New Hire Reporting & Payroll Setup
Checklist for Colorado Employers

In our last post, we covered how to correctly classify a worker as a 1099 contractor or a W-2 employee. Once you've decided someone is an employee, a specific sequence of paperwork and setup steps kicks in — and Colorado stacks several state requirements on top of the federal ones. This is a literal checklist. Bookmark it for the next time you hire.

Step 1: Get Your EIN (If You Don't Have One)

Before you can run payroll you need a federal Employer Identification Number. Apply online through the IRS and you'll have it in minutes.

• An EIN is free. The IRS says so plainly, and warns about sites that charge for one. If you're being asked to pay, you're on the wrong site.
• You get one EIN per responsible party per day.
• The online session expires after 15 minutes of inactivity and can't be saved partway — have your responsible party's SSN or ITIN ready and do it in one sitting.

Step 2: Register With Colorado

Colorado's business registration portal, MyBizColorado, is the state's front door for employer registration, and it's the Department of Revenue's stated path for opening a wage withholding account (the paper alternative is Form CR 0100).

What you'll need registered before your first payroll:

• Colorado wage withholding account — required if you pay Colorado wages, including if you have no permanent location in the state. In-state businesses can register through MyBizColorado or Form CR 0100; out-of-state businesses should use Form CR 0100.
• Unemployment insurance account with the Department of Labor and Employment, managed through MyUI Employer+
• FAMLI account through My FAMLI+ Employer — required for any employer with at least one qualifying employee, including small employers who only remit the employee share

Confirm each account is actually open and you have the account numbers in hand. Registration portals sometimes cover several agencies in one pass and sometimes don't — verify rather than assume, because a missing account number stalls your first quarterly filing.

Step 3: Federal Form I-9 (Employment Eligibility Verification)

Every employer in the country must complete Form I-9 for each new hire, verifying the employee is legally authorized to work in the U.S. The employee completes Section 1 no later than their first day of work, and you complete Section 2 within three business days of their start date, after examining acceptable identity and work-authorization documents.

• Check your form version. The current I-9 is the 01/20/25 edition, expiring 05/31/2027. The older 08/01/23 edition is still acceptable, but only in the printing that shows the 05/31/2027 expiration — the 08/01/23 printing bearing 07/31/2026 can no longer be used for new hires. If you have a stack of blank I-9s in a drawer, check the expiration date in the top right before you use another one.
• You do not file the I-9 with any agency — you keep it on file.
• Retain it for the longer of 3 years after the hire date, or 1 year after employment ends.
• Keep I-9s separate from regular personnel files in case of an audit.

Step 4: Federal Form W-4

The W-4 tells you how much federal income tax to withhold. It's completed by the employee on or before their first day and kept on file — not filed with the IRS. Employees can update it any time their situation changes.

Step 5: Colorado Form DR 0004 — Optional for Them, Mandatory for You

This one is genuinely confusing, and getting it backwards is common.

Form DR 0004 is Colorado's employee withholding certificate. Employees are not required to complete it. If they don't, you calculate Colorado withholding from their federal W-4 using the DR 1098 worksheet.

But two things follow for you as the employer:

• If an employee asks about adjusting their Colorado withholding, give them the DR 0004 — it's the only mechanism for doing so.
• If an employee gives you a completed DR 0004, you are required to calculate their withholding using the amounts on it.

Step 6: Colorado New Hire Reporting (Within 20 Days)

As covered in our 1099 vs. W-2 post, Colorado law requires reporting new hires to the Colorado State Directory of New Hires within 20 calendar days of the hire date — the date services are first performed for pay.

• You'll need the employee's name, address, Social Security number, date of birth, and hire date, plus your business name, payroll address, and FEIN. Reports missing required fields aren't processed.
• Electronic filing through the state portal is the preferred method; electronic filers must transmit twice a month, 12 to 16 days apart.
• Independent contractors paid $600 or more are reportable too, along with rideshare and delivery workers — Colorado is not a W-2-only reporting state. (This $600 is Colorado's new hire reporting trigger, and is separate from the federal 1099-NEC threshold, which rose to $2,000 for 2026.)
• Rehires count if the person was separated without pay for 60 or more consecutive days.

