Colorado Business Taxes: Agencies, Accounts & Dates (2026, 2027)

Core Colorado Business Taxes and Who Administers Them

Running a small business in Colorado means dealing with four main government bodies: the Colorado Secretary of State (SOS), the Internal Revenue Service (IRS), the Colorado Department of Revenue (CDOR), and the Colorado Department of Labor and Employment (CDLE).

The Colorado Department of Revenue handles three essential taxes for most businesses: Sales and Use Tax, Business Income Tax, and Wage Withholding Tax. Depending on what your business sells or does, CDOR also administers the Retail Delivery Fee, Consumer Use Tax, Special Event Sales Tax, Lodging Taxes, Marijuana Taxes, Firearms and Ammunition Tax, Severance Tax, IFTA, and the Carryout Bag Fee. Property taxes are overseen separately through the Department of Local Affairs (DOLA).

If you hire employees, you will also report to the Colorado Department of Labor and Employment for Unemployment Insurance (UI) premiums, workers' compensation requirements, and the Family and Medical Leave Insurance (FAMLI) program. At the federal level, the IRS requires businesses to cover five general tax categories: income tax, estimated taxes, self-employment tax, employment taxes, and excise tax.

• Colorado Secretary of State (SOS): Entity formation, trade name renewals, certificates of good standing, and periodic report filings.
• Internal Revenue Service (IRS): Federal Employer Identification Number (EIN), annual income or information returns, self-employment tax (Schedule SE), and federal employment taxes (Forms W-4, I-9, 941, and W-2).
• Colorado Department of Revenue (CDOR): State business income tax, state and state-collected local sales and use tax, employee wage withholding, and state fees.
• Colorado Department of Labor and Employment (CDLE): State Unemployment Insurance (UI) premiums and wage reporting, FAMLI, and workplace labor compliance.

• IRS: Business taxes
• tax.colorado.gov: Getting Your Business Started with Colorado Taxes

Colorado Tax Portals and Account Numbers

Colorado splits business registration, tax filing, local city sales taxes, and employer payroll across several online portals. Knowing which portal handles which task prevents missed filings and login lockouts.

When CDOR approves your state sales tax license or wage withholding application, you receive a Sales Tax Account Number or Wage Withholding Account Number. Both are referred to as your Colorado Account Number (CAN). Your physical licenses arrive in the mail, and you use the Letter ID numbers printed on those licenses to link your accounts inside Revenue Online.

• tax.colorado.gov: Getting Your Business Started with Colorado Taxes
• tax.colorado.gov: Sales & Use Tax

Step-by-Step New Business Tax Setup Checklist

Setting up your Colorado tax accounts in the wrong order causes delays because state portals ask for federal numbers and mailed Letter IDs. Follow this sequence written by our team from the official CDOR and IRS startup checklists.

• Step 1: Select your business entity structure (Sole Proprietorship, Partnership, LLC, or Corporation) and choose your tax year.
• Step 2: Create a new business record with the Colorado Secretary of State. Note that effective July 1, 2025, Colorado updated its registered agent requirements.
• Step 3: Apply for a federal Employer Identification Number (EIN) from the IRS.
• Step 4: Register for Colorado tax licenses. If your business maintains a physical location in Colorado (including an office, warehouse, distribution facility, or home office of a Colorado resident employee) and makes taxable sales, use MyBizColorado to apply for your sales tax license, wage withholding license, and CDLE unemployment account at the same time. If you are an out-of-state business without a physical location in Colorado, register through Revenue Online under Out-of-State Retailer/Employer Registration or file paper Form CR0100.
• Step 5: Contact every home-rule city where you do business to apply for local sales tax and business licenses directly with those municipalities.
• Step 6: Wait for your physical Sales Tax License and Wage Withholding License in the mail, then create a login ID on Revenue Online and go to Account Access to connect each Colorado Account Number (CAN) using the Letter IDs from your mailed licenses.
• Step 7: Collect federal Form I-9, federal Form W-4, and Colorado Form DR 0004 from your employees when you start hiring, and report all new hires to the State Directory of New Hires by the due date.

