You’ve picked a fantastic site to introduce your latest career venture if you’re preparing to form an LLC in Kansas. Kansas has an increasingly active and varied economy, along with an award-winning business environment.
By doing the actions listed below, you’ll go a lot closer to realizing your dream of forming a new LLC. The procedure of incorporating an LLC is surprisingly simple in Kansas. Your new company may be prepared to go live in a few of weeks if you concentrate on one activity at a time.
Starting an LLC in Kansas will include the following steps:
- #1: Reserve Your Kansas LLC Name
- #2: Choose a Kansas Registered Agent
- #3: Prepare Kansas LLC Articles of Organization
- #4: Obtain a Federal Employment Identification Number (EIN)
- #5: Draft an Operating Agreement
How to Start an LLC in Kansas: 5 Steps
Now comes the fun part — actually creating your LLC in Kansas. Follow these steps to launch your LLC.
1. Reserve Your Kansas LLC Name
Prior to the state approving your Kansas LLC registration, you must choose an official firm LLC name that satisfies certain standards. Your official business name must specifically:
- Stand out from the crowd in Kansas
- be recognizable from other company names being used in Kansas.
- include one of the following titles: LLC, L.C., LC, limited liability company, limited company, or L.L.C.
You must do a Kansas LLC name search to ascertain if the name you have chosen for your business is both distinctive and noticeable.
Verify even the smallest alterations to your chosen name, as it could be denied as being too similar to names currently in use by businesses with state approval.
Once you’ve decided on a unique, available name, you may choose to reserve it for up to 120 days. This reservation will retain the name for you while you register a working URL with that name, search the country for trademarks pertaining to that name, and begin the trademark application procedure.
In the future, you may have to deal with expensive lawsuit situations if you don’t safeguard your company’s interests and look for intellectual property problems.
2. Choose a Kansas Registered Agent
A Kansas registered agent must be included on the articles of establishment for each LLC. Another term for a registered agent is “agent for service of process.” On behalf of the LLC, this person or business is responsible for receiving court filings and government notifications.
A firm that is legally permitted to do business in Kansas or a resident of Kansas who is above the age of 17 must be named as the registered agent. In any case, the LLC’s registered agent has to maintain a physical address in the state.
You may modify or update this address. Your company’s registered agent may be one of you or another LLC member. But your company (as a separate legal entity) is unable to act as your own registered agent.
3. Prepare Kansas LLC Articles of Organization
After you file forms to register your business, the state will confirm that your new company exists and that it has permission to operate. These forms are known as articles of organization. To prepare these forms, you’ll need to have access to the following information:
- The legal name of your LLC
- The name and address of your LLC’s registered agent
- The closing month of your LLC’s tax year (most businesses choose December)
Don’t forget to sign the document and submit the required fee when you file this consequential paperwork.
4. Obtain a Federal Employment Identification Number (EIN)
Before you can recruit employees, apply for a bank loan, create a company bank account, or pay business taxes, you must apply online for a federal employment identification number (EIN). This number functions similarly to a social security number (SSN) for businesses and is provided by the IRS.
The exclusive number allotted to your organization will not be shared with any other company in the nation. Because of this, lenders, the government, and creditors may use this number to look up your company’s credit history and confirm your identification.
5. Draft an Operating Agreement
The state of Kansas doesn’t require aspiring LLC members to create an operating agreement. However, it’s important for LLCs to draft one anyway.
An operating agreement is not only important for financing, but also because these contracts can prevent misunderstandings that may lead to legal disputes down the road.
Operating the agreements are a good idea for a few key reasons:
- Formalize the powers, duties, responsibilities and authority of LLC members
- Outline key aspects of business operations, including how an LLC will be taxed, how much of the company is owned by each member and how distributions and losses will be divided among the members.
- Serve as legally-enforceable contracts that protect your interests
The Cost of Forming an LLC in Kansas
Kansas has affordable initial filing costs, which makes it a desirable state for LLC creation. Since LLCs only need a $160 filing fee in Kansas, they are among the more affordable options for startup and small company owners.
Additionally, LLCs are required by Kansas to submit an annual report, which must be paid for with a cost that usually falls between $50 and $55.
