To start a therapy practice in Colorado, follow these seven steps:
- Check local zoning regulations
- Register a business name
- Choose a business structure
- Register your business
- Obtain relevant licenses
- Get insurance
- Start paying taxes
If you’re moving your practice from a different state, there’s an eighth step you’ll need to follow: Figuring out how to pay taxes in multiple states.
This article covers the bare essentials needed to get your therapy practice up and running in the Centennial State. For advice on budgeting, marketing your practice, and billing your clients, check out our general guide, How to Start a Therapy Practice.
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Check local zoning regulations in Colorado
Colorado boasts 64 counties and 272 active municipalities. Before you settle on a location for your therapy practice—even if that location is your own home—you must make sure the local zoning allows you to operate there.
In cases where you aren’t typically allowed to operate a business in a certain area—for instance, a home business in a residential area—you can apply for a zoning variance. A variance is more or less an exception to zoning laws.
For information on whether you need to apply for a variance, what types of zoning your town or city recognizes, and what kind of business you can perform there, use the .
Register a business name in Colorado
To register a trade name for your therapy practice in Colorado, you must complete and file a Statement of Trade Name form with the Secretary of State.
Before doing so, you may wish to do a name search, to make sure your chosen name isn’t already taken. Then, you can file your Statement of Trade Name by filling out the right form (based on your business structure) provided on the Secretary of State’s website.
The fee for registering a trade name in Colorado is $20.
Do you need to register a name at all? If your therapy practice is a sole proprietorship, and you’d like to operate under your own name—eg. “Jane Smith”—you may do so without registering a business name.
If you want a name different from your own—eg. “Jane Smith Counseling”—or if you switch to a different business structure (for instance, an LLC), you’ll need to register an assumed name.
Choose a business structure recognized by the State of Colorado
Each state recognizes—and registers—different business structures (aka “entity types.”) Your practice’s business structure affects how its income is taxed and who may own shares of the practice.
In Colorado, the business structures you can choose from are:
- Sole proprietorship
- General Partnership (GP)
- Limited Liability Company (LLC)
- Professional Limited Liability Company (PLLC)
- Corporation
- Limited Partnership (LP)
- Limited Liability Partnership (LLP)
- Limited Liability Limited Partnership (LLLP)
- Limited Partnership Association
- Nonprofit organization
- Cooperative
This list is just an introduction. Before settling on a business structure, talk to your accountant—and, if necessary, a lawyer—for help choosing the right one.
For more information, check out our article How to Choose a Business Entity for Your Therapy Practice.
Sole proprietorship
When you go into business for yourself, you’re considered a sole proprietor by default. As a sole proprietorship, your business is identical with your person: all revenue is your revenue, all losses are your losses.
Sole proprietorships are the simplest form of business structure, but offer nothing in the way of legal or financial protection.
General Partnership (GP)
In a general partnership, all members are general partners—meaning, they all share legal and financial liability equally.
Limited Liability Company (LLC)
The LLC business structure offers liability protection similar to a corporation, but with the option to be taxed in different ways. Your accountant may recommend you elect to be taxed as either an S corporation or a partnership.
Professional Limited Liability Company (PLLC)
The PLLC business structure is identical to the LLC, except for the fact that every member must be a professional licensed by the State, and provide proof of certification when the PLLC files its articles of formation with the Secretary of State. Counselors qualify as professionals licensed by the state.
The PLLC business structure provides extra liability protection for all members in case of legal proceedings brought against the organization (eg. a patient suing for malpractice.)
Corporation
A corporation exists separately from its owners, who own shares in it. There are two types: C corporations and S corporations. C corporations may elect S corporation status by filing IRS Form 2553.
C corporations have their income taxed separately from the income of the shareholders. S corporations pass on the tax liability to each shareholder. (For a variety of reasons, Heard recommends its clients form S corporations at the federal level.)
Limited Partnership (LP)
A limited partnership offers some liability protection for some of its members. To operate as a limited partnership, at least one individual acts as a general partner, who heads the company and makes major decisions, while at least one other individual acts as a limited partner, who does not.
General partners have unlimited liability—they are personally liable for the partnership’s debts, legal proceedings, and so on. Limited partners are only liable for their controlling share of the partnership.
