You have big plans, but before your business can officially take off, you’ll need to make a bit of an investment.
And we’re not talking about renting office space or paying employees — before you sell a single product, there are startup costs associated with launching an LLC in Kansas.
Make sure that you consider all the possible costs associated with starting an LLC. To help you out, we’ve compiled the most common Kansas startup fees here.
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Overall Kansas LLC Formation Costs
LLC Name Reservation Fee
In Kansas, reserving a name isn’t mandatory for LLC formation. If you’re ready to start your business, you can jump right to the Articles of Organization without requesting a reservation, and that will officially register your name. But if you won’t be starting your business for a while and want to protect your unique name, a name reservation is a nice option. Online reservations cost $30 and paper forms cost $35; this gives you exclusive rights to that name for 120 days.
To clarify, most states don’t require name reservations, and they’re rarely necessary. If you’re concerned about someone else registering the name you want, you could opt to simply form your LLC instead of reserving the name.
Whether you reserve your business name or not, you should always perform a Kansas business name search to make sure the name you want is available.
Articles of Organization Fee
This is the big one, the most important (and most expensive) form that you’ll file to start your Kansas LLC. Without the Articles of Organization, the state won’t recognize your business as official. You can file online for $160, by mail for $165, or by fax for $185. It’s somewhat expensive, but the good news is that this is the only time you’ll need to file this form and pay this fee. As long as your submission is accepted, you won’t have to worry about the Articles of Organization again.
The information you’ll need to file your Articles of Organization includes the effective date of your LLC formation, your LLC’s official business name, the name and address of your registered agent, your LLC’s principal business address, your LLC’s tax closing month, and your LLC organizer’s signature.
Before we move on, we’ll note that if you’re forming a Kansas series LLC, you will need to use a specialized version of the Articles of Organization. For more information, take a look at our full guide on this topic.
Depending on the type and location of your business, you may need to obtain certain professional licenses before commencing business in Kansas. For example, CPAs need to seek licensure through the Board of Accountancy, and real estate brokers through the Real Estate Commission. Specific cities and/or counties may also require their own licenses. Take a look at the Secretary of State’s Business Licenses/Permits page and check with your local government to find out which licenses your LLC might need.
What are some of the most commonly required business licenses for Kansas LLCs? If your business operates in a regulated industry, you will probably need some sort of professional license to operate in compliance with state law. On the municipal level, things like alarm permits, building permits, and zoning permits are all very common.
LLC Setup Service
Starting an LLC in Kansas can be a complicated and time-consuming process. If you want to spend less time on paperwork and more time planning your business, you might opt for a service that does it for you. These services take care of the registration process for you, so you don’t have to spend time on research, paperwork, and filings.
Most of these services (which are very popular LegalZoom alternatives) offer LLC registration services like Articles of Organization filing, tax consultations, and phone/email support for a flat rate, with options to pay more for premium packages with premium services like Employer Identification Numbers, operating agreements, and expedited filing.
Resident Agent Service
Appointing a Kansas resident agent (also commonly referred to as a registered agent) is an important part of your LLC formation process. Your resident agent is responsible for handling sensitive legal and tax documents and keeping your business compliant with Kansas business law. In short, you need an agent you can trust.
While you can be the resident agent for your own LLC, this puts pressure on you to keep up with business filings and potential legal disputes. Sometimes it’s better to hand off that responsibility to a professional. A resident agent service ensures that your annual reports and other forms are filed efficiently, saving you from the penalties of delinquent filings and the stress of having to do it yourself.
If you have questions or concerns about the LLC formation process or if it’s the best business structure for you, sometimes it’s best not to take chances and consult an attorney. They’re not cheap, but they can provide essential business advice, professional filing assistance, and peace of mind.
Some attorneys offer free consultations (usually 30-60 minutes) but will charge by the hour after that. On average, business attorneys charge between $150-350 per hour. Some will offer a flat rate for setting up an LLC, which can range from $500-2,000.
Cost variations depend on the experience and location of the lawyer, and there are so many lawyers out there that finding the right one might seem like a tall order. Take advantage of sites like Avvo, which supply lawyer databases where you can find rates, locations, areas of expertise, and more, all in one place. Then you can compare and evaluate Kansas business attorneys to find the perfect fit for your LLC.
If you don’t want to go digging for your own attorney, we compiled the following list of highly rated business lawyers in Kansas. All of these attorneys are primarily focused on the business world, they all receive five-star ratings from clients, and they all have excellent Avvo ratings.
Foreign Qualification Fee
This only applies if your LLC was formed in another state and is now expanding into Kansas. Foreign qualification is essentially gaining permission to do business in another state. In Kansas, this means filing an “Application for Registration” instead of the Articles of Organization.
All foreign business entities are required to foreign qualify in Kansas, or they could incur some pretty severe penalties. Avoid them by downloading, completing, and filing the Application for Registration. Like the Articles of Organization, it will cost you a one-time fee of $165.
LLC Annual Fees
The Kansas Secretary of State needs a way to keep its business records up-to-date, and they do this by requiring business entities operating in-state to file an annual report every year. When planning your yearly budget, make sure to include $55 for this report ($50 for online submissions), which is due by April 15.
The information required to file your annual report includes your LLC’s Kansas business entity ID, the official business name of your LLC, your LLC’s tax closing date, the state where you originally formed your LLC, the name and address of each LLC member who owns at least 5% of the business, your LLC’s federal EIN (optional), your name, and your signature.
For more info on annual reports for Kansas LLCs, check out our full article on this topic!
When it comes to federal taxes, LLCs are, by default, classified as “pass-through” entities, so they don’t have to file separate corporate tax returns. Instead, income and/or losses are reported by the owners’ individual returns. And Kansas doesn’t impose “franchise” or “privilege” taxes like some states do.
