Form Your Business
Most companies will organize as either an LLC or a corporation. We typically do not recommend that companies start a business as a sole proprietorship or general partnership, as these types of entities vest personal liability for the company’s debts and obligations in the name of the owners. LLC’s and corporations, on the other hand, often help the owners avoid personal liability.
Whether your business forms as a corporation or an LLC is likely decided by the fundraising decisions that are made in step 1 above. For instance, if a founder or investor wishes to invest 401k funds into the business, it may be advisable to be structured as a C-Corporation. Also, corporations tend to require less disclosure to TTB down the road. LLC’s on the other hand, tend to be less structured than corporations, and may be an effective way lessen the overall tax burden of the company and/or its owners.
Forming a business in most states involves filing your Articles of Organization / Incorporation documents with the Secretary of State (some states have other agencies handling this function, such as a Corporation Commission).
It is often advisable or even required that a company write-up a comprehensive document that outlines the rights and responsibilities of the members, and appoints the initial officers and/or managers of the company. For an LLC, this document is called the “Operating Agreement.” For a corporation, this document is called the “Bylaws.”
You will need to provide your company’s organizational documents (articles and operating agreement/bylaws) to both TTB and Colorado in order to apply for your brewer’s notice and manufacturer’s license, so keep them handy.
Many states will also require you to obtain a state tax license, register as an employer, set up an unemployment insurance account, and/or obtain a sales and use tax certificate. Each state is different, so check with your state’s agency to find a checklist of items needed to start and operate a business.