Colorado ranks 18th, with per capita state and local taxes averaging 5% lower than the national average. Because of its extensive oil and gas activity, Weld County has been able to maintain a real estate property tax level that is significantly lower than the surrounding areas. This translates into a competitive advantage for businesses.
Retail Sales Tax
State of Colorado: 2.9%
Weld County: None
Larimer County: .08% (3.7 was state and county)
Windsor – 3.95%
State Corporate and Personal Income Tax
4.63% of Federal Taxable Income
Inventories, Goods in Transit and Intangibles
Not taxed in Colorado and there is no franchise tax
Industrial and commercial property (buildings, land and equipment) is assessed at 29% of market value (based on a variety of factors). The state does not levy a property tax; however, counties throughout the state do. In Weld County there are 150 tax districts that overlap in a way that creates over 1,522 different tax areas and therefore mill levies which range from approximately 60.000 mills to 148.000 mills. The mill levy represents the dollars levied for each $1,000 of assessed value. For example, with a mill levy of 95.000 mills, the property owner would pay $95.00 for every $1,000 in assessed value.
State Unemployment Insurance
Unemployment insurance tax liability is based on the taxable wage base, which is the first $10,000 of each worker’s wage. If covered for the first time, the tax rate will be 1.7% of the wage base or a rate equal to the industry average, whichever is greater. Upon the 3rd and 4th years of coverage, the rate is changed to a computed rate based on the employer’s individual experience.
Selling Products to the Public
Selling, leasing or renting tangible personal products or taxable services to the public require collection of sales tax. A state of Colorado and Town of Windsor Business/Sales Tax License must be obtained. Effective January 1, 2015, Windsor’s Sales and Use Tax rate is 3.95 percent of net sales and services in Windsor.
In Windsor, all food, beverages, machinery and tools are taxable. The state of Colorado sales tax exemption does not apply. The Colorado state sales tax rate is currently 2.9 percent. Depending on local municipalities, the total tax rate can be as high as 10.9 percent. Colorado is a “home rule” state. Local-level tax rates in the state of Colorado are quite complex compared against local level tax rates in other states. The total retail sales tax in the Larimer County portion of Windsor is 7.5 percent. The total retail sales tax in the Weld County portion of Windsor is 6.85 percent.
What is Use Tax?
This tax is a complement to the sales tax and is imposed on the storage, use or consumption of tangible personal property and taxable services on which the correct sales tax has not been paid. The amount of tax is paid on the purchase price or fair market value. If you purchase tangible personal property when buying a business (furniture, fixtures or equipment) and did not pay sales tax at the time of the sale, Use Tax is due. For more details, refer to the following Town of Windsor Municipal Code at bit.ly/2bIJoLp: • Sec. 4-3-190 — Use Tax, Taxable Property and Services • Sec. 4-3-120 — Imposition of Use Tax • Sec. 4-3-200 —Use Tax, Exemptions
State and Federal Employee Withholding
To obtain a Colorado Tax I.D. number, sales tax account and/or a Colorado wage withholding account, visit: http://www.colorado.gov. You must complete the Colorado Business Registration (CR 0100). Employers pay a substantial amount more than salaries for their employees. The U.S. Bureau of Labor Statistics states that the average employee compensation averaged $25.69 per hour as of July 2016. In addition to compensation, employers pay for benefits, along with local, state and federal taxes. You should also consider your expenses to recruit employees, physical workplace space and the cost of equipment.
Cost Break Down
According to the Bureau of Labor and Statistics (BLS), as of Aug. 15, 2016, wages and salaries average $24.61 per hour worked, while employer paid benefits average $10.70 per hour. Interestingly, private businesses pay less, averaging $24.61 per hour for wages and benefits. However, state and local government employee costs average $34.75 per hour. This might help explain why many nonprofit entities, such as cities, towns and states, are hurtling towards receivership. As you might expect, major metropolitan areas, like San Francisco, average more than $49 per hour while lower cost of living areas, like Miami-Fort Lauderdale average only $21.70 for compensation and benefits.
Employer Tax Costs
You should budget for Social Security/FICA taxes for each employee. These are currently 6.2 percent of the first $106,800 of compensation for each employee. Unemployment taxes amount to another 6.2 percent of $7,000 in pay. Medicare insurance taxes equal 1.45 percent of wages with no maximum salary cap. Don’t forget about Workers’ Compensation Insurance, which vary based on your employees’ job classifications. Office employees’ premiums are low, while manufacturing workers will cost more.
Both the IRS and the state of Colorado regulate who can be classified as an independent contractor. The tax law covering independent contractors is very complicated. To determine whether the person providing service is an employee or an independent contractor, all information that provides evidence of the degree of control and independence must be considered. To be completely sure, contact the IRS and/or the Colorado Department of Labor and Employment.
State Withholding Taxes
Colorado’s state income tax rate is a flat 4.63 percent of your federal taxable income, regardless of your income level. Visit the Colorado Department of Revenue website, www.colorado.gov/revenue, for all your necessary forms.
Detailed information about the state of Colorado’s unemployment taxes is available online at the Colorado Department of Labor and Employment website. www.colorado.gov/pacific/cdle/suta
Personal Property Tax
Personal Property Tax is imposed on income producing, tangible personal property. Even though the value is assessed in January, tax bills are not mailed until January of the following year. If you purchase a business, you should contact the Weld County or Larimer County Treasurer, depending on where the property is within the Windsor boundaries. A tax search is important to determine the status of the taxes, because unpaid taxes can result in a lien on the property. The search should be done by both the name of the business and the address.
Larimer County Treasurer
200 W. Oak Street Suite 2100, Fort Collins, CO 80521
Weld County Treasurer
1400 N. 17th Avenue Greeley, CO 80632
Personal Property Declaration
A Personal Property Declaration must be filed annually with the County Assessor. It requires a statement of the original cost, year acquired and description of the personal property (furniture, fixtures and equipment) used in the business and serves as the basis for determining the assessed value. A Business Personal Property Declaration Schedule is mailed to business owners and all owners of leased equipment at the beginning of January each year. If your business did not receive a declaration schedule, please contact the Assessor’s Office as soon as possible. Failure to receive a declaration schedule does not relieve the business owner of the requirement to file. If no declaration form was received, please print a blank form. All declarations must be completed and returned to the Assessor’s Office by April 15.
Larimer County Assessor
200 W. Oak Street, Second Floor Fort Collins, CO 80522
Weld County Assessor
1400 N 17th Avenue Greeley, CO 80631
970-400-3845 or 720-652-4255
Mileage and Fuel Tax
If you operate or will operate a vehicle upon the public highways of the state of Colorado and are liable for certain taxes, penalties or interest, you are required under the Colorado Revised Statutes Sections 42-3-123 to 42-3-126 to file a Colorado Mileage and Fuel Tax Bond as a condition of licensure. A surety bond protects the party requesting the bond, the obligee, against any financial losses as a result of poor financial decisions, damages, unethical decisions or a failure to follow state and local laws on the part of you, the principal. The Colorado Mileage and Fuel Tax Bond holds you accountable for your business decisions. By possessing a Colorado Mileage and Fuel Tax Bond, you are telling your obligee that you can be trusted as a principal and that you stand behind your business decisions.