How to Start a Business in Kansas
Want to start a business in Kansas? With modest taxes and an array of incentives, credits and programs—Kansas has a lot to offer entrepreneurs. All you need to do to start a business in Kansas is to sell something, but it’s one thing to go into business and another to make it successful. To make money, protect it, and navigate red tape, follow our guide!
Ready to Start a Business in Kansas?Let's Get You Started
Pick a Business Structure
Name Your Business
File Formation Paperwork
Draft Internal Records
Get Kansas Business Licenses
Organize Your Money
Get Business Insurance
Understand Your Tax Burden
Build Your Business Website
File Kansas Annual Report
Apply for Trademarks
1. Pick a Business Structure
If you do freelance medical transcription from home, sell hand-prepared small-batch barbecue sauce, or make money through any other means of selling goods or services—and you haven’t registered with the state—congratulations! You’re already a sole proprietor. If ownership and management is shared between one or more partners, the business is a general partnership. Both kinds of businesses are not legally separate from their owners—owners pay personal income tax on company profits, and are liable for any company debts or judgments. As a result, owners or partners’ personal assets—including car, house, or savings—may be seized if the company gets into trouble.
To secure your assets with liability protection, form your business as a separate entity from its owners. An entity is just something with its own independent legal status—and in the case of a business entity, its own liability. The most common limited liability entities are LLCs and corporations.
Kansas Limited Liability Company (LLC)
An LLC is a versatile business structure. LLC owner members can choose between being taxed like a partnership or like a corporation. LLCs also have a flexible management structure, with the option of being directly member-managed or operated by managers the members appoint. With their adaptability, combined with strong liability protections, LLCs are a popular choice for small businesses. To start a Kansas LLC, you’ll need to file paperwork with the Kansas Secretary of State.
Corporations lack the flexibility of LLCs—they must follow strict rules for record-keeping and a standardized management structure, where shareholders appoint a board, then the board elects officers to run the corporation. However, because of those standardized rules and structures, investors and donors often consider corporations more accountable—and therefore, safer to invest in—than other business types. To form a Kansas corporation, you’ll need to file paperwork with the Secretary of State.
Can an LLC be just one person?
Yes! A one-person LLC is called a single-member LLC. Single-member LLCs are one of the most common kinds of businesses in the country. For the most part, single-member LLCs are just like multi-member LLCs, but there are some slight differences in how they file taxes and protect personal assets.
Read all about Single-Member LLCs.
What about a Kansas nonprofit?
Starting a Kansas nonprofit corporation is an option if your company exists solely for charitable, religious, educational or scientific purposes—including distribution of funds to other exempt nonprofits.
To start a Kansas nonprofit corporation, you’ll have to file Not-For-Profit Articles of Incorporation with the Secretary of State and apply for tax exemption with the Internal Revenue Service. Nonprofits are also required to register with the Kansas Attorney General’s office before soliciting donations.
Want to learn more? Check out our Nonprofit Guide.
Does Kansas have public benefit companies?
In Kansas, your corporation or LLC can apply for public benefit status. Kansas is one of the few states that allow this. Like a nonprofit, a public benefit company has a mission that benefits the public or a community. Unlike a nonprofit, a public benefit company also exists to make a profit and doesn’t receive special tax exemptions. Starting a public benefit company allows you to pursue a cause you care about and work to make a profit.
2. Name Your Business
Naming a business in Kansas isn’t as simple as you might think. Without a separate entity like an LLC or corporation, you’ll have to use your own first and last name for your business (for example, Frank Morgan), or use a DBA for something more descriptive (like Morgan Aeronautics).
For an LLC or corporation, you’ll need a business name that will meet Kansas’s requirements. The name must:
- Include an identifier, such as “LLC” or “Incorporated.”
- Not use words that suggest a false business purpose, like “charity” or “nonprofit” (unless your business is a nonprofit).
- Not use words that describe a service that requires a professional license, like “architect” or “doctor.”
- Be unique in the state of Kansas.
Find out if your desired name is available in Kansas by searching the Kansas Business Entity Database.
Can I reserve a business name in Kansas?
Can I get a Kansas DBA?
A DBA (Doing Business As) is any name your business uses, other than its legal name. If you have an LLC or corporation, the legal name of your company is the one you list on your formation documents. If you’re a sole proprietor or partnership, your business name is your legal name or names.
Kansas is one of the few states that does not allow you to register a DBA. If you’re very concerned about protecting an unofficial name of your company, you can apply to trademark it on the state or national level.
