By Jonathan Feniak, Esq., MBA
If you are thinking about starting a business in Colorado, you should know there is no general licensing requirement.
Only certain types of businesses require a license to operate in the state of Colorado. However, it might be necessary to obtain certain permits or licenses on the county or city level even if none is required by the state.
The license or permit a specific business will require hinges on the type of services or products it sells. As an example, plumbers need a permit while a restaurant will require multiple licenses including food service and liquor licenses.
The type of business in question also dictates which state agency provides the license and which will regulate and monitor these licenses. Each specific agency has nuanced requirements for the granting of a business license or permit. Let's take a closer look at the specifics of registering and licensing a business in the state of Colorado.
Specific types of businesses such as insurance providers, banking institutions and electricians must have a Colorado business license. The purpose of requiring a license is to authorize the individual in question to comply with specific training, education, safety, and reporting requirements.
Businesses operating a venture under a name different than the owner's or entity's legal name are using a DBA name. DBA is short for “doing business as.” A business using a DBA name is required to file a Statement of Trade Name. The Statement of Trade Name will have to be renewed with the Secretary of State. It is particularly interesting to note there are no legal protections from the state for trade names. Therefore, a trade name used by another business within Colorado can be used by a separate entity, though there may be trademark issues of you do so without permission. However, it is not prudent to select exactly the same trade name as another business, especially if that business is located nearby. If two businesses share the exact same name or have a similar name, it will only serve to confuse customers. When in doubt, opt for a completely unique name to ensure customers can distinguish between your business and others with similar monikers. However, you may want to use the same trade name for two different entities if you control both of them. For example, if you own two sandwich shops, each in a separate LLC, you may want both to use the name trade name for both.
Licensing will often include a requirement that the business collect a use tax or sales taxes. Such licenses are issued at the county or city level based on the location of the business. Those applying for sales and use tax licenses will have to provide information about their industry, business property, legal structure, location, personal contact details including the owner's name and the entity's federal tax identification number.
Thankfully, the state provides a helpful Occupational License Database that makes it easy for business owners to select their industry from a convenient pull down menu. Licensing requirements along with contact details for state licensing agencies are available from the database. In fact, the database goes as far as noting extra licenses or permits that should be researched. The type of business ultimately dictates if the owner will have to further comply with requirements ranging from building codes to local zoning rules.
Certain professions and industries are regulated more thoroughly by the state of Colorado than others. Check out the Department of Regulatory Agencies' website to access the information and links about an array of specialized licenses required for operating specific types of businesses. This website also allows businesses and consumers to get updates on license statuses and file complaints against businesses. Furthermore, the business structure must be registered with the Secretary of State if the organization in question is a limited liability company, a non-profit, or a for-profit corporation. There is no need for partnerships and sole proprietors to make such filings.
Additional licenses and/or permits might have to be filed with local governments on the county and city levels as well. Each distinct municipality has its own nuanced regulations customized for its location. Examples of common licenses range from zoning permits to building permits, occupational permits, tax permits, signage permits and health permits. As an example, if your business needs a large sign to advertise your offerings, you must obtain a signage permit available through the local government. Once your company has all the proper licenses and permits, you will be free and clear to start conducting business in the state of Colorado. If you’re planning on opening an LLC, we have many helpful resources on our blog including information about articles of organization, EINs, and sole-proprietorships.Order Now