Colorado Business License: Everything You Need to Know
The state of Colorado does not have a generic or general license nor does it have a state business license.7 min read
2. Colorado Business: Colorado Tax Registration
3. Colorado Business: Business Licenses
4. Colorado Business: Local Permits
5. Colorado Business Resources: Incorporation Filing
6. Essential Business Records
7. New Hire Reporting
8. Insurance Requirements
9. Applying for a Business License in the State of Colorado
10. Starting a Business: Frequently Asked Questions
11. SBDC Network
Updated November 3, 2020:
What Is a Colorado Business License?
In Colorado, certain businesses must maintain a Colorado business license, which authorizes them to operate certain types of businesses in the state of Colorado.
Colorado Business: Colorado Tax Registration
If you're starting a new business in Colorado, you are required to register for taxes regarding your business's products or services. Depending on the services your businesses provide, additional taxes may also be assessed, including the following: a liquor excise tax, a tax on cigarettes and tobacco, a severance tax, and a fuel excise tax.
Colorado Business: Business Licenses
Additionally, Colorado-based businesses are required to obtain permits or licenses associated with the services offered. Obviously, the cost of the permit and the conditions involved in each individual permit or license are different, depending on the circumstances. Here are some examples of state permits and licenses: beer and wine licenses; plumbing permits; and bingo licenses and raffle licenses.
The state of Colorado does not have a generic or general license nor does it have a state business license. Instead, licenses are occupation-specific. One can apply for a license for different state agencies depending on the type of business, profession, or activity.
The relevant agency will monitor and regulate the appropriate license. Each agency has different requirements for their license or permit, specific to the needs and circumstances of the license. Sometimes the licensing is referred to as a sales or user tax license.
Colorado Business: Local Permits
Local governments, including cities and counties, may require additional specific perk permits and/or licenses. Each municipality may have its own unique regulations, specific to the location. Some of the most common licenses, but not the only licenses in Colorado, include the following:
- Alarm permit
- Building permit
- Health permits
- Business licenses
- Tax permits
- Occupational permits
- Signage permit
- Zoning permits
Colorado Business Resources: Incorporation Filing
Non-profits, partnerships, corporations, and limited liability companies are required to register with the Colorado Secretary of State. Sole proprietorships, on the other hand, are not required to register in the state of Colorado. This is because, in sole proprietorships, all profits are considered the income of the proprietor of the business. However, owners of sole proprietorships are liable for the debts of the businesses.
Essential Business Records
Different states have different requirements for maintaining business records. In Colorado, employers are required to maintain and track the following employment records for a minimum of four years:
- Employee identification number
- Employees full name
- Employee contact information
- Employee Social Security number
- Copies of tax withholding allowance certificates
- Pension payments data
W-2 and W-4 Forms
Certain rules apply to employers in all states. Employers are required to ensure that employees return the completed form W-4, which is a withholding exemption certificate. Upon receipt, employers must mail the forms to the IRS to be officially filed. Additionally, employers in Colorado have to send Social Security Administration a form W-2. A W-2 form contains information about the withheld taxes as well as the wages that are paid to employees. These documents must be submitted by the end of February of each year.
Employee Eligibility Verification Form I-9
When employers hire new employees in the state of Colorado, the employer should have the employee complete a form I-9. This form must be completed and returned to the employer within three days of employment. Form I-9 establishes each employee is eligible to work. It is an employer's responsibility to maintain a copy of employees’ I-9 form to avoid complications in the future.
New Hire Reporting
Whether an employee is a new employee or is an employee returning to work, this new employment needs to be reported. Employers should contact the Colorado State Directory of New Hires. This report should be filed with the Colorado State Director of New Hires within 20 days of the date the employee is hired or rehired. This responsibility is borne by the employer, not the employee. Employers should include the employees’ name, address, Social Security number, the employers’ payroll address, and the employer’s federal identification number.
Employers that maintain employees must pay Colorado unemployment taxes. Employers are also required to pay into the workers' compensation fund via a tax. In Colorado, unemployment insurance provides money to people who are unemployed through no fault of their own based on the circumstances. Workers' compensation is designed to compensate workers for injuries suffered while on the job.
