Two Colorado service businesses can finish 2026 with the same revenue, the same headcount, and the same margin, and still start 2027 in completely different shape. The difference is rarely the economy. It is whether the owner priced in the January cost increases before January.
Colorado has already published most of what changes on January 1. This Colorado small business year-end checklist covers the 2027 numbers that hit your payroll, the filings that carry a real penalty, and eight moves worth making in the next 60 days. Every figure comes from a state or city source, with the arithmetic shown.
Why a Colorado checklist is different from a generic one
Most year-end checklists are federal. Reconcile accounts, chase receivables, send 1099s. All true, all incomplete if you operate here. Colorado layers three things on top: a state wage floor that moves every January with a separate, higher Denver floor above it, a state paid leave program with its own rate and employer threshold, and a Secretary of State periodic report keyed to your entity’s anniversary month rather than a statewide date. That last one is the kind of deadline that gets missed.
The 2027 Colorado numbers that are already public
The state minimum wage rises to $15.71 per hour. The Colorado Department of Labor and Employment announced that the state minimum wage increases to $15.71 per hour in 2027, up from $15.16, with the tipped minimum going to $12.69 from $12.14. That is 55 cents an hour on every employee sitting at the floor.
Denver runs its own, higher floor. Denver’s citywide minimum wage is $19.29 per hour for 2026, with a tipped food and beverage rate of $16.27 when the worker records at least $3.02 an hour in tips. The city indexes its rate to the regional consumer price index and publishes the 2027 figure itself, so pull the current number from Denver Labor rather than assuming the state figure applies. It does not.
The FAMLI premium drops to 0.86 percent. Colorado’s paid family and medical leave premium falls from 0.88 percent of wages in 2026 to 0.86 percent in 2027. Employers may deduct up to half from employee pay, and those with fewer than 10 employees nationwide owe no employer share at all, though they still withhold and remit the employee portion. It is the one line item that gets cheaper, and the one most often set up wrong in payroll software.
Your periodic report costs $25 on time and $75 late. The Colorado Secretary of State charges $25 to file online plus a $50 penalty if you miss the window, and the deadline is personal to your entity: two months before your periodic report month through two months after. Miss it and the entity goes delinquent, which is the status a lender or title company notices at the worst possible moment.
One federal date belongs on the same page. Your fourth quarter 2026 estimated tax payment is due January 15, 2027, and the IRS waives it only if you file your full 2026 return by February 1, 2027.
The formula: what the 2027 wage floor actually costs you
Owners react to a minimum wage announcement emotionally rather than numerically. The real number is usually smaller than the dread and larger than the shrug. Run it:
2027 Payroll Increase = (New Hourly Floor – Current Hourly Floor) x Annual Hours per Employee x Employees Affected x (1 + Employer Payroll Tax Rate)
Hourly floor. Use the floor that applies where the work happens, not where the business is registered. A Lakewood company with a crew on a Denver job site has a Denver problem.
Annual hours per employee. Use real hours from payroll reports, not 2,080. Part-time and seasonal staff are where the floor bites hardest, and where owners guess instead of looking.
Employees affected. Only those paid below the new floor, and then the tier above. If floor workers go to $15.71 while experienced staff sit at $16.00, you have a compression problem that will cost more than the mandate did.
Employer payroll tax rate. Every dollar of wage increase carries tax with it. Social Security and Medicare alone are 7.65 percent. Add your FAMLI employer share if you have 10 or more employees, plus unemployment insurance at your experience rate.
Worked example: a Colorado business with six hourly employees
A cleaning company based in Aurora, outside Denver and Boulder city limits, so the state floor applies.
- Employees paid at the state floor: 6
- Annual hours each, from payroll reports: 1,800
- 2026 hourly floor: $15.16
- 2027 hourly floor: $15.71
- Employer payroll tax on wages: 7.65 percent
- Employees nationwide: 6, so no FAMLI employer share is required
Total hours: 6 x 1,800 = 10,800
2026 wages at the floor: 10,800 x $15.16 = $163,728
2027 wages at the floor: 10,800 x $15.71 = $169,668
Wage increase: $169,668 – $163,728 = $5,940
Employer payroll tax on the increase: $5,940 x 0.0765 = $454.41
Total 2027 cost increase: $6,394.41, or about $533 a month.
