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The state of Kansas has bolstered its national business profile in recent years. In 2021, the state was cited for having themost economic investment per capitain the United States. It was also ranked thetop business climate in its geographical region, coming in ahead of Nebraska, Missouri, Iowa, South Dakota, Minnesota, and North Dakota. The state boasts affordable housing, ample space, and nationally prominent research universities that add to its talent base. This has led entrepreneursstarting a businessto choose Kansas as a home base, which often take the form of LLCs.
How to start a Kansas LLC
- Name your Kansas LLC
- Create a business plan
- Get a federal employer identification number (EIN)
- File Kansas LLC Articles of Organization
- Choose a registered agent in Kansas
- Obtain a business license and permits
- Understand Kansas state tax requirements
- Prepare an operating agreement
- Examine business insurance options in Kansas
- Understanding financial considerations
- Market your Kansas LLC
What is an LLC?
Alimited liability company, best known by the abbreviation LLC, is a common business entity type in the United States. The LLC provides its owner(s) with personal liability protection, meaning that their personal assets are not at stake should any legal claims be brought against the entity. As an entrepreneur, you can establish a single-member LLC with just one owner, or a multi-member LLC with an unlimited number of owners.
LLCs are taxed as pass-through entities, meaning that the LLC owners report the profits (or losses) of the business on their personal tax returns. Their company income is thus taxed at a personal rate.
Is an LLC right for you?
There are a number of benefits to owning and operating an LLC that might make the entity type beneficial for your new Kansas business. LLCs offer simplicity, tax flexibility, and personal asset protection. The two main selling points of an LLC business structure are:
- Personal liability protection.If an LLC goes bankrupt or gets sued, only the LLC’s assets are at stake; not the owners’ assets. Other business entity types, like sole proprietorships, don’t offer owners these liability protections. A limited liability partnership (LLP) protects you from your business partners’ liability, but it does not protect you if you’re personally at fault for the LLP’s debts or misdeeds. Compared to both these business structures, LLCs offer the most protection.
- Limiting taxes. Some American business owners—those who own corporations—can be taxed twice on company-related income. The first tax comes from personal income they receive from company salaries or bonuses. The second tax occurs when the company itself pays corporate taxes on its profits. LLCs don’t have this problem. They enjoy “pass-through” status from the IRS. Profits and losses pass through the company to the individual LLC members, who report these balances as part of their personal returns. A pass-through structure also lets LLC members claim a personal income deduction (proportional to their ownership share) if their LLC loses money in a tax year. For example, if the LLC loses $27,000 in a year, an LLC member with a one-third ownership stake can claim a $9,000 deduction on their personal income taxes.
1. Name your Kansas LLC
You can give two different names to your Kansas LLC. The first is a legal name, which you register with the state and the Internal Revenue Service. The second name, if you desire one, is called a DBA (“doing business as”). A DBA is the name by which your LLC is known to the general public. Shopify’sbusiness name guidelinesexplain your options further. Once you’ve settled on names, you must register them with the Kansas Secretary of State. Here’s how:
- Pick a name no one else has.Before you register a legal name, confirm that no other Kansas company has already picked it. You can search for existing businesses using the Kansas Secretary of State’sname availability tool. You’ll want to confirm no other company has claimed your preferred name. When choosing, keep in mind that all Kansas LLCs must include the phrase “Limited Liability Company” or its abbreviations (“LLC” or “L.L.C.”) as part of their legal business names.
- Register your LLC name.Once you find an unclaimed LLC name, you can reserve it for up to 120 days byfiling a requeston the Kansas Secretary of State’s website. This costs $30 per name.
- You can use a DBA, but you cannot register it.Kansas lawdoes not provide forDBA registration. You can still operate under a DBA in Kansas, but the state will not help you if another company also wants to use your DBA.
- Reserve domain names and social media handles.Many of your potential customers will want an easy way to find your LLC online. Ideally, you’ll want to secure a domain name and social media handles that closely align with your LLC name or DBA. Shopify’sdomain name generatorcan help entrepreneurs find the perfect domain name for their company, and Shopify can help youregister your domainas well.
2. Create a business plan
Abusiness planis a document that lays out your company’s mission statement, core organizational goals, organizational hierarchies, workflow charts, core market analyses, projectable revenue streams, and objective measurements for success. By writing a business plan, you’re also thinking through the feasibility of your company and how it—your employees, your sales, marketing, logistics, etc.—will all work. You can peruse Shopify’s library ofbusiness plan examplesto see what real-world business plans look like. You can also use ourfree templatewhen you draft a business plan of your own.
