Hiring Your First Employee in Colorado: Withholding, UI, FAMLI, Sick Leave and Workers Comp Registrations
Hiring Your First Employee in Colorado: Withholding, UI, FAMLI, Sick Leave and Workers Comp Registrations
Hiring your first employee changes your business more than almost any other step. Once someone else is on your payroll, you take on tax withholding, unemployment insurance, FAMLI premiums, insurance, and reporting duties that a sole owner never had to track. Colorado does not issue a general state business license, so hiring is not one permit. It is a set of separate registrations and recurring obligations. This guide lists them in the order you should handle them, with the figures we can verify and clear notes where you need to confirm a current number with the agency that sets it.
Informational content only. This article is general information, not legal or tax advice. Employment and payroll rules change, and they can depend on your industry, your city or county, and your workforce. Talk with a qualified attorney or CPA before you make decisions that carry legal or tax consequences.
Start with your entity and a federal EIN
Your payroll accounts attach to a business entity, so the first step is to form one if you have not already. File Articles of Organization for an LLC or Articles of Incorporation for a profit corporation with the Colorado Secretary of State, Business Organizations Division, at coloradosos.gov. The filing fee is $50 for either entity. Most business documents must be filed online, and online filings are processed in real time once payment clears. A new LLC or corporation owes no Periodic Report in its first year.
You will also need a federal Employer Identification Number (EIN) from the IRS to set up payroll tax accounts. Get it before you start the state registrations below, because the state accounts ask for your federal identifiers.
The registration checklist for a first hire
Most of the items below are one-time registrations. A few are recurring duties that you will need to calendar from the day of the hire.
| Registration or duty | Agency or source | When | Key note |
|---|---|---|---|
| Withholding tax account | Colorado Department of Revenue (DOR) | Before your first payroll | DOR assigns your withholding frequency |
| Unemployment insurance (UI) account | Colorado Department of Labor and Employment (CDLE) | Before your first payroll | Your rate comes in a CDLE rate notice |
| FAMLI premiums | FAMLI Division, through My FAMLI+ Employer | Before your first payroll | Employers with fewer than 10 employees owe no employer share |
| Workers' compensation insurance | Private insurance carrier | Before the first employee starts work | Do not wait for the first paycheck |
| New hire report | Colorado new hire reporting | Within 20 days of the hire date | Rehires after a long break also count |
| Paid sick leave | Employer obligation under C.R.S. 8-13.3-403 | From the first hire | 1 hour per 30 hours worked, up to 48 hours a year |
| Pay range in job postings | Employer obligation | Every job posting | Applies even for your first opening |
| SecureSavings | Employer retirement savings requirement | When you have 5 or more employees and 2 years in business | Applies only if you offer no retirement plan |
What it will cost you to get started
The state costs for an entity and its recurring reports are modest. The bigger expenses are payroll taxes, premiums, and insurance, and those depend on your payroll. Use this table as a starting point, and confirm each figure on the agency page before you budget.
| Item | Figure | Source or status |
|---|---|---|
| Articles of Organization or Incorporation | $50 filing fee | Colorado Secretary of State |
| Periodic Report | $25 per year, starting in year two | Colorado Secretary of State |
| UI taxable wage base | $30,600 for 2026 | Listed by payroll providers. Check with CDLE. |
| UI new employer rate | 3.05% for 2026 | Listed by payroll providers. Your CDLE rate notice controls. |
| FAMLI premium rate | 0.88% for 2026 under C.R.S. 8-13.3-507 | FAMLI Division |
| Withholding | Based on the flat 4.40% Colorado income tax | Colorado Department of Revenue. Check with DOR for your frequency. |
1. Open a withholding account with the Department of Revenue
If you withhold Colorado income tax from employee wages, you need a withholding account with the Colorado Department of Revenue, Taxation Division. You can register through MyBizColorado or directly with DOR at tax.colorado.gov. Colorado's individual and corporate income tax rate is a flat 4.40%, and your payroll system applies it along with the federal withholding your employees owe.
DOR assigns your withholding frequency, which determines how often you remit withheld tax. You do not choose it freely, so ask DOR how it was set before you run your first payroll. Changes to your frequency take effect January 1, so plan any change for the start of a calendar year.
Keep this account separate from a sales tax license. The withholding account covers taxes taken from employee wages. A sales tax license covers tax you collect from customers. If you also sell taxable goods, the state sales tax is 2.9% plus special district taxes. Home-rule cities such as Denver, Aurora, Colorado Springs, Boulder and Fort Collins collect and license their own city sales tax, so the state license does not cover them. Services are generally not subject to the state sales tax.
2. Register for unemployment insurance with CDLE
Colorado's unemployment insurance (UI) program is administered by CDLE. Once you have employees, you must register for a UI account and pay premiums on taxable wages. For 2026, payroll providers list a taxable wage base of $30,600 and a 3.05% new employer rate. Treat those numbers as starting points, not settled figures. Your own rate comes in a CDLE rate notice after you register, and that notice controls what you pay.
