To start a business in Denver, choose your entity, file with the Colorado Secretary of State ($50 online for an LLC), get a free EIN from the IRS, then register for the Colorado and Denver tax accounts your business needs, such as state and city sales tax licenses and a state wage withholding account. If you will have employees, add unemployment insurance, workers' compensation and Denver Occupational Privilege Tax accounts before the first payroll.
Starting a business in Denver involves more registrations than most people expect, because you are dealing with the IRS, the State of Colorado and the City and County of Denver at once. The good news is that the government fees are modest and the steps follow a logical order. Do them in that order and each one sets up the next.
Step 1: Choose your business structure
Your entity affects your liability, your taxes and how much paperwork you carry every year. Fixing the wrong choice later costs far more than getting it right at the start.
- Sole proprietorship. The default if you start working without registering anything. It is simple, but there is no separation between you and the business, so your personal assets are exposed to business debts and claims.
- Limited liability company (LLC). The most common choice for Colorado small businesses. It separates business liability from your personal assets and, by default, is taxed like a sole proprietorship or partnership.
- S corporation. Not an entity at all, but a tax election that an LLC or corporation makes. Owners who work in the business take a reasonable salary, and only that salary is subject to payroll tax. The election is made on IRS Form 2553, which must be filed no more than two months and 15 days after the start of the tax year it covers, according to the Form 2553 instructions.
- C corporation. Taxed separately from its owners. It usually fits companies planning to raise venture capital or issue stock to many investors.
A useful rule of thumb: start as an LLC unless you have a specific reason not to, and revisit the S corporation question once the business shows steady profit. Our guide to small business tax planning walks through that comparison with numbers.
Step 2: Register with the Colorado Secretary of State
LLCs and corporations come into existence when you file with the Colorado Secretary of State. Under the Secretary of State’s fee schedule, Articles of Organization for an LLC and Articles of Incorporation for a corporation each cost $50 online. If you will operate under a name different from your legal entity name, a trade name statement costs $20.
Every year after that, you file a periodic report, which costs $25. Colorado lets you file it from two months before to two months after your entity’s periodic report month without penalty, according to the state’s periodic report FAQ. An entity that does not file becomes delinquent, which can cause problems with banks, lenders and contracts. Put the month on your calendar now.
Step 3: Get an EIN from the IRS
An employer identification number is your business’s federal tax ID. You need one to open a business bank account, hire employees and file most business returns. The IRS issues it online, usually in minutes, and the IRS says plainly on its EIN page that you never have to pay a fee for one. Ignore websites that charge.
Form your LLC or corporation with the state first. The IRS warns that applying before the entity exists can delay the EIN.
Step 4: Register for Colorado tax accounts
If you sell taxable goods or services, you need a Colorado sales tax license. The state rate is 2.9%, according to the instructions for the state’s sales tax and withholding application, and the standard retail license fee depends on when in the two-year cycle you apply: $12 from July through December 2026, $8 from January through June 2027 and $4 from July through December 2027. New accounts also pay a $50 deposit, refunded automatically once you have collected and paid $50 in state sales tax.
If you will have employees, register for a Colorado wage withholding account at the same time. The same instructions note that it has no fee and does not need renewing. Most businesses handle both through MyBizColorado.
Step 5: Register with the City and County of Denver
Denver collects its own sales tax rather than relying on the state, so businesses selling taxable items in the city need a separate Denver retail sales license. Denver’s Tax Guide Topic 47 sets the fee at $50 per location for each two-year period, prorated if you start mid-cycle. The same guide covers lodger’s tax licenses for short-term rentals and use tax accounts.
If you or any employees work in Denver, you also need an Occupational Privilege Tax account. It costs nothing to open, but the tax itself is due monthly or quarterly. Our page on Denver business taxes explains how it works.
Denver also licenses certain kinds of businesses, such as those selling food or alcohol, contractors and short-term rentals, separately from its tax licenses. Check zoning and permits before signing a lease, not after.
Step 6: Set up payroll registrations before your first hire
Hiring brings its own set of accounts. The Colorado Department of Labor and Employment’s new employer checklist covers the core requirements:
- Register for an unemployment insurance account through MyBizColorado once you pay wages to a Colorado employee.
- Report each new hire within 20 calendar days of the hire date.
- Carry workers’ compensation insurance once you have one or more employees.
- Pay at least the state minimum wage, $15.16 an hour for 2026. Denver sets its own, higher minimum wage for work performed in the city.
Colorado’s paid family and medical leave program, FAMLI, also applies to most employers. The premium is 0.88% of wages for 2026 and drops to 0.86% in 2027, according to the Colorado Department of Labor and Employment.
What does all of this cost?
Less than people expect. For illustration, an LLC opening a retail shop in Denver in November 2026 would pay about $50 to the Secretary of State, $12 for the Colorado sales tax license plus a $50 refundable deposit, and up to $50 for the Denver retail sales license, prorated. The EIN is free. That is roughly $162 in government fees, before any activity-specific license, attorney or accounting costs.
The real cost of a new business is not the registration. It is the time spent fixing a missed filing or a bad setup later.
Step 7: Set up your books from day one
The first month is the easiest time to build good habits:
- Open a business bank account and a business credit card, and run every business transaction through them.
- Set up accounting software such as QuickBooks Online or Xero with a chart of accounts that fits your industry.
- Decide how you will capture receipts, and do it weekly.
- Collect a Form W-9 from every contractor before you pay them.
- Put estimated tax dates on your calendar: April 15, June 15, September 15 and January 15.
Our bookkeeping basics guide covers the monthly routine in more detail.
The order matters
If you remember one thing, remember the sequence: entity, then EIN, then bank account, then state accounts, then city accounts, then payroll. Each step needs information from the one before it. If you would like help getting it right, our business consulting and accounting teams set up new Denver businesses regularly, and an introductory call is the easiest place to start.
Common questions
How much does it cost to form an LLC in Colorado?
The Colorado Secretary of State charges $50 to file Articles of Organization online, and $25 each year for the periodic report that keeps the LLC in good standing. Getting an EIN from the IRS costs nothing.
Should I form an LLC or a corporation?
Most small businesses start as an LLC because it offers liability protection with simple administration and flexible tax treatment. An LLC can later elect S corporation tax treatment once profit justifies it. A C corporation is usually reserved for companies planning to raise outside equity.
When do I have to file an S corporation election?
Form 2553 must be filed no more than two months and 15 days after the beginning of the tax year the election is to take effect. It can also be filed any time during the year before. Missing the window usually pushes the election to the next year.
Do I need a Denver sales tax license if I sell online?
If you sell taxable goods or services to customers in Denver, you generally need a Denver retail sales license in addition to your Colorado license, because Denver collects its own sales tax. Rules for remote sellers vary, so confirm your situation before your first sale.
What registrations do I need before hiring my first employee?
You need a Colorado wage withholding account, an unemployment insurance account, workers' compensation coverage and, if the employee works in Denver, an Occupational Privilege Tax account. You also need to report each new hire to the state within 20 days.