read the IRS webpage on employees and independent contractors. The primary difference is that employees work directly for you, so you’re liable for their actions. Independent contractors take the liability upon themselves. They are required to register with the state. Your company is not required to register as a foreign entity if you contract work.
Debt collection is a business activity, but you don’t need to register as a foreign LLC if you conduct that activity in Colorado. The phone calls, emails, and notices you send to collect your debt aren’t business “transactions.” Repaying the debt is a money transaction, but it doesn’t count towards the business activity that would make you a foreign entity.
Legal actions often require hiring a local attorney, which falls in the same category as independent contracting. You’re not required to declare yourself a foreign entity to do that. You’re also not required to register as a foreign LLC if an attorney based in your home state initiates a legal action in Colorado, but your attorney must be licensed to practice here.
If you open a business bank account in Colorado, you don’t need to register as a foreign LLC. That doesn’t count as having a physical presence in the state, but that may change if you use the bank account to conduct business inside the state. Review the section above on which businesses are required to register as foreign LLCs.
Now that you know the dos and don’ts, let’s review the steps to register your business. A Colorado foreign LLC registration is done through the Secretary of State’s Office. You can begin the process by navigating to their “Business Organizations” page. You’ll find the links you need there to complete the following steps.
The information we’ve provided in this article comes from several sources, including the Colorado Secretary of State and the Colorado Department of Revenue. You should seek advice from those organizations on filing as a foreign LLC and consult your attorney before opening a business in Colorado.
You’ll find a “Name Availability Search” link on the SOS Business Organizations page. Click that link and enter your business name into the search box. The system will tell you whether that name is available in Colorado. If not, you must register your LLC under a different name. You can do that on the “File a Business Document” page.
A Certificate of Good Standing means that the business has met all statutory requirements in its state or country of origin. You’ll need this certificate before you can move on, so contact your local Secretary of State’s Office to find out how to obtain one. You can do that in Colorado using the “Business Database Search” function on the SOS website.
Foreign LLCs must hire a local registered agent to receive legal documents and official government communications. This requirement is in all states, so you may have already done it in your home state. Unfortunately, you can’t use that same registered agent in Colorado. You need an RA with an in-state address and phone number.
You can file under your “true name” if it's available or under an assumed name if your true name is already in use. You can ignore the “Entity ID Number” box on the application because you’re not registered in Colorado yet.
You’ll also need to list your registered agent and submit the date you’ll commence business in the state.
🔍 The Secretary of State has put together a tutorial that you can go through to help you complete the form. |
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Use the “Secure Business Filing” link to set up an account you can use to file your application for a Statement of Foreign Entity Authority. You can also mail the application, which could add several weeks to the approval process. The fee to file is $100. You can pay that online when you e-file your document or write out a check and mail it to:
Colorado Secretary of State
Business Organizations
1700 Broadway, Suite 550
Denver, CO 80290
If you have additional questions and need to speak with someone over the phone, call 303-894-2200. They’ll likely point you to the website for most inquiries, so search there first before calling with a question. You may end up on hold for several minutes, which could have been spent researching the answer online.
You can apply for a state sales tax license through the Colorado Department of Revenue Taxation Division. This license is required if you plan to make in-state retail sales. Depending on how you sell your goods and services, you may also need a wholesale or special events license. Colorado charges a state income tax. Speak with your accountant about that. If you don’t have a local accountant, you may want to consider hiring one.
The Colorado DOR offers tax exemptions for non-profits, charitable organizations, schools, religious groups, and government agencies. It also offers exemptions to contractors who do business with anyone on its exempt list. An example would be a contractor building a school for a non-profit. Certain expenses on that project are tax-exempt. Check with your accountant or call the Colorado Department of Revenue at 303-238-7378.
The filing fee for a Colorado Secretary of State foreign LLC registration is $100. You can pay online if you e-file or mail a check with your paper application. You’ll also need to pay for a registered agent. Those costs vary by agency, so do some research. While you’re at it, ask your new Colorado accountant if the registration fee is tax-deductible.
Colorado is a pleasant place to do business, and the filing fee for a Statement of Foreign Entity Authority is fairly reasonable. Your best approach is to simply pay for it. If you don’t, you could face one or more of the following penalties for not completing a foreign LLC registration with the Secretary of State in Colorado:
To do business in Colorado, you’ll need a business bank account. If you use Wise Business in your home state, that has already been taken care of. Wise is not a bank, but a Money Services Business (MSB) provider and a smart alternative to banks. The Wise Business account is easy to set up online, with no need for in-person appointments or waiting in line.
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Wise charges no monthly fees, makes batch payments easy to facilitate simpler bill payments, and connects you to QuickBooks and other accounting software to track your income and expenses.
You might not know that Wise Business also holds over forty currencies and processes international payments at mid-market rates.
Colorado is one of the most popular tourist destinations in the world, with 93.3 million visitors in 2023, many of them from other countries. The ability to process international currencies could be an advantage for you.
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