Legal Question in Business Law in Colorado

Currently operate a professional services business in Maryland using a Maryland LLC. Office is moving to Colorado. Should I continue to operate using the Maryland LLC, create a new Colorado LLC, or incorporate in another state?

Asked on 6/15/17, 11:38 am

1 Answer from Attorneys

Robert Murillo Pivotal Legal Ltd.

This is a complicated question that should be left to the Colorado business attorney you plan to work with related to your business in Colorado. The best entity form and state depends on many more facts.

That said, here are some general observations. You can continue to use your Maryland LLC but that means you will have to get an agent in Maryland, continue to pay those fees and qualify that LLC to do business in Colorado and pay those fees. It is up to you if you think that is a logical expense. I don't think it is and Maryland does not provide any particular law that would make it more favorable than Colorado.

As to organizing in another state, that is also complicated. If this is a single-member LLC then it may make sense to consider states such as Wyoming or Nevada. That said, the law is in flux on this and there is no guarantee that this law will be respected if an issue of a charging order comes into play. If you don't understand why charging orders are important, that is a good question for your Colorado business attorney to answer. There are some options around this such as having what is termed a peppercorn member or springing member and these are things your business attorney can discuss.

If this is a multi-member LLC, then the charging order issue is moot. The important issue then becomes the terms of your operating agreement and I hope you have a solid written operating agreement that covers all the important issues. Our operating agreements run some 40 pages and up because of all the complexities and issues that should be determined in the agreement or ancillary agreements.

In the end, absent some compelling rationale, you are likely best served by using a Colorado entity if your business is just in Colorado.

Read more
Answered on 6/15/17, 11:51 am

Related Questions & Answers

More Business Law questions and answers in Colorado