Applying for a Business License in the State of Colorado
As a preliminary matter, it is important to note that not every business requires a license. Instead in Colorado, as well as in certain cities within the state of Colorado, only specific businesses are required to maintain a license. Contractors who need a license should visit the Community Planning and Development website for the city of Denver. Alternatively, they may visit the state of Colorado website for state business licensing requirements. A generic or non-specific business license is not required by the state of Colorado. Instead, different state agencies issue different types of licenses for businesses, professions, and certain activities. In addition to the occupational license database, the Department of Regulatory Agencies, DORA, provides links to information about an assortment of specialized licenses for various industries and professions. Limited liability corporations, nonprofit corporations, and for-profit corporations are also required to register the business structure with the Secretary of State in Colorado.
Starting a Business: Frequently Asked Questions
As a preliminary matter, the Colorado Business Resource Book provides general information about starting a business in Colorado. The guide includes licensing information for individual businesses as well as specific forms that a new business may need to file.
- How Do I Know If My Planned Business Name Is Already Being Used?
You can check with the Secretary of State's website in the state of Colorado to determine whether someone else is already using a business name. Limited Liability Companies, corporations, general partnerships, and sole proprietorships all register the required documents with the Secretary of State. However, registering a tradename with the Secretary of State does not grant exclusive rights to that name. Tradenames are not legally protected in the state of Colorado. Consequently, you can use any business name you wish, even if another business is already using the same name. However, businesses are costing the wisdom of operating under the same name as a business.
- How Do I Apply for a State Tax Identification Number?
Businesses apply for a state tax identification number in the state of Colorado by using an online form. This online form is referred to as CR 100 - new employer registration.
- What Is the State Sales Tax in Colorado?
In Colorado, the rate for state sales tax is 2.9 percent. However, the precise rate will be determined by including both the base sales tax rate of 2.9 percent as well as various other rates that apply depending on the location where the sale is completed. There are 71 cities called "home rule cities." These cities require a portion of sales tax on all sales that occur within that jurisdiction.
- How Do I Purchase Workers' Compensation Insurance?
Workers' Compensation insurance can be bought through private insurance companies within the state of Colorado. Colorado does not maintain a state fund for Workers' Compensation. Instead, the Colorado legislature has created Pinnacol Assurance, a nonprofit insurance carrier to sell Workers' Compensation insurance.
- Are There Grants for Small Businesses in the State of Colorado?
Yes. Small business innovative research grants are generally issued by federal agencies looking for research and development in narrow, precise areas. These areas include biotechnology, as well as military weapons development, and other high-tech fields. SBIR Colorado is a nonprofit organization that will assist you as an entrepreneur, scientist, or researcher, to identify SBIR grant opportunities.
- Where Can I Find Information About the Cost of Living and Quality of Life in the State of Colorado?
The Colorado office of economic development publishes something called the Colorado Databook. This book is basic information regarding the state of Colorado as a whole. There are more than 50 economic development offices in the state of Colorado. Colorado also boasts more than 150 chambers of commerce that provide information on specific locations.
- What General Questions Will Be Asked on the Business License Form?
When you're applying for a business license within the state of Colorado, you can reasonably expect to be asked the following questions:
- What type of business do you have?
- What is your business address?
- What is your business tax ID number or your Social Security number?
- How many employees will you have?
- What is the name of the owner?
- What is the owner's address?
- What is the name of the business?
- Is this a home-based business?
The Colorado small business development center also calls the SBDC network maintains the clearinghouse of local, state, federal, and educational resources. They also provide free confidential business consulting services. Finally, they offer low-cost and no-cost business training courses and workshops to help you develop your business.
The SBDC network publishes the Colorado business resource book. This complete guide for new businesses provides information on such topics as bookkeeping, legal structure, employer responsibilities, business planning, and taxation issues. SBDC operates an occupational license database. This database allows you to select your industry from a drop-down menu and then links you to an overview of any licensing requirements and contact information for the relevant state licensing agency.
If you need help with your Colorado business license, you can post your legal need on UpCounsel’s marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.