Pros and Cons of Forming an LLC in Kansas
Pros
- Kansas offers very cheap LLC formation costs and no state minimum franchise tax.
- Kansas does not need formal management boards or annual meetings, and it permits single-member LLCs.
- Kansas LLCs are free to choose their tax treatment, such as being treated as pass-through businesses to evade corporation taxes.
Cons
- Kansas limits privacy by requiring managers and LLC members to be identified in the organization’s articles.
- Although LLCs are exempt from corporation taxes, members of LLCs in Kansas are subject to higher individual income tax rates, which range from 3.1% to 5.7%.
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Craft a Business Plan
Once you’ve committed to an LLC structure, it’s time to either draft a business plan or formalize a draft that you already have in process.
A completed business plan may be offered to potential lenders and investors as proof that you’ve thought through how you’ll run your company and why it’ll be a success.
As only 30% of new businesses remain standing a decade after their launch, preparing to ensure that your company has staying power is important.
Analyze Your Business Structure Options
The legal structure of your business will impact fundamental aspects of its operations. When you choose a company formation structure, you’ll formalize the following issues:
- How your business will be taxed
- Whether your personal assets will be protected in the event that your company incurs financial liability
- Who will own your business
- The managerial structure of your company
- Whether your business will be subject to detailed registration and reporting requirements
Don’t commit to start an LLC in Kansas until you’re sure that this structure is the best fit for your company’s unique needs.
Corporations
Incorporating a company is often an ideal approach for large business operations. A corporation is owned by shareholders who benefit from maximum personal liability protection.
You won’t be able to control corporate operations outright, as each corporation is governed by a board of directors. You also won’t need to report a corporation’s finances on your personal tax return, as corporations are taxed as distinct legal entities.
Although this structure is not as easy to form as the others and is subject to detailed reporting mandates, it may be the best option if you hope to expand your business widely and quickly.
Sole Proprietorships and Partnerships
The complete opposites of corporations are partnerships and sole proprietorships. They are not subject to onerous regulations or onerous reporting obligations.
They are taxed on their owners’ personal tax returns and have the most flexible management structures out anywhere.
The main disadvantage of being a partnership or sole proprietorship is that none of them protects owners from personal responsibility.
Limited Liability Companies
There are several advantages to creating an LLC in Kansas. They have flexible management structures and little reporting obligations, much like partnerships and sole proprietorships. They shield owners from a large risk of personal culpability, just as companies do. LLCs may be taxed on the individual tax returns of its members (LLC owners) or as companies. LLCs have many tax advantages. This kind of structure is an excellent compromise for companies with one or more owners.
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Formed a Kansas LLC? Now What?
Need Help Financing Your Launch?
The Kansas government provides a plethora of services aimed at assisting small company owners with financing their operations. Since it’s not simple to raise enough money to start a company effectively, you should investigate as many of these financing options as fit your business plan.
You’ll need to have enough money set aside for after the launch in addition to the launch itself, until your firm can support itself.
You could have to start repaying loans right away if your business begins making money. As you get ready to fund the starting phase of your new LLC, don’t forget to account for these difficult realities in your strategy.
Look for possibilities that are open to small company owners in general as well as those that are specific to particular owners and business types while you are exploring your alternatives.
For instance, if you search for “grants for Black-owned bookstores” or “rural small business startup funding,” you may uncover funding opportunities particularly designed for your new firm. As you evaluate, use your imagination:
- Crowdfunding
- Traditional bank loans
- Federal small business loans
- Investment programs
- Microlending
- Grants
- Matching loans
- Rural opportunity zone funding
Expect the Unexpected
Your company will encounter challenging times at one point or another. It’s important to prepare to weather these stormy periods successfully. By anticipating challenges and seeking the guidance and protections available to you, you’ll better position your business to thrive well into the future.
Insurance
It’s likely that one of the primary reasons why you decided to structure your business as a Kansas LLC is that, unlike sole proprietorships and most partnerships, LLCs offer members liability protection.
In the event that your company’s finances take a dive, your LLC is sued or your company is fined, your personal assets can’t be seized to pay your business debts by virtue of the LLC business structure.
Be aware that the LLC legal formation structure only protects your personal assets. It won’t protect your company’s finances from taking a hit if your business falls on hard times.