Limited Liability Partnership (LLP)
An LLP is similar to a general partnership, but with extra protections; it’s typically favored by professionals like lawyers and accountants, but any professional licensed with the state (including therapists) may form an LLP. In Colorado, general partnerships already registered with the Department of Revenue may elect to organize as LLPs.
The LLP structure protects each partner against outcomes of the other partners’ professional negligence. For instance, if one partner in an LLP is sued by a client, the other partners are not liable.
Limited Liability Limited Partnership (LLLP)
The LLLP business structure is very similar to an LLP business structure. The main difference is that existing general partnerships may choose to register as LLPs, while existing limited partnerships may choose to register as LLLPs.
Limited Partnership Association
The limited partnership association is a new business structure in Colorado. It differs from LLPs and partnerships in that it has an indefinite life.
While a typical partnership dissolves when one of the partners chooses to leave the organization or dies, a limited partnership association does not. It only dissolves when all existing members vote to dissolve it.
Nonprofit organization
Nonprofit organizations in Colorado are organized in a variety of ways. Some are like loose associations between people, while others have a more formal structure, similar to a corporation. You can learn more about nonprofits in Colorado from the Colorado Business Resource Book.
Cooperative
A cooperative is a legal organization made up of individuals or businesses working together toward a common goal. Every member of the cooperative has an equal say in how the organization is run. This is achieved by giving each member one vote, regardless of how much time or money that have invested in the cooperative.
Cooperatives don’t typically focus on making a profit, but rather on covering their costs. The cooperative structure is not meant for a single, standalone business, but for multiple individuals and businesses working together to pool their resources.
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Register your therapy practice in Colorado
The easiest way to launch your business practice in Colorado is to use the MyBizColorado online portal.
Step by step, MyBizColorado collects information about your business, then helps you file articles of formation (or incorporation) for your chosen business structure and obtain any necessary licenses or permits. It consolidates information from five state agencies:
- Secretary of State
- Department of Revenue (DOR)
- Department of Labor and Employment (CDLE)
- Department of Regulatory Agencies (DORA)
- Office of Economic Development (OEDIT)
Below, you’ll find step-by-step instructions for each business structure.
Form a sole proprietorship in Colorado
Filing fees: $20 to register a trade name
If you are doing business under a name other than your own legal name, register your trade name with the Secretary of State.
There are no additional steps to form a sole proprietorship in Colorado, beyond reporting your self-employment income from your business.
Form a general partnership in Colorado
Filing fees: $20 to register a trade name
If you are doing business under a name other than your own legal name, register your trade name with the Secretary of State.
There are no additional steps to form a general partnership in Colorado, but consider drafting a partnership agreement. This isn’t required by law, but it will help you stay organized and settle any disputes between partners.
Register an LLC or PLLC in Colorado
Filing fees: $135 to file articles of organization
- Choose a name and register additional trade names if necessary.
- Appoint a registered agent. This person must be over 18 and have an address within the state. They’re responsible for receiving all official communications from the State.
- Log into MyBizColorado and follow the onscreen instructions. You will be able to register your company with the Secretary of State and file your articles of organization.
- Carefully review and, if necessary, respond to any correspondence you receive from State agencies.
Incorporate in Colorado
Filing fees: $100 to file articles of incorporation
- Choose a name and register additional trade names if necessary.
- Appoint a registered agent. This person must be over 18 and have an address within the state. They’re responsible for receiving all official communications from the State.
- Log into MyBizColorado and follow the onscreen instructions. You will be able to register your company with the Secretary of State and file your articles of incorporation.
- Carefully review and, if necessary, respond to any correspondence you receive from State agencies.
Register a limited partnership in Colorado
Filing fees: $110 to file a certificate of limited partnership
- Choose a name and register additional trade names if necessary.
- Appoint a registered agent. This person must be over 18 and have an address within the state. They’re responsible for receiving all official communications from the State.
- Log into MyBizColorado and follow the onscreen instructions. You will be able to register your company with the Secretary of State and file your certificate of limited partnership.
- Carefully review and, if necessary, respond to any correspondence you receive from State agencies.
- Draft a partnership agreement. This isn’t required by law, but it will help you stay organized and settle any disputes between partners.
