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Establishing an LLC in Kansas is a simple procedure that grants entrepreneurs a versatile and secure business framework. The state of Kansas offers a favorable environment for businesses, and the process of creating a Limited Liability Company (LLC) involves several well-defined stages.
From choosing an exclusive business name to submitting the required documentation to the Kansas Secretary of State, aspiring business proprietors can establish their LLC and benefit from liability protection as well as simplified tax procedures.
This comprehensive guide will provide you with step-by-step instructions and important factors to successfully launch your LLC in Kansas, also known as the Sunflower State.
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How to Start an LLC: Kansas 8–Step Guide
Establishing a Kansas LLC is a crucial step in building credibility for your small business and creating opportunities for future success. Are you ready to begin? Simply follow this concise guide, consisting of 8 steps.
Step 1: Choose a Name for Your Kansas LLC
Choosing the right name for your Kansas LLC is the first and most important step. It’s essential to select a name that complies with the naming regulations of Kansas and can be easily found by potential customers.
Adhere to Naming Guidelines:
- Your selected name must include the term “limited liability company” or one of its abbreviations (LLC or L.L.C.). Avoid words that might create confusion between your LLC and a government agency (e.g., FBI, Treasury, State Department).
- Be aware that specific words (e.g., Bank, Attorney, University) may require additional documentation and the participation of a licensed individual, such as a doctor or lawyer, in your LLC.
Confirm Name Availability in Kansas:
To ensure that your chosen name isn’t already in use, it’s important to perform a name search on the official website of the State of Kansas.
Check URL Availability:
It’s advisable to conduct an online search to determine if your desired business name is accessible as a website domain. Even if you have no immediate plans of creating a business website, reserving the URL can prevent others from acquiring it.
Once you have verified the availability of your preferred name, you can proceed with selecting a reputable service provider to aid you in successfully completing the LLC formation procedure.
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Step 2: Choose a Registered Agent in Kansas
In order to establish your Kansas LLC, it’s necessary to appoint a resident agent who resides in Kansas. Similar to the role of a registered agent in other states, the resident agent is responsible for receiving important legal documents on behalf of your business. Consider them as the main point of contact between your company and the state.
The eligibility criteria for selecting a resident agent are as follows: they must either be a Kansas resident or an authorized corporation that conducts business in Kansas, such as a registered agent service. You also have the option to choose an individual within your own company, including yourself, to fulfill this role.
Step 3: Choose Between a Single-Member or Multi-Member LLC
Regardless of whether your LLC has one member or multiple members, the filing obligations remain consistent. The only variation arises in the taxation process at the conclusion of the year.
For a single-member LLC, the profits are reported on the individual member’s personal tax return as income classified as “self-employed.”
On the other hand, for a multi-member LLC, it’s necessary for both the LLC itself to submit a tax return and for each member to file an individual tax return accompanied by a K-1 form.
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Step 4: File Your Articles of Organization
To establish a Kansas LLC, you need to file the Kansas Limited Liability Articles of Organization (Form DL 51-09) with the Kansas Secretary of State. These documents must include:
- The name of the LLC
- The name and address of the registered agent
- The mailing address of the LLC
- The final month of its tax year (usually December)
- The signature of an authorized individual
How Quickly Can a Kansas LLC Be Formed, and What Is the Processing Time?
Establishing a Kansas LLC is characterized by its efficient processing time. Once the online payment is received, the state promptly handles the Articles of Organization, while submissions sent by mail are processed in around two days. It’s crucial to grasp the difference between a domestic and foreign LLC.
A domestic LLC operates within the state it was formed in, whereas a foreign LLC is created when an existing one expands its business to another state. The cost of initiating a Kansas LLC can be paid online ($160) or by mail ($165).
Mailing Address
Kansas Office of the Secretary of State
Memorial Hall, 1st Floor
120 SW 10th Ave.
Topeka, KS 66612
Step 5: Drafting an Operating Agreement
Although not required in Kansas, it’s highly advisable to create an LLC operating agreement. This internal document serves as a comprehensive outline for the operational structure of your LLC.
It clearly defines the responsibilities and duties of both members and managers while also specifying the management framework.
By establishing these specific details, an operating agreement can further solidify the unique identity of your LLC as a distinct business entity. This ultimately helps protect your limited liability. Without such an agreement in place, the operations of your LLC will be subject to state LLC laws.
