Technical Guide: Hiring

Technical Guide: How to Make Your First Hire in Colorado

Hiring your first employee requires careful legal, financial, and operational setup. Below is a step-by-step technical guide to ensure compliance and a smooth onboarding process. 

ONE: Register as an Employer: Obtain an Employer Identification Number (EIN)

What it is: An EIN is a federal tax ID number required to hire employees.

How to apply:

TWO: Register for Colorado State Payroll Taxes

What it is: Employers must withhold state income tax and pay unemployment insurance.

How to register:

  • Register with the Colorado Department of Revenue (DOR) for state tax withholding: Register here.
  • Register with the Colorado Department of Labor and Employment (CDLE) for unemployment insurance: Sign up here.

THREE: Set Up Workers’ Compensation Insurance

What it is: Required in Colorado for any business with employees, regardless of size.

How to get it:

  • Purchase a policy through a private insurance provider or Pinnacol Assurance (Colorado’s largest provider).
  • Verify compliance with the Colorado Division of Workers’ Compensation.

FOUR: Choose a Payroll System

Why it’s important: Ensures accurate payroll processing, tax withholdings, and compliance.
Recommended tools for Colorado:

  • Gusto – Great for small businesses, automatically calculates state and federal payroll taxes.
  • QuickBooks Payroll – Ideal for accounting integration.
  • ADP Run – Best for growing teams and compliance automation.

FIVE: Report New Hires to the State of Colorado

Why it’s required: Colorado law mandates new hire reporting within 20 days of hiring.

How to report:

SIX: Verify Employment Eligibility (I-9 Form)

What it is: Employers must verify each employee’s identity and work authorization.

How to do it:

  • Have the employee complete Section 1 of Form I-9 on their first day.
  • Employers must complete Section 2 within three business days.
  • Store the form for at least three years.
  • Optional: Use E-Verify to confirm work eligibility.

SEVEN: Have Employee Fill Out Tax Forms (W-4 & DR 0004)

What it is: Employees must complete federal and state tax withholding forms.

Forms needed:

EIGHT: Set Up Employee Recordkeeping

Why it matters: Employers are legally required to keep personnel records, including:

  • Tax and payroll records (keep for at least four years).
  • I-9 forms (keep for three years).
  • Employee agreements and policies.

NINE: Display Required Workplace Posters

What it is: Employers must post state and federal labor law notices in the workplace or provide them digitally for remote workers.

Where to get them:

TEN: Stay Compliant with Colorado Wage & Labor Laws

Key laws to follow:

  • Minimum Wage (2025): $14.42 per hour (may vary by local laws)
  • Overtime Law: Employees must receive 1.5x pay after 40 hours per week or 12 hours per day
  • Paid Family Leave (FAMLI): Colorado’s state-run paid leave program – Learn more

Need Help Hiring in Rural Colorado?

If you’re a rural business owner looking for support in hiring, workforce training, or navigating employment laws, here’s where to start:

  • For personalized HR consulting and training: Contact your local SBDC for one-on-one assistance (Find an SBDC).
  • For job postings, recruitment assistance, and wage subsidies: Visit a Colorado Workforce Center (Find a Center).
  • For compliance guidance, wage data, and tax credits: Check out CDLE’s Employer Services (Learn more).
  • For free job listings and candidate matching: Use Connecting Colorado (Post a Job).