Register a Limited Liability Partnership (LLP) in Colorado
Filing fees: $35 to register up to two partners, $3.00 for each additional partner.
Note: LLP is a status elected by a general partnership. You must already have formed a general partnership before electing LLP status.
- Choose a name and register additional trade names if necessary.
- Appoint a registered agent. This person must be over 18 and have an address within the state. They’re responsible for receiving all official communications from the State.
- Log into MyBizColorado and follow the onscreen instructions. You will be able to file a Limited Liability Partnership Registration with the Secretary of State.
- Carefully review and, if necessary, respond to any correspondence you receive from State agencies.
- Draft a partnership agreement. This isn’t required by law, but it will help you stay organized and settle any disputes between partners.
Register a Limited Liability Limited Partnership (LLLP) in Colorado
Filing fees: $110 to file a certificate
Note: LLLP is a status elected by a limited partnership. You must already have formed a general partnership before electing LLP status.
- Choose a name and register additional trade names if necessary.
- Appoint a registered agent. This person must be over 18 and have an address within the state. They’re responsible for receiving all official communications from the State.
- Log into MyBizColorado and follow the onscreen instructions. You will be able to file a Limited Liability Limited Partnership Registration with the Secretary of State as well as a certificate of formation.
- Carefully review and, if necessary, respond to any correspondence you receive from State agencies.
- Draft a partnership agreement. This isn’t required by law, but it will help you stay organized and settle any disputes between partners.
Register a Limited Partnership Association in Colorado
- Choose a name and register additional trade names if necessary.
- Appoint a registered agent. This person must be over 18 and have an address within the state. They’re responsible for receiving all official communications from the State.
- Log into MyBizColorado and follow the onscreen instructions.
- Carefully review and, if necessary, respond to any correspondence you receive from State agencies.
- Draft a partnership agreement. This isn’t required by law, but it will help you stay organized and settle any disputes between partners.
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Get business licenses and permits for your therapy practice in Colorado
To operate in Colorado, your therapy practice will need a business license. Besides that, you may need additional permits and licenses based on your practice’s location. To get a list of all necessary permits, and apply for them online, use the Business License Wizard.
Get business insurance for your therapy practice in Colorado
The following types of business insurance are highly recommended for therapy practices operating in Colorado:
- General liability insurance
- Commercial property insurance
- Business income insurance
- Professional liability insurance
- Colorado worker’s compensation insurance
While shopping for insurance, look for a business owner’s policy (BOP). A BOP typically includes the three core types of insurance coverage: general liability, commercial property, and business income.
Commercial general liability insurance protects you in case of any damages you cause to someone else’s property or person.
Commercial property insurance protects property your therapy practice owns, like computers, business phones, or office furniture. It also protects the building where you operate, whether owned or rented.
Business income insurance covers you for loss of income due to specific circumstances. These include natural disasters, such as fire or storm damage; and man-made disasters, like theft.
Professional liability insurance covers you in case you are sued for libel or slander, for mishandling patient records, for providing inaccurate advice, or for otherwise causing harm in the process of practicing your profession.
If you have employees, you are legally required to have Colorado worker’s compensation insurance. This protects employees in the event of workplace injury or illness.
Prepare to pay taxes in Colorado
Every business earning income in Colorado is required to pay state taxes. If you owe over $1,000 in state taxes, you’re required to pay that amount in quarterly installments.
To learn how to pay taxes for your business in Colorado, check out our complete guide to how to pay income tax for your therapy practice in every state.
Learn how to pay taxes in multiple states
If you started your therapy practice in a different state, and you’re moving to Colorado—or if you operate in Colorado, and you’re planning to move to a different state—you’ll need to figure out how to pay taxes in multiple states.
The rules vary depending on which states you operate in over the course of the year, and how long you spend in each. Check out How Moving to a Different State Impacts your Taxes as a Therapist.
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Want to learn more? Check out our guide on how to start a therapy practice.
This post is to be used for informational purposes only and does not constitute legal, business, or tax advice. Each person should consult their own attorney, business advisor, or tax advisor with respect to matters referenced in this post.
Bryce Warnes is a West Coast writer specializing in small business finances.
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