Step 6: Obtain an EIN
Obtaining an Employer Identification Number (EIN) from the IRS is a free process that plays a crucial role in identifying a business entity and facilitating efficient tracking of its tax reporting. Similar to an individual’s Social Security number (SSN), the EIN is vital for various reasons.
Why is an EIN necessary?
An Employer Identification Number (EIN) is necessary for the following reasons:
- Facilitating the establishment of a business bank account for the company
- Meeting federal and state tax obligations
- Allowing the company to hire employees
Where Can I Get an Ein? After forming their company, business owners can obtain an EIN at no cost from the IRS through either online or mail application methods.
For International Applicants: It should be noted that international applicants don’t need to have an SSN in order to obtain an EIN.
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Step 7: File the Business Entity Report
In Kansas, it’s necessary for limited liability companies to file an annual report with the Secretary of State. This can be done either online for a fee of $50 or by mail for $55.
The deadline for submitting your annual report is the 15th day of the fourth month that follows your LLC’s tax closing month. For example, if your tax closing month is December, you must submit your annual report by April 15. It’s important to remember that failure to file an annual report within 90 days will result in the dissolution of your LLC in Kansas.
Step 8: Keep Your Company Compliant
Kansas LLC Licenses & Permits
In order to operate your LLC, it’s crucial to comply with regulations imposed by the federal, state, and local governments. The fees and requirements for licenses and permits will differ depending on the particular type of business license that’s needed.
Kansas LLC Tax Filing Requirements
In order to maintain a positive position for your company, it’s essential to stay updated on your Kansas LLC tax obligations. Depending on the nature of your business, you may be required to file different tax forms.
Kansas Sales Tax
When engaging in the sale of tangible goods, it’s generally required to acquire a seller’s permit through the official website of the Kansas Department of Revenue. The state sales tax rate in Kansas stands at 6.5%, accompanied by potential municipal taxes ranging from 1% to 2% for general or specific purposes.
Furthermore, counties have the authority to impose an additional 1% tax alongside a supplementary 1% levy specifically allocated towards healthcare services.
Kansas Business Taxes
In order to comply with the state’s requirements, businesses with employees in Kansas are obligated to enroll for Unemployment Insurance Tax with the Kansas Department of Labor.
It’s also crucial to complete the necessary registration process for Employee Withholding Tax by contacting the Kansas Department of Revenue Customer Service Center.
Income Tax
State:
In Kansas, the income tax rates for LLCs vary from 3.1% to 5.7%, depending on their revenue in a given tax year. Both state and federal income tax returns are required to be filed annually.
To calculate your taxes or ascertain your tax bracket, you can visit the official website of the Kansas Department of Revenue.
Federal:
When it comes to reporting federal income taxes, there are two options available depending on the type of LLC. For multi-member LLCs, Form 1065 is used, while single-member LLCs utilize Form 1040 Schedule C.
Hiring Employees in Kansas
To ensure legal compliance when hiring employees, it’s important to follow these steps:
- Verify the eligibility of new employees to work in the US
- Report new hires to the state as required
- Offer workers’ compensation insurance coverage for employees
- Deduct employee taxes as necessary
- Display workplace compliance posters conspicuously in your workspace
How to Start an LLC in Kansas – Buyer’s Guide
What Is an LLC?
A widely used business structure in the United States is the limited liability company (LLC). It offers personal liability protection to its owner(s), shielding their personal assets in case of legal claims against the company.
There are two options for entrepreneurs when establishing an LLC: a single-member LLC with one owner or a multi-member LLC with multiple owners.
For tax purposes, LLCs are treated as pass-through entities, which means that the profits or losses of the business are reported by the owners on their individual tax returns. As a result, the company’s income is taxed at each owner’s personal tax rate.
How Can I Establish an LLC in Kansas?
To commence the procedure, you must submit Articles of Organization, either via online or offline mediums, accompanied by the necessary fee. Online filings levy a state fee of $160, whereas paper filings come with a cost of $165.
In Kansas, both domestic and foreign entities are subject to the same fee structure; however, out-of-state entities are unable to file online.
Is It Possible to Obtain a DBA for an LLC?
Undoubtedly, a DBA functions as an assumed name for engaging in business activities within a designated jurisdiction. Certain Limited Liability Companies (LLCs) may require a DBA if their initial business name isn’t accessible.
Is an LLC the Right Choice for You?