3. Get a federal employer identification number (EIN)
Your Kansas LLC needs a federalemployer identification number(EIN), which acts as your federal tax identification number. You can get a free EIN from the Internal Revenue Service. Once you’ve obtained your federal EIN, you will get a business tax license from theKansas Department of Revenue. This will enable you to legally conduct sales in the state.
4. File Kansas LLC Articles of Organization
To formally establish your LLC in the state of Kansas, you will file articles of organization by using the堪萨斯业务实体的形成portal on the Kansas Secretary of State’s website. You can also download formDL 51-09and mail it in. If you’re forming a professional LLC (one intended to practice a licensed trade like medicine, dentistry, or law), you’ll file formDL 51-22, which is specifically for a professional LLC (PLLC). The filing fee for each form is $165.
If your LLC already exists in another state, Kansas law describes it as a “foreign entity.” Foreign entities doing business in Kansas must register with the state usingform FA. The fee is $165. Whether you’re establishing a new LLC in Kansas or registering a foreign LLC in the state, plan to provide your:
- LLC name
- Nature of your LLC’s business
- Physical street address, phone number, email address
- Name and address of the LLC’s registered agent (which Kansas calls a resident agent)
5. Choose a registered agent in Kansas
Kansas law requires all LLCs to designate a resident agent (more commonly known as a registered agent) who can accept legal documents and tax correspondence on behalf of the business. You or one of your fellow LLC members can act as the resident agent, provided that you or they live in and have a mailing address (not a PO box) in the state and can receive documents during regular business hours. If none of your members live in Kansas, or none wish to take on the duties of a resident agent, you can hire a professional registered agent service.
6. Obtain a business license and permits
The state of Kansas and its various counties and cities subject many professions tolicensing requirements. These professions include fields ranging from internal medicine to propane storage. Some permits are issued at the state level, while others are issued at the county level or even the city level. The state maintains a website that helps business owners locate theappropriate licenses and permitsfor their profession.
7. Understand Kansas state tax requirements
Your Kansas LLC passes its profits and losses through to company owners. These owners will then report them on the federal tax returns they file with the Internal Revenue Service. In accordance with this tax status, other Kansas business taxes and fees include:
- Annual report.Every year, a Kansas LLC must file a report listing its most up-to-date business information with respect to address, registered agent, and membership group. You can file this formonlinefor $50 or mail in a paper copy of KansasForm LC-50, which costs $55.
- Kansas sales tax.As of 2022, Kansas’s state sales tax rate is 6.5%, and localities may add their own sales taxes (as much as 4%) on top of this. The average Kansas sales tax is8.7%when combining state and local rates. Before you sell goods and services in Kansas, you must have a license (Form CR-16) from theKansas Department of Revenue. You will then be expected to collect and remit sales taxes to the DOR and the applicable tax authorities in your area.
- Employer taxes.If your Kansas LLC has employees, you must periodically remit their state withholding taxes, which come out of their paychecks. You’ll also pay into the state’s unemployment insurance tax fund. FilingForm CR-16will get you into the system.
- Corporate tax.As an LLC owner, you may choose to have your company taxed as an S corporation. Because corporate tax rates are typically lower than personal income tax rates, a profitable company can save a lot of money by paying corporate tax instead of passing their income through the LLC. To have your LLC taxed as a corporation, fileForm 2553with the IRS. You then payKansas business taxes, which range from 4% to 7%, depending on your LLC’s income, its employee base, and where it does business.
8. Prepare an operating agreement
Kansas doesn’t mandate LLC operating agreements, but most LLC owners choose to draft one anyway. Your Kansas LLC operating agreement will help you and your co-owners govern your fledgling company. It codifies high-level information about the company’s membership group, its purpose, its financial agreements, and its planned lifespan. A typical operating agreement includes:
- LLC name and its DBA (if applicable)
- LLC business address, email address, and phone contact
- Nature of the LLC, including business scope
- Name and address of the LLC’s registered agent (known as a resident agent in Kansas)
- List of LLC members and their respective ownership percentage
- List of which LLC owners are managing members and which are non-managing members
- Description of member duties and responsibilities to the LLC
- List of business decisions that require a membership vote, along with specific voting procedures
- 支付模型的有限责任公司的利润和损失es
- Regulations for admitting new LLC members and removing existing members
- Company policies on member indemnification and liability
- Planned lifespan of the LLC (whether temporary or continued in perpetuity)
9. Examine business insurance options in Kansas
The LLC business structure protects owners’ personal assets in the event of a lawsuit against the company. However, the LLC’s business assets need protections of their own. A well-chosenbusiness insurance policycan handle this type of asset protection, allowing you to operate without the fear of losing your company cash and property. Kansas law mandates some types of insurance coverage, likeworkers’ compensation insurancefor employers andcommercial automobile insurancefor anyone with a commercial vehicle (such as a delivery truck or food truck). Other insurance policies may not be mandated by the state, but they may be required as a condition of getting a loan or renting commercial property.
