Starting a business in Colorado?
One of the first steps is making sure you have the right licenses in place.
We know it can feel overwhelming to figure out exactly what you need, especially with all the changes that come with a new year.
To make things easier, we’ve put together this step-by-step guide to help you with this guide to Colorado business licenses for 2025.
Whether you’re just getting started or double-checking your compliance, this guide will simplify the process and get you on the right track.
Prefer to skip the hassle of tackling things on your own? Reach out to us to see how we can help fast-track the entire process for you.
Step 1: Determine Your Business Structure
It goes without saying, but before diving into the paperwork, make sure your business idea is solid. Take some time (and yes, a little money) to do market research and confirm that there’s a real demand for what you’re offering. Once you know there’s a customer base, create a business model that meets their needs.
Now, based on what you’ve learned, the resources you have, and your goals, it’s time to choose the right structure for your business.
Here’s a breakdown of the main options:
- Sole Proprietorship: The simplest and quickest way to start. If you use a business name that’s not your own, you’ll need to register it as a “Doing Business As” (DBA) with the Colorado Secretary of State.
- Partnership: Perfect if you’re starting with one or more partners. In a general partnership, everyone shares responsibilities and liability. In a limited partnership, some partners invest money but aren’t involved in day-to-day operations. Be sure to create an agreement that spells out each partner’s role and profit share.
- Limited Liability Company (LLC): This is a popular choice because it protects your personal assets while letting you run the business with flexibility. It’s a blend of simplicity and protection, but keep in mind that it is not a tax election, so you will have to elect one of the other options (defaults to partnership when there are 2 or more members)
- Corporation: The most complicated option, with more paperwork and strict rules, but it offers the strongest protection for your personal assets. If you’re planning to scale or bring on investors, a corporation might be the best fit.
To learn more about choosing the right business structure for your Colorado-based business, you can check out our in-depth blog post here.
Step 2: Organize Your Paperwork
Having your documents ready ahead of time can make your business application process much smoother. Here’s what you’ll need:
- Create a Business Plan: This plan should outline your expected revenue and expenses. While it’s not always required, some cities or industry-specific agencies might ask for it, so it’s good to have one prepared.
- Business Name Registration: After deciding on your business structure, register your business with the Colorado Secretary of State and make sure to save your entity ID number. This number is important for official filings and communication.
- Employer Identification Number (EIN): An EIN is a nine-digit number issued by the IRS and is used for tax purposes. It’s different from your entity ID number and is needed for tax filings, hiring employees, and opening a business bank account. The easiest way to apply for an EIN is online, as it’s quick and straightforward.
- Proof of Insurance: Many businesses in Colorado need to have insurance, like general liability or workers’ compensation, especially if you have employees or work in certain industries. For instance, contractors, electricians, and plumbers typically need general liability insurance.
- Business Address and Phone Number: You’ll need an official address and phone number for registering your business and for any communication with state agencies.
Step 3: Apply for a Business Operating License
Colorado does not require or issue a general, statewide business operating license. However, most of its cities and counties will require you to get a general business operating license with varying rules or restrictions.
For example, if your business is in the city of Aurora, you will be required to obtain a business license.
Conversely, Colorado Springs does not require all businesses to get a business license but only for certain businesses like food trucks, bike-sharing, or concrete contractors.
If your business operates in multiple locations within the state, you will need to secure all the appropriate licenses per location.
Step 4: Apply for Other Local Permits (if applicable)
Depending on your industry, you may need specific local permits to operate legally. For example, health permits are typically required when you run a food and beverage business.
Certain permits like occupancy permits or even home occupation permits may also be required depending on your location. There are also other permits like building permits and signage permits to take care of in some cases.
Step 5: Apply for Statewide License(s)
A sales tax license in Colorado is often called a seller’s permit as it is the only statewide licensing requirement to all businesses where sales tax is collected.
Generally, you will need to secure a sales tax license if you meet any of the following qualifications
- Your business has a physical presence in Colorado
- You made more than $100,000 of sales in Colorado regardless of having physical presence or not
- You sell taxable products
Sales tax licenses cost between $4 to $16 depending on what month the application was submitted, plus a refundable $50 security deposit. Permit renewal is required every two years.
In addition to a sales tax license, you will also be required to secure a license from the Department of Revenue if your business is involved in:
- Selling liquor, or
- Buying or selling wholesale
Finally, if your business is among the 50+ different professions regulated on the state level, you will also need to get a license from the Department of Regulatory Agencies.
Step 6: Apply for Federal Licenses
If your business is among those regulated by a federal agency, you will need to secure a federal license with certain government agencies.
Some of these businesses include agriculture, firearms, mining, and transportation. Requirements and fees vary depending on the kind of business you operate and the issuing agency.
Final Thoughts
Although it does require some muscle to get your business fully licensed, it is essential to ensure smooth operations and avoid costly legal issues in the future.
Anyhow, it sure is worth all the time and energy, especially with a thriving business environment such as in Colorado.
However, we understand that navigating business registrations plus managing the financial side of things can be time-consuming and overwhelming. That’s why we’re here!
Whether it’s helping you organize your financials, ensuring tax compliance, or providing expert advice to keep your business on track, our team is equipped to support your needs.
Head over to our getting started page to see how we can help!
Until next time!