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Starting an LLC in Kansas is a straightforward process that offers entrepreneurs a flexible and protective business structure. Kansas provides a business-friendly environment, and forming a Limited Liability Company (LLC) in the state involves a series of clear steps.
From selecting a unique business name to filing the necessary paperwork with the Kansas Secretary of State, aspiring business owners can establish their LLC to enjoy liability protection and simplified tax treatment. This guide will walk you through the essential steps and considerations to successfully initiate your LLC in the Sunflower State.
How to Start an LLC: Kansas 8–Step Guide
Embarking on the journey of establishing a Kansas LLC is a pivotal stride toward establishing credibility for your small business and opening doors to future prosperity. Ready to get started? Just follow this brief 8-step guide.
Step 1: Choose a Name for Your Kansas LLC
The initial and crucial step in establishing your Kansas LLC is selecting an appropriate company name. Ensure that the chosen name adheres to Kansas naming regulations and is easily discoverable by potential clients.
Adhere to Naming Guidelines:
- Your chosen name must incorporate the phrase “limited liability company” or one of its abbreviations (LLC or L.L.C.).
- Exclude words that might cause confusion between your LLC and a government agency (e.g., FBI, Treasury, State Department).
- Note that certain words (e.gBank, Attorney, University) may necessitate additional documentation and the involvement of a licensed individual, such as a doctor or lawyer, in your LLC.
Confirm Name Availability in Kansas:
Verify that your desired name isn’t already in use by conducting a name search on the State of Kansas website.
Check URL Availability:
We recommend checking online to ascertain whether your business name is available as a web domain. Even if you don’t plan to create a business website immediately, securing the URL can prevent others from obtaining it.
Once you’ve confirmed the availability of your chosen name, you can proceed to select a professional service to assist you in completing the LLC formation process.
Step 2: Choose a Registered Agent in Kansas
You must designate a Kansas resident agent for your Kansas LLC, commonly referred to as a registered agent in other states.
What does a resident agent do? A resident agent, also known as a registered agent in many states, is an individual or business entity tasked with receiving crucial legal documents on behalf of your business. Consider your resident agent as the primary point of contact between your business and the state.
Who is eligible to be a resident agent? A resident agent must either be a Kansas resident or a corporation, such as a registered agent service, authorized to conduct business in Kansas. You have the option to choose an individual within your company, which may include yourself.
Step 3: Choose Between a Single-Member or Multi-Member LLC
Whether your LLC has one member or multiple members, the filing requirements remain the same. The only difference lies in the tax process at the year’s end. In a single-member LLC, the net earnings are reported on the member’s personal tax return as “self-employed” income. In the case of a multi-member LLC, the LLC needs to submit a tax return, and each member must file a K-1 form along with their individual tax returns.
Step 4: File Your Articles of Organization
Establishing a Kansas LLC involves submitting the Kansas Limited Liability Articles of Organization (Form DL 51-09) to the Kansas Secretary of State. These articles should contain:
- The LLC’s name
- The registered agent’s name and address
- The LLC’s mailing address
- The closing month of its tax year (typically December)
- The signature of an authorized person
How Quickly Can a Kansas LLC Be Formed, and What Is the Processing Time?
The processing time for establishing a Kansas LLC is efficient. Upon receiving online payment, the state promptly handles the Articles of Organization, while mailed submissions are processed within approximately two days. Additionally, understanding the distinction between a domestic and foreign LLC is essential.
A domestic LLC operates within its state of formation, while a foreign LLC is established when an existing LLC expands its business to another state. To initiate a Kansas LLC, the cost is $160 online or $165 by mail.
Kansas Office of the Secretary of State
Memorial Hall, 1st Floor
120 SW 10th Ave.
Topeka, KS 66612
Step 5: Drafting an Operating Agreement
While not mandatory in Kansas, creating an LLC operating agreement is strongly recommended. This internal document outlines the operational framework for your LLC, defining the roles and obligations of members and managers and specifying the management structure.
By establishing these details, an operating agreement can also reinforce the distinct identity of your LLC as a separate business entity, thereby safeguarding your limited liability. In the absence of such an agreement, the operations of your LLC will be governed by state LLC law.
Step 6: Obtain an EIN
Acquiring an Employer Identification Number (EIN) from the IRS is a cost-free process that serves to identify a business entity and facilitate efficient tracking of its tax reporting. Essentially functioning as the company’s Social Security number (SSN), the EIN is integral for various purposes.
Why Is an EIN Necessary?
An EIN is essential for the following purposes:
- Facilitating the opening of a business bank account for the company
- Fulfilling federal and state tax requirements
- Enabling the hiring of employees for the company
Where Can I Obtain an EIN?
The business owner can obtain an EIN from the IRS at no cost after the company is formed. This process can be completed either online or by mail.
FOR INTERNATIONAL APPLICANTS:
It’s important to note that an SSN isn’t required for international applicants to obtain an EIN.
