Find out how to qualify your LLC to conduct business in Colorado.
If you own a company that was founded in a state other than Colorado, you must qualify or register it in Colorado in order to conduct business there. The requirements for qualifying your international (non-Colorado) limited liability corporation (LLC) to conduct business in Colorado are summarized here.
What exactly is a Foreign LLC?
If your LLC was founded in another state, it is referred to as a foreign LLC in Colorado. In other words, being foreign does not imply being from another nation. Instead, it signifies that your company was formed under the laws of another state. A domestic LLC, on the other hand, is one that is created in the state in which it operates. This is a prevalent phrase in the United States. In Mississippi, for example, an LLC founded in Alabama is a foreign LLC.
Doing Business in Colorado
You must register your foreign corporation with the state of Colorado if you are “transacting business” or “conducting operations” in Colorado, according to the Foreign Entities provision of Colorado’s Corporations and Associations Act. (Both terms are used throughout the Act.) What exactly does this mean? Well, Colorado, like other states, does not define “transacting business” or “conducting operations” in connection to international registrations.
State regulations determining when foreign enterprises must collect state sales tax in their state, on the other hand, give some advice on the subject. To be obligated to collect state sales tax on sales to citizens of a state, a firm must have a physical presence in, or nexus with, that state. In general, physical presence and nexus are synonymous and refer to:
a storage facility in the state
A shop in the state, an office in the state, or a sales representative in the state are all examples of state-based businesses.
Certain exclusions may apply, and the regulations become more convoluted in situations such as Internet sales. However, if you have an office, a shop, a warehouse, or workers in another state, you must register your LLC as a foreign corporation in that state. Certain Activities are Exempt for further information, including some potential differences between physical presence and linkage.
Certain Activities are Exempt
Colorado law, like that of many other states, identifies specific acts that do not constitute doing business in the state. Among the objects mentioned are:
defending or settling a lawsuit dealing with internal business affairs such as holding member or manager meetings having a bank account in the state selling through independent contractors soliciting or obtaining orders that require acceptance outside the state before they become contracts
creating or acquiring indebtedness as a borrower or lender creating or acquiring mortgages or other security interests in real estate as a borrower or lender securing or collecting debts on behalf of the business or enforcing mortgages or other security interests in property owning real estate or personal property conducting an isolated transaction that is completed within thirty days and is not one in a series of similar, repeated transactions
The legislation expressly indicates that this is not a complete list. Check Section 7-90-801 of the Colorado Revised Statutes for the exact legal definition of each of these objects.
If your LLC’s only operation in Colorado is one or more of the activities mentioned above, you should not be required to register with the state.
Foreign Entity Authority Declaration
You must submit a Statement of Foreign Entity Authority with the Colorado Secretary of State to register your foreign company in Colorado (SOS). You must submit your application online. While there is no blank paper form accessible, the SOS does have an example form available for download and inspection on their website.
To fill out the form, you must submit much of the same information that you would if you were forming an LLC in your home state. However, since each state is different, there may be materials that Colorado requires that you did not need to submit when you initially formed your LLC. More precisely, you must supply the following information for a Colorado Statement of Foreign Entity Authority:
the name under which your LLC will operate in Colorado
the “real name” of your LLC, which is the name under which it was formed if it differs from the name under which it will do business in Colorado (which would happen if the original name was not available for use in Colorado)
the structure of your company (“LLC”)
the state where you originally formed your LLC the street address of your LLC’s principal office\s the name and street address, and, optionally, mailing address of your registered agent in Colorado\s an indication that your Colorado registered agent consents to acting in that capacity\s the date your LLC commenced or will commence business in Colorado, and\s an authorized signature.
The SOS provides a website with form completion instructions. If the name you initially established your LLC under is not accessible in Colorado (typically because another registered firm is already using it), you will need to use an assumed name for your business. The Statement of Foreign Entity Authority has a filing cost of $100.
What Happens If You Don’t Register?
If your LLC does business in Colorado without first filing and accepting a Statement of Authority, it cannot sue in the state to recover debts. Furthermore, if your LLC transacts or does business in Colorado without permission, it may face costs and penalties. However, the absence of a legitimate assertion of authority does not render your LLC’s actions in the state (such as executing contracts or defending a lawsuit) unlawful.
Forming a Foreign Corporation
If your company is a corporation rather than an LLC, the procedures for registering as a foreign entity in Colorado are identical, and you must use the same online form (Statement of Foreign Entity Authority).