Contents
If you’re thinking of starting a business in Kansas, there are a few things you should know. From taxes to licenses, we’ve got you covered.
Checkout this video:
Choose the Right Business Structure
Before you can start operating your business, you need to choose a business structure that best suits your company. The business structure you choose will determine what kind of tax liability your business will have, as well as the level of personal liability you will have as a business owner. There are four main types of business structures in Kansas: sole proprietorship, partnership, limited liability company (LLC), and corporation. Let’s take a look at each one in more detail.
Consider an LLC
A limited liability company (LLC) is a business structure allowed by state statute. LLCs are popular because, similar to a corporation, they offer limited liability protection to their owners. Other features of LLCs include pass-through taxation and the ability to choose your management structure. You should discuss the pros and cons of each business structure with an attorney or accountant before settling on one.
To form an LLC in Kansas, you must file Articles of Organization with the Kansas Secretary of State’s office. The filing fee is $165 for domestic LLCs and $490 for foreign LLCs.
Consider a Sole Proprietorship
If you’re doing business on your own, you may want to operate as a sole proprietor. This is the simplest business structure and involves nothing more than registering your business with the state. You don’t have to take any special steps or file any paperwork, but there are some disadvantages to consider.
As a sole proprietor, you are personally responsible for all debts and liabilities of the business. This means that if your business fails, you could be held liable for any debts, including personal ones. In addition, raising money for a sole proprietorship can be difficult because you are limited to using your personal assets as collateral.
If you decide that a sole proprietorship is right for you, there are a few things you need to do:
1. Choose a name for your business and register it with the state.
2. Obtain any licenses or permits required by local or state law.
3. Open a business bank account in your business name.
4. Apply for a tax ID number from the IRS (if required).
Get a Kansas Tax ID Number
You will need to obtain a Kansas Tax ID number if you plan to start a business in the state of Kansas. You can apply for a Kansas Tax ID number online or by mail. The process is simple and only takes a few minutes.
Register Your Business Name
You must choose a name for your LLC that is distinguishable from other business names already on record with the Kansas Secretary of State. You can search the business entity database online on the Kansas Secretary of State website.
If your LLC will be doing business under a name other than the legal LLC name, you will need to file a DBA. You can file a DBA online through the Kansas Secretary of State website, by mail or in person.
Open a Business Bank Account
It is important to open a business bank account so that you can keep your personal and business finances separate. This will make it easier for you to track your expenses and income, and will also make it easier to file your taxes at the end of the year. You can open a business bank account at most major banks, such as Wells Fargo, Bank of America, or Chase.
When you are ready to open your account, you will need to bring some documentation with you, such as your business license, tax ID number, and Articles of Incorporation (if you are a corporation). The bank may also require that you deposit a certain amount of money into the account when you open it.
Get Business Insurance
As a business owner, it’s important to understand the types of insurance available to you and your business. Insurance can protect your business from unexpected losses, help you recover from expensive damages, and get you back on your feet after a disaster strikes.
There are many different types of insurance available, and the best way to determine which type is right for your business is to speak with a licensed insurance agent. A good agent will take the time to understand your business and its risks, and will then recommend the coverage that’s right for you.
Some of the most common types of business insurance include:
-Property insurance: This type of insurance protects your business property from damage or destruction. It can cover buildings, equipment, inventory, and other physical assets.
-Liability insurance: This type of insurance protects your business from claims alleging that your business caused injury or property damage. It can help pay for damages, legal fees, and other costs associated with these claims.
-Product liability insurance: This type of insurance protects your business from claims alleging that a product you sell caused injury or property damage. It can help pay for damages, legal fees, and other costs associated with these claims.
-Business interruption insurance: This type of insurance can help cover the costs of lost income and expenses if your business is forced to close due to an insured event like a fire or severe weather.
-Flood insurance: This type of insurance protects your business from damage caused by floods. It is important to note that standard property and liability policies do not cover flood damage.
Understand Employer Responsibilities
As an employer in Kansas, it is your responsibility to withhold, report and pay employment taxes. These taxes include federal income tax, Social Security, Medicare, federal unemployment tax and state unemployment tax. To make sure you are withhold the correct amount of taxes from your employee’s paychecks, you will need to obtain a Federal Employer Identification Number (FEIN) from the Internal Revenue Service (IRS).
As an employer, you will also be responsible for providing workers’ compensation insurance for your employees. In Kansas, this insurance is mandatory for all businesses with one or more employees.
You can obtain employer responsibilities information from the IRS here:
https://www.irs.gov/businesses/small-businesses-self-employed/understand-your-employer-responsibilities
Get an Occupational License
In addition to a business license, you will need to acquire an occupational license if your business will be providing certain services. The services that require an occupational license vary by county, but they typically include occupations such as:
-Animal care
-Construction
-Cosmetology
-Electrical work
-Plumbing
-Tattooing
Contact your local Chamber of Commerce or county clerk’s office to find out if your business needs an occupational license.
Understand Kansas Sales Tax
To collect sales tax in Kansas, you must first register with the Kansas Department of Revenue. You can do this online, by mail, or in person. After you have registered, you will be issued a sales tax permit. You must display your permit at your place of business.
If you make sales through an online marketplace such as eBay or Etsy, you may also need to register with the marketplace. This is so the marketplace can collect and remit sales tax on your behalf.
Once you have registered and been issued a permit, you will need to collect sales tax from your customers at the rate that applies to your locality. In Kansas, there are three rates that may apply: state, county, and city. The state rate is 6.5%. County rates range from 0% to 3%, and city rates range from 0% to 5%.
You will also need to file regular sales tax returns with the Kansas Department of Revenue. Returns are due quarterly on the 20th day of the month following the end of each quarter. For example, if your fiscal year ends on March 31st, your first return would be due on April 20th.
