your one-stop resource for everything related to starting a small business in colorado.
If you sell, rent or lease tangible personal property in Colorado, you must obtain a sales tax license. The type of license you need and the amount of tax you are required to collect depends upon who you are selling to and where and how you are doing business. A license is also required to rent accommodations for periods of less than 30 days. The Colorado Sales Tax Guide, topic-specific publications and sales tax FYIs are found at colorado.gov/tax.
If you purchase items to use in your business, sales/use tax should be paid at the time of purchase or by filing a Consumer Use Tax Return, Form DR0252. The tax on items which were originally purchased for resale but are actually used by your business should be paid on your consumer use tax return. You may also be subject to local use taxes. Check with the city’s sales/use tax (DR 1002).
A retail sales tax license is required if you are selling, renting or leasing your product to the end user of the product. If you will be doing wholesale and retail sales, you only need a retail sales tax license. Apply for the sales tax license on form CR 0100, “Colorado Sales Tax/Wage Withholding Account Application.” You can also apply online at mybiz.colorado.gov. A retail sales tax license costs $16 for a two-year calendar period, plus a one-time $50 deposit. The deposit will be automatically refunded to you once you have collected and remitted a total of $50 in state sales tax to the Colorado Department of Revenue.
A wholesaler license is required if you are selling your product to another business that will resell your product or use it as an ingredient in another product to be resold. A wholesaler license costs $16 for a two-year period. Apply for the sales tax license on form CR 0100, “Colorado Sales Tax/Wage Withholding Account Application.” If your business is primarily wholesale, you may have up to $1,000 in retail sales per year and will not be required to obtain a retail sales tax license. If you will have more than $1,000 in retail sales per year, you should get a retail sales tax license and record your wholesale sales under your retail license.
If you plan to attend a single event as a vendor at a location other than your regular business location, you must obtain a single event license. A single event license costs $8 for each event, unless you already have a wholesale or retail license (in that case, there is no charge.) Apply for the single event license on form DR 0589, “Special Event Application.” To register a Trade Name, visit the Secretary of State at sos.state.co.us.
If you attend more than one event during a two-year period, you should obtain a multiple event license. A multiple event license costs $16 for a two-year calendar period, unless you already have a wholesale or retail license, and then there is no charge. Apply for the multiple event license on form DR 0589, “Special Event Application.” To register a Trade Name, visit sos.state.co.us.
Most county and city sales taxes are collected by the state. However, there are 72 self-collecting Home-Rule cities that collect their own sales tax and require separate reporting directly to the city. Any city or county can require a business license for business conducted within its jurisdiction. Form DR 1002 can be found at colorado.gov/tax and provides a list of self-collected Home Rule Cities with addresses and phone numbers. It is updated in January and July each year.
Retail and wholesale licenses are obtained by completing the Colorado Sales Tax/Wage Withholding Account Application, Form CR0100. Application can also be made at mybiz.colorado.gov. Multiple and single event licenses are obtained by completing the Sales Tax Special Events Application, Form DR 0589. All state sales tax licenses, except for single events, cost $16 per two-year calendar period. Each two year period is divided into four six-month quarters. The actual cost of your initial license will be prorated depending upon the quarter in which you obtain your license.
If you will be selling a product to the end user, you must collect sales tax. The amount of sales tax you collect depends generally on the location the purchaser receives the purchased property or service (see House Bill 19-1240). To determine the amount of tax you must collect, you need to add together the various rates that apply to your business (DR 1002). To determine how to collect the state tax, refer to the Colorado Sales Tax Guide for determining when to collect state and local sales tax.
The 2.9% state sales tax must be collected for all sales sourced to Colorado pursuant to Colorado law (see House Bill 19-1240).
Businesses are required to collect 1.0 percent for the Regional Transportation District (RTD) and 0.1 percent for the Scientific and Cultural Facilities District (SCFD), for a total of 1.1 percent for any sale made or delivered in those districts. The DR 1002 describes in detail the boundaries of RTD and SCFD. The boundaries for the two districts are not identical.
There are 224 cities with established sales tax. One hundred fifty two are state-collected; the remaining 72 are home-rule self-collected.
There are 35 state-collected jurisdictions with established lodging taxes.
Other special taxes are the Local Improvement District tax, Mass Transit District tax, Multi-Jurisdictional Housing Authority (MHA), Public Safety Improvement (PSI), Health Services District Tax (HSD), Metropolitan District Tax (MDT) and Local Marketing District Tax (DR 1002). Health Service Districts can also impose sales tax in Colorado. See DR 1002 for more information.