Step 7: File the Business Entity Report
In Kansas, limited liability companies must submit an annual report to the Secretary of State. This process can be completed online for $50 or by mail for $55.
The deadline for your annual report falls on the 15th day of the fourth month following your LLC’s tax closing month. For instance, if your tax closing month is December, the annual report is due by April 15. It’s crucial to note that Kansas dissolves LLCs that fail to file an annual report after a 90-day period.
Step 8: Keep Your Company Compliant
Kansas LLC Licenses & Permits
To run your LLC, adherence to federal, state, and local government regulations is essential. The fees and criteria for licenses and permits will vary based on the specific type of business license required.
Kansas LLC Tax Filing Requirements
To maintain a favorable standing for your business, it’s crucial to stay informed about your Kansas LLC taxes. Depending on your business type, you may need to register for various tax forms.
Kansas Sales Tax
If you’re involved in selling physical products, it’s typically necessary to obtain a seller’s permit from the Kansas Department of Revenue website. Kansas’ state sales tax rate is 6.5%, with additional city taxes of up to 2% for general purposes and/or 1% for “special purposes.” Counties can add a 1% tax plus an extra 1% for healthcare services.
Kansas Business Taxes
If you have employees in Kansas, you must register for Unemployment Insurance Tax with the Kansas Department of Labor. Additionally, signing up for Employee Withholding Tax through the Kansas Department of Revenue Customer Service Center is essential.
Iowa’s graduated income tax rates range from 3.1% to 5.7%, depending on your LLC’s revenue for the tax year. State tax returns are due annually alongside federal income tax returns. Visit the Kansas Department of Revenue website to calculate your tax or determine your tax bracket.
Federal income tax reporting can be done using either Form 1065 (multi-member LLC) or Form 1040 Schedule C (single-member LLC).
Hiring Employees in Kansas
If you intend to hire employees, ensure compliance with the law by adhering to the following steps:
- Confirm new employees’ eligibility to work in the US
- Report new hires to the state
- Provide workers’ compensation insurance for employees
- Withhold employee taxes
- Display workplace compliance posters visibly in your workspace
How to Start an LLC in Kansas – Buyer’s Guide
What Is an LLC?
An LLC, short for limited liability company, is a prevalent form of business entity in the United States. It furnishes its proprietor(s) with personal liability protection, safeguarding their personal assets in the event of legal claims against the entity. Entrepreneurs have the option to establish either a single-member LLC with a sole owner or a multi-member LLC with an unlimited number of owners.
LLCs operate as pass-through entities for tax purposes, meaning that the profits or losses of the business are reported by the LLC owners on their individual tax returns. Consequently, the income of the company is taxed at the personal rate of the owners.
How Can I Establish an LLC in Kansas?
Initiate the process by submitting Articles of Organization, either through online or offline channels, along with the requisite fee. Online filings incur a state fee of $160, while paper filings carry a cost of $165. Both foreign and domestic entities face the same fee structure in Kansas, but out-of-state entities are restricted from filing online.
Is It Possible to Obtain a DBA for an LLC?
Certainly, a DBA serves as a fictitious name for conducting business within a specific state. Some LLCs may need a DBA if their original business name isn’t available.
Is an LLC the Right Choice for You?
Several advantages make owning and operating an LLC a potentially beneficial choice for your new business in Kansas. LLCs offer simplicity, tax flexibility, and protection of personal assets. The two primary advantages of an LLC business structure are:
- Personal liability protection: In the event of bankruptcy or legal action against the LLC, only the assets of the LLC are at risk, not those of the owners. Unlike other business structures, such as sole proprietorships, LLCs provide robust liability protection. While a limited liability partnership (LLP) shields you from the liability of your business partners, it doesn’t offer protection if you’re personally responsible for the LLP’s debts or wrongdoing. Compared to both of these structures, LLCs offer the highest level of protection.
- Tax advantages: Some U.S. business owners, particularly those who own corporations, may face double taxation on income related to their company. The first tax occurs on personal income received from company salaries or bonuses, and the second tax is imposed when the company pays corporate taxes on its profits. LLCs, however, enjoy pass-through status, meaning that profits and losses pass through to individual LLC members, who report these balances on their personal tax returns. This pass-through structure also allows LLC members to claim a deduction on their personal income taxes proportional to their ownership share if the LLC experiences a loss in a given tax year.
What Are the Various Types of LLCs to Establish?
When contemplating how to form an LLC, there are diverse LLC structures to consider. Familiarity with these options is crucial for selecting a business model that aligns closely with your company’s nature and intended operations. These LLC structures encompass:
- Single-member LLC: Owned and managed by a single individual, this LLC offers additional tax benefits and liability protection akin to a sole proprietorship.
- Multi Member LLC: Standard LLCs with more than one member, often categorized as manager-managed or member-managed entities.
