Forming an LLC in Kansas
Are you interested in forming a Kansas limited liability company? A limited liability company (LLC) is a business entity that many small business owners choose to organize themselves when they are just getting started. The business structure of a Kansas LLC appeals to entrepreneurs because it can provide liability protection to the owners and help them protect their personal assets.
Steps to Form an LLC in Kansas
Name Your LLC
Creating a legally proper LLC name and then protecting it is one of the first actions in LLC formation. This process can be complex and time-consuming, but the LLC needs to operate legally in Kansas.
The first thing you may want to do in the LLC formation process adventure is come up with a great LLC name (that's up to you). Kansas law requires that the name be unique and different from any other company's name. You can do a name search on the Secretary of State business entity search page to check name availability and confirm the name you want isn't being used by an existing business. The name you decide on must contain one of these legal suffix abbreviations, or a similar variation:
- Limited Liability Company
- Limited Company
- Ltd. Co.
Kansas also allows name reservations for 120 days while the formation process continues through the Kansas Business Center website. Reserving a business name is not a guarantee that your name will be approved, but it keeps anyone else from using your Kansas LLC name for that time. There is a $30 filing fee.
Get a Registered Agent
The State of Kansas requires a registered agent (or resident agent) for service of process within Kansas state when you start an LLC. A registered agent is designated to receive legal documents, business notices, and other important mail on behalf of the LLC. A Kansas registered agent can be an individual or company but must have a physical Kansas street address. A forming LLC will often choose a professional registered agent service or the company lawyer.
File Your Articles of Organization
You are now ready to register your Kansas LLC by filing formation documents with the Kansas Secretary of State. Your Kansas articles of organization must contain the following information:
- LLC name and mailing address
- Name and street address of the registered agent
- Tax closing month – you choose this when you form the LLC, and it is connected with when you will file your annual report
- Effective date of the LLC
- Organizer name (must be at least one)
- Organizer signature(s)
The state fee is $160 for filing online through the Business Center (with a credit card or electronic check) and $165 for paper filing by mail or in person. If you file online, you are able to confirm the formation of your LLC immediately. If you file with paper forms, it can take 2-3 business days.
Once registration of your LLC is complete, a business entity ID number will be issued for future filings and correspondence with the Kansas Secretary of State.
Draft an Operating Agreement
An LLC operating agreement is not required under Kansas law but is a good way to clarify members' interests. A Kansas LLC operating agreement can contain the following points:
- Percentage of members' ownership
- Voting rights and responsibilities
- Powers and duties of members and managers
- Distribution of profits and loses
- Holding meetings
- Buyout and buy-sell rules (procedures for transferring interest or in the event of a death)
The members may manage an LLC or hire an outside manager. You will indicate which you have chosen on your registration application.
Get an EIN
An EIN (Employer Identification Number) is issued by the Internal Revenue Service (IRS) and is like having a Social Security number for your business. You can apply for an EIN on the IRS website. You will likely need an EIN if your LLC has more than one member, to open business bank accounts, and for federal tax purposes.
Set Up Business and Tax Accounts
Your LLC will likely be subject to federal income taxes and state taxes. You should find out if your LLC is required to set up an account with the Kansas Department of Revenue to register and pay business taxes, including withholding taxes, sales taxes, use, and service provider taxes. You'll fill out a questionnaire to find out what business taxes your LLC is required to pay. You might want to consult an accountant about your LLC taxes before filing your tax returns.
You will likely have to comply with some local and state requirements to make sure your LLC is properly established once you complete registering your LLC with the Secretary of State. LLCs have particular requirements for filing taxes.
State Business Tax
LLC owners should set up an account with the Kansas Department of Revenue Customer Service Center for your LLC to register and pay business taxes.
State Employer Tax
If members of the LLC earn any income through the business, they have to pay self-employment taxes. If the LLC has employees, it must pay state employer taxes through the Kansas Workforce Commission. If your LLC has employees, you may also need to register with the Kansas Department of Labor for unemployment taxes and for Workers' Compensation Insurance.
Sales and Use Taxes
If the LLC provides tangible goods and services, it must pay sales and use tax. LLCs may also be charged for additional local sales and use tax.
Business Licenses and Permits
Your LLC might also need to comply with local government license and permit requirements depending on the type of business your LLC conducts and where it is located. If your LLC's business involves liquor or tobacco products, you may need to obtain additional licenses and permits with the state. Depending on the type of business your LLC conducts, you may also need to apply for local permits and licenses in the city or county where your LLC is located.
Kansas LLCs must file an annual report with the Secretary of State to remain in good standing. The due date depends on your LLC's tax closing period. An LLC with a calendar year tax period may file an annual report any time after the end of the tax period. An annual report may be filed beginning January 1 but must be filed by April 15. An LLC with a tax period other than a calendar year must file an annual report no later than the 15th day of the fourth month following the end of the LLC's tax period. The fee for online filing is $50 and for paper filing is $55.