Owning and operating an LLC in Kansas can be a strategically advantageous choice for your new business due to several key benefits. LLCs offer simplicity, tax flexibility, and protection of personal assets, making them an appealing option. The primary advantages of an LLC business structure include:
- Shielding of Personal Liability: In cases of bankruptcy or legal action against the LLC, only the assets of the LLC are at risk, safeguarding the personal assets of its owners. Unlike sole proprietorships, LLCs provide robust protection against liability. While limited liability partnerships (LLPs) protect partners from each other’s liabilities, they don’t shield against personal responsibility for LLP debts or misconduct. LLCs offer the highest level of protection compared to both sole proprietorships and LLPs.
- Tax Benefits: Many U.S. business owners, particularly those with corporations, may encounter double taxation on company-related income. This occurs when personal income is taxed from company salaries or bonuses and again when the company pays corporate taxes on its profits. LLCs, however, benefit from pass-through taxation, whereby profits and losses flow through to individual LLC members, who report them on personal tax returns. This structure allows LLC members to deduct losses from their personal income taxes based on their ownership share if the LLC experiences losses in a given tax year.
What Are the Various Types of LLCs to Establish?
When considering the formation of an LLC, it’s essential to explore various LLC structures. Understanding these options is crucial for selecting a business model that closely aligns with your company’s nature and intended operations. The following are some of the LLC structures to consider:
- Single-Member LLC: Owned and managed by a single individual, this type of LLC provides additional tax benefits and liability protection similar to a sole proprietorship
- Multi-Member LLC: These are standard LLCs with more than one member, often categorized as either manager-managed or member-managed entities
- L3C: Also referred to as “low-profit limited liability companies,” these entities prioritize business causes over profits, serving as a bridge between nonprofit and for-profit LLCs
- Series LLC: These are tiered business structures where the topmost LLC owns a series of lower-tiered LLCs, each operating independently with segregated assets
- PLLC: This type of LLC is exclusive to certain licensed professionals and is tailored for specialized business formations
- Restricted LLC: These LLCs are exempt from taxation during the initial 10 years of formation but cannot distribute profits to members. This restriction is explicitly stated in the articles of organization
Ways to Create a Kansas LLC
Prior to initiating the formation procedure, it’s essential to determine the most suitable method for setting up your Limited Liability Company (LLC) in Kansas.
DIY
The DIY approach may be the perfect choice for entrepreneurs on a budget who are looking to establish their Kansas LLC.
This method is particularly suitable for simple LLCs, as there is plenty of information provided in this guide and on the Kansas Secretary of State website to help you complete the process independently.
Using an LLC Formation Service
Entrepreneurs in Kansas who are dealing with the challenges of running a small business might discover the benefits of utilizing an LLC formation service that’s cost-effective.
These online LLC formation services specialize in managing all the required documentation for forming an LLC and usually provide features such as guaranteed acceptance by the state, assistance in obtaining an Employer Identification Number (EIN), registered agent services, and aid in creating the operating agreement.
The service packages offered are often customizable, which allows you to explore different options and select the one that best suits your specific requirements.
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When you partner with ZenBusiness, worries about paperwork become a thing of the past. This company offers a wide range of LLC services that are specifically designed to help you establish your business correctly, including the submission of all necessary documents to the appropriate state government department.
While there is a fee for using ZenBusiness’s services, many clients find that they receive outstanding value for their money.
Starting a business endeavor involves handling a significant amount of paperwork that’s required by the state. For new business owners, this can be quite overwhelming.
Northwest provides business services specifically designed to assist entrepreneurs in obtaining the essential documents, accurately completing them, and promptly submitting them to the appropriate government agency.
Apart from facilitating LLC formation, Northwest also offers various other services that are extremely advantageous for new owners. These include registered agent services, which prove to be highly beneficial.
Bizee offers a wide range of resources to assist inexperienced entrepreneurs in selecting the most suitable business framework for their needs. In addition, Bizee provides support with the paperwork and filing procedures, simplifying terms like a registered agent, articles of organization, and EIN.
The company has established a strong reputation and receives favorable feedback from customers online.
Hiring an Attorney
Engaging the expertise of a lawyer may not be suitable for every startup; however, it can prove to be a prudent decision for specific businesses, especially those that have investors or intricate financial frameworks.
Common Questions About Kansas LLCs
Bottom Line
Acquiring an LLC in Kansas involves several important procedures that must be completed before and after the formation of your business entity. By diligently obtaining the necessary paperwork, fulfilling the applicable fees, and maintaining good standing, your Kansas LLC can operate effectively and thrive for a prolonged period of time.
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