What about trademarked names?
It’s a good idea to check with the US Patent and Trademark Office (USPTO) to make sure your business name hasn’t been trademarked by someone else. If it has, and you use it anyway, there’s a chance that the business could come after you for infringement.
3. File Formation Paperwork
If you’re a sole proprietor or part of a general partnership, you won’t need to file formation paperwork with the Secretary of State, because you’re not creating a separate business entity.
But to start a Kansas LLC or corporation, you’ll need to file paperwork with the Kansas Secretary of State. This is the step that officially creates your business as a legal entity.
- To form a Kansas LLC, file Kansas Articles of Organization.
- To start a Kansas corporation, file Kansas Articles of Incorporation.
You’ll need to list a Kansas registered agent on the forms who will handle your legal mail. Once the form is complete, you’ll need to send it to the Kansas Secretary of State. You can submit it online, by mail, or in person.
Note: The information you list on this form will become part of the public record. This means that the names and addresses you provide will be posted online on the Kansas Business Entity Database for anyone to find.
How can I keep my information off the public record?
The best way to keep your private information off the public record is to keep it out of public documents. To do so, you need a registered agent who will list their information on the form instead of your own. (Hint: we do that!)
In Kansas, LLCs are a particularly good way to keep your information private, as the Articles of Organization do not require member names or addresses, just the address of the company and contact information for the registered agent. With a professional registered agent service like Northwest, the trail of your LLC’s public record ends with us.
What is a registered agent?
A registered agent is the person or entity who is responsible for receiving legal mail on behalf of your business. By law, your registered agent is required to have a physical address in Kansas where they’re generally available during business hours to accept service of process. Of course, not all business owners are free to wait at a physical address all day—especially owners who need to travel for their work. For this reason, many businesses opt to hire a registered agent to serve as their business’s point of contact.
4. Draft Internal Records
So far in this guide, we’ve dealt with public forms that you’ve had to file with the Kansas Secretary of State. Now, it’s time to organize your internal records. These are the documents your business will keep on record within your company.
Though these documents are internal, you’ll likely need to show them to third parties like the bank or—if you start a nonprofit—the IRS.
Here are the major internal documents you need to organize for LLCs and corporations:
Kansas LLC Operating Agreement
This is your LLC’s rule book. It defines how your LLC will do things like make decisions, distribute money, manage operations, and appoint officers. Your operating agreement plans for every big picture scenario your LLC is likely (or unlikely) to face, including dissolution.
Drafting an operating agreement is hard, and the internet is full of shabby templates that have been copy and pasted from who knows where. So we had our attorneys draft a Kansas LLC Operating Agreement template that you can use as a solid foundation.
Kansas Corporate Bylaws
Bylaws are the rules your corporation will adopt and follow internally. Bylaws detail how your corporation will appoint directors and officers, hold shareholder and board meetings, and handle emergencies, among other things. While corporate bylaws aren’t strictly required by Kansas law, their necessity is implied by a statute that states an organizing meeting must be held to form bylaws (see KS Stat § 17-6008).
As with operating agreements, you can find plenty of bylaws templates online. But bylaws are pretty serious, so you don’t want to just use the first template you come across. Our attorneys drafted a Kansas Corporate Bylaws template you can use to get started.
Starting a nonprofit? Learn about Kansas nonprofit bylaws.
5. Get Kansas Business Licenses
There’s no one-size-fits-all license required for every business in Kansas, but practically every business will need one or more licenses, permits or certificates of some sort to do business in the state.
Kansas State Tax Certificates
While Kansas doesn’t have a specific business license, all businesses must register for assorted business taxes, which can include (among others) Retailer’s Sales Tax, Withholding Tax, Corporate Income Tax, and liquor and cigarette taxes. The company later receives Certificates of Registration for each applicable tax, which need to be posted prominently in the business as proof of proper registration. Companies with multiple places of business need separate certificates for each location.
Professional Business Licenses
Professional services are ones that require specialized training or education to perform safely. Think brokers, medical professionals, tattoo artists, contractors, or pilots, just to name a few—a full list of professions and their relevant authorities can be found on the Kansas Business One Stop. To get a professional license, you must apply with the board that regulates your industry in Kansas. Each board has its own licensing process.
Local Business Licenses
Depending on what kind of business you’re doing and where you’re doing it, you might need a city or a county business license. General occupational license applications are required for all businesses in the cities of Lenexa, Liberal, Shawnee, and many others. Meanwhile, in places like Wichita and Topeka, specific businesses—such as cab companies, amusement parks, and second hand dealers—need city licenses, but no general license is required.
