Do I Need to Charge Sales Tax in Colorado?

If you own a business in Colorado, you may be wondering whether you have to add sales tax on the products or services you offer for sale. In most instances, the answer is yes. Local governments in Colorado are permitted to tack on their own levies on top of the state’s 2.9% sales tax. This implies that depending on where your firm is located, the overall sales tax rate may change.

Before you may begin collecting sales tax in Colorado, you must apply for a sales tax license with the Colorado Department of Revenue. You must include information about your company when applying online or by mail, including your EIN or social security number, your company name and address, and the kinds of products or services you offer. After registering, you will be required to collect and submit sales tax on a regular basis, usually monthly or quarterly.

You might also have to deal with marketplace facilitator taxes if you sell products or services on sites like Amazon or Etsy. You don’t have to worry about these taxes because the marketplace collects and sends them on your behalf. You must verify with each marketplace to see if you are in charge of collecting and remitting sales tax on your own because not all of them collect these taxes.

You must take certain actions in order to launch a business in Colorado. You must first decide on a business structure. Many small business owners choose to operate as a sole proprietorship or an LLC. A single proprietorship is easier to set up and maintain than an LLC and protects the owners from personal liability. Additionally, you’ll need to apply for any required licenses and permissions, as well as register your company with the Colorado Secretary of State. Finally, the Colorado Secretary of State’s office is where you can go if you need to obtain a letter ID. This special number is used to keep track of the actions taken by your company, like filing taxes and applying for licenses. You must include information about your company, like your name, address, and business structure, when you apply for a letter ID, which you may do either online or by mail.

In conclusion, it’s critical to comprehend your sales tax responsibilities if you own a business in Colorado. If you sell on online marketplaces, you’ll probably need to apply for a sales tax license, regularly collect and submit sales tax, and deal with marketplace facilitator taxes. You must also follow the correct procedures to open a business in Colorado, which may include picking a business structure, filing an application with the Secretary of State, and acquiring all required licenses and permits.