Start a business in Colorado

Most states have one sales tax administration. A city, a county and a transit district may all take a share, but one revenue department collects it, on one return, using one definition of what is in the base. Colorado has that system too — and then it has about seventy home-rule municipalities sitting outside it.

A home-rule city administers its own sales tax under its own municipal code. The Department of Revenue's return does not cover it, the Department cannot resolve a dispute with it, and — the part that catches people — it does not have to use the state's definition of a taxable sale. Something exempt at state level can be taxable inside a city, and the city decides.

Take a small firm on the Front Range selling into Denver, Boulder and Aurora — all home rule, all within an hour's drive of each other. Here is what that actually means, in order.

The state does try to help with the paying part: the Sales and Use Tax System (SUTS) lets you remit to participating home-rule jurisdictions through one portal, and the Department publishes the list of which ones participate. Use it — it is genuinely better than nothing. But it moves money; it does not consolidate your licences and it does not merge seventy municipal codes into one taxable base. The judgement calls stay yours, city by city.

It is worth being precise about what Colorado itself charges, because the reputation of the local system unfairly colours it. The state's side is the least demanding of any state in this region.

Registration is through MyBizColorado or form CR 0100. If you have no physical location in Colorado and sell remotely into it, the licensing position differs — check the Department's retailer guidance rather than assuming the $16 per-location rule describes you. The formation hub covers the $50 articles of organisation and how Colorado compares on the entity side.

No Colorado city taxes income. Five of them — Denver, Aurora, Glendale, Greenwood Village and Sheridan — charge an occupational privilege tax instead, which is a flat monthly head tax on people, not a share of what they earn or what you make.

Denver's is the one most businesses meet: $5.75 a month withheld from each employee who earns at least $500 for work done in the city that month, plus $4.00 a month paid by the business for each of those employees. It is charged per head whether the business made money that month or not.

The amounts are small; the administration is not proportionate to them. It is a monthly filing tied to which employees did work in that specific city in that specific month, which is fiddly for anyone with staff who move between sites.

Workers' compensation is required for every employer with one or more employees working in Colorado — the Division of Workers' Compensation puts it as applying "regardless of the number of employees, whether the employees only work part-time, or if they are members of the same family". There is no threshold to sit under and no family carve-out.

Alongside it sits FAMLI, the state paid-leave programme, at 0.88% of wages in 2026, split 0.44% employer and 0.44% employee. There is a real break for small employers and it is narrower than it sounds: an employer with nine or fewer employees pays none of the employer half — but must still withhold the employee's 0.44%, report it and remit it. Exempt from the premium, not from the administration. On a $60,000 salary that is $264 a year coming out of the employee's pay that you are responsible for handling correctly.

Unemployment insurance follows the standard test: register with the Colorado Department of Labor and Employment once you pay $1,500 or more in wages in a calendar quarter in the current or previous calendar year, or employ at least one person for any part of a day in each of 20 weeks in a year.

Colorado's recurring state filing is the periodic report: $25, due in your anniversary month with a two-month window either side, which is generous by any standard. Miss the window and there is a $50 late fee — the report went from $10 to $25 in July 2024, so older guidance understates it.

Add it up and the first ninety days run $150–$900: $50 to form, $16 for the state sales tax licence plus the refundable $50 deposit, a separate licence for each home-rule city you sell into, general liability cover, and workers' compensation from the first employee. The periodic report falls in your anniversary month rather than the first quarter.

The honest summary of Colorado: nothing the state charges is expensive or slow. The cost of being here is the map — how many home-rule cities you have decided to sell into, and whether you knew you were deciding.