Federal Income Taxes
Federal income taxes are passed through the LLC to individual members based on ownership percentage.
Federal Self-Employment Tax
LLC members pay 15.3% self-employment tax on net earnings, which covers social security and Medicare taxes.
Colorado Income Tax
Colorado has a 4.40% flat income tax rate for LLC members to report on their personal returns.
Sales and Use Tax
Colorado levies a 2.9% statewide sales tax, with some counties and cities adding additional local sales taxes.
- No annual state franchise tax
- Payroll taxes if the LLC has employees
- Various business license and permit fees
LLC members will be taxed at the 15.3% federal self-employment tax rate and will pay the flat Colorado income tax rate of 4.40%.
The cost of hiring an accountant in Colorado varies, but most charge between $300 and $900 for tax return preparation.
Single-Member LLCs
The owner files a personal return that includes the LLC’s profits or losses.
Multi-Member LLCs
The LLC may need to file a Partnership return at the state level, in addition to owners’ personal returns including LLC profits or losses.
Local sales taxes can range between 0% and 8.3%, with some cities imposing their own rates.
For the most accurate sales tax rates, use the Colorado Department of Revenue’s Sales Tax Lookup tool.
- Single-Member LLCs
- Multi-Member LLCs
- LLCs Taxed as S-corp
- LLCs Taxed as C-corp
A penalty of 5.5% of the unpaid tax due per month can be assessed by the Colorado DOR for late filings and payments, with a minimum of $5 per month.
All Colorado S corporations must file a federal tax return using Form 1120S before referencing it in their state tax return.