Discovering Kansas
Being a plains state, there are a lot of plains and low hills in the state. One unique thing about its geography is the Flint Hills, which are made up of flint, which unlike other rocks and minerals, doesn’t erode. Its two biggest resources are sunflowers and wheat. It’s called the Sunflower State due to the huge fields of sunflowers that grow in the state, which produce both oil and seeds. And it produces more wheat than any other state in the country.
Economic Overview of Kansas
$167.7 billion is the Gross State Product of Kansas, and its GSP has a growth rate of 17.5k% from 2018-2023. The industries that make the most revenue are Corn, Wheat & Soybean Wholesaling, Aircraft, Engine & Parts Manufacturing, Farm, Lawn & Garden Equipment Wholesaling, Meat, Beef & Poultry Processing, and Petroleum Refining. The companies that employ the largest number of residents in the state are the State of Kansas, Walmart Inc., the University of Kansas, Spirit AeroSystems, Inc., and The Kroger Co. And the companies that put the most into the state’s GSP are Manufacturing, Real Estate and Rental and Leasing, Healthcare and Social Assistance, Professional, Scientific and Technical Services, and Wholesale Trade.
Business Environment in Kansas
The business environment in Kansas was rated #35 in the country by Usnews.com. The state has a cost of living index of 91.2, which is a little lower than the national average of 100, and a median household income of $64,124 which is also slightly below the national average of $69,717. This means that generally speaking, it isn’t as expensive to live and do business in Kansas as it is in other states.
It has excellent infrastructure. The commute to work for most people in the state averages around 19.6 minutes, compared to the 25.6 minutes that the rest of the country experiences. And it ranks #13 in the nation in higher education, which means that most of the workforce is well-educated. 91% have a high school diploma, 34% have a bachelor’s degree, and 40% have an associate degree.
Low taxes are great for businesses, too. The highest corporate tax rate is 4.0%, and the top personal income tax rate is only 5.70%.
State-Specific Regulations and Incentives for Forming an LLC in Kansas
Here’s a look at the incentives, regulations and programs for starting a business in Kansas.
- Promoting Employment Across Kansas (PEAK): This program allows businesses that qualify to get back up to 95% of their payroll withholding tax for 5-10 years.
- Kansas Industrial Training (KIT): This is a training incentive program for companies that create new jobs in the state. The training can be in fields that educate workers with specific knowledge or specialized skills for entry-level jobs, and you’re allowed to have them trained on equipment in your building or use similar types of machinery in their classroom.
- Kansas Industrial Retraining (KIR): This program allows employees who are likely to experience job cuts because their job skills are lacking or outdated to be retrained for job retention.
- Workforce Aligned with Industry Demand (AID): This program works with both employers and employees to bring qualified workers to the attention of businesses and to suggest businesses to qualified workers. They also give potential employees information about the job duties, working environment and more before they accept an offer, which leads to higher job retention rates.
- Kansas Department of Transportation (KDOT) Economic Development Program: This program incentivises investments in transportation projects that can provide jobs in the state and boost its economy.
- Utility Incentive Programs: Many utility companies have partnered to offer businesses in Kansas discounted utility rates and other tools to cut utility costs to ease the financial burden on companies so they have the opportunity to grow.
- Kansas International Trade Marketing Assistance Program: This program is in place to help businesses expand their exports internationally by providing them with funding for marketing activities and sales trips.
- High Performance Incentive Program (HPIP): The HPIP is a tax incentive program that supplies qualifying employers with a tax credit for qualifying investments.
- Community Development Block Grants (CDBG): This is a grant program that finances companies expanding their company or starting a new business in non-metropolitan areas in the state.
- Tax Increment Financing (TIF): This is a real estate redevelopment program that applies to commercial, industrial, intermodal transportation area and residential projects. It works by increasing revenues from real estate tax and local sales tax so they can retire the bonds that were sold to pay for certain redevelopment projects.
- Real Property Tax Abatement: Laws in Kansas allow for a 100% property tax abatement up to 10 years on any real property as long as industrial revenue bonds were used or it otherwise qualifies under provisions of the state Constitution.
- Rural Opportunity Zones: These are zones that provide income tax waivers to new residents in Kansas. They’re available in 77 counties in the state.
- Minority & Women Business Development: The Office of Minority and Women Business Development provides information and referrals for things like property procurement, financing and business management, contracting and subcontracting. They put a focus on business owners who are minorities, disadvantaged or owned by women.
- Federal Opportunity Zones: Federal Opportunity Zones were set up by the federal government to provide tax benefits to investors who put money into low-income communities. It’s designed to encourage investments in areas that are economic underdogs. Some of the incentives offered are a temporary capital gain tax deferral, a step-up in basis (basis increase by 10% of deferred gain after an investment is held for 5 years: 90% taxed, basis increased by another 5% of deferred gain after an investment is held for 7 years: 85% taxed), and forgiveness of some additional loans.
