Fact checked for accuracy by Billie Anne Grigg, a bookkeeper and Mastery Level Certified Profit First Professional.
Are you looking to create a Limited Liability Company (LLC) in Kansas? Like any other state, Kansas has specific requirements and processes to be followed when creating an LLC. It may seem lengthy at first, but your Kansas LLC will be up and running in no time with the right guide.
Here is a detailed step-by-step guide on forming an LLC in Kansas.
Before anything else, you must pick a unique name for your LLC. The name should be unique and easy to search online by clients.
It must comply with the following Kansas naming requirements.
- Your LLC name should be unique from any other existing business in Kansas, either reserved or registered
- The name must end with any of these phrases, “Limited Liability Company,” “Limited Company,” or one of their abbreviations, LLC, LC
- You cannot register a DBA, trade name, assumed name, or other fictitious names
After choosing a name for your LLC in Kansas and ensuring it complies with the above requirements, the next activity is to check for availability.
Thankfully, the Kansas Secretary of State makes this process easy by providing a name search platform on their website.
You can reserve your LLC name for up to 120 days if you need more time to prepare the necessary paperwork.
It’s also necessary to conduct a domain name search for your website and reserve it.
Another requirement for forming an LLC in Kansas is choosing a resident agent for your company.
The resident agent will be your company’s point of contact for all its legal requirements, including petitions, summons, necessary documents, and taxation notices.
It can be an individual in Kansas, the business entity itself, or a corporation authorized to do business in Kansas.
Most LLCs enlist attorneys and legal service providers to act as registered agents. Information regarding statutory agents is in the public record. Anyone can search and find out who serves as an agent for a particular LLC.
A resident agent must have a permanent address in Kansas and be available during regular business hours at the provided address.
When forming your Kansas LLC, you need to file the Articles of Organization with the secretary of state.
Your Kansas LLC Articles of Organization must contain the following information
- The name of the LLC
- Your LLC’s resident agent information, including name and address
- Your Kansas LLC mailing address
- The closing month of your LLC tax year
- Your signature or the signature of an authorized person
The filing fee for the LLC Articles of Organization is a non-refundable $165. It’s payable to the secretary of state by cheque, credit card, or money order. If filing online, the turnaround time is immediately but takes three to five days if by mail.
An operating agreement for your Kansas LLC is a document that will govern its entire framework.
This agreement covers the company’s financial and operational decisions, including:
- Responsibilities for each member
- Your rights as the owner
- How to distribute profits and losses
Although it’s not necessary for Kansas LLCs to have this legal document, it helps reduce and solve future conflicts.
All LLCs operating or intending to operate in Kansas must get an EIN from Internal Revenue Service (IRS).
This nine-digit number helps identify your Kansas LLC for tax purposes. It works the same way as your social security number.
Your LLC’s EIN comes in handy when:
Opening a company bank account
- Filing tax returns
- Hiring employees
- Registering for permits and licenses
You don’t have to pay when registering for the EIN from the IRS website. It’s also available immediately after you submit your application online but may take some time when applying via mail, fax, or phone.
How is the federation going to tax your LLC in Kansas? You can choose how the company taxation for federal income tax will happen when applying for the Kansas employer identification number.
There are four classifications for the LLC federal income tax. These are sole proprietorship, partnership, C-corporation, and S-corporation.
If your Kansas LLC is a single-member LLC, it gets taxed as a sole proprietorship company. However, the members can change the taxation method to C-corporation or S-corporation later.
A multi-member LLC gets taxed as a partnership. The members can later change it to C-corporation or S-corporation.
There is a difference between electing to get taxed as a partnership/sole proprietorship and a corporation.
A partnership/sole proprietorship passes the LLC’s profits and losses to the members’ federal income tax returns depending on their ownership percentages. Then, as the LLC owner, you pay self-employment taxes on all the profits.
On the other hand, corporations allow all LLC members to take a reasonable salary as they pay payroll taxes. Then, they distribute any remaining profits equally, enabling the LLC to save on tax.
Hiring a competent accountant for your Kansas LLC will help you with this process, so you only select the most suitable method for your LLC.
Kansas doesn’t have a general business license like most states. However, you must fill out a Business Tax Application form with the Kansas revenue department to get your LLC running.
To start and keep your Kansas LLC operational, you must file your LLC Annual Reports with the state secretary. The filing fee is $50 when filing online and $55 by mail.