- L3C: Also known as “low-profit liability companies,” these entities prioritize business causes over profits, bridging the gap between nonprofit and for-profit LLCs.
- Series LLC: Tiered business structures where the topmost LLC owns a series of lower-tiered LLCs, each operating independently with segregated assets.
- PLLC: Exclusive to certain licensed professionals, this LLC type is tailored for specialized business formations.
- Restricted LLC: Exempt from taxation during the initial 10 years of formation, these LLCs cannot distribute profits to members, with this restriction explicitly stated in the articles of organization.
Ways to Create a Kansas LLC
Before embarking on the formation process, it’s crucial to identify the most appropriate approach for establishing your Limited Liability Company (LLC) in Kansas.
For budget-conscious entrepreneurs, the DIY method may be ideal for launching their Kansas LLC. This approach is well-suited for straightforward LLCs, with ample information available in this guide and on the Kansas Secretary of State website to facilitate an independent completion of the process.
Using an LLC Formation Service
Entrepreneurs in Kansas managing the demands of a small business may find value in the modest cost of hiring an LLC formation service. These online services specialize in handling the necessary paperwork for LLC formation and typically offer features such as guaranteed acceptance by the state, assistance with obtaining an Employer Identification Number (EIN), registered agent services, and help with drafting the operating agreement.
Service packages are often customizable, allowing you to explore various options to find the best fit for your needs.
Concerns regarding paperwork become obsolete when you collaborate with ZenBusiness. This company provides an extensive range of LLC services dedicated to ensuring the proper establishment of your business, complete with all required documentation submitted to the relevant state government department. Although ZenBusiness charges for its services, many customers discover that they receive exceptional value for their investment.
Embarking on a business venture entails managing a substantial volume of state-mandated paperwork, a task that can be daunting for new business owners. Northwest offers business services designed to aid entrepreneurs in finding the necessary documents, filling them out accurately, and promptly submitting them to the relevant government agency.
In addition to helping you set up an LLC, Northwest offers a range of additional services, including registered agent services, which are highly beneficial for new owners.
bizee provides an extensive collection of resources to help novice business owners in choosing the most appropriate business structure for their requirements. Following this, bizee aids in the documentation and filing processes, simplifying terms such as registered agent, articles of organization, and EIN. The company has garnered a robust reputation and receives positive reviews online.
Hiring an Attorney
Although not the ideal option for every startup, engaging the services of an attorney can be a wise choice for certain businesses, particularly those with investors or complex financial structures.
Common Questions About Kansas LLCs
What Distinguishes an LLC From a DBA?
Filing a DBA (doing business as) doesn’t provide the rights or protections that come with an LLC. An LLC is a business structure offering liability protection, while a DBA is simply a fictitious name for a person or business to operate under.
Is a Business License Required in Kansas?
Depending on the business type and location, your LLC may need various local and state licenses. For local licenses, consult the city clerk or county if in an unincorporated area. Visit the Kansas Business Center website for state license information.
Are There Specific Business Taxes in Kansas That I Must Pay?
If your LLC engages in activities like selling goods or has employees, you may need to register with the Kansas Department of Revenue. Registration can be done online or by mail using Form CR-16, Kansas Business Tax Application.
Is a Registered Agent Necessary in Kansas?
Kansas LLCs are required to designate a registered agent, also referred to as a resident agent. While you can act as your own resident agent, hiring a service provider offers benefits such as increased privacy, flexibility, and a lower risk of missed deadlines.
How Can I Dissolve an LLC in Kansas?
To dissolve a Kansas LLC, use your KanAccess account for online filing, incurring a $30 fee (or $35 by mail). Provide your business entity name and ID number, ensure all annual reports are up-to-date, submit a Notice of Business Closure (CR-108) to the Kansas Department of Revenue, and pay any outstanding taxes.
Are Annual Reports Mandatory for Kansas LLCs?
Kansas LLC owners must file an annual report containing members’ personal information and ownership percentages. This can be done online for $50 via KanAccess or by mailing the form with a $55 filing fee.
It’s clear that obtaining an LLC in Kansas requires a series of crucial steps both preceding and following the establishment of your business entity. Through conscientiously obtaining the required documentation, satisfying the relevant fees, and ensuring good standing, your Kansas LLC can operate successfully and endure for an extended duration.
About the author
Dr. Alexander Sterling, Esq, a distinguished legal scholar with a business law degree and a Doctor of Juridical Science, is a leading expert in business registration and diverse business departments. Renowned for his academic excellence and practical insights, Dr. Sterling guides businesses through legal complexities, offering invaluable expertise in compliance, corporate governance, and registration processes.
As an accomplished author, his forthcoming book is anticipated to be a comprehensive guide for navigating the dynamic intersection of law and business, providing clarity and practical wisdom for entrepreneurs and legal professionals alike. With a commitment to legal excellence, Dr. Alexander Sterling, Esq, is a trusted authority dedicated to empowering businesses within the ever-evolving legal landscape.