Legal Services for Entrepreneurs in Colorado

The Stupidest Mistake Startups and Small Businesses Make

In Colorado, creating a new business entity is simple. It costs $50 and takes fifteen to twenty minutes to set up online. But just because it’s simple doesn’t mean people don’t get it wrong.

In fact, many thousands of people get it wrong every year.

In Colorado, every Limited Liability Company is required to include one of eight corporate designations in its company name. They are:

• “Limited Liability Company”
• “Ltd. Liability Company”
• “Limited Liability Co.”
• “Ltd. Liability Co.”
• “Limited”
• “L.L.C.”
• “LLC”
• “Ltd.”

Similarly, every corporation must include one of eight corporate designations in its corporate name. They are:

• “Corporation”
• “Incorporated”
• “Company”
• “Limited”
• “Corp.”
• “Inc.”
• “Co.”
• “Ltd.”

But many Coloradans spend $50 to set up a business and then fail to include one of the prescribed designations in the name.

What are the consequences of this mistake? Without a corporate designation, your company won’t have limited liability. Which is the whole point of setting up a separate entity in the first place.

How common is this error? By my count, 340 businesses in Colorado screwed this up in the first two weeks of the year alone. That annualizes to nearly 9,000 flawed business filings a year. At a cost of $50 a filing, that’s $442,000 flushed down the toilet by Coloradans every year. And since every state has a similar rule, we can safely assume as a nation we’re wasting tens of millions of dollars around the country every year.


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