Optima Law Group Blog

Colorado: The Highly Underrated State of Incorporation

When choosing a state to incorporate in there are several things to consider. Formation fees, taxes, annual fees and filings vary significantly from state to state. Although it may make the most sense to form your corporation in your home state, it may prove beneficial to incorporate somewhere else. The most popular states to incorporate in are referred to as “business friendly” states such as Delaware, Wyoming, and Nevada. A state that doesn’t seem to be on many radars is the underrated State of Colorado, so we thought it was about time we gave it a nod and the respect it deserves. There are 44 states in the US that charge a corporate income tax – of those 44, six have rates at or below 5 percent – Colorado being one of those states at 4.63 percent. Iowa is at the other end of the spectrum at a whopping 12 percent! Not only that, we have compiled a list of other perks of forming a corporation in Colorado:

a.       Filing fee for incorporation: $50

This is only a one-time fee, but considerably more affordable than the cost to incorporate in Connecticut which will set you back a minimum $400, so the potential savings here should not be completely disregarded.  

    

b.         Annual requirements/cost: $10

A Periodic Report needs to be filed with the Colorado SOS and is only $10. Other states, which have done an excellent job branding themselves as being “business friendly”, have significantly higher fees and more reporting requirements.

 

c.       Privacy:

Neither the Articles of Incorporation nor the Colorado Periodic Report ask for information about officers, directors, or shareholders. According to the Colorado Secretary of State’s website, “Entities are not required to file officers’, owners’, or directors’ names and addresses with the Secretary of State's office. This information should be managed through your internal records” (https://www.sos.state.co.us/pubs/business/FAQs/regAgent.html). Colorado does not even require you to list who operates a business, so it provides a lot of privacy and asset protection. That kind of privacy usually costs a lot of extra money in other business friendly states like Nevada and Wyoming by allowing a nominee service.

 

It is important to remember that you will still need to register in the state of your principal place of business, at a minimum. If that happens to be in Colorado then you are in a great position to take advantage of Colorado’s beneficial incorporation structure. There are a lot of factors that go into determining where you should incorporate, but it pays to do the research and find the state that would be most advantageous to your business based upon your specific circumstances.