Sole Proprietorships

• Sole proprietorships is the most common business entity in the state and United States. This is due to its easy formation; any person who is considered self-employed are sole proprietors. Generally the only paperwork filing by sole proprietors would be to register their business names with Colorado's Secretary of State office. The fee to file a trade name is $20 as of 2011. Additional paperwork filings are necessary if sole proprietorships need office and facility space, business permits and licenses.
  
  

Operating a Partnership

• Business owners can take on additional partners in joint ventures and form partnerships instead of sole proprietorships. Only two individuals are needed to form these types of businesses, which are started with handshakes, oral or written agreements. Partners determine how they are going to split up profits and losses, responsibilities, authorities and decision making processes. These terms are included in partnership agreements along with what they each contributed to their companies and which course of action to take to resolve disputes. Partnership agreements, however, are not required to be filed in Colorado. What is required is the filing of business names with the Secretary of State office.
  
  

Operating a Corporation

• Opening and operating corporations in Colorado takes more paperwork filings, government regulations than sole proprietorships but it also provides owners with limited liability protection. Unlike sole proprietorships, corporations are treated as separate entities; they are responsible for their own tax filings and company debts. If corporations are sued by customers or file for bankruptcies, owners are not held personally liable for lawsuits or debts. To start corporations in Colorado, business names must be filed with the Secretary of State office. Owners must also file Articles of Incorporation with the state agency as well, which are documents detailing the basic information of their corporations. As of 2011, the fee to file Articles of Incorporation in Colorado is $50.
  
  

Operating a Limited Liability Company

• Individuals also open limited liability companies, LLCs, instead of sole proprietorships. LLC owners are called members, and companies are owned by one or any number of people. Members are afforded the same protections as corporate owners. To open LLCs in Colorado, business names and Articles of Organization must be filed with the Secretary of State. Articles of Organization detail companies' names and addresses and other basic information. Colorado statutes don't require LLCs to file operating agreements, however, but companies draft these documents to govern their business as they outline members' voting rights, responsibilities, ownership percentages and buyout agreements for withdrawing members.