Colorado LLC Taxes: The Complete Filing Guide (2025)

Colorado LLC Tax Basics

Navigating your Colorado LLC tax obligations doesn’t have to be complicated. We’ll walk you through the essentials of pass-through taxation, explain Colorado’s specific requirements, and highlight strategies to stay compliant and organized. This guide covers everything from federal income taxes to city-specific requirements and filing deadlines.

Use the links below to jump directly to the section you need:

• Colorado LLC Taxes at a Glance
• Understanding LLC Taxation Basics
• Federal Tax Obligations
• Colorado State Taxes
• Local Tax Considerations
• Tax Calendar and Filing Tips
• Tax Strategies for Colorado LLCs
• Forms and Resources

Colorado LLC Taxes at a Glance

Tax Type	Rate	Filing Deadline	Forms Required
Federal Income Tax	10-37% (personal brackets)	April 15, 2025	Form 1040 + Schedule C or Schedule E/K-1
Self-Employment Tax	15.3%	April 15, 2025	Schedule SE
Colorado Income Tax	4.4% (flat rate)	April 15, 2025	Form DR 0104
Federal Payroll Taxes (If Employees)	7.65% employer + 7.65% employee (FICA)	Quarterly (April 30, July 31, October 31, January 31)	Form 941
Colorado Unemployment Tax (If Employees)	3.05%-7.605%	Quarterly (April 30, July 31, October 31, January 31)	Reported online
Federal Unemployment (FUTA)	6% on first $7,000 per employee (0.6% after credits)	January 31, 2026 (annual)	Form 940
Sales & Use Tax	2.9%	Monthly, quarterly, seasonally, or annually based on sales volume	Form DR 0100
Occupational Privilege Tax (OPT)	$2-$5.75 per employee	Monthly	Varies by city (Denver, Glendale, etc.)
Periodic Report	$25 fee	Your LLC’s yearly formation anniversary	Filed online

Understanding LLC Taxation Basics

How Colorado LLCs Are Taxed By Default

Your Colorado LLC doesn’t pay taxes itself. Instead, profits flow through to you and your members, who report them on personal tax returns. This is called pass-through taxation.

Here’s how it works:

1. Your LLC earns income from business activities
2. The LLC itself files no tax return (unless you elect otherwise)
3. Profits “pass through” to members based on ownership percentage
4. Each member reports their share on their personal tax return
5. Members pay tax at their individual income tax rates

What this means for you: Unlike corporations, your business profits are only taxed once, which typically saves money.

Tax Classification Options

While pass-through taxation is the default, your Colorado LLC can choose alternative tax treatments:

Default LLC Tax Status:

• Single-member LLC: Taxed as a sole proprietorship
• Multi-member LLC: Taxed as a partnership

Optional Tax Classifications:

• S Corporation: Can reduce self-employment taxes by paying “reasonable salaries”
• C Corporation: LLC pays corporate tax on profits, members pay personal tax on distributions (creates double taxation)

Not sure which tax classification is right for your business? Schedule a free consultation with 1-800Accountant.

Federal Tax Obligations

Income Tax

As a Colorado LLC owner, you’ll report your share of business profits on your personal tax return using:

• Form 1040 + Schedule C (single-member LLCs)
• Form 1040 + Schedule E + Schedule K-1 (multi-member LLCs)

Federal income tax rates range from 10% to 37% based on your tax bracket (actual brackets will depend on inflation adjustments and any tax law changes).

Simply Put: Whatever money your business makes (after expenses) gets added to your personal tax return, just like income from a job.

Self-Employment Tax

LLC members actively involved in the business must pay self-employment tax of 15.3% (covering Social Security and Medicare) on their share of LLC profits.

Key points:

• Applies to net earnings of $400 or more
• Calculated on Schedule SE
• You can deduct 50% of the self-employment tax as an “above-the-line” deduction, which lowers your adjusted gross income

What happens if I miss this payment? The IRS charges penalties of 0.5% per month plus interest. However, first-time mistakes can often qualify for penalty abatement if you have a clean compliance history.

Employment Taxes

If your LLC has employees, you must:

• Withhold federal income tax
• Pay and withhold FICA taxes (7.65% each for employer and employee)
• Pay federal unemployment tax (FUTA)
• File quarterly employment tax returns (Form 941)
• Provide W-2 forms annually

Estimated completion time: 2-3 hours per quarter (significantly less with payroll software or professional help)

Estimated Tax Payments

Because no tax is withheld from your LLC profits, you’ll likely need to make quarterly estimated tax payments using Form 1040-ES. These payments cover both income and self-employment taxes on your share of the business income. Missing deadlines or underpaying can lead to IRS penalties, even if you pay in full later.

Working with an accountant can help ensure accurate calculations, on-time payments, and a smarter overall tax strategy.

Key deadlines:

• April 15
• June 16
• September 15
• January 15

Pro Tip: Set calendar reminders 15 days before each deadline. This gives you time to prepare without the last-minute rush that leads to mistakes.

Colorado State Taxes

Colorado Income Tax

Colorado has a flat personal income tax rate of 4.4% that applies to your LLC’s profits on your personal return.

Filing requirements:

• Use Colorado Form 0104
• Due April 15, 2025
• LLCs taxed as C corps, use Colorado Form DR 0112 (due May 15)

Bottom Line: For every $1,000 your LLC earns, expect to pay about $44 in Colorado state income tax (in addition to federal taxes).