Example: To determine the amount of tax you must collect at your location, add all the rates that apply to your location and type of business. For example, if you have a restaurant in the City of Lakewood, you must collect 2.9 percent for the state, 1.1 percent for RTD/SCFD, 0.5 percent for Jefferson County, and 3.0 percent for Lakewood. Your total sales tax rate would be 7.5 percent. Sales tax is based on the seller’s location only if the purchaser receives the property at that location. Otherwise, sales tax is based on the location the purchaser receives the property or service (House Bill 19-1240). Refer to Colorado Sales Tax Guide for more information.
Publication DR 1002, “Sales/Use Tax Rates,” lists all the various sales tax rates throughout Colorado and should be used as a guide to calculate the sales tax rates for different locations. The Department of Revenue also publishes separate rate charts which are useful tools in determining the correct amount of tax based upon the tax rates and the dollar value of the sale. You can easily find the current sales tax and special tax rates in your county and/or city at colorado.gov/tax.
If your business involves sales at your client’s address, deliveries or is mobile, you must collect the appropriate tax for each sales location. This will apply to many different types of businesses, including but not limited to: traveling salespersons, mobile locksmiths and interior decorators. If this situation applies to you, you will not have a principal place of business and must collect the appropriate tax for each point of sale. You should obtain one retail sales tax license to collect all state taxes. You may need several city sales tax licenses from the self-collected Home Rule cities where you do business. You do not need to obtain an additional state tax license for each sale tax location. Department of Revenue Publication DR 1002, “Colorado Sales/Use Tax Rates,” lists all state, county and city sales tax rates, as well as addresses and phone numbers for self-collected home rule cites with separate licensing and collection procedures.
If you will be selling at events, you must have a state multiple events license. If the event is held in a city that collects its own city sales tax, you may be required to obtain an additional city sales tax license.
Flea markets that operate more than three times per year are considered to be a retail location. Neither statute or regulation establishes the rule described here, based upon selling at a flea market more than five times. The Colorado Sales Tax Guide currently states: “Anyone making sales at a flea market or farmers market in Colorado is a retailer and is subject to sales tax licensing, collection, and filing requirements with respect to each market at which they make sales.” You may not use an event license.
If your business has multiple permanent locations (sites), each site must have its own license and collect the appropriate tax. Exception: Vending machine operators and mobile businesses are only required to have one state license but report the appropriate tax collection under additional sites. However, each machine is required to display a vending machine decal and may still be subject to local licensing requirements. All local taxes and licensing at the vending machine location(s) are applicable.
Colorado allows charitable organizations that have been classified 501(c)(3) by the U.S. Internal Revenue Service an exemption from state-collected sales tax. The exemption must be requested in writing using the form, “Application for Sales Tax Exemption for Colorado Organizations,” Form DR 0715. The exemption only applies to items purchased for use in the regular charitable functions and activities of the organization. When making tax exempt purchases, the organization must show a copy of the exemption certificate or have one on file with the vendor. Purchases over $250 must be made using an organization check or credit card.
Tax exempt organizations must still obtain a sales tax license and collect sales tax on all items sold to the public. However, organizations making sales with net proceeds of less than $45,000 are exempt from state sales tax licensing and the obligation to collect sales tax. Most cities and counties have not adopted this exemption. Licensed charitable organizations are exempt from payment of the $50 deposit on retail sales tax licenses. See “FYI Sales 2: Sales Tax Exempt Status for Charitable Organizations: Application Requirement” at colorado.gov/tax for more information.
It is illegal to use your sales tax license to obtain personal goods or assets which you will use in business tax-free. Only goods which will be resold may be purchased exempt from sales tax. Sales tax must be listed separately from the purchase price on the items you sell on all invoices. Vending machines, bar drinks and mobile food cart vendors are exempt from this rule. It is illegal to advertise that you will make retail sales “tax free” or absorb the cost of sales tax.
Once you have obtained a sales tax license, you will be able to file returns. Returns may be file electronically after an online login has been established through Revenue Online at colorado.gov/RevenueOnline. Returns may also be filed on the paper form DR 0100 which is available at colorado.gov/tax under instructions and forms. If you have a wholesaler license, you will file annually.
If you have a retail license and you collect less than $300 in state sales tax each month, you may file quarterly. If you collect $300 or more in state sales tax every month, you must file monthly.