- Private Activity Bonds: These are federally tax-exempt bonds for projects that support communities. Examples of qualifying projects include: furnishing water, building new sewage facilities, mass commuting facility projects, residential rental projects, facilities that supply utilities in the community like electric or gas, hazardous waste facilities, solid waste disposal facilities and more.
- Kansas Aviation Tax Credits- Employer Hiring Incentive and Tuition Reimbursement: This incentive exists to help out the aviation sector in the state and allow them to hire quality employees by lowering the cost of doing business in the state. Employers can receive a tax credit for 10% of what they pay each qualified employee for their first five years of employment. There’s a limit of $15,000 per employee per year, and it adds up to a total of $75,000 per employee. Employers can also get a credit for expenses used to train their employees. The credit is for as much as 50% of employee tuition. The employee must graduate from the program within a year of their hire date.
Pros and Cons of Establishing an LLC in Kansas
Low taxes for businesses and individuals is great if you want to start a Limited Liability Company in Kansas. Whether you set up your business entity to be taxes as a corporation, or pay taxes through your personal income taxes, your LLC will enjoy lower taxes in Kansas than it would in other states.
A well-educated workforce means that you won’t have trouble finding employees that are qualified to work for your business. Low commute times and a low cost of living mean that your employees will likely be happier, too.
And the fact that the state received more than $9 billion from new investors in 2019 means that there’s an opportunity to receive capital here.
The drawback is that although the workforce is well-educated, there aren’t many employees to choose from. Kansas has a ridiculously low unemployment rate, which means that you’ll struggle to find new employees. And while you’re trying to find employees, you’ll be competing with every other business in the state for them, too. You’ll need to offer competitive pay and benefits to attract them to your company. The government tries to make up for this setback by attempting to draw in out of state workers and training the workforce well, but this issue can still be a pain.
Procedure of Establishing an LLC in Kansas
It’s important that you learn the steps of forming an LLC before you find out about LLC formation time frames. This section of our guide will provide you with step-by-step information about how to form an LLC in Kansas.
- Get an Articles of Organization Form: The Articles of Organization form is crucial to forming a Limited Liability Company. It’s the main form, and it serves as an application. You can obtain your Articles of Organization from the Kansas Secretary of State.
- Settle On a Business Name: There are lots of rules and regulations surrounding business names, so you can’t just choose whichever business name you want. It needs to contain “Limited Liability Company”, “LLC”, “Limited”, “Co.”, “Ltd.”, or other abbreviations that are used to indicate an LLC. And one important stipulation you need to know about is that your business name can’t be the same as or too similar to any other business name currently being used by businesses in the state. How do you determine whether other businesses may be using the business name you want? Run a search for the business name on the Business Entity Search Station (BESS), which you can find on the Secretary of State’s website.
- Pick a Registered Agent: Your LLC is required by law to have a registered agent, which is someone who receives mail from government agencies and service of process for your company. There are several stipulations that your registered agent must meet, like having a physical address and being barred from using a PO box.
- Select an LLC Address: Guarding your information is important, so it’s imperative for you to know that your company’s business address is placed on the public record. This means that if you choose your home address as a business address, it’s listed on the public record and literally everyone has access to it. Instead, you could find out whether your state will allow you to use a virtual address or virtual office.
- Sign and File Your Documents: If you sign and file your Articles of Organization, then your name and information are placed on the public record as the organizer of your LLC. Hiring an LLC formation service can safeguard your information.
Once you’ve filed your Articles of Organization with the Secretary of State, you’ll begin waiting for the allotted processing times from the Secretary of State. There are also a number of things you’ll need to do once your Articles are filed. Here are some of the other documents you’ll need, and some of the legal requirements you’ll need to meet.
Necessary Documentation for Filing an LLC in Kansas
Just because the Articles of Organization is the primary form you’ll need to file to get your LLC doesn’t mean it’s the only bit of information you’ll need. Here’s a look at some of the other documents you’ll need.
- IRS Form SS-4: This is an application for an EIN, or Employer Identification Number. You’ll need this to open a business bank account, hire employees, and generally allow government agencies to identify and look up your business using this number. You can obtain one immediately and for free on the IRS website.
- Name Reservation: Once you’ve made sure that your business name meets all of its legal requirements and is available, you must fill out a business name reservation form and file it with the state. There’s a $35 filing fee for this in Kansas.
