When starting a business in Colorado, there are several registrations to take care of. The most common is the Colorado sales tax license, which is sometimes referred to as a retailer certificate, seller’s permit, sales tax permit, sales and use tax number, or sales tax registration.
Keep reading to learn who needs a sales tax permit, what kinds of products and services are taxable, how to register, and what you need to do for reporting.
Related: Guide to starting a business in Colorado
Who needs a sales tax license in Colorado?
A business must register as a retailer in Colorado when:
- A business has “economic nexus” (physical presence in the state), such as when they have a physical location like a retail store or office or uses a warehouse or fulfillment center to store inventory.
- Selling items at craft shows, fairs, seminars, conventions, etc. in Colorado
- A Colorado online business selling products to Colorado residents
- A remote seller selling over $100,000 in taxable products to Colorado residents.
What products and services are taxable in Colorado?
Physical Products
There are a few exceptions, but almost all tangible personal property is taxable when sold at retail in Colorado. Common examples include:
- General merchandise like furniture, appliances, and clothing
- Titled or registered items like vehicles
Groceries, prescriptions, gasoline, and some farm implements are tax-exempt.
Digital Products
Digital products such as music, movies, and software are taxable in Colorado.
Services
Most services aren’t taxable in the state of Colorado, however, there are a few exceptions.
- Short-term lodging
- Renting or leasing tangible personal property
- Catering
Services are not taxable in Colorado under state statutes C.R.S. 39-26-102(15)(a)(I).
How to register for a Colorado sales tax license
A sales tax license can be obtained by registering through MyBizColorado or by mailing in the Sales Tax / Wage Withholding Account Application (CR 0100) form.
Information needed to register includes:
- Type of business entity: sole proprietorship, general partnership, corporation, Limited Liability Company (LLC)
- Business name
- Name, address, phone number, and SSN of owners/officers/members
- Federal Employer Identification Number (FEIN) from the IRS or the owner’s Social Security Number if a sole proprietorship with no employees
- Description of what products are being sold
- Principal place of business
- Seasonality
- Filing frequency
- Date business activities began or will begin
- Employee information
There are multiple sales tax license types a business can pick from, which include:
Standard Retail License (Sales Tax License): The most common sales tax license for a business with a permanent location, and sales are conducted on a regular basis. If the business has both retail and wholesale sales, only the standard license needs to be applied for.
Wholesale License: For a business only selling to vendors.
Single Special Event License: For a business with a Standard Retail License that also sets up a temporary location for one non-recurring event a year (such as an annual festival) and there are three or more vendors. This license is free for all standard license holders.
Multiple Special Event License: Similar to the Single Special Event License, businesses planning on having more than one special event can apply for the Multiple Special Event License that allows them to attend multiple events and/or when there are three or more vendors at the event (such as a Farmer’s Market). This license is also at no cost for Standard Retail License holders.
Exempt License for Contractors: Contractors purchasing construction and building materials for tax-exempt organization projects can obtain this license.
Small Home Businesses: Business owners operating out of their homes can get this license if they:
- Make occasional retail sales of products from their home
- Total sales are less than $1,000 per year and
- Do not have a member of the household in business selling similar items.
Home-Rule City Sales Tax License
In addition to the state sales tax license, businesses operating in a home rule city will need to register directly with that city. Here is a list of home-rule cities.
A business will have to first register with the state before registering with their home-rule city.
Sales tax reporting
How is sales tax collected?
When a business sells a taxable product or service, it charges the customer the appropriate sales tax rate. The company collects this tax and then sends it to the Colorado Department of Revenue.
How much is sales tax in Colorado?
If the purchase is made at a store or in a mobile location, the sales tax rate varies depending on where the sale took place in Colorado. In addition to the statewide tax, there are additional sales taxes that may be added by cities, counties, and special districts. When shipping in-state, the sales tax is based on the purchaser’s address.
The Colorado Department of Revenue has a publication with Colorado Sales/Use Tax Rates (Form DR 1002) to determine how much sales tax to charge.
When are Colorado sales tax returns due?
The Department of Revenue will determine a filing frequency based on the expected annual sales volume, which will be monthly, quarterly, or annually. A business collecting over $300 in sales tax monthly will file monthly. The frequency is re-evaluated annually.
Filings are due on the 20th day of the month following the reporting period unless the 20th falls on a weekend or federal holiday, which would move to the next business day.
Even if the business had no sales during the reporting period, a filing indicating no sales is still required.
Colorado Sales Tax License FAQs
How much does a sales tax license cost in Colorado?
The filing fee for a sales tax license in Colorado is $16 for each location in the state for in-state sellers, in addition to a $50 deposit, which will be refunded after the first $50 in sales tax is paid. Out-of-state sellers will apply for a Retailer’s Use Tax License, which is free.
How long does it take to get a Colorado sales tax license?
Typically, a sales tax license will be approved the same day when applying online through MyBizColorado or 2 to 3 weeks when applying by mail.
Do you have to renew the Colorado sales tax license?
Most sales tax license types must be renewed at a cost of $16 every two years and expire at the end of each odd-numbered year.
How do I get a wholesale license in Colorado?
A business can purchase items to resell without paying state sales tax. The tax liability is passed from the distributor to the retailer, who will then charge sales tax to the end-user of the item.
Wholesalers and distributors will require a sales tax number and a Colorado Sales Tax Exemption Certificate (also referred to as a wholesale license, reseller’s permit, or resale certificate) to document that the items being purchased are for resale.
Is a business license the same thing as a sales tax license?
No – In addition to registering for a sales tax permit, there may be other business licenses needed before starting a business in Colorado.
Are mobile businesses required to collect sales tax?
If your business moves around and doesn’t have one main office in Colorado, such as salespeople who travel, locksmiths, or interior decorators, you must collect the right amount of sales tax based on the sales tax rate at each place you make a sale.
You just need one main state license to collect sales tax for the state. But, if you sell things in certain cities that have their own rules, you might need to get extra licenses for those places.
Do I need to collect sales tax at craft shows in Colorado?
If you will be selling at events in Colorado, you must have a special sales tax license, called 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.
Do home-based businesses in Colorado need to collect sales tax?
If you operate a small business from your home and your total annual sales are less than $1,000 per year, you do not have to obtain a state sales tax license. However, you must collect all applicable sales taxes and file a “Combined Annual Retail
Sales Tax Return,” DR 0100A, at the end of each calendar year.
If you are located in a home rule city, contact your city officials regarding your local sales tax requirements.
More information can be found in the Colorado Department of Revenue’s Sales Tax Guide.
If you have questions about the sales tax license, the Colorado Department of Revenue can be contacted by calling 303-238-7378.
Business owners can also visit a regional service center, which are listed below.
Denver Metro Service Center
1375 Sherman St.
Denver, CO 80261
Colorado Springs Service Center
2447 N. Union Blvd.
Colorado Springs, CO 80909
Pueblo Service Center
827 W. 4th St., Suite A
Pueblo, CO 81003
Grand Junction Service Center
222 S. 6th St., Room 208
Grand Junction, CO 81501
Fort Collins Regional Service Center
3030 S. College Ave.
Fort Collins, CO 80525
