How to Start an LLC in Kansas
The majority of Kansas is sprawling land, which makes for an agriculture-based economy that keeps the center of the United States thriving. But whether you are interested in farming or any other industry, there are plenty of opportunities to go around in Kansas. The State Small Business Credit Initiative exists to encourage entrepreneurs to make a home for their venture in The Sunflower State. One way to go about starting a Kansas business is to form an LLC. It’s a simple, inexpensive type of business to set up, and it offers personal liability protection to safeguard your personal assets.
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The steps to create an LLC in Kansas are simple and straightforward, but it is important to follow them exactly and understand all relevant restrictions. Being prepared can help you avoid duplicate paperwork and fees, letting you move towards an operational business sooner.
If you’re ready to learn how to set up a Kansas LLC, follow this step-by-step guide. You’ll find out how to register your new business with the state, learn important state tax information, and get essential information to run your LLC in Kansas.
Name your LLC
Have a name in mind? Check on name availability by searching the state’s business directory. If the name comes up in a search, it’s taken. If it doesn’t, it’s yours to claim.
If your business doesn’t have a name, you cannot file the paperwork with Kansas to make it an official entity. This name will be a unique identifier in the eyes of the state – in part because it is required to be a completely unique name. You will not be allowed to form any business under a name that is already taken. Before you settle on a name, be sure to check the Kansas business name search page to see if your idea has been taken. This will save you from spending any money on branding before you find out another name is necessary.
Kansas also has an LLC-specific rule for naming your business – the final words of the name must be some form of the phrase “limited liability company.” You can spell it out in full or use “limited company” or abbreviations like “LLC” and “L.L.C.” This must be at the end of your business name.
Reserving a business name
Once you’ve settled on the perfect name, you don’t want to risk someone else using it. Forming an LLC is one way to ensure that the name is yours, but if you’re not ready for that step yet, you have another option. Kansas will allow you to file a name reservation for 120 days so that no one else can use it. There is a $30 fee and the process can be done online.
While you are at it, this is a good time to reserve your website URL (domain name) and any social media handles that match the business name as well. You want to ensure that customers find you when they perform an online search and that your online branding is consistent, so these are important to secure.
You can reserve a business name in Kansas for 120 days.
Select a registered agent
Every state requires LLCs to name a person who serves as the official point of contact between the state and the business. In most places, this is called a registered agent or even a statutory agent, but in Kansas, the term is resident agent. These terms all mean the same thing: your business needs an official point of contact.
This person will handle documents like service of process, tax notices, and other important papers.
You do not need a professional to be a resident agent. Anyone who is over 18 and has an address within Kansas can be named, including yourself, another LLC member, or a loved one.
However, keep in mind that it is required for this agent to be available during all normal business hours at the risk of missing legal paperwork. For this reason, some people prefer to use a registered agent service who acts on your behalf.
File Articles of Organization
The reason you need a name and resident agent chosen as the first steps is that these are required fields on Kansas’ Articles of Organization. The Articles of Organization are the official documents filed with the Kansas Secretary of State in order to form an LLC through the state. These can be submitted online or through the mail, though the latter has a slightly higher cost.
The Kansas Articles of Organization will require you to provide the following information:
- Your LLC’s name
- Name and address of the resident agent
- Mailing address for your business (P.O. boxes aren’t allowed)
- Month used for tax closing
- Signature of the authorized person, such as the owner of the LLC
This document is fairly short and simple as long as you have prepared this information ahead of time. Be sure to keep a copy of the Articles of Organization before you send it in.
You can fill out and submit your LLC formation documents on the state website.
To submit your Kansas Articles of Organization online, there is a $160 fee. If you would prefer to file using a physical form and mail, the fee is $165. Both of these are payable to the Secretary of State and nonrefundable.
Kansas processing time
For those who file online, Articles of Organization are issued immediately provided all the information is present and accurate. The expected processing time for this business structure is two days from the time the form is received.
Create an LLC operating agreement
There is no law in Kansas that says an LLC needs to have an operating agreement in place before it is formed, and you will not have to submit one. However, the best practice is for each LLC to have an operating agreement in place regardless of legal need.
The primary purpose of an agreement is to avoid conflict in the future by clearly spelling out each member’s power, privileges, and responsibilities. But these legal documents are advisable for every company doing business as an LLC, even a single-member LLC.
One benefit is further separation of personal assets and business finances, as well as showing a viable business commitment to potential investors.
The basic components of a Kansas operating agreement should include:
- Basic company information: name, address, registered agent, business purpose, duration
- Member and management structure: names, addresses, titles, job responsibilities, ownership shares, contributions, meetings, voting rights, and member compensation
- Membership change: how new members are admitted, exit rights and responsibilities
- Dissolution: voting process, responsibilities, asset disbursement
- Additional provisions: liability statements, death of a member, dispute resolution, communication, state law, special agreements
Most people are able to create an operating agreement based on an online template. Large or complex organizations may benefit from using an attorney to help with the process. The final agreement should always be signed by all members and kept on file, as well as updated as needed.
Forming your LLC with the state is the first step in running your business in Kansas. You will need to keep up with regular operations as well as be sure you are in compliance with all state laws. Staying on top of these items can ensure you avoid fees and penalties while demonstrating a commitment to your business.
Get your EIN
While your business will have a unique name within Kansas, this requirement is not national, so names can be duplicated across states. This could cause confusion for the Internal Revenue Service at tax time. To alleviate any chance of mix-ups, the IRS issues a nine-digit Employer Identification Number to businesses. Like a Social Security Number, this is a unique ID that can be used to trace your business for a number of things, particularly taxes.
