Starting LLC in Kansas: Peculiarities & Detailed Manual
Want to start an LLC in Kansas? It is a profitable decision for a business, as the state has waived corporate tax in favor of gross corporate income tax. So you’ve decided to start an LLC? Not sure how to initiate the process? To start an LLC in Kansas, you need to get ready for several stages.
We’ve prepared a guide for you with just six steps to form your LLC and to get success! You can also refer to the virtual LLC formation service.
Note: ZenBusiness is the best service to file the LLC. You’ll surely appreciate reasonable prices, company values, and other peculiarities.
An Kansas LLC: The Notion & Essence
Many Kansas business owners choose to start an LLC. So, unlike a corporation, they can take advantage of flexible management. We’re talking about the protection of personal assets that sole proprietorships and general partnerships lack.
The state of Kansas puts forward simplified requirements for registration and maintenance of LLC and invites business owners to choose the type of taxation. Do you still have doubts about the LLC?
6 Stages to Form an LLC Correctly
Stage №1: Choose Your LLC Name
The LLC name is a significant aspect, as it is the name of your company that makes the first and strongest impression on the audience of your potential customers! The name must be different from existing company names and must meet Kansas’s regulatory requirements. Now get started with the following aspects.
LLC name in terms of jurisdiction
The State of Kansas obliges business owners to include the abbreviation DDS or the phrase – limited liability company in the name. Please note that the terms corporation or registered are prohibited. In addition, you cannot use the designations of other forms of business: banks or law firms.
Take care of the explanations
You must include in the title an explanation of the nature of your business. For example, if you are engaged in the computers’ repairing, write in the LLC title – computer wizard. If you have any values or principles, also indicate this. For example, if you are farming, use the term natural, nitrate-free, etc.
So, you need to get a little creative and fully comply with Kansas’s legal requirements.
Stage №2: Hire a Registered Agent
A registered agent is called a statutory agent in Kansas and will help you to start an LLC. The agent can be an Kansas resident, natural or legal attorney responsible for sending and receiving legal documentation on behalf of the future company. A company representative can also be an employee of the company or its owner. The State of Kansas notifies:
No Kansas LLC can exist without a resident agent. The natural or legal person can be a resident agent. For example, a domestic corporation or a foreign limited partnership. This person or company agrees to accept legal mail or official notices on behalf of your limited liability company such as official government notifications, service of process notices, tax forms, and notice of lawsuits.
The resident agent must be registered in the same state as the business is established. The second main thing is that the representative’s office must be open during business hours.
A registered agent guarantees an excellent reputation for your Kansas LLC. Also, if your business gets worse, Kansas can take legal action against it without notifying you. The registered agent will always receive appropriate notification and will be able to take timely measures to protect your interests as an attorney.
You should apply to the online service to get started a business in compliance with all regulations and requirements. So, you will have the opportunity to filter spam and protect your personal and contact information. If you use the ZenBusiness and Northwest Registered Agent to form an LLC, you will receive the free services of a registered agent.
Stage №3: Applying for Registration
To register a business in Kansas, you must file the Articles of Association with the Kansas State Secretariat. If you are anxious about your LLC formation, you can submit your documents for pre-processing, which will allow the Secretary of State’s office to advise you of the eligibility. It can be a good option if you get started for the first time in an LLC without consulting an attorney. Be sure to provide:
- The desired name of your business.
- Personal and contact details of the registered agent.
- Business management form.
- Personal and contact details of the manager of your company.
- Signature of the applicant and registered agent.
- Date of application submission.
Pay state fees: $160 to file online and $165 fee to form an LLC.
Online applications are processed faster: usually within 1 day. Processing paper documents takes 2-3 business days from the date of receipt. If the documents are filled in incorrectly, they are returned for revision. In this case, the processing time starts over again.
Stage №4: The Operating Agreement Background
While an operating agreement is not binding in Kansas, creating one could significantly improve the company’s climate. An operating agreement is a document that describes the structure of a project, the way it works, the rights and obligations of each partner.
