The number of new businesses in Colorado shot up 12.3% in the first quarter from a year ago, according to new data from the Secretary of State’s Office released Monday.
Approximately 54,620 entities filed to incorporate in the state in the first three months this year, which was just a tad lower than the quarterly record set three years ago when the state cut fees to $1 to encourage post-pandemic business growth. Filing fees are back to $50.
Brian Lewandowski, an economist at the University of Colorado business school’s business research division, called the growth “extraordinary” Monday during a new conference. The numbers do follow a seasonal pattern with a 27.3% jump from the fourth quarter because business activity tends to ramp up at the start of the year.
“But this Q1 is special,” he said. “It’s really the highest level of new entity filings that we’ve seen in history, at least going back to 2005.”
The economy hasn’t been the most favorable to local businesses. Worried about global trade, geopolitical challenges and state budget shortfalls last year, Colorado employers did not add jobs for the first time since 2020. The state lost 7,700 jobs instead. The number of Coloradans in the labor force has also been shrinking, though that’s similar to what is happening nationwide. The rate of Coloradans who are working or looking for work is ranked eighth highest in the U.S.
More folks could be starting a business after losing a job or having trouble finding one. But Lewandowski said that’s pure speculation. It’s hard to pinpoint reasons from the data, which only includes names, locations, dates and type of business, such as a nonprofit, limited liability company or corporation.
The vast majority of new entity filers are in Colorado. But “foreign” entities, or filers from outside Colorado, had a 66.5% jump in new filings from a year ago — to 5,147 from 3,091 a year ago. About 88% or nearly 47,000 filings were from companies in Colorado, followed by 696 from California, 594 from Texas, and nearly 500 from New York and Florida, as seen in the map below. Another 50-plus had addresses outside the U.S.
“It could be a franchise opening up more Colorado locations,” said Lewandowski, who wasn’t sure why there was an uptick in foreign filings. “That is what it means. Some sort of foreign, outside Colorado domiciled company is opening up a new location in Colorado.”
Other business filings data showed that 3.5% fewer Colorado businesses dissolved during the first quarter from a year ago and renewals were up 1%. But the number of companies considered delinquent because they’re late on their periodic filings or paying fees, was up 9.4%.
According to the Secretary of State’s Office, the agency also continues to address complaints about fraudulent filings and business identity theft. Since February 2023, there have been 9,026 reports of fraudulent filings. Of those, 5,765 have been completed and 2,302 are still under review.