Payroll Compliance Checklist
for Colorado Small Business Owners

Once you've got employees set up correctly (see our new hire reporting and payroll setup checklist if you haven't already), the compliance work doesn't stop — it becomes a recurring calendar of deposits, quarterly filings, and year-end deadlines. Colorado adds several layers most states don't have, so here's every one of them in a single reference, organized by frequency.

Federal Deposit Schedule: Monthly or Semiweekly

Federal income tax and FICA (Social Security and Medicare) withheld from paychecks has to be deposited on a schedule the IRS assigns based on your "lookback period" — your total tax liability over a specific prior 12-month window.

• $50,000 or less in the lookback period: you're a monthly depositor. Deposit by the 15th of the following month.
• More than $50,000 in the lookback period: you're a semiweekly depositor. If payday falls Wednesday–Friday, deposit by the following Wednesday. If payday falls Saturday–Tuesday, deposit by the following Friday.
• New employers start as monthly depositors by default.
• If your accumulated liability hits $100,000 or more on any single day, you must deposit by the next business day regardless of your normal schedule — and you're bumped to semiweekly for the rest of that year and all of the next.

All federal deposits must be made electronically. For 2026, Social Security tax applies to the first $184,500 of each employee's wages; Medicare has no wage cap.

Quarterly: Federal Form 941

Form 941 reports income tax, Social Security, and Medicare withheld from employee paychecks, plus the employer's matching FICA share:

• Q1 (Jan–Mar): due April 30
• Q2 (Apr–Jun): due July 31
• Q3 (Jul–Sep): due October 31
• Q4 (Oct–Dec): due January 31 of the following year

If you've made all your deposits on time and in full, you get a 10-day grace period to file. If a due date falls on a weekend or federal holiday, it shifts to the next business day.

Colorado Wage Withholding: Three Filing Frequencies

Colorado assigns your state withholding filing frequency based on how much you withheld during a look-back period running July 1 through June 30. There are exactly three:

• Quarterly — annual withholding under $7,000. Due the last day of the month after each quarter ends.
• Monthly — annual withholding of $7,000 to $50,000. Due the 15th of the following month.
• Weekly — annual withholding over $50,000. Tax periods end Friday, with payment due the third business day after — normally the following Wednesday, later if a holiday intervenes. Electronic funds transfer is mandatory at this tier.

Quarterly: Colorado Unemployment Insurance

Every Colorado employer files a quarterly wage report with the Department of Labor and Employment through the MyUI Employer+ portal. Deadlines match the federal 941 schedule — April 30, July 31, October 31, and January 31.

• The 2026 taxable wage base is $30,600 per employee, up from $27,200 in 2025 — a meaningful jump if you're forecasting payroll costs.
• New-employer rates for 2026 run 3.05% for non-construction, general construction, and trades; 6.285% for heavy construction; and 0.20% for political subdivisions.
• Experienced employers currently pay a standard rate plus a support surcharge and a solvency surcharge, the last of which is in effect because the trust fund reserve ratio sits below its target.
• Electronic filing is mandatory unless you hold a waiver. Late or incomplete reports can draw penalties and interest.

Quarterly: Colorado FAMLI Premiums

Colorado's Family and Medical Leave Insurance program is the state payroll obligation newer employers most often overlook entirely.

• The 2026 premium rate is 0.88% of wages, split evenly — 0.44% employer, 0.44% employee.
• Employers with fewer than 10 employees nationwide are not required to pay the employer share. They still must register, file quarterly wage reports, and remit the 0.44% employee share.
• Premiums apply to wages up to the federal Social Security wage cap — $184,500 for 2026.
• Reports and premiums are due April 30, July 31, October 31, and January 31 through the My FAMLI+ Employer portal.
• Your employee headcount had to be updated by February 28, 2026 to qualify for the small-employer rate. Miss that window and the full 0.88% applies regardless of your actual size.

The rate is recalculated annually, so this is a line item to re-check every January rather than set once and forget.

Annual: W-2s, 1099-NECs, and Year-End Forms

By January 31 (or the next business day when that falls on a weekend), you must:

• Provide W-2 forms to every employee who worked for you during the prior year, and file them with the Social Security Administration
• Provide Form 1099-NEC to every contractor you paid $2,000 or more — the threshold rose from $600 for 2026 payments and is inflation-indexed from 2027 — and file those with the IRS; there is no automatic extension for 1099-NEC
• File Colorado Form DR 1093, the annual transmittal of state W-2 forms, along with your Colorado W-2 copies

Form 940 (federal unemployment) is also due January 31, or February 10 if you deposited all FUTA tax when due. FUTA runs 6.0% on the first $7,000 of each employee's wages, and most employers get a 5.4% credit that brings the effective rate to 0.6% — about $42 per employee per year. Deposit FUTA quarterly whenever your accumulated liability exceeds $500. Colorado has not been a credit reduction state; the IRS confirms each year's list around November.