Learn more about How to Get a Business License.
How do I get a Kansas tax certificate?
The Kansas Department of Revenue allows you to register for business taxes online through their Customer Service Center, or by use of a paper application. You’ll have to answer a lot of questions, the form is extensive and covers a number of possible tax purposes. After submitting the application, you’ll receive tax certificates in 2-3 weeks.
How much does it cost to get a Kansas tax certificate?
Tax certificate registration is free, except in the case of cigarette sellers, who need to pay a $25 fee per location.
How do I get a professional license in Kansas?
The process for applying for a license will vary depending on the service you provide. Criteria for getting professional licenses are determined by the board or agency that regulates your industry in Kansas: for example, pharmacists apply for a license from the Kansas Board of Pharmacy, while pest control technicians apply with the Kansas Department of Agriculture.
How do I get a local business license?
Every county or city has different requirements. In Liberal, for example, all businesses must fill out a Business License Registration form and turn it in with a $5 fee to the City Clerk. However, in Wichita, fees vary based on the business, and are paid to the Treasurer’s Office. Contact your local city or county government to learn whether you need a license for your business, and how to apply for one if required.
6. Organize Your Money
The liability protection you get from forming an LLC or corporation is only as strong as the separation between you and your business. At a minimum, you’ll need to open a bank account for your business. And if you’re going to hire employees, you’ll need to tackle payroll, too.
Open a Business Bank Account
To keep your business spending separate from your personal spending, you’ll need to open a business bank account. If you don’t, a court could find that your business is not actually separate from you, the owner, under the Alter Ego Doctrine. Also known as piercing the corporate veil, this is the outcome when a judge finds that a company is not a separate entity but rather an alter ego of the owner. If this ever happens, you could lose your limited liability status.
Opening a business bank account as a sole proprietor is important, too. Though sole proprietors and general partnerships have no limited liability status to protect, both will benefit from organizing their business finances come tax season.
How do you set up a business bank account?
Do I need a business bank account to accept credit card payments?
Probably. Payment processors require you to provide them with a bank account. This is where they’ll deposit funds from transactions. Most of the time, this needs to be a business bank account.
Some payment processors may let you get away with listing a personal bank account, but it’s not a great idea. Mixing your business finances with your personal finances erodes the separation between you and your business, weakening your liability protection. It also turns tax season into a nightmare.
Learn more about Payment Processing.
Set up Payroll
If you’re planning to hire employees or independent contractors, you need to set up payroll. To do so, you’ll need to:
- Get an EIN
- Register for a Employer Serial Number with the Kansas Department of Labor and a Withholding Account Number with the Department of Revenue
- Find your Employer Unemployment Insurance (UI) Contribution Rate
- Determine whether you’re hiring employees or independent contractors
- Prepare the forms your employees will fill out
- Choose a payroll service or software
- Decide on a payroll schedule
Setting up payroll in Kansas is complicated, but a solid payroll service or software will automatically withhold payroll taxes, file state and federal returns on your behalf, and pay your employees either by check or direct deposit—whichever you choose.
What forms do my employees need to fill out?
Your new employees will need to fill out a W-4 to determine how much you’ll withhold and an I-9 to verify that the employee is eligible to work in the US.
What’s the difference between an independent contractor and an employee?
It’s important to understand the difference between an independent contractor and an employee. That’s because for employees, you’ll need to withhold and pay income, social security, and Medicare taxes. Independent contractors pay these taxes on their own.
An independent contractor is self-employed—how they complete their work is not directly controlled by an employer. An independent contractor may perform the same kind of work for other businesses, and can do the work when and how they choose.
An employee, on the other hand, performs their work how and when their employer chooses.
If you’re unsure, you can file Form SS-8 with the IRS and let them decide.
Learn everything you need to know about hiring independent contractors.
How do I get a Kansas Employer Account Number?
You can register for a Kansas Employer Serial Number via the Kansas Department of Labor Development’s online KansasEmployer system. When you register, you’ll also receive your business’s Employer Unemployment Insurance (UI) Contribution rate, which you’ll need to set up payroll.
7. Get Business Insurance
Forming an LLC or corporation protects your personal assets. But if anything disastrous befalls your business—like a lawsuit, burglary, flood, or fire—your business is on the hook to pay. Business insurance can help cover the costs.
