Is Colorado a Business-Friendly State?
Small businesses play a critical role in our nation’s economy. In fact, small businesses are responsible for roughly 44% of the country’s economic activity, and they employ roughly 50% of the private-sector workforce. If you’re planning on starting a business, you’ll likely fall under the “small business” category for a while, as it typically takes time to grow your company into a large enterprise.
Starting a business is a high risk, high reward venture. It offers the potential for a lucrative income while allowing you to build something from the ground up in a field you’re passionate about. This can lead to a more fulfilling work life for many individuals. However, there are also many challenges associated with starting a business – startup costs and ongoing overhead expenses can be significant, attracting and retaining quality employees is more difficult than ever, and there are myriad other issues you’ll need to navigate in order to build the foundation for a successful business.
With such high stakes associated with starting a business, it’s critical to make the right decisions from the beginning of the process. One of the most important decisions you’ll make is where to start your business, as not every state provides the same climate for success. Even if you make a savvy choice and operate in a business-friendly state, you will still need the guidance and expertise of an experienced small business lawyer who can protect your interests and set you up for success.
Should I Start a Business in Colorado?
If you’re considering Colorado as the home for your small business, you’re making a smart decision. A recent study ranked Colorado as the 7th best state to start a business in 2024. This data remains consistent with rankings from the previous few years, where Colorado is regularly considered to be among the most business-friendly states.
Colorado also has a strong business survival rate, with over 75% of new businesses lasting over five years.
Key Factors Contributing to Colorado’s Business-Friendly Environment
Colorado possesses a variety of attributes which make it a great place to start a business. The following factors will increase your chances of success when you choose Colorado as the location for your business:
- Low Startup Costs and Ease of Formation
- Favorable Tax Climate
- Highly Educated Workforce
- Strong Small Business Presence
- Economic Strength and Growth
Low Startup Costs and Ease of Formation
Colorado offers a wide range of incentives and resources to encourage new business formation, and it boasts one of the lowest startup costs in the country for small businesses. The cost to establish an LLC or corporation in Colorado is only $50. This low barrier to entry makes it attractive for entrepreneurs looking for a place to operate their new venture.
Favorable Tax Climate
Colorado’s 4.55% income tax rate for corporate entities and 2.9% sales tax can be extremely beneficial for small businesses. This relatively low tax burden will help fledgling businesses retain more of their earnings, making it easier to succeed during the early years when you are still building your reputation.
Highly Educated Workforce
You’ll need a team of highly educated and skilled employees for your business to thrive. Colorado provides an abundant supply of highly educated talent, as it ranks as the second most educated state in the country. This highly educated workforce not only gives you access to a skilled and competitive labor pool, but it fuels much of the innovation and economic growth that Colorado has become known for in recent years.
Strong Small Business Presence
Small businesses make up 99.5% of all businesses in Colorado, with 691,230 businesses employing 1.2 million workers. This robust small business ecosystem creates a supportive environment for new and growing companies.
Economic Strength and Growth
U.S. News & World Report ranked Colorado 4th in the country for best economy, best business environment and employment. In addition, numerous Colorado cities regularly appear on a wide range of “best places to live” lists, allowing the state to attract talented individuals looking for a great lifestyle. This strong economic environment provides opportunities for small businesses to thrive and expand.
Recent Initiatives Which Support Colorado’s Business-Friendly Environment
The Colorado state government is continuously taking steps to further enhance its business-friendly environment. Some recent initiatives that will help small business owners include:
- Investing in workforce development programs to ensure a skilled labor supply
- Implementing tax cuts and increasing certainty for business leaders
- Focusing on increasing housing supply and affordability to support employee recruitment and retention
- Allocating over $10.5 million to strengthen the state’s business climate and create more opportunities for small business development
- Establishing the Colorado Enterprise Zone Program which offers a major incentive for new businesses by providing up to $3,000 in tax credits for qualified businesses
Elizabeth Lewis Provides Legal Services for Small Businesses in Colorado
Colorado’s combination of low startup costs, favorable tax climate, highly educated workforce and supportive government policies make it an attractive destination for businesses. While the advantages of operating in a business-friendly state like Colorado can set you up for success, you still need expert legal guidance to help you navigate many of the challenges impacting small businesses. At the Law Office of E.C. Lewis, we’ll make sure your interests are protected every step of the way.
Elizabeth Lewis is a small business attorney providing comprehensive legal services for businesses in Denver and throughout Colorado. If you’re considering starting a business in Colorado, she can assist you with any legal matters associated with business formation to ensure your company is set up properly. In addition, Elizabeth will be your go-to lawyer for any legal challenges your business experiences moving forward, including contract law matters, employment law issues, and more. When you work with Elizabeth Lewis, you’ll have peace of mind that all legal matters will be handled properly, and your business will be positioned for ongoing success.
Contact us today to schedule a consultation. The Law Office of E.C. Lewis serves small and medium-sized businesses in Denver and throughout Colorado.