If your place of business is flooded or struck by a tornado, if a vengeful former employee sues your company or if your inventory is set ablaze by an arsonist, only LLC insurance can protect your bottom-line.
There are different kinds of business insurance available, so speak with a small business insurance provider before committing to any specific type of coverage.
Legal Concerns
Small business owners face all kinds of liability risks that can’t be covered by insurance. A competitor could claim that you’ve infringed upon their intellectual property rights or a vendor could sue you for breach of contract.
The need to protect your company from the risk of being sued, compliance violations and other liability concerns is one of the two primary reasons why it’s important to develop a working relationship with a small business attorney.
The other is that your company may need to hold an individual or competitor accountable for infringing on your business rights.
Connecting with a lawyer proactively will help to mitigate liability risks, protect your company’s legal interests and keep the government from accusing you of missteps. Too often, business owners only seek legal counsel when they’re in trouble.
Working with a business lawyer from the start can halt potential causes for concern in their tracks.
Accounting Needs
How will you monitor the financial health of your business? If you have the time to devote to recording each and every transaction, you may be able to employ trustworthy accounting software.
Accounting software cannot provide you the type of individualized advice you need when it comes to tax strategy and financial planning. Instead, you should consult with your attorney in these areas.
As an alternative, you may collaborate with a small company accountant. Accounting services are adaptable to the particular requirements of your business.
An accountant is a good person to talk to about financial goal-setting and get thorough feedback from. Investing in an accounting service rather than accounting software may help your organization in many ways that might be advantageous if you’re going to be managing a complicated enterprise.
Start Hiring Workers
If you’re not launching a single-member LLC, you’ll likely need to hire capable employees to help you operate your business. You’ll need to take the following steps before any promising applicants can start work:
- Apply for a state unemployment insurance tax account
- Formally report any new employees to the state within 20 days of hire
- Hang required posters if your employees will be working on-site
Unlike many other states, Kansas does not offer a state-run workers’ compensation program. Private employers are generally required to obtain private workers’ compensation coverage unless they’re eligible to operate as self-insured entities.
You may want to speak with your small business lawyer about this requirement and any other employment-related mandates that you’ll be obligated to follow moving forward.
Implement a Winning Marketing Strategy
You’ve put a lot of effort into financing your beginning phase, safeguarding the interests of your business, and registering your Kansas LLC. It’s time to start bringing in business so you can begin gaining their trust and making money.
A marketing strategy can have been developed as a part of a larger corporate plan. Once your company has obtained the necessary licenses to operate, you will need to develop those concepts and put them into practice.
Kansas has a distinct culture and a long history. Find out as much as you can about the market’s demographics and the issues that local residents are passionate about.
You may use this information as inspiration to target prospective consumers and establish the most natural and productive connection with them.
As you’re doing marketing, don’t forget to invest time and money in building a strong web presence:
- Register a memorable domain name
- Build a professional-looking website
- Open business-related profiles and develop a presence on major social media sites
The Bottom Line: Forming an LLC in Kansas
Forming an LLC in Kansas is a fairly straightforward process that can be completed in just a few steps. The state provides ample resources like step-by-step guides and template forms to simplify the paperwork. Additionally, exploring leading LLC formation services can further streamline the process.
How to Start a LLC in Kansas: FAQ
How much does launching a Kansas LLC cost?
The fees associated with formally registering a new LLC in Kansas only amount to a few hundred dollars total. However, the expenses that will arise as you launch your business could be significant.
In addition to hiring workers or renting physical space, costs associated with marketing, legal guidance and business supplies can be high. Factor all of these financial realities into your planning as you prepare to secure funding to last until your company starts turning a profit.
How do I request a LLC name change?
Kansas uses a specific online process for business name change requests. You’ll need your state business identification number or the formal (current) name of your LLC to get started.
If you need to amend any other information listed on your articles of organization, you’ll need to submit a business entity certificate of amendment to the Kansas Secretary of State.
Do Kansas LLC operations need to file annual reports?
Each LLC in Kansas is required to file an annual report with the state. You’ll need to submit your LLC’s annual report by the 15th day of the fourth month following the end of your tax year noted on your company’s articles of organization.
The majority of businesses choose to end their tax year in December, so their annual reports are due by the 15th of April.