But this doesn’t mean that your LLC is completely off the hook for taxation. There are specific taxes that your business may need to pay, depending on the circumstances. Businesses that sell merchandise, for example, must pay a sales tax, and businesses with employees must pay a withholding tax. For these types of taxes, you will need to submit a Business Tax Application either online or on paper. See the Kansas Department of Revenue website for more information.
Lastly, if you’ve set your LLC up to be taxed as a corporation, you will need to file a corporate tax return and pay the 4% corporate income tax. Otherwise, you’ll need to pay the state’s personal income tax of 3.1% to 5.7%.
What if I Don’t Pay?
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Looking at all these fees, you might be thinking: how can I pay less? While you might be tempted to look for loopholes or find a way around them, this could cause you bigger problems in the future.
Miss an annual report, resident agent change, or another required filing, and your LLC will earn “delinquent” status. This means that it has lost its good standing with the state. You can get back in the state’s good graces by submitting all outstanding forms and/or fees. However, if your LLC maintains a delinquent status for 90 days, it can be administratively dissolved.
And that’s not all. A delinquent business cannot obtain a Certificate of Good Standing for as long as it has outstanding filings/fees. In most cases, if you don’t have a Certificate of Good Standing, you cannot foreign qualify in most other states, apply for business loans, or make new business filings. In short, staying ahead of your required filings will save you a lot of trouble in the future.
Planning Your Expenses
By now, your budget spreadsheet might be looking a little crowded, but have no fear! Most of these are one-time fees that you won’t have to worry about again. Plus, with all these on the books, there won’t be any surprise costs when you register an LLC in Kansas.
Soon, you’ll have these fees behind you and you’ll be forging ahead, growing your business and earning profits. As you do, make sure to keep up with the few recurring fees — like annual reports and resident agent updates — so your business doesn’t fall out of good standing.
Key Steps for Starting a Kansas LLC
- The first step to forming a Kansas LLC is to come up with a good name for your business. You’ll want to make sure the name you want is still available and hasn’t already been claimed by another business, so you’ll need to search the state’s business database to verify its availability.
- Next, you’ll need to choose your resident agent. While you can legally serve as your own resident agent in Kansas, this role can actually be more of a hassle than you might expect. That’s why we always recommend hiring a reputable resident agent service that can handle the responsibility of this position on your behalf.
- The third step involves the preparation and filing of your Articles of Organization. You’ll need to fill out the paperwork and pay a $160-185 fee, depending on how you file it. Once the state processes this document, your LLC will be officially open for business!
- That’s not the end of the road for the startup process though, as you’ll also need to create an operating agreement for your LLC. There is no legal requirement for Kansas LLCs to have written operating agreements, but it’s still an extremely important element of any LLC. The operating agreement is an internal document that outlines how your LLC will operate, and there are several aspects of this document that can prevent messy ownership disputes down the line.
- You will also need to acquire a federal tax ID number (also known as an EIN, or employer identification number). This is essentially a Social Security number for your business, as it is a nine-digit code used to file taxes, hire employees, open business banking accounts, and more.
- Next, you’ll need to register for any relevant taxes with the Kansas Department of Revenue, and also obtain all licenses and permits that apply to your business type. Keep in mind that, depending on the nature of your business, you might require licenses from the federal, state, county, and municipal governments.
Once you’ve finished all of these steps, you’re ready to operate a compliant business entity with the state of Kansas!
Key Steps for Maintaining a Kansas LLC
After you’ve completed all of the items in the previous section, you’ll need to focus on maintaining your LLC. The first step in this process is to open a business bank account. This will help you keep your business and personal expenses entirely separate, and it will also help immensely with your accounting and taxation responsibilities.
You should also keep detailed records of every financial transaction that takes place with your LLC. This means maintaining a file of invoices for every purchase and sale you make, along with information regarding your employees or contractors and the work they perform for your business.
As we already mentioned, annual reports are a key component of LLC maintenance in this state, and there are harsh financial penalties for delinquent reports. Additionally, you might want to hold an annual meeting to discuss goals and priorities for your LLC, although this is an optional step.
Frequently Asked Questions
Before we wrap things up, let’s take a look at some of the most common questions we hear from readers regarding the LLC formation process in Kansas.
What are the state business tax rates in Kansas?
If your LLC is taxed like a sole proprietorship or general partnership, you’ll need to pay taxes on your business income at the state’s personal income tax rates (between 3.1% and 5.7%, depending on your income level). If your LLC is taxed like a corporation, you’re required to pay Kansas’ 4-7% corporate income tax on your business revenue.
How quickly does Kansas process LLC formations?
The Secretary of State should be able to process your LLC’s formation within 3-5 business days. If you’re in a hurry, you can file online. Kansas typically processes online LLC formations within one business day.
How many small businesses are there in Kansas today?
The state of Kansas is home to nearly 275,000 small businesses. Entrepreneurs of all backgrounds and business types find that Kansas is a great place to own and operate a small business.
What are the top small business resources and websites in Kansas?
The Kansas chapter of the Small Business Development Center is a great place to start, as they offer a wide variety of tools and resources for Kansas LLCs. The U.S. Small Business Administration’s Kansas District Office is another valuable resource, and the state’s small business resource page also has plenty of good info.
Should I form my LLC in Kansas, or choose a state like Delaware or Wyoming?
Some people like to form their LLCs in states with favorable legal settings. For instance, Delaware is often seen as the most business-friendly state, as it has an entire court system that’s dedicated solely to business matters. As for Wyoming, this state has some of the most generous anonymity laws for LLC ownership.
However, for most people, your best option is to simply form your business in your home state. Forming in a different state can be a tremendous hassle, and it can add some unnecessary complexity to tax issues as well.