Annual reports should be due on the 15th day of the 4th month after your LLC’s tax closing month, usually in December.
Failure to do this leads to LLC forfeiture after 90 days. Once forfeited, it will be costly to regain the company’s good standing status because of the penalties involved.
The basic cost to start an LLC in Kansas is $165. That’s the amount you pay to the Kansas Secretary of State when filing the Articles of Organization online.
Apart from the standard filing cost, you might incur the following fees.
- Annual report fee payable to the Secretary of State. This fee is $50 when filing online or $55 by mail
- A name reservation fee. You’ll pay $30 to reserve the name online and $35 to reserve the name by mail
The name reservation fee is optional and available to those who need additional time to complete paperwork.
What next after forming your LLC in Kansas? Below are vital things that will help your LLC run smoothly.
Opening an LLC bank account protects your liability by separating personal funds from business funds.
You don’t want to mix company and personal funds as you may lose all your assets should the LLC get into a lawsuit battle.
The best way to protect LLC assets is by getting insurance coverage. In a business environment, anything can happen, and you may lose everything you’ve worked hard for within seconds. For this reason, it’s better to remain ready and prepared.
There are several business insurance covers to choose from, but the most common types include:
- General liability insurance protects your LLC from insurance claims it caused
- Commercial property insurance to cover property damage
- Workers’ Compensation Insurance benefits your employees if they get injured or become sick from work
- Business income insurance to help cover lost income
Hiring an accountant to handle all your LLC’s financial needs is advisable. Accounting services will be indispensable if your LLC starts raking in profits and running into tax issues.
You could outsource accounting, but an in-house accountant is advantageous since they can handle undesignated accounting work.
Below are scenarios where an accountant might benefit your LLC.
- Your LLC has altered its tax classification
- Your LLC seeks to interpret financial standings
- Your LLC pays members’ health expenses, including insurance premiums
- You earn a lot from the company
- Your company has multi-member disputes
- Your LLC seeks new investors
You may need to apply for a business loan in the future to help you keep your company operational or expand it. A credit score determines whether your company should get a loan and the loan amount.
Getting a credit card for your business immediately after opening a business bank account is wise. It will help you grow your credit score, putting you in the right position to get a loan in the future. It also separates your business and personal financial expenses and allows you to keep track of your costs, among other benefits.
A website showcases your company to the world, not just Kansas. You’ll be missing out on potential customers if your LLC lacks an online presence.
You can create a business website yourself or hire a professional to do the job for you. Hiring a professional can be costly but rewarding in the long run.
If you want your LLC in Kansas to run smoothly without getting into trouble with the authorities, you should keep it compliant with the law.
Kansas LLCs must have the necessary documents to run, including permits and licenses. Remember to complete a Business Tax Application and file the annual reports to keep your Kansas LLC operational.
Running an LLC in Kansas requires you to file the annual reports plus other taxes. You can file the annual report of your LLC either online or by mail to the state’s secretary.
The fee for filing the LLC’s annual report is $50 online and $55 by paper. You should pay this amount on the 15th day of the 4th month after your LLC’s tax closing month. However, you can pay this fee as early as 1st January every year.
Besides the annual reports, your LLC must pay state employer taxes and sales taxes.
If your company has employees, then as their employer, you must pay employer taxes, which should begin with getting the employer identification number-EIN.
You pay sales taxes to the Kansas Department of Revenue if your LLC sells goods to Kansas residents.
It takes approximately 24 hours to get your Articles of Organization approved in Kansas when filing online with the Kansas Secretary of State. However, if you decide to do it by mail, it will take about three to five working days for the registration process to complete.
It’s common for single-member company owners to have their Kansas LLCs taxed as either partnerships or sole proprietorships. They get to pay the federal and state taxes from the LLCs’ income by default.
The IRS classifies multi-member LLCs as partnerships, making every member pay federal and state taxes on their share.
A corporation tax structure might be suitable if your LLC seeks to onboard outside investors.
Consider hiring a qualified accountant to determine the best tax structure for your Kansas LLC.
Forming an LLC in Kansas is quite simple and easy. It only takes a day to complete once you file the Articles of Organization with the state’s secretary. Therefore, there’s no need to hire an LLC formation service.
But if you find it too overwhelming, you should hire an LLC formation service to take the load off your shoulder. An LLC formation service might be necessary if you aren’t from Kansas and are unaware of LLC formation procedures.
Filed under: Kansas Business Guides