As the name suggests, an EIN is often used to designate a company as an employer and trace applicable taxes, like payroll withholding or unemployment insurance. Sole proprietorships don’t need an EIN, but any company with an employee must have an EIN. But it is not just these instances where an EIN is required – an LLC with more than one member, for example, must have one. Businesses that file excise taxes may also need an EIN.
But even if your business doesn’t have to have an EIN by law, they are useful. Most banks will expect you to have one in place and may not let you open accounts without one. Vendors and customers can also request an EIN, and without one, you’d need to use a personal social security number. There is no charge to obtain or use an EIN, so it is a good thing to do at the start of your business to gain credibility.
You can get your EIN by visiting the IRS website.
Get Kansas business licenses
The majority of LLCs will need some kind of general license that permits them to operate. In Kansas, these are not issued at the state level and there is no requirement. However, each city and county can set its own rules surrounding licensing. For example, the City of Topeka has no general business license but requires certain business activities to have certain licenses in place. Your best path is to check with local government offices to determine what is required for your LLC.
Kansas does have one state-level requirement: a seller’s permit. This allows a business to collect sales tax on any taxable goods and services. The Kansas Department of Revenue offers these permits at no fee, both online and via mail.
Additionally, certain industries and professions are subject to additional requirements at the state and local levels. Kansas offers a list of professions that typically require more licensing and relevant contact information.
Open business bank accounts
Something that can often go overlooked when running an LLC is the importance of having a business bank account. Not only is this a convenient way to make accounting and taxes simple, but it is a crucial way of shielding yourself against potential liability. If there is any indication that you are not separating business and personal finances, you could be held responsible for lawsuits and debts in the name of the LLC.
The best thing to do is start by opening a checking account dedicated to your business, which will house income and expenses. From there, you can look at savings accounts and credit cards as well. The latter is helpful in establishing a credit score for your business in case you need to apply for loans in the future.
Review LLC tax rules in Kansas
Kansas LLCs follow the typical rules for an LLC: most owners will choose to use the LLC as a pass-through entity, claiming profits and losses on their own tax returns rather than paying the state’s corporate tax rate.
Kansas does not leverage a franchise tax on businesses anymore. The tax “expired” in 2010.
File an annual report
It is important to file an annual report each year on behalf of your LLC. This can be done online through the Kansas Business Center or by mailing in the appropriate forms.
Annual reports are due on the 15th day of the fourth month after your tax closing month. For example, if your tax year ends on December 31st, your annual report is due by April 15th of the following year, but you could file it as early as January 1st. There is a $50 fee for filing online and a $55 fee for filing by mail.
Some states call an annual report a Statement of Information.
Get insurance for your LLC
Even for the smallest businesses, having some kind of insurance in place is a crucial way of protecting assets. Without general liability insurance, the business can be forced to pay out of pocket to settle any claims that arise from normal business operations. This includes bodily injury or property damage caused by the business, employees, or products. General liability coverage is what most LLCs will have in place.
Businesses that offer certain professional services may also choose to purchase professional liability insurance. This coverage protects against claims of malpractice or business errors.
Kansas also requires almost all employers to have workers’ compensation insurance. This offers coverage for employees who may be injured or ill as a result of their work.
Additional resources to help you set up a business in Kansas
Kansas offers a “one-stop” center for business owners and those looking to start a business. Kansas Business One Stop is full of resources, including:
- A quick guide to determining your business tax requirements.
- Business starter kits for a variety of industries and professions.
- A startup wizard which takes you through the process of starting a business step-by-step.
Do LLCs pay business taxes in Kansas?
For tax purposes, most LLC owners choose pass-through taxes, meaning profits and losses are taxed as a part of personal taxes and not corporate tax rates. However, these businesses will still be subject to federal taxes and state taxes including specific LLC taxes in Kansas.
Can I have a foreign LLC in Kansas?
A foreign LLC can do business in Kansas if it has registered appropriately with the Kansas Secretary of State. There is a $165 fee for this registration when done online, or $185 if it is done via fax. It must be accompanied by a Certificate of Good Standing. These LLCs must also have a resident agent located in Kansas.
Does Kansas have professional LLCs?
In Kansas, LLCs designed to perform a licensed professional service will need to register as a professional limited liability company or PLLC. This includes any profession, but generally, anyone who needs a state license to practice should expect to need a PLLC. Each PLLC can only provide one professional service.
When are Kansas annual reports due for LLCs?
Annual report due dates will depend on when you have listed your tax year as ending in your Articles of Organization. The due date will be four months from the listed date. If your tax year is also the calendar year, this means April 15th is the due date.
Can my LLC get a Kansas Certificate of Good Standing?
Yes, you can apply for a Certificate of Good Standing through the Kansas Secretary of State’s office. The document is issued online and can be printed from there, including the authentication code that proves validity. Online requests are $10 and paper requests are $15. You can also verify your certificate online using the authentication code at the bottom of the certificate.
How long does it take to create an LLC in Kansas?
The actual filing and approval of a Kansas Articles of Organization form can be done immediately online or within 2 days of a paper application being received. However, you will likely need more time to set up things like a registered agent and be sure you have all the necessary documents.
What can I name my Kansas LLC?
Kansas requires that your LLC name is distinguishable from all other business entities in the state. Your unique business name also cannot contain certain words like “association,” “trust,” or “union.” The last word of your business name must be “limited liability company”, “limited company”, or some abbreviation of those. You can also not imply illegal activity in your name.
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