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Colorado Business License Basics

Colorado Business License Basics

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Colorado Business License Basics

Starting a small business in Colorado often means registering with several federal, state, and local agencies. Let’s review common Colorado business license registrations so your business starts off right.

Related: Guide to starting a business in Colorado 

First Step – Set Up the Business

Sole proprietorship: In Colorado, a sole proprietorship is a business owned by one person. It is the simplest form of business structure, with no legal distinction between the owner and the business. The owner has complete control over the business but is also personally liable for all debts and obligations.

General partnership: A general partnership in Colorado is an agreement between two or more individuals to operate a business together. No formal setup is needed, but a partnership agreement, but it’s a great idea to draw up a partnership agreement to outline operations and responsibilities.

Corporation: A Colorado corporation is a legal entity separate from its owners, known as shareholders. It offers limited liability protection, meaning shareholders are not generally personally responsible for the corporation’s debts and liabilities. The downside is that corporations are the most complex structure to start and operate. 

Limited Liability Company (LLC): A Colorado LLC combines aspects of a sole proprietorship or partnership and a corporation. It provides limited liability protection to its owners, called members, shielding their personal assets from the company’s debts and liabilities, in addition to a flexible management and tax structure.

Related: Comparison of Business Structures

What Licenses Do Colorado Businesses Need?

With the business structure out of the way, we can begin looking at the different types of registrations businesses in Colorado may need. There isn’t a standard business license, as requirements vary depending on where the business is located and its activities. Here is a general overview of the different registrations your business may need.

State of Colorado Business Licenses

There is no general state of Colorado general business license, however, many cities require businesses to be licensed in order to operate. Business license requirements vary depending on location and what the business does. Below are a few cities that have licensing requirements.

  • Denver: The City of Denver requires several types of businesses operating in City limits to register, such as auto parts recyclers, caters, ice cream vendors, and many more. Denver business licenses can be obtained through the Denver Business Licensing Center.
  • Colorado Springs: Businesses such as concrete contractors, excavators, pawn brokers, tree services, and others need to obtain a business license from the City Clerk’s office.
  • Aurora: The City of Aurora requires any business operating within City limits to submit a Business License Application.
  • Fort Collins: Any business operating within City limits needs to obtain a City Sales and Use Tax License. Additionally, bowling alleys, contractors, establishments serving liquor, pawn brokers, and more will need additional licensing.
  • Lakewood: The City of Lakewood requires all businesses operating in City limits to register for a Sales and Use Tax License.
Take the guesswork out of figuring out what licenses and permits are required to start your business with license research packages from Bizee and LegalZoom.

For as little as $99, you can save a lot of time and know your business is in compliance with local, state, and federal requirements. 

Trade Name Registration

Sole proprietorships and partnerships in Colorado that want to operate under a business name other than the full name of the owner(s) will register for a Colorado Statement of Trade Name (also known as a Doing Business As or DBA) with the Colorado Secretary of State.

Building & Zoning Permits

Zoning: Before deciding on a location for your business, check with the local planning and zoning department to ensure you can operate the business from that location.

Building Permit: If you plan to construct, alter, or repair a building for your business in Colorado, you’ll likely need a building permit from your local building department. Building permits ensure compliance with the Colorado Building Code. In most cities and counties, the local building department is responsible for issuing building permits. For example, in Colorado Springs, building permits are issued by the Pikes Peak Regional Building Department.

Signage Permit: Before installing any business signage in Colorado, you must obtain a sign permit from your local government. Each city and county has its own signage regulations and permit requirements. In Boulder, sign permits are issued by the Planning and Development Services Department, while in Fort Collins, the Zoning Department handles sign permits. Check with your local government for specific signage requirements and permit application processes in your area.

Employer Identification Number (EIN)

The Colorado Employer Identification Number (EIN), also known as a Federal Tax Identification Number, is a unique nine-digit number assigned by the Internal Revenue Service (IRS) to businesses operating in Colorado. It is used for tax filing and reporting purposes, similar to how an individual uses a Social Security number. Companies can apply for an EIN through the IRS website or by submitting a paper form.

Colorado Sales Tax License

Most businesses in Colorado selling a product and some services will need to register for a Colorado Sales Tax License (sometimes referred to as a reseller’s license, a vendor’s license, or a resale certificate) with the Colorado Department of Revenue.

Sales Tax Exemption Certificate

After obtaining the Sales Tax License, most businesses will want to obtain a Colorado Sales Tax Exemption Certificate. This allows them to not pay sales tax on their inventory purchases meant to be resold to customers.

Professional License

A variety of professions in the state are regulated and need to be registered before offering certain services. A few common professions that require licensing in Colorado include; cosmetologists, massage therapists, plumbers, and many more. Additional information, fees, and licensing requirements for professions are available from the Colorado Department of Regulatory Agencies (DORA).

While most licensing is handled through DORA, a few other types of businesses are licensed by other agencies. A few of these industries include:

Next Steps

While it’s a good start, there are so many different licenses that may be needed. Double-check with the City Clerk’s Office, Chamber of Commerce, and/or Economic Development office in your area before opening your doors.

Author

  • Greg Bouhl

    With over two decades as an entrepreneur, educator, and business advisor, Greg Bouhl has worked with over 2,000 entrepreneurs to help them start and grow their businesses. Fed up with clients finding and acting on inaccurate and outdated information online, Greg launched StartUp101.com to be a trusted resource for people starting a business.

Colorado Business License Basics

Colorado Business License Basics

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