• tax.colorado.gov: Getting Your Business Started with Colorado Taxes
• sos.state.co.us: Business Organizations Skip to content

Colorado Business Income Tax and Self-Employment Rules

Any corporation, partnership, joint venture, limited liability company (LLC), or other organization that is required to file a federal income tax return must also file a Colorado income tax return if it is doing business in Colorado beyond the protections of Public Law 86-272. At the federal level, all businesses except partnerships file an annual income tax return, while partnerships file an information return.

If your business operates only inside Colorado, you compute your Colorado tax on 100% of your Colorado taxable income. If your business operates in multiple states, you must apportion your taxable income across the states where you do business. Pass-through entities can also review the SALT Parity Act election through CDOR.

First-time Colorado business income tax filers face a specific portal restriction: you cannot file your very first Colorado income tax return directly through Revenue Online. First-time filers must submit a paper return or file through an accepted third-party tax software program. Once CDOR processes that initial return, you can create a Login ID and password to file future returns in Revenue Online. Even without a login, you can still use Revenue Online to make a payment, submit e-filer attachments, file a protest, or add a Power of Attorney.

If you are a sole proprietor or independent contractor, federal income tax is a pay-as-you-go system. You must pay federal self-employment tax (Social Security and Medicare) and file Schedule SE with Form 1040 or 1040-SR if your net earnings from self-employment are $400 or more, or if you receive $108.28 or more in wages from a church or qualified church-controlled organization exempt from Social Security and Medicare taxes. When withholding does not cover your income and self-employment taxes, you make regular estimated tax payments during the year.

• tax.colorado.gov: Business Income Tax
• tax.colorado.gov: Business Income Tax

Sales and Use Tax, Home-Rule Cities, and 2026, 2028 E-Filing Rules

If you make taxable sales in Colorado, you must collect state and applicable local sales taxes. Taxable tangible personal property includes standard retail goods like clothing, furniture, and jewelry, as well as digital items like videos, music, and e-books. Colorado also taxes prepared food and drink sold by restaurants, bars, and caterers, short-term rentals of rooms and accommodations, and specific services including telephone services, telegraph services, and commercial gas and electric service.

A Colorado state sales tax license is valid for a two-year period and expires on December 31 of every odd-numbered year (such as December 31, 2025, December 31, 2027, and December 31, 2029). If you sell at an event where more than three sellers make retail sales outside their normal business location occurring no more than three times per calendar year, you must get a Special Event Sales Tax License unless the event organizer holds a license to collect tax on behalf of all sellers.

Colorado has both state-administered local jurisdictions and self-collecting home-rule cities. You use Revenue Online to file state-collected sales taxes (and retailers with two or more sites can file via an approved spreadsheet service in Revenue Online). For participating self-collecting home-rule municipalities, you can look up rates in the state GIS tool and file through the Sales & Use Tax System (SUTS).

Two major rule changes took effect on January 1, 2026. First, under House Bill 25B-1005, retailers may no longer retain the state sales tax service fee starting January 1, 2026, though you may still be eligible to keep local jurisdiction service fees listed in CDOR publication DR 1002. Second, CDOR adopted rules 39-21-119.5-2, 39-21-119.5-10, and 39-21-119.5-11 phasing in mandatory electronic filing between 2026 and 2028. If you do not file electronically when required, the penalty is the greater of $50 or 5% of the tax due.

• tax.colorado.gov: Sales & Use Tax
• tax.colorado.gov: Getting Your Business Started with Colorado Taxes

Employer Payroll Taxes: Wage Withholding and Unemployment Insurance

Whenever your business pays wages to Colorado residents or employees performing work in Colorado, you must withhold Colorado state income tax from their pay and remit it to CDOR. If an employee works in another state, you must follow that state's withholding rules. Keep Colorado Form DR 0004 on file alongside federal Forms W-4 and I-9. Note that the 2026 Colorado minimum wage is $15.16 per hour, and $12.14 per hour for tipped employees.

Most employers must also pay Colorado Unemployment Insurance (UI) premiums to CDLE if they meet either of two triggers during the current or previous calendar year: paying at least $1,500 in wages in a calendar quarter, or employing at least one person for any part of a day in 20 weeks (the weeks do not need to be consecutive or involve the same employee). Domestic, agricultural, and nonprofit employers follow separate liability charts.

