Colorado Single-Member LLC Operating Agreement
Create a Colorado single-member LLC operating agreement with state-specific guidance on default rules, fiduciary duty waivers, and asset protection.
Introduction
A single-member LLC operating agreement is the internal document where you, as the sole owner of a Colorado LLC, set the rules for how your business runs and how profits are handled. Colorado law does not require an operating agreement to be in writing, and its LLC Act gives "maximum effect" to whatever your agreement says, including letting you waive fiduciary duties many other states won't let you touch. That flexibility cuts both ways: without a written agreement spelling out your own rules, Colorado's default rules fill the gap automatically, and a written agreement remains the clearest evidence, if a court or the IRS ever asks, that your LLC is a real business, not just a personal wallet.
Key Things to Know
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Colorado does not require an operating agreement to be in writing at all (C.R.S. Section 7-80-102(11)(a)); oral and implied operating agreements are legally valid, though a written one is still strongly advisable.
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Without an operating agreement, Colorado law allocates profits and losses based on the value of each member's contribution to the company, not split evenly among members (C.R.S. Section 7-80-503).
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Colorado's charging order statute does not use 'sole and exclusive remedy' language, and in the bankruptcy case In re Albright, 291 B.R. 538 (Bankr. D. Colo. 2003), a federal court held that a single-member LLC's charging-order protection does not apply in bankruptcy, because that protection exists to shield other members who don't exist in a single-member LLC.
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Colorado has no annual franchise tax on LLCs. Instead, every Colorado LLC must file a $25 Periodic Report with the Secretary of State each year to stay in good standing, regardless of income or activity.
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Colorado's LLC Act allows fiduciary duties, including the duty of loyalty and duty of care, to be restricted or eliminated entirely by the operating agreement, as long as the provision is not 'manifestly unreasonable' (C.R.S. Section 7-80-108(1.5)); the one duty that can never be eliminated is good faith and fair dealing.
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The operating agreement itself is not filed with the state. You form the LLC by filing Articles of Organization online with the Colorado Secretary of State for a $50 fee, and the Articles must state whether management is vested in managers or in the members.
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If a single-member LLC's sole member dies or exits without a new member being admitted within 91 days, Colorado law causes the LLC to automatically dissolve (C.R.S. Section 7-80-801).
Key decisions before you file
Before you file a LLC Operating Agreement in Colorado, a few decisions shape the document: which option to choose and what each one means. The LLC Operating Agreement guide walks through them.
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Colorado Requirements for LLC Operating Agreement
Pursuant to Colorado law, this Operating Agreement governs the relations among members, managers, and the LLC. To the extent this Agreement is inconsistent with the Colorado LLC Act's default provisions, this Agreement shall control for all matters where the Act permits modification by agreement.
Members and managers of the Company are not liable, under a judgment, decree, or order of a court or in any other manner, for a debt, obligation, or liability of the Company solely by reason of being a member or acting as a manager, as provided by C.R.S. Section 7-80-705. This protection is not absolute: Colorado courts, like courts in every state, may disregard the liability shield under common-law veil-piercing or alter-ego doctrine if the Company's formalities are not observed or its finances are not kept genuinely separate from the Member's personal finances.
The Company has been or will be formed by filing Articles of Organization with the Colorado Secretary of State (online-only, $50.00 filing fee), in compliance with C.R.S. Section 7-80-204. The Articles must state, among other required information, whether management of the Company is vested in one or more managers or is vested in the Members, and this Operating Agreement shall be interpreted consistently with that election.
The Company shall maintain a registered agent and registered office in Colorado as required by Title 7, Article 90, Part 7 of the Colorado Revised Statutes, which C.R.S. Section 7-80-301 makes applicable to limited liability companies formed under Article 80. The registered agent shall be available to accept service of process and other communications on behalf of the Company.
The Articles of Organization must affirmatively state whether management of the Company is vested in one or more managers or is vested in the Members, as required by C.R.S. Section 7-80-204(1)(e); Colorado's Act does not supply a silent default management structure the way some other states' acts do. Once that election is made, ordinary-course decisions are made by a majority of the Members or, if the Company has one or more Managers, by a majority of the Managers, and the unanimous consent of each Member is required to amend the Articles of Organization, amend this Agreement, or authorize an act outside the ordinary course of business, as provided by C.R.S. Section 7-80-401.
Members and managers owe the Company and each other duties of loyalty and care, as defined by C.R.S. Section 7-80-404. Unlike in some other states, Colorado's Act permits these duties to be restricted or eliminated entirely by this Agreement, provided the restriction or elimination is not manifestly unreasonable, as permitted by C.R.S. Section 7-80-108(1.5). The one duty that can never be eliminated by this Agreement is the obligation of good faith and fair dealing under C.R.S. Section 7-80-404(3); this Agreement may only set the standard by which that obligation is measured, and only if that standard is not itself unreasonable.
