If you want to start and run a Colorado limited liability company (LLC), you'll need to prepare and file various documents with the state. This article covers the most important ongoing reporting and state tax filing requirements for Colorado LLCs.
The State of Colorado requires you to file a periodic report annually for your LLC. You must file the report online at the SOS website. The report is due during the three-month period beginning with the first day of the anniversary month of your LLC's formation. For example, if you formed your LLC on June 15, the report would be due each subsequent year between June 1 and August 31. You can also file the report up two months early. The current filing fee is $10. There is also a $50 penalty fee for reports filed late.
When it comes to income taxes, most LLCs are so-called pass-through tax entities. In other words, the responsibility for paying federal income taxes passes through the LLC itself and falls on the individual LLC members. By default, LLCs themselves do not pay income taxes, only their members do. Some states impose a separate tax or fee on LLCs for the privilege of doing business in the state. Colorado, though, is not one of those states.
However, in some cases, the owners of an LLC choose to have their business treated like a corporation for tax purposes. This choice is made by filing IRS Form 2553 with the IRS. (See the IRS website for the form.) Unlike the default pass-through tax situation, when an LLC elects to be taxed as a corporation, the company itself must file a separate tax return. The State of Colorado, like almost every other state, taxes corporation income. In Colorado, the corporation income tax currently is a flat 4.63% of taxable income (in limited cases an alternative tax is available). The tax is payable to the state's Department of Revenue (DOR). Use the state's corporation income tax return (Form 112) to pay the tax. For more details, check Nolo’s article, 50-State Guide to Business Income Tax, or the DOR website.
Does your LLC have employees? If so, you'll need to pay employer taxes. Some of these taxes are paid to the federal government (the IRS) and are not covered here. (But note that federal employer tax obligations start with obtaining a federal employer identification number (EIN).) However, Colorado employers also must pay taxes to the state.
First, you'll need to withhold and pay employee income taxes to the DOR. Begin by registering your business with the DOR either online or on paper (Form CR). Once you've registered, you'll need to go online and file withholding taxes on a periodic basis—weekly, quarterly, or monthly. You'll also need to use Form DR 1093 and/or Form DR 1106 each year to reconcile your LLC's tax withholding. For more information, including regarding online filings, check the DOR website.
In addition, you'll probably need to register to pay state unemployment insurance (UI) taxes. These taxes are handled through the Colorado Department of Labor and Employment (CDLE). You should register for these taxesonline unless you're not eligible to do so, in which case you'll need to download and use Form UITL-100 (Application for Unemployment Insurance Account). Then, each quarter, use Forms UITR-1 and UITR-1 or file online to report on wages and pay the UI taxes. For more information, including regarding online filings, check the CDLE website.
If your LLC will sell goods to customers in Colorado, you will need to collect and pay sales tax. This means you'll have to register for this purpose with Department of Revenue and then make periodic sales tax payments for goods sold. You can register online or mail in Form CR 0100AP (Colorado Sales Tax Withholding Account Application). After you've registered, you'll be sent a sales tax license. Then, on a periodic basis—monthly, quarterly, or annually—you must submit sales tax returns to the DOR. You can do this on paper (Form DR 0100, Colorado Retail Sales Tax Return) or online. For more information, check the DOR website.
If you will be doing business in states other than Colorado, you may need to register your LLC in some or all of those states. Whether you're required to register will depend on the specific states involved: each state has its own rules for what constitutes doing business and whether registration is necessary. Often activities such as having a physical presence (a business location) in a state, hiring employees in a state, or soliciting business in a state (such as by telephone, print ads, mail, or the Internet) will be considered doing business for registration purposes. Registration usually involves obtaining a certificate of authority or similar document.
For more information on the requirements for forming and operating an LLC in Colorado, see Nolo’s article, 50-State Guide to Forming an LLC, and other articles on LLCs in the LLC section of the Nolo website.