You pay UI premiums on each employee's chargeable wages up to the annual cap. The chargeable wage base has risen steadily: $20,400 in 2023, $23,800 in 2024, $27,200 in 2025, $30,600 in 2026, and $32,100 in 2027. By our calculation from CDLE's chargeable wage limit schedule, the taxable wage cap per employee increased by $1,500 (or 4.90%) from 2026 to 2027, and by $11,700 (or 57.35%) across the four-year span from 2023 to 2027.

New employers pay an industry-based introductory rate for the first year of business activity, or the first three years for construction-related employers. After you build sufficient reporting history as of June 30 of a given year (36 months of reporting history as of June 30 for construction employers), CDLE assigns an experience (computed) rate. As of June 30, 2026, the Colorado UI Trust Fund balance stood at $1.6 billion, creating a reserve ratio of 0.843%. Because of that reserve ratio, Colorado employers are placed on the 0.008 to 0.011 rate schedule for calendar year 2027, and the Solvency Surcharge is not in effect for 2027.

• cdle.colorado.gov: Premiums
• cdle.colorado.gov: Premium Rates

Worked Example: How Colorado Calculates Your UI Rate and Penalty Exposure

Understanding how CDLE calculates your Total Combined Rate on your annual UI Rate Notice, and how CDOR calculates e-filing penalties, helps you verify your notices before protest windows close. Here are two worked examples calculated by our team using CDLE's 9-item Rate Notice formula and CDOR's 2026, 2028 e-filing penalty rules.

Worked Example 1 (CDLE UI Percent of Excess): Suppose your non-construction business has paid $9,000 in lifetime UI premiums (Item 1) and had $3,000 in lifetime benefits charged to your account for former employees (Item 2). Subtracting Item 2 from Item 1 gives you an excess of $6,000 (Item 3). If your average annual chargeable payroll over the previous three state fiscal years (July through June) was $60,000 (Item 4), CDLE divides the $6,000 excess by $60,000 to get a percent of excess of +10% (Item 5). That percent of excess maps to your base rate (Item 6), support rate (Item 7), and solvency surcharge rate (Item 8, which is zero for 2027) to produce your Total Combined Rate (Item 9). If you have an experience rate and no past-due balances, you can make a non-refundable Voluntary Premium Payment (VPP) online in MyUI Employer+ to raise your excess and potentially lower your rate.

Worked Example 2 (CDOR Sales Tax E-Filing Penalty): Suppose your retail store had $80,000 in gross sales in 2026. Under CDOR rules, you are required to file Form DR 0100 electronically starting January 2027 because your prior-year sales were $50,000 or more. If you mail a paper return in February 2027 with $600 in tax due, 5% of the tax due is $30, so CDOR assesses the $50 minimum penalty (the greater of $50 or 5%). If your paper return had $2,000 in tax due, 5% is $100, so your penalty for not e-filing is $100.

• tax.colorado.gov: Sales & Use Tax
• tax.colorado.gov: Businesses

Key Colorado Business Tax Dates and Deadlines

Missing a Colorado tax deadline or protest window can lock in higher unemployment rates or trigger automatic penalties. Keep these recurring dates on your calendar.

• tax.colorado.gov: Business Income Tax

Working with a Small Business Accountant and Bookkeeper in Colorado

The Colorado Department of Revenue states that it cannot offer personalized tax advice, advise you on which entity structure to pick, or tell you how to structure multi-state operations. When you work with an accountant or tax preparer, you can grant Third-Party Account Access inside Revenue Online so they can view letters, check balances, and file returns, and set up a Third Party Administrator (TPA) login in MyUI Employer+.

Aldro is the cheapest way to get your business taxes done: $399 flat, with bookkeeping at $20 a month. The flat price covers everything tax for the year (every federal and state or provincial business return: Schedule C, 1065, 1120-S, 1120 and state returns. T2 and T1 with T2125 in Canada), plus multi-state returns at the same price and the owner's personal return when the business income needs it.

If you have fallen behind, each unfiled prior year is billed at the same flat price. Extensions and quarterly estimate reminders are included, we work out quarterly estimates and CRA instalments, and 1099-NEC, T4/T4A and T5018 slips are included, along with city and local business returns and state franchise tax reports. Our bookkeeping covers unlimited bank and card accounts, monthly reconciliation and statements, but not payroll processing or sales-tax filing. If you are switching from Bench or another service, we start within a week of getting the documents.

• tax.colorado.gov: Business Income Tax
• tax.colorado.gov: Businesses