The KansasDepartment of Insuranceregulates insurance offerings in the state. Common business insurance policies include:
- Workers’ compensation insurance.Workers’ compensation insuranceprovides medical expenses if an employee is injured on the job. It also covers payments to employees who must miss work due to on-the-job injury. If your LLC has employees (not independent contractors), you must pay into the state’s workers’ comp fund for each of them.
- Commercial general liability insurance.Companies take commercialgeneral liability insurance(CGL) to protect against claims of bodily injury, property damage, slander, libel, or misleading advertising, If your LLC is found liable for any of these accusations, your CGL policy will make payments and protect company assets.
- 专业liability insurance.专业liability insurancewill pay litigants’ damages and protect your business assets if your LLC is ever found guilty of malpractice or gross negligence.
- Unemployment insurance.All Kansas employers pay into an unemployment insurance fund, which contributes to compensation for laid-off workers.
10. Understand financial considerations
Your new company will need to easily get cash, issue checks, deposit incoming checks, and receive payouts from payment providers. You’ll do this via abusiness bank account——在一个商业bank or a credit union. Obtain your federal EIN before setting up your account.
If your LLC would benefit from investment, grants, and special tax benefits, it’s worth exploring theKansas Business Center One Stop. This resource focuses on tax credits and loan assistance, with a special emphasis on agriculture. On a federal level, theUS Small Business Administrationoffers micro-loans and connects LLC owners to various financing resources. The SBA has an office inKansas City, Missouri, serving counties in eastern Kansas. It has another office inWichita, serving the rest of the state. You can also explore merchant support services likeShopify资本. These services connect business owners to commercial lenders and investors.
11. Market your Kansas LLC
Once you’ve filed your Kansas LLC articles of organization, have an EIN, and a tax certificate,set up a business bank account, and bought the applicable insurance policies, you can turn your focus toward marketing andbrand building. A holistic marketing strategy involves craftingslogans and taglines, color schemes,logos, fonts, and a clear, unified marketing voice. Potential marketing paths include:
- TV and radio ads.This traditional form of advertising exposes your LLC to a broad audience. Broadcast ad rates are lower in Kansas than in many other parts of the country, making this a more feasible regional option.
- Online ads.Online ads stand out for their ability totarget an audiencewith messages placed in web pages, social media feeds, and online videos. The leading online ad platforms let you reach users based on their demographics, geographic location, income, interests, and search histories.
- Social media influencer campaigns.Social mediaadvertising frequently features online celebrities promoting products, offering testimonials, and sharing discount codes. You can hire a social media influencer to introduce your brand to their legions of followers.
- Store displays.For some marketers, fewmarketing strategiesyield better results than showcasing products at the point of purchase. You can do this with in-store displays, demo booths, and stationed sales reps.
For further information on the art of marketing, peruse Shopify’ssmall business marketing guide. It’s yet another resource in your path toward building audiences, converting customers, and sustaining long-term client relationships.
Starting an LLC in Kansas FAQ
How much does it cost to start and maintain an LLC in Kansas?
The startup costs for a Kansas LLC include $30 to reserve your LLC name and $165 to file articles of organization (or establish a foreign LLC in Kansas). To remain in good standing, your LLC must file an annual report, which costs $50 if filed online or $55 through the mail.
What are the pros and cons of establishing your LLC in Kansas?
Kansas is known for its strong agricultural sector, its abundant land, and its affordable cost of living. The state government prides itself on nurturing a pro-business environment. Drawbacks to Kansas include a relatively small population and a lack of major metropolitan areas.
Do you need a registered agent for your LLC in Kansas?
Yes. All Kansas LLCs are required to designate a registered agent (known as a resident agent in Kansas) with a physical address in the state. Your LLC can choose one of its members to be its resident agent. You also can outsource the duties to a professional registered agent service with a presence in the state.
How do state taxes work for LLCs in Kansas?
默认情况下,有限责任公司的收入通过公司to individual members. Those LLC members receive their share of company profits or losses via IRS Schedule K-1. They include these K-1 totals in their personal income tax filing. Alternatively, you can have your LLC taxed as an S corporation. You’ll then pay both federal and state corporate income tax. In Kansas, the corporate rate ranges between 4% and 7% depending on your total company revenue, number of employees, and location of your business operations. To have your LLC taxed as a corporation, file Form 2553 with the IRS, and then arrange to make state business tax payments via the Kansas Department of Revenue (DOR). Kansas LLCs must pay unemployment insurance tax on behalf of all their employees. They must also collect and remit Kansas’s sales tax. You can set up these tax accounts by filing Form CR-16 with the DOR.