Registering to Pay Taxes
Once you have officially obtained the necessary licenses and permits for your business, you will be responsible for notifying Uncle Sam. In many cases, you can simply contact a central tax agency, which in turn will get you started with the appropriate forms and filing requirements. Once your business is listed in their database, you may receive periodic inquiries about your business or forms that you must complete to comply with state or federal laws, or both. The main taxes you will need to be aware of include:
- Estimated federal and state individual income taxes,
- Estimated federal and state corporate income taxes,
- A sales and use tax, and
- Property taxes.
Oftentimes, there may be a single form or tax application that will get you registered with several agencies regarding several different taxes. If your Colorado business will have sales or employees, or both, the Colorado Department of Revenue has a single form called CR 100, Colorado Business Registration form that will register your trade name as well as open your sales tax license, state wage withholding, and unemployment insurance accounts.
Get an Employer Identification Number
Unless you form a sole proprietorship, you must obtain an employer identification number (EIN), even if you do not have employees. The first registration you should make is to file Form SS-4, Application for Employer Identification Number, with the federal government. You will receive an employer identification number that you will need in many cases to complete other registrations. It is somewhat similar to your personal Social Security number, only it relates to your business.
You can obtain Form SS-4 from your local IRS office or your accountant. Once you have the form, you can apply for an EIN either by mail or by telephone. If you want an EIN immediately, call the Tele-TIN phone number for the service center for your state. If you are not in a hurry, you can apply for your EIN through the mail. Keep in mind, you will need to complete Form SS-4 at least four to five weeks before you will need your EIN.
After you receive your EIN, you will need to register with the state agency that governs employees and employers.
Estimated Income Tax
As a small business owner in Colorado, you will need to estimate the amount of money your business has made and pay taxes on these estimates. Regardless of the form of business you have chosen, you will be responsible for paying estimated income taxes several times throughout the year - usually on a quarterly basis. And, if you have underpaid, you will be required to pay underpayment penalties at the end of the year. Make sure you calculate these amounts or any underpayment penalties in your monthly cash flow projections. Your accountant may be able to advise you on how best to plan for paying estimated income taxes.