New business filings climb to record level in Colorado

Phil Castle, The Business Times

Jena Griswold
Brian Lewandowski

A record number of new business filings bodes well for a Colorado economy otherwise expected to slow this year.

The secretary of state’s office recorded 48,806 new entity filings in the fourth quarter of 2022 — a 37.2 percent year-over-year increase and the most ever for the fourth quarter.

Another 171,210 existing entity renewals were recorded in the fourth quarter of 2022, a 2.9 percent year-over-year gain.

“Colorado isn’t just a great start to start a business, but a great place to stay in business,” said Jena Griswold, secretary of state.

Other indicators — including job growth,  personal income and gross domestic product — also offer encouragement. But higher inflation and interest rates as well as slowing consumer spending pose headwinds, said Brian Lewandowski, executive director of the business research division of the Leeds School of Business at the University of Colorado in Boulder.

The division prepares a quarterly business and economic indicators report based in part on information from the secretary of state’s office.

Griswold said she’s heartened by what she considers an upward trajectory for business filings and other indicators. “Colorado’s economy is strong and in a strong position.”

New filings for businesses, nonprofit corporations and other entities increased almost 11.8 percent between the third and fourth quarters of 2022.

For all of 2022, 175,650 new entity filings were recorded. That’s an 11.5 percent gain over 2021.

New entity filings constitute a leading indicator of subsequent business and job growth.

While many factors go into decisions to start new businesses, Griswold said Colorado offers a business friendly environment.

She said she’s pushing to extend a reduction in filing fees as well as help businesses guard against identity theft and deceptive solicitations.

Lewandowski said it’s unknown exactly what’s behind the fourth quarter surge in new entity filings. But more people are starting ventures, perhaps to supplement their incomes.

A total of 698,970 entity renewals were recorded in 2022, a 6.3 percent increase over 2021.

A total of 917,384 entities were in good standing as of the fourth quarter, up 6.4 percent from a year ago.

Business dissolution filings hit a record in the fourth quarter and delinquencies also increased, however.

There were 13,293 dissolution filings in the fourth quarter, up 17 percent from the fourth quarter of 2021. For all of 2022, there were 49,491 dissolution filings, up 22.4 percent from 2021.

Total delinquencies climbed to 798,981 in the fourth quarter of 2022, up 9.7 percent from the fourth quarter of 2021.

Lewandowski said Colorado fares better than many other states in other economic measures.

Nonfarm payrolls increased 104,700 in 2022, a 3.7 percent increase in employment that ranked eighth nationally. The statewide seasonally adjusted unemployment rate fell two-tenths of a point between November and December to 3.3 percent.

A 7.9 percent gain in per capital personal income in Colorado ranked first.

Gross domestic product — the broad measure of goods and services produced in the state — increased at an annual rate of 3.2 percent in the third quarter. That matched national growth in GDP for the quarter and ranked sixth highest among the states.

Slower growth is forecast for 2022, he said.

Inflation remains high with a 6.9 percent year-over-year increase in the Consumer Price Index for the Denver, Aurora and Lakewood area in November.

Higher interest rates imposed to curb inflation have slowed business investment.

In addition, there are indications the consumer spending that accounts for the bulk of economic activity is slowing, he said.

Still, Colorado remains poised to continue to outperform other areas of the United States, Lewandowski said.