A Member's contribution may be in cash, property, services rendered, or a promissory note or other obligation to contribute cash, property, or services, as provided by C.R.S. Section 7-80-501. Unless this Agreement provides otherwise, a person, including the sole Member of a single-member LLC, may be admitted as a Member without making, or being obligated to make, any contribution at all.
Unless this Agreement provides otherwise, profits and losses of the Company are allocated among the Members on the basis of the value, as stated in the Company's required records, of the contributions made by each Member, as provided by C.R.S. Section 7-80-503. This is a contribution-proportional default, not an equal per-Member split. Allocations must also comply with applicable federal partnership tax rules under 26 U.S.C. Section 704.
The Company shall not make a distribution to a Member if, after giving effect to it, the Company's liabilities would exceed the fair value of its assets, as provided by C.R.S. Section 7-80-606. A Member who knowingly receives a distribution made in violation of this restriction is liable to the Company to repay it, but only if an action to recover the distribution is commenced within three years of the date the distribution was made.
The transfer of membership interests shall be governed by this Agreement and Colorado law. Unless otherwise provided in this Agreement, a transferee of a membership interest does not automatically become a member without the consent of other members.
Colorado's Act does not use a "dissociation events" framework. Instead, a Member may resign from the Company at any time by giving notice to the other Members, as provided by C.R.S. Section 7-80-602. If the resignation violates this Agreement, the Company may recover damages for the breach from the resigning Member, offset against any amount otherwise distributable to that Member.
The Company dissolves upon the agreement of all Members, upon the occurrence of an event stated in this Agreement, or, if the Company ceases to have any Members, on the 91st day after it loses its last Member unless a new Member is admitted before that day, as provided by C.R.S. Section 7-80-801. Upon dissolution, the Company's assets shall be distributed first to creditors and then to Members as provided in this Agreement and by law.
The Company shall maintain records required by C.R.S. Section 7-80-408, including financial information, tax returns, membership lists, and copies of the Articles of Organization and this Agreement. Members have the right to inspect and copy these records for any purpose reasonably related to their interest as a Member, may keep trade-secret or confidential third-party information confidential for a reasonable period, and have the right to a formal accounting of Company affairs whenever circumstances render it just and reasonable.
This Agreement may be amended only with the consent of each Member, as required by C.R.S. Section 7-80-401(2)(b), unless this Agreement itself provides a different amendment procedure consistent with the Act's freedom-of-contract framework under C.R.S. Section 7-80-108.
The Company shall reimburse a Member or Manager for payments made, and shall indemnify a Member or Manager for liabilities incurred, in the ordinary course of the Company's business or for the preservation of its business or property, provided such payments were made or liabilities incurred without violation of the person's duties to the Company, as provided by C.R.S. Section 7-80-407.
Frequently Asked Questions
It's the internal document where a Colorado LLC's sole owner sets the rules for running the business and handling profits. Colorado doesn't require it to be written, but a written agreement is still the clearest proof the LLC is a real business, not a personal wallet, and it lets you set your own rules instead of relying on statutory defaults.
Not by legal requirement. Colorado's LLC Act allows oral or implied operating agreements (C.R.S. Section 7-80-102(11)). But without a written one, Colorado's default rules apply automatically, including a contribution-based profit split rather than one you choose, so most single-member LLCs still put their agreement in writing even though the law doesn't demand it.
Colorado's default LLC rules fill the gap. Profits and losses get allocated based on the value of each member's contribution to the company rather than however you'd choose to split them, which matters most once you bring on a second member and haven't defined your own split (C.R.S. Section 7-80-503).
It supports that protection, but doesn't guarantee it, especially for single-member LLCs. Colorado's charging order statute doesn't call itself the creditor's exclusive remedy, and a federal bankruptcy court held in In re Albright that a single-member LLC's charging-order protection doesn't apply in bankruptcy, since it exists to shield other members who don't exist here.
Colorado has no annual franchise tax on LLCs. Instead, every LLC must file a Periodic Report with the Secretary of State each year for a $25 fee to stay in good standing, regardless of income or activity, plus a $50 late fee if the report is filed after the window closes.
No. You file Articles of Organization online with the Colorado Secretary of State for a $50 fee to form the LLC, and the Articles must state whether management is vested in managers or members. The operating agreement itself stays with your own business records; it's never submitted to the state.
Largely yes. Colorado allows the duties of loyalty and care to be restricted or even eliminated by the operating agreement, as long as the provision isn't manifestly unreasonable. The one duty that can't be eliminated is good faith and fair dealing, though the agreement may set the standard used to measure it.