How to Get a Business License in Colorado

Before your business in Colorado opens its doors to new customers, there is one necessary step to take. You need to apply for a business license or licenses allowing you to operate legally.

A business license is an official permit that state or government bodies require an operating business to have. You might consider it a green light to operate within a specific area in Colorado.

Having the proper license is a must to keep your business in good standing and to avoid unnecessary fees or penalties. Note that licensing requirements vary and to stay compliant, you need to research the specific license requirements for your location. 

But think about this for a moment. The rules for business licenses vary in every city in Colorado. So, it’s natural for new entrepreneurs to get confused about where to start.

If you’re unfamiliar with the process of obtaining a Colorado state business license, this article will break it down for you.

Do I Need a Business License in Colorado?

The state of Colorado doesn’t have a generic business license that all businesses need to possess. However, businesses require a license from specific regulatory bodies in the state and cities. The only statewide license necessary is the “sales tax license, which ensures that your business is registered with the Department of Revenue.

Depending on your business type and location, you may need multiple licenses. Since these are available from all levels of the government, you have to submit applications to multiple agencies. For example, a telecommunications business in Colorado may require five licenses depending on the location from which it operates.

Here are some factors that influence the number of licenses you will need. Keep in mind that there can be other factors influencing the process as well.

• The city/county from which your business will be operated
• The nature of your business activities
• The level of regulation in your industry 

Steps to Getting Your Colorado Business License

The exact steps for getting a business license depend on the type of license and the controlling agency. There are a few basic steps that new businesses need to follow for all applications.

To obtain a business license in Colorado, begin by determining your business’s legal structure. A business can be a sole proprietorship, a partnership, a limited liability company, or a corporation. The registration process varies depending on the type of business.

In general, you need to take the following steps to register your business.

Name and Form Your Company

Form your company by choosing a unique name for it, be sure to check the Colorado Secretary of State’s website to ensure that the name isn’t already in use. The online procedure allows you to register your business. Remember, business name and trade name can be different and the trade name of your business need not be unique. 

There are a few pieces of information that you’ll need to submit to register your business and obtain the required licenses. These include the business location address, and phone number. If you are the sole proprietor, your SSN and driver’s license number will be needed. 

Another essential requirement is the Employer Identification Number (EIN) – a unique nine-digit federal tax ID number. This can be obtained from the Internal Revenue Service by using their online services. Basic information like the legal structure, ownership details, and purpose of your business is needed for your application.

The certificate of insurance (COI) corresponding to your business insurance policy will be required as well. Depending on your business type, you may need to submit your fingerprints for a background check conducted by the Colorado Bureau of Investigation.

Apply for Your Business License

After registering you need to apply for additional licenses based on the nature of your business activities. For local license requirements, you can check the City Clerk or County Clerk’s website which has occupation-specific licenses listed in a chart. By clicking on the specific license category, you can learn about the steps involved and access the application form. 

To apply, fill out the form online and upload the necessary documents for processing. If the details are not available on your city or county website, some digging around will be needed. 

Determine Other Available Local Licenses

There can be additional licensing requirements from local bodies as well. For example, there are zoning and land use regulations in Denver that a business should comply with. If your business is related to health, food, and safety sectors, ensuring compliance with the local health and safety standards is a must.

If you’re selling online from a business based in your home, you may need a zoning permit. More on online businesses later. 

Apply for Additional Statewide Licenses

Here’s one effective way of finding out the type of licenses your business needs. Simply visit the official website of the Department of Regulatory Agencies (DORA). Additionally, you will need a sales tax license from the Colorado Department of Revenue to meet your tax obligations at the state level for selling goods.

Apply for Federal Licenses and Tax Treatment

For small business owners, chances are that a federal license will not be required. But hang on a minute…

In case your business activities are regulated at the federal level, a federal license can be necessary. A few business categories and their corresponding federal licensing authorities are listed below. For more details, check the Small Business Administration website.

• Broadcasting services – Federal Communications Commission (FCC)
• Investment advising – Securities and Exchange Commission (SEC)
• Drug manufacturing – Food and Drug Administration (FDA)
• Preparing meat products – Food and Drug Administration (FDA)
• Ground transportation – Department of Transportation (DOT)
• Selling alcohol, tobacco, or firearms – Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF)

What Are the Requirements to Get a Business License in Colorado?

The first step for obtaining a Colorado small business license is to research and determine the exact license requirement for the city where you conduct your business. Since the exact steps can vary based on your business type, make sure to do your due diligence to avoid any legal consequences.

Remember, that registration of your business with the Colorado Secretary of State and applying for licenses and permits are two different steps. The paperwork needed for both these purposes will be different. 

Ensuring a solid legal foundation for your business and obtaining proper documents wil help in speeding up the process. Make sure to fill in the paperwork correctly to expedite the process.

How to Apply for a Colorado Business License 

To simplify the entire process here are the step-by-step requirements for a Colorado business license.

• Develop a solid business plan and determine the legal structure for your business.
• Organize the paperwork by registering a business name and applying for an Employer Identification Number (EIN). Establish a business address and phone number. In addition, obtain the necessary proof of insurance
• Apply for the required business operating license based on your city or county. If your business operates from multiple cities in Colorado you’ll have to secure licenses for each location.
• Apply for other local permits as needed.
• Apply for statewide and federal licenses.
• Await your approval and pass any inspection related to local health and safety standards.

Cost of a Business License in Colorado

The cost of a business license in Colorado varies depending on the industry and location. Additional fee requirements can be there depending on your municipality. The costs can range from $15 to several hundred dollars. Most licenses need to be renewed after a period of one to two years.

Types of Business Licenses

The license requirements for a Colorado business can be classified into three categories

Local Business Licenses in Colorado

The countries and cities in Colorado have their own license requirements. You may require multiple licenses from different government agencies depending on the nature of your business.

Colorado Statewide Licenses 

The primary statewide license required in Colorado is the sales tax license or the seller’s permit. This license covers both retail and wholesale transactions. Now, if you conduct business in Colorado without having a physical presence in the state, the license requirement will vary.

Additional Local Permits

Depending on your location other local permits may be needed. These include health permits, building permits, and occupancy permits.

How Long It Takes to Get a Business License

The processing time for licenses varies depending on the issuing agency and it may take some time for all the pieces to fall in place. In some scenarios, license processing can take up to 60 days or even longer. 

On the other hand, sales tax permits can be processed within 24 hours if you apply online. Since federal agencies take more time than state agencies, submitting federal applications before the state paperwork makes sense.

Do I need a Business License in Colorado to Sell Online?

Whether you have a brick-and-mortar store or an online business, a valid license is a must to operate in Colorado. That being said, the exact process for listing an e-commerce business as a taxpaying entity depends on your location as well as the nature of your business. 

For instance, the license requirements for businesses selling physical goods can be different compared to those offering digital services. Even if you’re running your online store from home there are licenses or permits to comply with local regulations. Beyond industry-specific licenses, you’ll require a professional license for selling specialized skills, qualifications, or certifications online. 

We suggest that you check directly with the official agencies in your city to find out the exact licensing requirements for an online business.

Final Thoughts

Deep down, you might be thinking that obtaining a business license in the state of Colorado may seem like an overwhelming task. Even so, it’s a must to ensure your business’s success and long-term reputation. Not only does it allow you to stay within the law, but it also helps you earn the trust of customers.

In the end, it’s worth spending the time and energy to do the necessary research and get the correct licenses for your business. Consider it a crucial step towards building your brand.