Sales and Use Tax

If your Colorado LLC sells physical products or certain services:

• Collect 2.9% sales tax on taxable sales
• Register for a seller’s permit through the MyBizColorado portal
• File and pay collected taxes monthly, quarterly, seasonally, or annually based on sales volume
• Use Form DR 0100 or file online

60-Second Check: Do I Need to Collect Sales Tax?

• Do you sell physical products in Colorado? → Yes, collect tax
• Do you sell digital products? → Yes, collect tax
• Do you provide services? → Most services are exempt 
• Do you sell online to Colorado customers? → Yes, collect tax

Products typically subject to sales tax include:

• Tangible personal property
• Prepared food and drink 
• Digital products

Payroll Taxes 

If you have employees in Colorado, you will be responsible for two types of payroll taxes. 

Unemployment Insurance (UI) Tax 

• Register a new UI Employer Account in MyUI Employer+ 
• Rate is 3.05%-7.605% for new employers 
• Due quarterly 

Withholding Tax 

• Register with the Colorado Department of Revenue using Form CR 0100 
• Flat rate of 4.4% 
• Use Colorado Form DR 1094 to file
• Due weekly, monthly, or quarterly (varies by amount collected)

Periodic Report Filing

While not a tax, your Colorado LLC must file a periodic report:

• Due before your LLC’s yearly formation anniversary date
• $25 filing fee
• Filed with the Colorado Secretary of State online

Calendar Alert: Set a reminder for the month prior to your due date to ensure you don’t miss this easy but required filing.

Local Tax Considerations

Occupational Privilege Tax (OPT)

Five Colorado cities impose OPT, sometimes referred to as operational or head taxes, on businesses with employees: 

• Denver: $5.75 per employee earning at least $500 per month withheld, plus a $4 business OPT per month for each taxable employee 
• Glendale: $5 per employee earning at least $750 per month, plus $5 per employee matched by employer 
• Greenwood Village: $2 per employee and employer earning at least $250 per month, plus $2 per employee matched by employer 
• Sheridan: $3 per employee and employer, plus $3 per employee matched by employer 

Filing requirements:

• Separate returns for each city where you conduct business
• Different forms for each city
• Due monthly 

Local Sales and Use Taxes 

In addition to state sales and use tax, several counties and cities in Colorado impose their own sales and use taxes. 

State-Collected Local Sales and Use Taxes:

• Rates vary by city/county and range from 1%-5%
• Many local sale and use taxes are collected by the Colorado Department of Revenue 
• Use Colorado Sales Tax Lookup to determine applicable taxes

“Home-Rule” Local Sales and Use Taxes (Not Collected by the State): 

• Rates vary by city and range from 2%-7.25% 
• Cities include Boulder, Denver, Fort Collins, and more 
• Paid directly to city 

Property Taxes

If your LLC owns real property in Colorado:

• Rates vary by locality
• Revalued every odd-numbered year 
• May qualify for various exemptions based on business type
• Personal property tax may apply to business equipment

Tax Calendar and Filing Tips

Key Deadlines for Colorado LLCs

January:

• January 15: Final estimated tax payment for previous year
• January 31: Issue W-2s/1099s to employees/contractors
• January 31: Fourth quarter payroll tax payment due (state and federal) 

April:

• April 15: Personal tax returns due
• April 15: Federal income and self-employment tax returns due
• April 15: First quarter estimated tax payment due 
• April 30: First quarter payroll tax payment due (state and federal) 

May:

• May 15: Corporate income tax return due (C corps only) 

June: 

• June 16: Second quarter estimated tax due 

July: 

• July 31: Second quarter payroll tax payment due (state and federal) 

September:

• September 15: Third quarter estimated tax payment due

October:

• October 31: Third quarter payroll tax payment due (state and federal) 

Record-Keeping Checklist

Keep these records for at least 7 years:

• Business income records (invoices, receipts)
• Expense receipts and documentation
• Bank and credit card statements
• Asset purchase and improvement records
• Vehicle mileage logs
• Home office documentation
• Payroll records
• Previous tax returns

Tax Strategies for Colorado LLCs

S Corporation Election Benefits

Converting your LLC to an S Corporation for tax purposes can save on self-employment taxes:

1. File Form 2553 with the IRS
2. Pay yourself a “reasonable salary” subject to employment taxes
3. Take remaining profits as distributions exempt from self-employment tax

Example: An LLC making $100,000 in profit pays 15.3% self-employment tax on the entire amount. As an S Corp, if $60,000 is a reasonable salary and $40,000 is taken as distributions, only the $60,000 is subject to employment taxes.

Potential Savings: In this example, you’d save about $6,120 in self-employment taxes.

Business Expense Deductions

Common deductions Colorado LLC owners often overlook:

• Home office deduction
• Business mileage (70¢ per mile for 2025)
• Health insurance premiums
• Retirement plan contributions
• Professional development expenses
• Business meals (50% deductible)

Forms and Resources

Federal Tax Forms

• Schedule C: Profit or Loss From Business (sole proprietors)
• Form 1065: U.S. Return of Partnership Income
• Schedule K-1: Partner’s Share of Income, Deductions, Credits
• Form 1120-S: U.S. Income Tax Return for an S Corporation
• Form 2553: Election by a Small Business Corporation (S Corp)
• Form 8832: Entity Classification Election

Colorado Tax Forms

• Form DR 0104: Colorado Individual Income Tax Return
• Form DR 0112: Colorado Corporate Income Tax Return
• Form DR 0100: Colorado Sales and Use Tax Return 

Helpful Resources

• Colorado Department of Revenue: Tax Division
• Colorado Department of Labor and Employment
• Internal Revenue Service
• Colorado Secretary of State

Colorado LLC Taxes FAQs