1. Incorporate in Colorado

Incorporate in Colorado

Author: Real Estate Holding Company

Published Jul 17th, 2023Updated Feb 14th, 2024
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Why Form a Company?

  • Limits Liability
  • Lower Taxes
  • More Professional
  • Easier to Grow
  • Everything Done Online

LLC vs. Corporation

They both enjoy the corporate veil for protection from business creditors. Small business owners, however, generally prefer forming an LLC due to their reduced corporate formalities. This makes it easier to stay in compliance and maintain the corporate veil.

Corporations are double taxed by default and Colorado levies a 4.63% tax. They also provide less favorable asset protection from personal creditors. Due to quirks in the law it is easier to seize shares in a corporation than an interest in an LLC.

Corporations do offer the flexibility of multiple share classes and the splitting of economic from voting rights. When this flexibility is required a corporation is the best fit. However, even then, owners would do well to own their shares with an LLC for additional protection.

What is Corporate Structuring?

The corporate veil is known for protecting personal assets from corporate creditors. Those desiring additional protections, or lower taxes, will find their solution through corporate structuring. The formation of additional entities allows the safe guarding of assets and shifting of income to friendlier entities and jurisdictions.

Holding companies, trusts and retirement funds provide unique opportunities to protect assets and save on taxes. Learn more about setting up a holding company here.

What about other states?

Those with a location or employees in Colorado must form at least one Colorado company. While Colorado allows anonymous ownership, It does not offer the same asset protection as Wyoming, nor the simplicity of New Mexico.

Wyoming offers nation leading asset protection and no state taxes. These benefits can be leveraged via a holding company which protects assets and lower taxes. Learn about forming a Wyoming LLC or corporation today.

New Mexico offers an extremely easy to maintain LLC. After formation there are no annual, or other, reports to keep up with. Learn more about the New Mexico LLC here.

Colorado makes it easy to form and maintain a company. They allow online filings and have low fees, including an annual periodic report of only $10. For many this will do. Others will be drawn to Wyoming for its asset protection, or New Mexico for its simplicity.

Personal creditors cannot seize a Wyoming LLC, force distributions or liquidate its assets. Wyoming is commonly used to hold valuable assets, e.g. cash, trademarks and domains. This company then leases and loans assets to your Colorado company. This separates valuable assets from operating company liabilities.

While Colorado makes it easy, New Mexico has them beat. New Mexico only requires the initial filing... there are no additional filings ever. No annual reports, no nothing. This means a New Mexico LLC cannot be administratively dissolved and there is no paperwork to keep up with.

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