Now change one input. If those six employees worked inside Denver city limits at the 2026 city floor of $19.29, the same 10,800 hours would cost $208,332, or $44,604 more than the Aurora business pays for identical labor. The mandate increase is a rounding error next to which side of a city line your crew stands on.
How much of this belongs in your 2027 prices
Anyone who hands you a single “raise prices by this much” number is guessing. It depends on something you already know: what share of your revenue is labor.
The state floor move is a 3.6 percent raise on affected wages ($15.71 divided by $15.16, minus one). To hold your margin, the price increase you need is roughly 3.6 percent multiplied by labor’s share of revenue. At 30 percent of revenue that is about 1.1 percent. At 60 percent it is about 2.2 percent.
So the defensible range is 1 to 2 percent attributable to the wage floor, not the 8 or 10 percent some owners reach for in January because it feels like the year to do it. That math holds your current margin. It does not fix a price that was wrong to begin with, a larger problem covered in 7 pricing mistakes that cost small businesses thousands.
6 year-end mistakes Colorado owners keep making
- Treating the state floor as your floor when you operate in Denver. The city rate applies to work performed in Denver no matter where the business is registered. Paying the state rate to someone working a Denver address is a wage violation, not a rounding issue. Fix: list every employee by the city where the work happens, then apply that city’s floor.
- Assuming FAMLI stays free because it was free last year. The employer share exemption turns on nationwide headcount, and it disappears the moment you hit 10. Fix: if you are at 8 or 9 and hiring, model the employer share at 0.43 percent of wages before you make the offer. On $400,000 of wages that is $1,720 a year.
- Missing the periodic report because there is no statewide deadline to remember. It is keyed to your own month, which is why it slips. The penalty is small and the delinquent status is not. Fix: look up your report month on your Secretary of State summary page today and set a recurring reminder one month ahead.
- Paying the fourth quarter estimate without re-running the year. Most owners pay a quarter of last year’s tax in January and move on. If 2026 ran better or worse than 2025, that is either a penalty or an interest-free loan to the government. Fix: close through November, project December, and size the January 15 payment off that.
- Cleaning up the books in February instead of December. Every uncategorized transaction becomes a question your tax preparer bills you to answer and a deduction you may not be able to support. Fix: work the queue before December 31, while you still remember the charges. The traps are in 6 bookkeeping mistakes that cost small businesses thousands at tax time.
- Calling the review done once the return is filed. A return tells you what happened. It does not tell you which clients were profitable or what January cash looks like. Fix: run an operating review alongside the tax work, using the pattern in 5 quarterly financial review mistakes that cost small businesses.
Your Colorado small business year-end checklist
- List every employee by the city where the work is performed, and mark who sits below the 2027 floor that applies.
- Run the payroll increase formula on your real hours, then check the tier above for compression.
- Confirm your payroll provider has the 2027 FAMLI rate of 0.86 percent loaded and the employer share matched to your headcount.
- Look up your periodic report month and set a reminder one month ahead of it.
- Close the books through November, project December, and size your January 15 payment off that projection.
- Clear the uncategorized queue and reconcile every bank and card account through December 31.
- Set your 2027 price list, with the wage-driven increase separated from any margin repair.
- Build a 13-week cash flow view running through March, because January and February are when seasonal Colorado businesses find out what they got wrong.
If item eight is the one you keep skipping, it is the one that matters most. The usual failure modes are in 6 cash flow forecasting mistakes that sink small businesses.
When to bring in help
Most of this list is work an owner can do alone with a clean spreadsheet and a free afternoon. The part that usually needs a second set of eyes is pricing, because a small error there compounds across every invoice you send in 2027.
We work with Colorado owners on exactly this through fractional CFO services in Denver, and you can start with a free 20-minute call by booking a consult. If your trigger is making bigger decisions than your reporting can support, 6 signs your small business needs a fractional CFO is the better starting point.
The owners who have an easy January are not the ones who guessed well. They are the ones who did this arithmetic in November.
Simply Spreadsheets helps real estate investors and small business owners make confident decisions with clean, reliable numbers. Founded by Erin Onsager, a fractional CFO with more than 20 years of finance experience, the firm builds custom spreadsheets, financial models, and analysis that turn raw data into clear answers.
Leave a Reply