Colorado LLC Tax Rate: Everything You Need to Know
Colorado LLC tax rate is designated for certain business types. An LLC can be classified as a sole proprietorship, partnership, or corporation for tax purposes.3 min read
2. Annual Filing Requirements
3. Colorado State Business Tax
4. State Employer Taxes
Colorado LLC tax rate is designated for certain business types. An LLC can be classified as a sole proprietorship, partnership, or corporation for federal tax purposes. A license must be obtained through the state and a fee must be paid. Business types that fall into this category include:
- Family Therapists.
- Physical Therapists.
- Real Estate Agents.
Colorado requires the name of the LLC (Limited Liability Company) to include "Corporation", "Incorporated", "Limited", or an abbreviation such as LLC, or L.L.C. The name must imply its purpose and match the description of the company's purpose in the articles of incorporation. The name cannot be similar to or the same as another company in a deceptive manner. This applies to domestic and foreign corporations, limited partnerships, limited liability companies, or other Colorado business entities. A name may be reserved for a period of 120-days.
Colorado LLC Formation
Forming a Colorado LLC requires the articles of organization to be filed with the Colorado Secretary of State. The person(s) forming the organization must be over the age of 18. However, members of the LLC are not restricted by age or residence. Colorado LLC members do not have to be listed in the articles of organization.
The duration of the LLC is perpetual unless a stipulation is made in the Colorado Articles of Organization regarding the company's existence or until the LLC is dissolved or terminated. A registered agent must be appointed and kept in place to act as the point of contact for any communications from the state. The registered agent must be available at the physical address during normal business hours to receive any legal or tax documents related to the Colorado LLC.
After filing and formation of the LLC, an operating agreement should be drafted to document the management, profit and loss allocation, and member capital contributions. This document does not have to be filed with the State of Colorado.
Annual Filing Requirements
There are specific filing requirements for annual filing. They include:
- Both domestic and foreign LLC periodic reports to be filed online for a $1 processing fee. If late, a $40 fine is assessed.
- A report is due annually on the anniversary date of the organization's incorporation. A postcard notification is sent to the corporation's registered agent as notice that the report is due.
- LLC's must file a Colorado Form 106 if any income is received from Colorado resources.
- Returns and taxes must be filed three and a half months after the tax year closes.
Colorado State Business Tax
LLCs are pass-through entities where any income taxes are passed to the individual LLC members. Therefore, LLCs do not pay income taxes. While some states apply a separate tax or fee to conduct business in that state, Colorado does not. If the owners of the LLC want to have the business treated as a corporation for tax reasons, they must file IRS Form 2553. This means the company must file a tax return and eliminates the pass-through of taxes.
The State of Colorado taxes corporation income. The tax can be paid through the state's Department of Revenue (DOR) using Form 112. Colorado does not require a state identification number for business purposes.
State Employer Taxes
All Colorado employers must pay taxes to the state. As an employer, you must withhold and pay employee income taxes to the Department of Revenue. The process of filing withholding taxes should be completed weekly, quarterly, or monthly and can be completed online or via paper (Form CR). To reconcile the LLC's tax withholding, Form DR 1093 and/or Form DR 1106 must be used each year.
In most situations, you will need to register to pay state unemployment insurance (UI) taxes through the Colorado Department of Labor and Employment. Most employers are able to complete this step online. If ineligible, Form ITL-100 should be downloaded, completed, and filed. Form UITR-1 should then be used to report wages and pay the UI taxes. This can also be done online or via paper.
If goods are sold to customers in Colorado, sales tax must be collected and paid through the Department of Revenue (DOR). You must be registered with the DOR which can be completed online or with Form CR 0100AP (Colorado Sales Tax Withholding Account Application). A sales tax license will be sent to your after registration is completed.
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