But do you really need business insurance? Maybe, maybe not. Certain coverage is recovered by law in Kansas, but whether or not you should purchase additional insurance depends on the level of risk you’re comfortable taking on.
Here’s a breakdown of the most commonly purchased business insurance:
Workers’ Compensation Insurance
If you have one or more employees, this one is required by law in Kansas. Employers have to purchase workers’ compensation insurance—if they can’t get it from the voluntary insurance market, they must enroll in an Assigned-Risk Plan where they will be assigned to an insurance carrier, and face higher premiums.
If you don’t purchase workers’ compensation insurance, the consequences are pretty grim—intentional failure to provide workers’ compensation payments is a Class A misdemeanor, and non-compliant employers are subject to a penalty of twice the amount they would have paid in premiums, or $25,000—whichever is greater.
You can buy a workers’ compensation insurance plan through an insurance company.
This covers the costs of claims against your business for injuries or damages to the property of others, like clients or customers. This includes medical expenses, legal fees, settlements, and judgments. Whether or not you need it depends on whether your business is likely to be sued and how many assets your business needs to protect. If it’s just you and your computer in your basement, you might feel comfortable skipping liability insurance. Or maybe you won’t. Beyond general liability insurance, you can purchase or add on more specific types, like professional, cyber, commercial, home-based business, or product liability insurance.
Do business owners need workers' compensation insurance in Kansas?
Workers’ compensation insurance is only required by law in Kansas for employees. Corporate officers and LLC members who own at least 10% of their business aren’t considered employees in Kansas and can elect to be exempt by filing a form with their insurance company. However, your health insurance plan could deny a claim for a business-related injury, so it’s wise to include yourself on your business workers’ compensation insurance plan.
Do I need business insurance for my home-based business?
Probably. That’s because you can’t count on your homeowners’ or renters’ insurance policy to cover damages related to your business. Most insurance companies offer a home-based business insurance plan.
8. Understand Your Tax Burden
Corporate tax rates in Kansas are around average for the United States, with businesses that earn their money solely within the state paying a rate of 4% of net income (plus a 3% surtax on net income over $50,000). The state offers a number of tax credits and rebates. But your tax burden isn’t determined by the state alone. You’ll also have federal, state, and local taxes to consider.
- LLCs. Single-member LLC? By default, you’re taxed similar to a sole proprietor. More than one LLC owner? You’re taxed as a general partnership. Either way, your default tax status is “pass-through,” which means you don’t pay corporate taxes. Instead, your LLC’s owners report profits and losses on their personal tax returns. For those personal returns, Kansas has a variable individual income tax rate of between 3.1% and 5.7%. An LLC can file paperwork with the IRS to be taxed as an S-Corp or C-corp instead.
- Corporations. Corporations are taxed as C-corps by default. This means that corporations pay the 21% federal corporate tax rate and the applicable Kansas corporate tax rate.
To pay your federal taxes (and take a good deal of other steps required to start a business), you’ll need to get an Employer Identification Number (EIN). You can apply for one with the IRS or hire us to get one for you.
Do I need an EIN if I’m self-employed?
If you’re operating a sole proprietorship or single-member LLC that doesn’t employ anyone else and you don’t need to file excise or pension plan returns, you don’t legally need an EIN.
However, you can still get one—and you probably should. Otherwise, you’ll have to use your own social security number to do business. Plus, you’ll likely need an EIN to open a business bank account.
How do I get an EIN?
To get an EIN, you can either apply online or file form SS-4 by mail with the IRS. Getting an EIN is free.
Check out our guide to applying for an EIN.
What is an S-Corp?
An S-Corporation is a federal tax election. Registered business entities like LLCs and corporations start out with a default tax status, but can file paperwork with the IRS to be taxed as an S-Corp. Like LLCs, S-Corps are taxed as pass-through entities. Like corporations, S-Corps can make distributions that aren’t subject to the 15.3% self-employment tax.
Learn more about the S-Corp tax election.
What is a C-corp?
A C-corporation is the default federal tax election assigned to corporations. Most corporations are taxed as C-corps, but LLCs can also apply for C-corp tax designation by filing paperwork with the IRS. C-corps file federal corporate income taxes and state corporate income taxes (in Kansas, the corporate tax rate ranges from 4% to 7%). C-corps can pay their shareholders in distributions, and the shareholders report those profits on their personal tax returns.
Learn more about the C-corp tax election.