Before you calculate your first payroll, confirm the current wage base and your assigned rate with CDLE. Print or save the rate notice and keep it with your payroll records. Your payroll software will need the rate entered correctly, or your first quarterly filing will be wrong.
3. Set up FAMLI premiums
The Colorado Paid Family and Medical Leave Insurance (FAMLI) program funds paid family and medical leave for eligible workers. Premiums are based on wages, and the 2026 premium rate is 0.88% under C.R.S. 8-13.3-507. Register and manage your premiums through My FAMLI+ Employer, the FAMLI Division's employer portal.
Your size determines how the premium is split. If you have fewer than 10 employees, you owe no employer share, but you must still remit the employee share, which you deduct from employee wages. If you grow to 10 or more employees, confirm how the shares apply to your business with the FAMLI Division at that point rather than assuming the split stays the same.
4. Buy workers' compensation insurance before the first employee
Get a workers' compensation policy in place before your first employee starts work. An injury on the job with no coverage can create serious liability for the business and for you personally, and the gap is hard to fix after the fact. Premiums depend on your payroll and the job classifications your employees fall under, so ask an insurance agent for a quote that reflects the actual work each person will do.
Ask the agent to confirm that the policy covers every employee and every role on your payroll, including any owner who works in the business. Keep a copy of the certificate of insurance with your hiring records.
5. File the new hire report within 20 days
Colorado new hire reporting requires you to report each new employee to the state within 20 days of the hire date. The requirement also covers rehires after a long break in service, not only first-time hires. Employers often miss rehires because the person already has a file in the system, so add a rehire check to your onboarding steps.
The 20 day deadline is the part you should calendar. Before your first hire, confirm the agency that runs the reporting program and the submission method it accepts, since those details are the part of this process most likely to change.
6. Provide paid sick leave from the first hire
Every employer in Colorado must provide paid sick leave under C.R.S. 8-13.3-403. Employees accrue 1 hour of paid sick leave for every 30 hours worked, up to 48 hours per year. Your obligation starts with your first employee, so set up a tracking method before the first pay period, whether that is your payroll software or a simple spreadsheet.
Track accrual on each pay stub so employees can see their balance. Missing a single accrual can turn into a compliance problem later, and a clear record is the easiest defense if a question comes up.
7. Put a pay range in every job posting
Colorado requires a pay range in job postings. Include the range in every posting you publish, including the posting for your first opening. A posting that says competitive pay or market rate does not satisfy the requirement. Confirm the current posting requirements and any agency guidance with CDLE before you publish your first ad, because the wording and scope of the rule matter.
8. Check whether SecureSavings applies to you
SecureSavings is Colorado's retirement savings program for employers. The requirement applies to you when you have 5 or more employees, you have been in business for 2 years, and you do not offer a retirement plan. Track both conditions from the start, since your employee count can cross 5 faster than you expect. Confirm the current obligations, deadlines and registration steps with the SecureSavings program before you reach the threshold rather than after.
Check your city and county requirements
Colorado issues no single general statewide business license, but your city or county may require one for your activity. Cities and counties, through their building departments, license many trades. For example, Colorado does not license general contractors, roofers, HVAC contractors, handymen or home inspectors at the state level, so those licenses come from your city or county. DORA licenses electricians and plumbers. Check with your local clerk or building department before you hire, because a missing local license can block work even when every state registration is in order.
What this guide does not cover
To keep this guide focused on first-hire registrations, we have not covered the following topics. Confirm each one with the agency that governs it.
- Overtime and exempt salary thresholds, which change each year. Check with CDLE for the current figures, and do not assume last year's numbers still apply.
- Rest and meal break rules, which we are not summarizing here.
- Required workplace posters.
- Employment eligibility verification.
- Local paid leave ordinances in cities and counties.
- Final pay timing.
- Employer laws passed in the 2026 legislative session.
This guide is meant to be your checklist for the registrations that come first. Several related topics, including minimum wage, FAMLI, SecureSavings, paid sick leave, pay transparency and workers' compensation, have their own detailed treatment, and you should review each one before you make a hiring decision that depends on it.
A practical order of operations
- Form the entity with the Colorado Secretary of State and obtain a federal EIN.
- Request workers' compensation quotes and bind coverage before the hire's start date.
- Open your DOR withholding account and confirm your assigned frequency.
- Register for a CDLE UI account and read the rate notice when it arrives.
- Set up FAMLI premiums through My FAMLI+ Employer.
- Set up paid sick leave tracking and include a pay range in your job posting.
- Report the new hire to the state within 20 days of the hire date.
- Track your employee count and years in business so you know when SecureSavings applies.
When to bring in a professional
Talk with an attorney or CPA before your first hire if you have more than one owner, plan to use independent contractors who may actually be employees, have employees who work across state lines, or do not understand how your payroll software calculates withholding. A professional can review your setup against your specific facts, and that review costs far less than correcting a payroll error after several quarters.
Disclaimer: This article is informational content, not legal or tax advice. Verify all figures, deadlines and requirements with the named agency before you act, and consult a qualified attorney or CPA for decisions about your business.