Colorado SecureSavings: The Retirement Mandate

Colorado requires employers to either offer a qualified retirement plan or facilitate payroll deductions into the state-run Colorado SecureSavings program. You're covered if you meet all three criteria:

• In business at least 2 years
• 5 or more employees
• You don't already offer a qualified retirement plan

You either register or certify your exemption — the Treasury notifies eligible employers directly. You're not a fiduciary and you don't manage investments; you facilitate the deduction. Employees get a 30-day window to opt out. Penalties run up to $100 per employee per year, capped at $5,000 annually, and the statute requires three months' notice of noncompliance before fines are assessed.

Note the two-year clause: a brand-new business isn't eligible until year three, which is precisely why this one gets forgotten.

Minimum Wage and Overtime: Colorado Is Not Federal

Colorado's wage rules diverge from federal law in ways that catch out-of-state payroll providers regularly.

• Statewide minimum wage for 2026 is $15.16/hour, with a tipped minimum of $12.14 (a $3.02 tip credit).
• Local minimums override the state figure. Denver is $19.29, Edgewater is $18.17, and both the City of Boulder and unincorporated Boulder County are $16.82.
• Overtime is not just the 40-hour rule. Under COMPS Order #40, effective January 1, 2026, time-and-a-half is owed for hours over 40 in a workweek, over 12 in a workday, or over 12 consecutive hours — whichever calculation pays the employee more. No averaging across weeks, no comp time in lieu of overtime pay.
• Meal and rest periods are mandatory: a 30-minute unpaid, duty-free meal period for shifts over 5 hours, and a paid 10-minute rest period for every 4 hours worked.
• The 2026 exempt salary threshold is $57,784/year, and it must be a true salary — not an hourly rate or day rate.

Local Occupational Privilege Taxes

Several Colorado municipalities levy a monthly "head tax" on employees who work within their limits. It's based on where the work is performed, not where your business is located or where the employee lives.

Each of these cities sets its own OPT return schedule — monthly or quarterly depending on your size — so add those filing dates to your calendar alongside the state ones. And that last row matters. A number of widely-read payroll guides still list Aurora at $2 employee and $2 employer with a $250 threshold. Those figures have been dead since the start of 2025. If your payroll software or provider is still withholding Aurora OPT, that's money coming out of paychecks for a tax that no longer exists.

Sheridan also levies an OPT. Its published figures are harder to verify from primary sources, so confirm current rates with the city directly before setting it up in payroll.

Final Paychecks: Colorado's Timing Rules Are Strict

• If you terminate an employee: wages are due immediately. If your accounting unit isn't operating at that moment, you have until 6 hours after the start of its next regular workday — or 24 hours if payroll is handled off-site.
• If an employee quits: wages are due on the next regular payday.

The penalty for getting this wrong is steep. If you fail to pay within 14 days of a written demand, you owe the greater of twice the unpaid wages or $1,000. If the failure was willful, it's the greater of three times the unpaid wages or $3,000.

Recordkeeping: How Long to Keep Payroll Records

Keep employment tax records for at least 4 years after the tax becomes due or is paid, whichever is later. That includes:

• Copies of filed 941s, 940s, W-2s, 1099-NECs, and DR 1093s
• Payroll registers and pay stub records
• Timesheets and hours records
• Records supporting any tax deposits made

I-9 forms have their own, shorter retention rule (3 years after hire, or 1 year after termination, whichever is later) — see our new hire checklist for details.

The Annual Colorado Payroll Compliance Calendar

• Every payday: deposit federal withholding per your monthly or semiweekly schedule; remit Colorado withholding per your weekly, monthly, or quarterly frequency
• January 31: Q4 Form 941 · Form 940 · Q4 Colorado UI wage report · Q4 FAMLI premiums · W-2s to employees and SSA · 1099-NECs to contractors and IRS · Colorado DR 1093
• February 28: update your FAMLI employee headcount for the year's premium rate
• April 30: Q1 Form 941 · Q1 Colorado UI wage report · Q1 FAMLI premiums · Q1 Colorado withholding (quarterly filers)
• July 31: Q2 Form 941 · Q2 Colorado UI wage report · Q2 FAMLI premiums · Q2 Colorado withholding
• October 31: Q3 Form 941 · Q3 Colorado UI wage report · Q3 FAMLI premiums · Q3 Colorado withholding
• Each January: re-check the FAMLI rate, the UI taxable wage base, the Social Security wage base, the state and local minimum wages (and local tip credits, which cities can now set themselves), and the COMPS exempt salary threshold — all of these change annually
• Ongoing: retain all employment tax records for a minimum of 4 years

Let Payroll Compliance Run Itself

Every deadline above is manageable on its own. The real risk is losing track of one while you're focused on running your business — and Colorado's stack of federal, state, and municipal obligations gives you more chances to lose track than most states do.

Colorado Bookkeeping handles payroll processing, deposits, and quarterly filings for Colorado small businesses so none of these dates ever slip through the cracks.

Rates, thresholds, and wage bases change annually and were current as of August 2026. This article is general information, not tax or legal advice — verify current figures with the relevant agency or a qualified professional before relying on them.