All sales tax returns are due the 20th of the month following the end of the taxing period (i.e., the return for April through June is due July 20). If the 20th falls on a Saturday, Sunday or holiday, the due date is the next regular business day. If you have a single or multiple event license, an individual return must be filed for every event. Each return must be filed by the 20th of the month following the month in which an event is held. County lodging tax, Local Marketing District Tax (LMD) and Home Rule city collected sales taxes are each filed separately. If your sales tax return is not filed or postmarked on or before the due date, you must pay a 10 percent penalty plus an additional .5 percent for each additional month up to a maximum of 18 percent on the total tax due plus interest on the amount due.
You must file a sales tax return for every period, even if no tax was collected for the period. Each applicable line must be completed on the DR 0100.
If you sell, rent or lease tangible personal property, or rent accommodations for less than 30 days, you must collect retail sales tax. For more information about sales tax responsibilities or existing sales tax accounts, contact the Colorado Department of Revenue at 303-238-SERV. You can also visit its website at colorado.gov/tax.
If you use products on which Colorado sales tax has not been paid, consumer use tax is due! Use tax is imposed on the storage, use or consumption in Colorado of tangible personal property upon which Colorado sales tax has not been paid. For example, if you purchase a piece of machinery for your business in another state, consumer use tax must be paid in Colorado. In calculating the amount of use tax due, a credit is allowed for sales tax paid to another state. The amount of tax is based upon the primary location where an item is used and the purchase price or fair market value. The state use tax rate is 2.9 percent, the RTD/SCFD rates total 1.1 percent and the RTA district taxes vary from one location to another. These taxes are paid to the Department of Revenue by filing Form DR 0252, “Consumer Use Tax Return.” If you use items taken from your sales inventory, you may report the cost and tax. State-administered cities and counties can impose use tax only on motor vehicles and building materials. In either case, the use tax is paid directly to the city or county, either during the vehicle registration or building permit process. Home-rule cities administer their own use taxes. No local use taxes (other than special district use taxes) are remitted directly to the Department of Revenue. If the seller collects the tax, it is sales tax. If the seller does not collect the appropriate tax, the consumer (user) must pay use tax. File and pay at colorado.gov/tax
Website internet access, email services, website hosting and domain name registration are nontaxable services in Colorado. However, if service providers sell tangible personal property to customers in Colorado, then sales tax should be charged on those items. The sale of goods through the internet is treated the same as the sale of tangible personal property through traditional selling methods.
Sales tax classes are held at the Department of Revenue Service Centers at the beginning of each month. Visit colorado.gov/tax for current class locations and schedules. Sales tax classes include information on what sales tax is, how to collect sales tax and how to fill out sales tax returns. Check with the local Home Rule cities to see if they offer a class.
Colorado Springs
2447 North Union Blvd
Colorado Springs, CO 80909
Denver
1375 Sherman St.
Denver, CO 80203
Fort Collins
3030 S College Ave,
Suite #100
Fort Collins, CO 80525
Grand Junction
222 S 6th St
Room #208
Grand Junction, CO 81501
A retail sales tax license is required if you are selling, renting or leasing your product to the end user of the product.
If you will be selling a product to the end user, you must collect sales tax.
It is illegal to use your sales tax license to obtain personal goods or assets which you will use in business tax-free.
Once you have obtained a sales tax license, the Department of Revenue will send you preprinted “Combined Retail Sales Tax Return” forms DR 0100.
Use tax is imposed on the storage, use or consumption in Colorado of tangible personal property upon which Colorado sales tax has not been paid.
Website Internet access, e-mail services, website hosting and domain name registration are nontaxable services in Colorado.
Colorado Business Development Foundation
info@coloradobdf.org
www.coloradobdf.org
Small Business Navigator Hotline: 303-592-5920
© 2022 Colorado Business Development Foundation. All rights reserved.
All information within this resource book and website is for informational purposes only and is not intended to be legal, tax, business or other professional advice. It is current to the best of our knowledge as of the date of publication. You should contact an appropriate professional to discuss any issue particular to you or your business and only rely upon your own research into those issues. Use of and access to this resource book or the associated website does not create any relationship between the publisher, authors, and the reader, or any other individual or entity. TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAWS, THE MATERIALS AND INFORMATION IN THIS RESOURCE BOOK AND WEBSITE ARE DISTRIBUTED ON AN "AS IS" BASIS WITHOUT WARRANTIES OF ANY KIND, EITHER EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION, WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE.