Any business that sells goods or taxable services within the state of Colorado to customers located in Colorado is required to collect sales tax from that buyer. This will include all online businesses. Any seller which conducts business and has a major presence within the state must collect sales tax in Colorado must pay taxes to the state. Therefore, these sellers required to file for a Sales tax certificate. By not doing so the business may face sanctions or other types of penalties. Additionally, depending on the businesses location and tax jurisdiction, localities such as counties, cities, and other districts can also add additional sales and use taxes.
Do you need to get a Sales Tax certificate in Colorado State?
You may need a Sales Tax Certificate if any of the following apply your business:
- You have a physical office or place you conduct business within the state
- You have a distribution location such as a storage area or warehouse space
- You have employees physically present in Colorado (including independent contractors, Sales persons, representatives, or agents)
- Your business has economic presence (businesses who make over $100,000 in sales annually from Colorado consumers)
- Your business has taxable services in the state of Colorado (see below)
What constitutes taxable services in Colorado State?
The majority of service businesses are not taxable in Colorado. The exceptions would be service businesses that manufacture tangible parts or products and sells them. Also janitorial and transportation services are exempt
Why do I need a Sales Tax Certificate to purchase wholesale items for Resale in the State of Colorado?
As a wholesale company conducting business in the state of Colorado, you are required to have a sales tax certificate when purchasing items at wholesale prices, Therefore, suppliers must request a copy of your resale certificate before selling you items at wholesale prices.
If you an online seller, Do you need to collect sales tax on shipping and handling of merchandise?
If you sell tangible personal goods in Colorado than in almost all cases you would charge sales tax on shipping and handling charges. Shipping and handling charges are generally not taxable if you separate it from the purchase price of the item being sold on the invoice.
Is there sales tax on drop shipments in the state of Colorado?
A drop shipment is where a seller (most times out of state) sells a product which is then delivered to a consumer by a third party shipper. In most instances, drop shipments in Colorado are required to have sales tax added
Are there any exemptions to taxable items sold?
Specific medical related devices, groceries, raw materials or machinery, equipment, and all custom software are tax exempt
Register for a Colorado sales/use tax number
Colorado state, county, city, & municipal tax rate table