- Operating Agreement: Your LLC isn’t legally required to have an Operating Agreement, however it’s recommended that all LLCs draft an Operating Agreement. It’s a valuable internal business document that serves as a legal agreement between LLC members, as well as details how each LLC member interacts with other LLC members and departments, the job of each LLC member, and the percentage of ownership and shares and profits that each LLC member is entitled to. It also details important information about how the business itself will run, and what will happen if an LLC member decides to leave or should die.
- Initial Report: Every LLC in the state is required to file an annual report with the Secretary of State each year. The first one is filed with your Articles of Organization, is called an initial report, and typically doesn’t require a filing fee.
- Tax Registration: Not only do you have to get set up with the IRS, you need to get your business set up with the state and local government to collect sales tax in Kansas. You can do this by registering with the Kansas Department of Revenue.
- Business Licenses: You’ll need business licenses and permits along with your LLC application. And you’ll probably need more than one, probably from state, county and local government agencies. You can learn which agencies you need to file with through the Secretary of State’s Business Filing website.
Legal Requirements for Starting an LLC in Kansas
Every Limited Liability Company in Kansas is required to have what’s known as a registered or resident agent. This is someone who remains at the registered agent address during normal business hours to receive official mail from government agencies, and legal notices like service of process. You’re allowed to designate a friend, family member or employee as your registered agent. But since it’s such an important legal job, many business owners choose to hire a professional registered agent service.
All LLCs are required to file an annual report with the Secretary of State each year. There’s a filing fee of $55. Not only does this generate income for the state, it also ensures that the information on file for your company is up-to-date.
Time Frame for Establishing an LLC in Kansas
What you need to know about formation time frames is that there are two different times you need to factor in. There are processing times, which only count how long it takes for the government agency to process your paperwork and get it entered into the computer system, and approval times which describe the total amount of time it takes for your application to get approved, including processing times. Here’s everything you need to know about formation times in Kansas.
How Long Does the Initial Paperwork Take in the State of Kansas?
Approval times for mail filings are around a week, or immediately if you file online.
Processing Times in the State of Kansas
Kansas has immediate processing for online LLC filing, and processing times for mail filings are between 2-3 business days.
Common Delays in the LLC Formation Process in Kansas
Here’s a look at some of the things that can delay the formation process, and some things you can avoid.
- Holidays and Weekends: Since the Secretary of State’s office only processes LLC formation applications on business days, you don’t want to file on holidays or weekends because those don’t count. You also don’t want to file the day before a weekend day or holiday because your processing will be delayed.
- Document Errors: When you submit your paperwork to the Secretary of State for processing, it has to be perfect. All of the information must be correct, and you must have the correct number of copies for each of the documents. Otherwise, the entire application will likely be rejected, and you’ll have to apply again.
- Timing: There are two times of year when LLC filing happens at high volumes: the beginning and the end of the year. If you file during either of those times, then there’s likely to be a backlog of filings for the Secretary of State to process, and that will slow down processing times.
Expedited Processing for LLC Formation in Kansas
Of course if you’re looking for a speedy LLC formation process, it makes sense to choose a filing option with the word “expedited” right in the name! Here’s an overview of expedited processing in Kansas.
What Are the Expedited Options Available?
I hate to be the bearer of bad news, but Kansas doesn’t offer expedited processing. But with processing times of 2-3 days on mail filings and immediate online processing, the state government probably doesn’t find expedited options necessary.
Comparing LLC Formation Time Frame in Kansas with Other States
Whether you live in Kansas or you’re considering Kansas as a place to form a foreign LLC, looking at the formation times of other states can give you a better idea of how good (or bad) Kansas’s times really are.
Brief Comparison with Key States
Mail processing times in Kansas are 2-3 days, with immediate processing on online filings. It can take up to a week for overall approval times for mail filings, and there aren’t expedited filing options.
You really can’t beat immediate processing of online orders. And while a week may sound like a long time for mail processing, it’s nothing compared to the 8 whole months for New York’s mail processing. And some states have expedited processing that’s as long as Kansas’s mail processing. For instance, Maryland has 7 day expedited processing. And when it comes to online processing, it could definitely be worse. Arizona has 14-16 day processing times for online filing.
West Virginia, Delaware, Nevada, Michigan and Montana have 1 hour expedited processing options available. And Kentucky and Ohio have 1 day mail processing times. Even Alabama, Massachusetts and South Dakota have faster mail processing times at 1-2 days.
Why is Kansas a Favorable Place for Forming an LLC?
Kansas has low tax rates that make it attractive to business owners. Whether you’re taxed as a corporation or as a pass-through entity, low taxes are a must-have for any business. The workforce in the state is well-educated, which means you’ll have employees that are equipped to handle the job. And investors are active in the state, meaning your business has a good chance to obtain funding and capital, which can be difficult to come by in some states.
