Don’t be Startled When Starting a New Business: What to Know Before You Start a New Business

Starting a business can feel daunting, but the initial steps are often simpler than they seem. The real challenge isn’t just starting- it’s starting strong and staying compliant. Building a business on a solid legal and financial foundation takes foresight and careful planning. That’s where good legal guidance makes all the difference. Here are a few key issues you’ll want to consider.

Choosing the Right Entity

Your choice of business entity is one of the most important decisions you'll make. Whether you're forming a sole proprietorship, LLC, corporation, or partnership, the structure you choose affects how your business is taxed, how profits and losses are shared, and—critically—your personal liability for business debts or lawsuits.  To truly benefit from the protections these entities offer, it’s critical to properly draft and execute formation documents such as an LLC operating agreements or Corporation’s bylaws. These documents don’t just check a box—they establish how your business is run, how decisions are made, and how conflicts between owners will be resolved.  For a deeper dive into entity types and how they affect your business, read Establishing an Entity for Entrepreneurs: What to Consider When Starting Your Business.

Laying the Financial Groundwork

Before you begin operations, you should develop a business plan that includes a clear budget, revenue strategy, and projected cash flow. You’ll need to determine your working capital needs, set up a business bank account and credit card, and, if applicable, begin building your business credit. On the tax side, registering for a federal tax ID number (EIN) is just the beginning. You may also need to register for wage withholding accounts and sales tax licenses with the Colorado Department of Revenue. If you plan to buy or sell wholesale goods, additional tax compliance will be necessary. Engaging an accountant early is a wise move—they can help you set up bookkeeping systems, explain your tax obligations, and monitor your financial health as your business grows.

Forming the Business in Colorado

Starting a business in Colorado begins with filing your formation documents online through the Secretary of State’s website. Be sure to subscribe to email notifications to receive important compliance reminders, such as for your annual Periodic Report—missing deadlines can lead to penalties or administrative dissolution. After registration, you’ll need to formalize your internal structure. This includes adopting bylaws or an operating agreement, appointing officers or managers, and deciding who is authorized to act on behalf of the business. If you’ll operate under a name different from your registered entity, you must file a trade name. You may also want to consider trademark protection at the state or federal level. For corporations or LLCs planning to issue shares, elect S-corp status, or set up a buy-sell agreement among owners, these actions should be documented early with help from legal and tax professionals. Your first meeting—whether with directors, managers, or shareholders—should confirm these decisions and adopt your official governance documents.

Where Will You Operate Your Business?

Location is more than just a line on your business plan. Whether you’re operating from a commercial office, storefront, warehouse, or even your home, the legal and logistical considerations vary. Zoning laws, lease terms, and property use restrictions can impact your timeline and operations. If you’re leasing or buying a commercial space, having an attorney review or negotiate the lease or purchase contract can help you avoid costly surprises down the road. For more insight on commercial real estate considerations, visit Entering Into a Commercial Lease: What to Know when Leasing Commercial Property.

Understanding Local and State Regulations

Depending on your business type and location, you’ll likely need to navigate local zoning rules and obtain specific licenses or permits. For example, a restaurant may need approvals from the health department, a liquor license, and fire inspections, while a contractor may need a local business license and a state-regulated trade license.

If your business falls under a regulated industry—such as legal, medical, insurance, or financial services—you’ll need to apply for a license through the Colorado Department of Regulatory Agencies (DORA). Some businesses may also require oversight by the Public Utilities Commission or Department of Health and Environment. An attorney can help you determine which agencies regulate your specific business activity.

Hiring, Employment Law & Insurance Requirements

If you plan to hire employees, your obligations as an employer begin immediately. Colorado law requires employers to register for unemployment insurance and workers’ compensation coverage, and to comply with wage, hour, and anti-discrimination rules.

You should verify employee eligibility under federal immigration laws, comply with Colorado’s employment verification laws, and be aware of whether you’re classifying workers properly as employees or independent contractors. This classification has major implications for taxes, liability, and benefits. It’s also a good idea to draft employment contracts for leadership roles and consider key policies such as vacation, sick leave, retirement benefits, and confidentiality or non-disclosure agreements. These decisions set the tone for your business culture and reduce the risk of disputes later on. In addition, you'll need appropriate insurance coverage—often beyond general liability. Depending on your industry, this may include professional liability, product liability, auto, property, workers' comp, or business interruption insurance. The Colorado Department of Regulatory Agencies publishes a helpful guide on small business insurance options.

Marketing and Launch Strategy

Even from a legal perspective, how you present your business to the public matters. From choosing your business name and logo to launching a website and social media presence, your brand is part of your business’s identity—and a potential source of legal risk. You should ensure that your name and logo don’t infringe on existing trademarks, and consider protecting your own brand through registration.

Whether you’re marketing online, through print, or on television and radio, consistency and clarity in how you hold your business out to the public can impact both customer trust and legal compliance. You may also want to consult with an attorney before signing advertising contracts or entering partnerships with outside vendors or distributors.

General Legal and Operational Oversight

Once your business is up and running, you’ll need to stay compliant with both federal and state laws. This includes annual filings with the Secretary of State, maintaining internal records, and meeting tax deadlines. You should also have standard contracts in place—for vendors, suppliers, customers, and any third parties you work with. These contracts should be reviewed or drafted by legal counsel to ensure enforceability and clarity. Depending on your business, you may also need terms and conditions, privacy policies, or other legal disclaimers—especially if you’re selling products or services online. Lastly, having a clear management structure and decision-making process is essential. Decide how day-to-day decisions will be made, who has authority over finances, and how conflicts or changes in ownership will be handled. These may seem like distant concerns now, but planning for them upfront can prevent serious problems later.

Ready to Start? Geraghty Law Office Can Help

Launching a business is about more than just getting started—it’s about building something that lasts. From selecting your entity and drafting your contracts to securing the right licenses and staying compliant, Geraghty Law Office can help you navigate each step of the process.

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GLO has prepared this blog to provide general information on legal issues that may be of interest. This blog does not provide legal advice for any specific situation and this does not create an attorney-client relationship between any reader and GLO or its attorneys. GLO engages clients only through specific signed fee agreements. GLO does not guarantee any results.

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