How to Start a Business in Colorado

Introduction

The state of Colorado offers a variety of resources for entrepreneurs and small business owners, including helpful information about licensing and tax requirements. Use the following steps to get started:

Get Licenses and Permits

The licensing and permitting process varies depending on where you’re located. If you’re going to be selling food, alcohol, or tobacco products, then you’ll need to get a license from the city or county where your business is located. To find out what licenses and permits are required for your location, call your city or county clerk’s office.

You will also need to register with the state of Colorado for business taxes and worker’s compensation insurance if you plan on hiring employees. This can be done through the Colorado Secretary of State website.

Register with the Colorado Department of Revenue Taxation Division

If you are a sole proprietor or a partnership, you will need to register with the state’s department of revenue Taxation Division. However, if you are a corporation or LLC (Limited Liability Company), then no registration is required. You can register online or in person at your local Department of Revenue office.

Purchase Insurance for your Business

Once you’re all set up, you’ll want to make sure that your business has the right insurance coverage. Colorado law requires that all businesses have liability insurance, either as part of their policy or as a rider. Liability insurance protects both the business owner and employees from financial losses related to lawsuits resulting from injuries or property damage caused by the business. It pays for legal expenses and damages if someone sues your company, so it’s vital to have this type of coverage if something happens on your watch.

In addition to liability protection, there are many other types of coverage options available:

• Employee benefits
• Property and casualty (for example, fire loss)
• Commercial auto liability (such as vehicles used in delivery or service work)

Get a tax ID for your Business

You need a tax ID number for your business if you plan to hire employees, register with the Colorado Secretary of State’s office or file any type of Colorado sales-and-use tax returns.

This number is also known as an Employer Identification Number (EIN), Federal Tax Identification Number or Federal Employer Identification Number. It’s comprised of nine digits and follows the format XX-XXXXXXX. The first five digits are always expressed in two groups: 23-6789012

Hire Employees and Pay Employment Taxes

In the hiring process, you will be required to complete a new hire form and update the Colorado Department of Labor and Employment (CDLE). This includes providing basic information about your business, such as:

• The number of employees hired
• The hourly wages paid to each employee
• Whether these employees are eligible for health insurance or other benefits.

You should also notify CDLE if any employee is fired or quits within 90 days from date of hire. You’ll need to pay unemployment taxes on wages paid after January 1st in the previous year. For example, if you hired someone in June 2019 and paid them $10/hour for six weeks before firing them on August 31st, then you’ll have to pay $300 worth of unemployment taxes on their final paycheck!

If you provide health insurance benefits for your employees (or arrange for COBRA continuation coverage), then there are specific rules about how much time must pass between when an employee leaves work before COBRA kicks in and it’s no longer required by law; otherwise known as “COBRA Continuation Coverage Requirements.

Make sure you get the proper documentation for your business.

Once you’ve decided on a business name and location, it’s time to get the proper documentation. First, you’ll need to get a Tax ID number from the Internal Revenue Service (IRS). Your EIN will help your new business file taxes, as well as open bank accounts and apply for loans.

Conclusion

Starting a business in Colorado can be a challenging and exciting process. There are many things to consider when deciding which type of business structure is right for you, including whether you want to incorporate it as an LLC or corporation. It’s also important to remember that each state has different laws regarding small business registration, so it’s best if you research what’s required before starting up your venture!