Step 7: Workers' Compensation Insurance

Colorado requires workers' compensation from your very first employee. There's no small-business exemption, and it applies to part-time and full-time staff — including family members on payroll.

• Coverage is regulated by the Division of Workers' Compensation within the Department of Labor and Employment.
• Going without it draws per-day fines that escalate to $500 for every day you're uninsured for repeat violations, and the state can shut the business down.
• If a worker is injured while you're uninsured, you pay the claim personally plus an additional 25% of the injured worker's benefits, which goes to the state's uninsured employer fund.

This is the single most expensive item on the checklist to skip.

Step 8: Post the Required Notices

Colorado requires several workplace posters, and they're free to download from the Division of Labor Standards and Statistics — you print them yourself, and you do not need to buy a commercial poster service. The required set includes, but isn't limited to:

• COMPS Order poster (2026 version) — wages, overtime, meal and rest periods
• Colorado Workplace Public Health Rights poster — paid sick leave, health and safety, PPE
• Notice of Paydays — your paydays and place of payment
• FAMLI Program Notice — obtained separately from the FAMLI toolkit, and updated in December 2025
• Colorado Anti-Discrimination notice, Employment Security Act notice, Notice to Employer of Injury, and the Pregnancy Accommodations notice
• Agricultural employers have two additional required notices

Posters go somewhere employees actually pass during the workday. Where the work site makes physical posting impractical, you may instead provide a copy to each worker within their first month of employment. Check CDLE's current guidance before relying on that route for remote staff — the rule's own examples are things like single-worker private residences and outdoor sites without an indoor area.

Step 9: Check Whether SecureSavings and Local Head Taxes Apply

• Colorado SecureSavings: if you've been in business at least 2 years, have 5 or more employees, and don't offer a qualified retirement plan, you must register or certify an exemption. Growing past four employees is the trigger most owners miss.
• Occupational privilege tax: if the employee works in Denver, Greenwood Village, Glendale, or Sheridan, a monthly head tax may apply based on where the work is performed. Confirm Sheridan's current rates with the city directly — they're harder to verify from published sources than the other three. Note that Aurora repealed its OPT effective January 1, 2025 — if your payroll setup still withholds it, that needs to come out.

Step 10: Set Up Payroll in QuickBooks Online

Once the paperwork is in place, here's the sequence for getting a new employee running through QuickBooks Online Payroll:

• Add the employee profile — name, address, Social Security number, hire date, and pay rate.
• Enter W-4 details, plus DR 0004 amounts if the employee submitted one.
• Set up direct deposit — voided check or bank details plus authorization.
• Link your Colorado accounts — withholding, unemployment insurance, and FAMLI — so state amounts calculate correctly from the first check.
• Confirm local tax setup if the employee works in an OPT city.
• Add deductions and benefits — health insurance, retirement contributions, garnishments.
• Run a test payroll before the first real paycheck to confirm withholding and net pay look right.

QuickBooks Online Payroll automates most ongoing calculations and filings from here, but the initial setup is where accuracy matters most — a mistake here compounds with every paycheck until someone catches it.

The Quick Reference Checklist

• ☐ EIN obtained
• ☐ Colorado withholding, unemployment insurance, and FAMLI accounts registered
• ☐ Form I-9 completed within 3 business days — current 05/31/2027 edition
• ☐ Federal Form W-4 collected
• ☐ DR 0004 offered if requested, and applied if submitted
• ☐ New hire reported to Colorado within 20 days
• ☐ Workers' compensation insurance confirmed active
• ☐ Required posters displayed, or provided to remote workers within their first month
• ☐ SecureSavings and local occupational privilege tax checked
• ☐ Employee set up correctly in QuickBooks Online Payroll
• ☐ Test payroll run and reviewed before the first live paycheck

Once the new hire is running, the recurring calendar takes over — see our Colorado payroll compliance checklist for every deposit and filing deadline in one place.

Don't Want to Manage This Alone?

Every one of these steps is a place where a small error turns into a compliance headache later. Colorado Bookkeeping can set up new hires correctly the first time — forms, filings, and QuickBooks all handled — so you can focus on running your business instead of chasing paperwork.

Forms, thresholds, and agency requirements change. This article is general information, not tax or legal advice — verify current requirements with the relevant agency or a qualified professional before relying on them.