Kansas State Business Taxes
Kansas has corporate income tax rates that vary between 4% to 7%, depending on how much of the business is confined to the state—and a surcharge of an additional 3% can apply if your company has a taxable net income of over $50,000. Individual state income taxes start at 3.1% and top out at 7.5%. The state-level sales tax is 6.5%, but counties and cities have the option of raising the sales tax within their own jurisdiction.
Local Kansas Business Taxes
Easy, partner, there’s more. You may also need to pay a local business tax in your municipality or county. All Kansas residents and corporations who own taxable property are subject to a local tax on “intangibles,” such as savings accounts, stocks, bonds, accounts receivable and mortgages. These rates vary depending on city or county—in 2022, combined county and city intangible tax rates could be as much as 3%.
Some local governments also collect a sales tax (in addition to the 6.5% state sales tax). These sales taxes can be leveraged for another 4%, and by both counties and cities, so in some Kansas cities, the sales tax is as high as 11.5%.
It’s recommended that you get in touch with your local municipality or county to determine your local tax obligations.
9. Build Your Business Website
If you want Kansans to find your business, they have to be able to find you online. This means you’ll need a website, a business email account, and social media accounts. Don’t worry if you’re not especially tech-savvy—you don’t have to be a web developer or an influencer to establish a robust online presence. You’ll just need the following:
- Domain name. Your domain is the address where your website will live. You’ll want a domain name that is short, unique, local, and—most importantly—available. If your domain is trademarked, you could face legal trouble.
- Domain registrar. Once you’ve decided on a domain name, you’ll want to register it with a domain registrar. Some domains are more expensive than others. Some domain registrars also offer hosting and most will provide you with a business email that includes your domain name (“[email protected]”).
- SSL certificate. An SSL certificate signals to your users that your website is secure. If your website will use forms—like a sign-up form or a “contact us” form—an SSL certificate is critical. But even if you don’t you use forms, you’ll still probably want one—it allows an encrypted connection, which means your users’ data is transported securely. There are several types of SSL certificates, and you can often get one through your domain registrar.
- Site design. The easiest option is to use a free website creation tool—there are a number of free options available. Most are easy even for a newcomer to use, with styles and built in templates. For a more custom design, you can hire a web designer to work on your website, but this will be much more expensive.
10. File a Kansas Annual Report
Kansas requires LLCs and corporations to file an annual report by the 15th of the fourth month after the end of a taxable year (in most cases, this will be April 15th.) This filing requires you to provide current information about your business, including the names and addresses of LLC managers and members with more than 4% of the company’s interest, and all the directors and officers of a corporation. Corporations must also list shares of stock, and the names and business ID numbers of any subsidiary businesses your company owns 50 percent or more of. Filing costs $50 for LLCs and corporations, and $40 for nonprofits, and can be done online or via paper form.
Read more about How to File a Kansas Annual Report.
What if I don’t file an annual report in Kansas?
There are no late fees for failing to file an annual report in Kansas. However, the state will dissolve your business or revoke your registration if no report is submitted within 90 days after your due date.
11. Apply for Trademarks
A trademark is a design, symbol, word, phrase—or any combination thereof—that represents a brand’s goods or services exclusively. Only some businesses register trademarks.
You can apply to register your trademark with the State of Kansas or federally with the U.S. Patent and Trademark Office (USPTO). Registering your trademark in Kansas is cheaper and easier than registering with the USPTO, but doing so only protects your trademark in Kansas.
You can only register a trademark once you’ve started using it (so slap it on that website you just made), and not all applications are approved. Trademark law is complex, and the strength of a trademark application (and the trademark itself) depends on many factors.
Our attorneys can review your application, offer advice, and prepare and submit the application for you—Check out our Trademark Service.
How do I register for a trademark in Kansas?
To register a trademark in Kansas, you’ll need to file a Trademark or Service Mark Application and pay a $40 filing fee. You’ll have to attach three examples of your business using the mark to prove that you’ve established a connection between the mark and the goods or services you’re selling. You can’t register a trademark before you use it.
Registering your trademark with the Kansas Secretary of State only protects your trademark in Kansas.
Can I register a trademark before I use it?
No. But you can file an application with the USPTO under Intent-to-Use status. This gets your application in line before you’ve actually used the mark, which could be helpful if you’re worried someone else might register your mark before you’ve had a chance to use it.
For your trademark to become official, you’ll eventually need to show proof that you’re using it. An Intent-to-Use application buys you some time to do that.
Learn more about filing an Intent-to-Use Trademark.