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Doing business in

Colorado

Navigate Colorado’s business landscape with ease—whether you’re incorporating, expanding, or managing tax compliance. Commenda helps you stay ahead with automated solutions for incorporation, compliance, and tax filings.
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colorado

Business Overview

Colorado features a diverse economy with strengths in aerospace, technology, energy, and outdoor recreation industries. The state combines a highly educated workforce, strong innovation culture, and quality of life factors that make it attractive for both startups and established businesses seeking growth opportunities.

Key Facts & Figures

Category Details
Capital Denver
Major Cities Denver, Colorado Springs, Aurora, Fort Collins, Lakewood
State Sales Tax Rate 2.90%
Local Sales Tax Rate Up to 8% additional (varies by locality)
Corporate Income Tax 8.84% flat rate (plus $800 minimum franchise tax)
Physical Nexus Threshold Physical presence including property, employees, or in-state representatives
Economic Nexus Threshold $100,000 in annual sales

Did you know?

Colorado has the highest concentration of aerospace and defense companies in the United States, with over 300 companies employing more than 190,000 workers.

Setup & Compliance

Colorado offers a business-friendly environment with mostly online registration processes.

Starting a Business in Colorado:

  1. Select Your Business Structure: Compare liability protection and tax advantages of different entity types.
  2. Register Your Business: File formation documents through the Colorado Secretary of State’s online portal.
  3. Obtain Necessary Licenses: Research and acquire relevant state and local business licenses.
  4. Register for Tax Accounts: Register with the Department of Revenue for sales tax and withholding if applicable.
  5. Set Up Employment Requirements: Register with the Department of Labor if hiring employees.

Key Compliance Considerations:

  • Periodic Reports: Colorado requires regular periodic reports (typically annually) for most registered entities.
  • Sales Tax Licensing: Businesses must obtain a sales tax license and collect state and local sales taxes.
  • Trade Name Registration: Businesses operating under a name different from the legal entity name must register a trade name.
  • Local Compliance: Counties and municipalities may have additional licensing and permitting requirements.

Hiring & Payroll

Colorado has enacted several progressive employment laws that employers must follow.

Colorado Payroll Requirements:

  • Unemployment Insurance: Rates range from 0.75% to 10.39% on first $13,600 in wages.
  • State Income Tax Withholding: Flat 4.55% of federal taxable income.
  • Paid Family and Medical Leave Insurance: Starting January 2023, 0.9% of wages split between employer and employee.

Colorado Employment Laws:

  • Minimum Wage: $13.65 per hour ($10.63 for tipped employees).
  • Overtime: Due for hours over 40 per week, 12 per day, or 12 consecutive hours.
  • Paid Sick Leave: 1 hour for every 30 hours worked, up to 48 hours annually.
  • Wage Transparency: Job postings must disclose compensation and benefits.
  • Final Paycheck: Due immediately if terminated; next scheduled payday if resigned.

State Incentives

Colorado develops strategic economic incentives to attract innovative businesses.

Key Business Incentives:

  • Advanced Industries Acceleration Grant Program: Support for high-tech and innovative industries.
  • Job Growth Incentive Tax Credit: Encourages job creation in targeted sectors.
  • Enterprise Zone Program: Tax credits for businesses in economically distressed areas.

Small Business & Startup Support:

  • Colorado Small Business Development Center: Provides business consulting and resources.
  • Proof of Concept Challenge: Grants for early-stage innovative businesses.
  • Rural Jump-Start Program: Tax exemptions for businesses in rural areas.

Regulatory Considerations

Colorado maintains progressive regulatory standards across various business sectors.

Key Business Regulations:

  • Data Privacy: Comprehensive data protection laws with strong consumer rights.
  • Environmental Compliance: Advanced regulations supporting sustainable business practices.
  • Professional Licensing: Rigorous licensing for healthcare, cannabis, and technical industries.

Additional Regulatory Areas:

  • Cannabis Industry Regulations: Unique and detailed compliance requirements.
  • Workplace Equity: Strong anti-discrimination and equal pay regulations.

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