Colorado has over 11,000 independent restaurants, with Denver, Boulder, and Colorado Springs driving most of the market. The Colorado Restaurant Association reports that the industry employs over 300,000 people statewide. Colorado's regulatory environment is moderately complex -- the state's liquor license system has genuine secondary market value, and Denver's local requirements add a layer that statewide operators sometimes overlook.
Colorado Liquor License
Colorado liquor licenses are issued by the Colorado Liquor Enforcement Division (LED). Colorado operates a local option system where both the state LED and the local licensing authority (city or county) must approve a license. This dual-approval structure means that when you close, you need to notify both the state and the local authority.
Colorado Hotel and Restaurant licenses have secondary market value in high-demand markets like Denver's RiNo, Capitol Hill, and LoDo neighborhoods. Licenses in desirable Denver locations have sold for $5,000 to $20,000. When you close, you can surrender the license or initiate a transfer to a buyer. Contact the LED and your local licensing authority at least 30 days before your planned closing date.
Colorado requires you to account for all on-hand liquor inventory. You can return it to the distributor or transfer it to another licensee with LED approval. Colorado does not allow you to sell inventory directly to consumers or other businesses without authorization.
Colorado Final Paycheck Law
Under Colorado Revised Statutes 8-4-109, if you discharge an employee, final wages are due immediately or on the next regular payday, whichever is sooner. The Colorado Division of Labor Standards and Statistics enforces wage claims. Colorado allows employees to recover unpaid wages plus a penalty of 125% of the unpaid amount for willful violations.
Colorado requires payout of accrued vacation at termination unless your written policy explicitly states that vacation is forfeited upon separation. This is one of the stronger vacation payout requirements in the country -- if your policy is silent, you owe it.
Colorado WARN Act
Colorado does not have a state WARN Act. The federal WARN Act (100+ employees) applies. The Colorado Department of Labor and Employment administers WARN Act notifications. Most independent restaurants are below the federal threshold.
Colorado Sales Tax
Colorado's sales tax structure is one of the most complex in the country because it involves state, county, city, and special district taxes that must be filed separately in many cases. File a final state sales tax return with the Colorado Department of Revenue. Denver restaurants must also file a final Denver sales tax return with the Denver Treasury Division. Colorado's combined state and local rate in Denver is approximately 8.81%.
Colorado Secretary of State Dissolution
To dissolve a Colorado LLC, file Articles of Dissolution with the Colorado Secretary of State. For a corporation, file Articles of Dissolution. The filing fee is $25. Colorado does not require a tax clearance certificate before dissolution, but the Department of Revenue recommends closing all tax accounts first.
Denver-Specific Considerations
Denver requires a separate Retail Food Establishment license issued by Denver Public Health and Environment. Cancel this permit when you close. Denver also has a local minimum wage that exceeds the state minimum -- ensure your final payroll reflects the correct rate. As of 2025, Denver's minimum wage is $18.81 per hour.
Denver also has a local occupational privilege tax (OPT) that applies to employees. Ensure your final payroll accounts for any outstanding OPT obligations and notify the Denver Treasury Division of the closure.
For the full exit checklist, see The Restaurant Exit Checklist: What to Do Before You Shut the Doors. If you are weighing selling versus closing, Sell vs. Close: How to Decide What to Do With a Restaurant That Is Not Working covers the decision framework.
The Correct Sequence
Notify employees, pay final wages immediately or on next regular payday, pay out accrued vacation (unless policy explicitly forfeits it), file final state and local sales tax returns, cancel Denver Retail Food Establishment license, notify both the state LED and local licensing authority about the liquor license, file dissolution with the Secretary of State.