This document reflects the consistency of partners and thereby reduces the chance of controversy and disputes. Therefore, it is significant that all members of the future LLC carefully read this document before joining the company.
An attorney can help draw up an operating agreement and determine the way income and liabilities will be distributed among the owners of your LLC. You will find more information about the operating agreement here. Prepare to enter the following information:
- Names of all participants.
- The rights and obligations of each of the listed participants.
- Description of procedures for voting or resolving differences between members.
- Regulations on the financial share of participation of LLC members.
- Description of the way you’re going to manage the LLC.
So, do not neglect this stage of LLC formation. It largely guarantees your safety and the observance of your rights by all members of the business project.
Stage №5: Tax Compliance
To conduct a business that you want to register as an LLC successfully, you need to comply with several tax requirements at various levels.
Requirements of Federal Significance
Does your LLC involve multiple owners? Then you need to take care of the EIN! The EIN, or Employer Identification Number, is a unique nine-digit number assigned by the IRS to US corporations. This number must be obtained by all business owners under whose leadership the hired employees work. A business owner can obtain an EIN from the IRS in person or by mail.
Your state’s cess requirements
The amount and procedure for calculating tax in the state depend on the form of business. The state has the following taxes:
Income tax: sole partnership or proprietorship pays income taxes on its individual tax returns. Limited liability companies which choose to be taxed as corporations will be subject to the state’s corporate income taxes. You can learn more about it here. The company income tax is 7%.sales tax
A sales tax is a consumption tax imposed by the government on the sale of goods and services. The seller collects it at the time of the sale. The Kansas sales tax rate is 6,5%. You can read more about this kind of tax here.
Franchise tax: the state franchise tax is $55. This tax is obligatory for every enterprise regardless of the form of ownership.
Withholding taxes: if the LLC hires employees, a group of taxes from the salary is added to the standard taxes. These fees are deducted from salary. Unemployment insurance taxes help to fund the state’s unemployment assistance program. Learn more about the unemployment tax liability here.
Industry taxes: Kansas has sectoral taxes for some industries. Specific industry taxes include liquor, minerals, vehicle rentals, and more. The Kansas Department of Revenue does not provide a list of such taxes. But you may use the list of taxes for businesses of any other Department of Revenue for example.Local Tax Business Demands
Local Tax Business Demands
The communities shall establish local taxes and duties within the scope defined by law. Their size depends on the location of your company. At first, this is your property taxes. You can read more here. In addition, some counties in Kansas add a surcharge to the state sales tax. Please read about it here. It is better to contact the municipality in advance and find out what local taxes you need to pay
Stage №6: Getting Business Licenses & Permits
There is no state license or certificate to do your business. But there are federal licenses for doing business in specific industries, for example, fish and wildlife, maritime transportation, nuclear energy, and more. Here you can find the Small Business Association’s listings for federally-regulated industries requiring licensure.
There are a lot of such licenses. To get started, you can browse the Kansas list of common business licenses and permits. We strongly recommend referring to the list to avoid liability for doing business without a license.
Other Stages for Business Owners After LLC Registration
After completing the six mandatory steps towards starting an LLC, you need to take care of the following.
Opening a business bank account
Separate your personal and LLC accounts. Thus, you will be sure of the safety of your personal and financial data. Besides, you won’t have any hassle when filing your charge returns. Your EIN will help you open a business account quickly, no matter what you choose a bank or credit union.
All owners of companies/corporations, regardless of their form of management that attracts employees, must go through the compensation insurance procedure. All basic and detailed information is available with the Kansas Bureau of Workers’ Compensation.
This policy aims to protect the rights of workers who are injured at work and unable to work. It will not be superfluous to get a civil liability insurance policy, as well as pay attention to some other types of insurance.
Income reporting must be completed by each company, regardless of the profit made in the current period. The state of Kansas provides FAQs to help clarify policies for income reporting and taxes.
Referring to the services of a qualified accountant
Each company must file an annual report and pay a fee in the amount of $50. You can file it online here with the Kansas Business Center. This report helps you update information about your company that may have changed over the past year. The due date is on the 15th day of the 4th month following the tax closing month.