Why should you form a limited liability company (LLC) in Kansas?
Because this state has a reasonable cost of living and attractive tax rates. If you plan to hire employees, you’ll have access to a talented workforce. Ample startup resources are available through the Kansas business center.
If you want to launch a new business in Sunflower State, you’ll have to complete several administrative formalities. These include preparing company incorporation documents, business license applications, and tax registrations.
In this guide, we show how to form an LLC in Kansas.
Steps to form an LLC in Kansas
- Step 1: Choose a business name for your Kansas LLC
- Step 2: Designate a registered agent
- Step 3: File the Kansas LLC articles of organization
- Step 4: Obtain an Employer Identification Number from the IRS
- Step 5: Register with the Kansas Department of Revenue
- Step 6: Prepare an LLC operating agreement
- Step 7: Open a Kansas business bank account
Step 1: Choose a business name for your Kansas LLC
Kansas has specific naming requirements for new business entities.
Your Kansas LLC name should be different or distinguishable from other active business entities.
For example, the Secretary of State recognizes “10” and “ten” as distinguishable. A plural version of a word is considered different from the singular version of the same word.
The Kansas Secretary of State has a name search tool for verifying business name availability.
The state also provides extra naming guidelines for using symbols, abbreviations, and characters in your LLC’s name.
Try different combos to come up with a fine brand name!
Kansas allows you to reserve available business names for up to 120 days. This prevents other business entities from registering it within that time frame.
To reserve a name in Kansas, you must file a name reservation form. The filing fee is $35.
If you started your LLC under one name but want to operate it under a different business name, you can file a trade name registration (also called a “DBA”) in many states.
Kansas, however, doesn’t recognize fictitious names.
Your alternative to assumed name registration in Kansas is registering a state trademark.
Like name reservations, trademarks must also be distinguishable from other registered marks. You need to apply for a trademark/service mark registration with the Kansas Secretary of State. The filing fee is $40.
Step 2: Designate a registered agent
You’ll have to choose a registered agent before filing your formation documents.
A registered agent is a person or a legal entity you appoint to receive legal documents on behalf of your LLC (including service of process).
As the business owner, you can serve as your own registered agent if you decide to. A registered agent must be at least 18 years old, have a physical business address in Kansas (not a P.O. box), and be available during normal business hours.
Some small business owners choose to outsource registered agent responsibilities to free up their time during the day. You’ll pay about $100/annually for a professional registered agent service in Kansas.
But the cost is worth it since you won’t have to be available every day at the registered office address in case of service of process.
Step 3: File the Kansas LLC articles of organization
To incorporate an LLC in Kansas, you have to file Form DL, Articles of Organization for a domestic LLC. with the Secretary of State.
State filing fees are the same for domestic and foreign LLCs at $165.
On the Articles of Organization form, you must provide the following details:
- Your LLC‘s name and address
- Your registered agent details
- Tax closing month
Unlike other states, Kansas doesn’t require listing the names of all LLC members. You can just include one LLC organizer, giving owners some extra privacy.
You can file your formation documents by mail at the Kansas Secretary of State‘s office in Topeka. You can also fax your documents for an additional $20.
Online filing is best for quicker processing. But it’s only available for domestic LLCs and costs $5 less – $160.
Step 4: Obtain an EIN (Employer Identification Number) from the IRS
Once you create your LLC, determine whether or not you’ll need an employer identification number (EIN).
An EIN is a unique nine-digit number issued by the Internal Revenue Service for new businesses. It’s similar to a social security number for an individual.
Having an EIN is mandatory for multi-member LLCs to track federal income tax and employment activities. Single-member LLCs, reporting taxes as sole proprietorships, will need to get an EIN only if they choose to hire employees.
You can apply for an EIN on the IRS website. You’ll get the number issued immediately after answering several questions about your new business.
Once your LLC has an EIN, you can also use this number to establish business credit and open business bank accounts.
Step 5: Register with the Kansas Department of Revenue
You may have to register for a sales tax permit in Kansas if your LLC provides taxable services or sells taxable products.
The same applies to foreign LLCs who have created a nexus with the state.
The state sales tax rate in Kansas is 6.5%.
However, it doesn’t include local taxes, charged at the city/county level. These rates vary by locality.
The Kansas Department of Revenue issues sales tax permits. Online filing is mandatory. Kansas sales tax returns are due by the 25th of the following month.
Step 6: Prepare an LLC operating agreement
If your LLC has multiple members, it’s best to consider creating an operating agreement.
An operating agreement is supplementary to your LLC formation documents. It’s a document outlining company management principles, members’ voting rights, ownership percentages, profit distribution agreements, and other operational matters.
Your LLC‘s operating agreement doesn’t have to be filed with the Kansas Secretary of State, but it’s good to have it already created and ready.
You can draft your own LLC operating agreement using an online template or hire a corporate attorney to handle it for a fee.
Step 7: Open a Kansas business bank account
LLC owners should open a business bank account separate from their personal accounts.
You’re legally not allowed to commingle personal and company assets. Or else you risk losing the LLC protections of limited liability and personal asset protection.
Business bank accounts include debit cards and online banking for quick access to transactions. Kansas City Credit Union, Bank Midwest, and the Central Bank of Kansas City offer banking services for small businesses. You can open an account for under $100 in most cases.
Kansas LLC taxes, costs, and fees
Every limited liability company in Kansas must file an annual report.
Your LLC’s annual report provides the Kansas Secretary of State with current information about your business. The state fee for your LLC’s annual report is $55.
Taxes make up a bulk of other LLC operating costs in Kansas.
In addition to sales taxes, there are multiple business taxes that may apply to your business, depending on where your office is located and the industry you operate in.
- Motor fuel taxes
- Vehicle Rental Excise
- Clean Drinking Water Fee, Water Protection Fee
- Liquor and tobacco products taxes
- And others!
Also, as an employer, you’ll have to pay employer taxes and file quarterly payroll tax returns. Rates vary by locality but typically range between 2-6%.
Kansas business permits and licenses
Kansas does not have a statewide business license. However, you’ll have to check with each county or city where your business is located to determine licensing requirements. Permit and business license fees vary by locality and by industry.
For example, the City of Wichita doesn’t require a general business license — but requires registrations for operators in some industries such as:
- Well drilling
Also, if you provide regulated services in industries such as construction, law, or healthcare, you’ll need to have a professional license (as a service provider).
You can review the official list of common professions requiring a license.
Pros and cons of forming an LLC in Kansas
There are many good reasons for forming an LLC in Kansas, but there are a few drawbacks.
Here’s a quick summary.
Kansas LLC pros
- Same filing fees for foreign & domestic LLCs
- Convenient online filing process
- No minimal annual taxes for LLCs
- Reasonable cost of living
Kansas LLC cons
- Doesn’t have trade name registrations
- Not a big domestic market
- Relatively high state sales tax
- Kansas is a budget-friendly place to operate a business.
- LLC formation fees are higher compared to other small domestic markets.
- Kansas doesn’t recognize DBAs, fictitious names, or assumed names.
- Licenses and permits are required for specialized industries.
- Kansas LLCs must be renewed annually.
Kansas LLC FAQs
Below are some of the most frequently asked questions (FAQs) about forming an LLC in Kansas.