Start a Business in Kansas

Benefits of Opening a Business in Kansas

There’s a reason small businesses and startups are opting for Kansas. In recent years, the state has experienced regulatory and tax reform that has changed the way business owners can calculate their expenses for the better. Mainly, the new rules allow companies to deduct a greater percentage of the cost of an investment.

Kansas has also made it a point to focus on bringing new business to the area with a bevy of enticing tax incentives. The Kansas Opportunity Fund offers performance-based financial assistance to existing companies looking to relocate or expand within the state. There’s also an income tax waiver for out-of-state businesses relocating to one of Kansas’s designated “Rural Opportunity Zones.” 

Also, Kansas has the High-Performance Incentive Program (HPIP), which is geared toward attracting companies willing to invest in their employees. Among other things, the program offers a 10% income tax credit for capital investments and a state sales tax exemption to businesses that pay higher than average wages and make a sizable investment in employee training.

How to Start a Business in Kansas

Starting a business doesn’t have to be an intimidating process. You can do a great deal of it online by using a business formation service. Plus, the Kansas Secretary of State’s website has an online business filing center where you can do things like electronically register your business entity (e.g., file your Articles of Organization for an LLC or Articles of Incorporation for a corporation) and submit your Kansas annual report.

If you want to form a domestic corporation or limited liability company (LLC), you’ll have to sign up for KanAccess first (out-of-state businesses require a different set of forms). Beyond that, many businesses follow similar steps prior to their launch. This checklist can help guide you along:

Step 1: Create a business plan

Writing a business plan is a vital step for many startups and brand new businesses. Not only can a business plan help attract investors or secure a loan, but it helps keep you on track with your vision, goals, and finances. When you’re writing a business plan, consider the following steps:

• Clarify your “SMART” goals
• Understand your product line and pricing
• Run a market analysis: If there’s no market need, your business is probably going to run into trouble. Also, if you understand your ideal customer, you can better serve them.
• Run a competitive analysis: What are your competitors doing, and how are you going to do it differently and/or better?
• Draft a financial outline: What’s your main revenue source, how much does your business cost to run, and when do you expect it to be profitable?
• Search for tax breaks, local grants, and other government resources

Step 2: Choose a business structure

All businesses have to choose a business structure, whether they opt to operate as a corporation, general partnership, LLC, sole proprietorship, or some other business entity type. Let’s take a quick look at the pros and cons of each type of company.

Corporation

Corporations are one business structure option. They’re intended to shield their shareholders’ personal assets from liability, so if the business gets into trouble, your home, car, and bank accounts can stay safe. However, income for C corporations (the default form of corporation) is taxed twice — once at the level of the corporation, and again on the personal tax returns of its shareholders.

Limited Liability Company

LLCs, general partnerships, and sole proprietorships are among the most popular business structures because they’re considered “pass-through” entities, meaning their profits are reported only on the owners’ personal income tax returns without first being taxed at the business level.

Though the tax benefits make them similar, they’re definitely not equal. LLC owners enjoy limited liability protection on their personal assets, which is important in the event of a lawsuit against the business or bankruptcy. LLCs must file Articles of Organization with the state and must declare a registered agent and registered agent office, while sole proprietorships do not.

Sole Proprietorship and Corporation

Sole proprietorships and general partnerships are the cheapest types of entities with the least amount of paperwork. They don’t have to craft an LLC operating agreement or create corporate bylaws. They also avoid the formation of documents. Unfortunately, these structures don’t offer any liability protection on personal assets. That means if your company gets into financial trouble, you do, too.

For all these reasons, the LLC is a very popular form of business entity. With liability protection and tax benefits, it’s an attractive choice for many.

Step 3: Determine your business costs

Kansas has relatively low startup costs compared to less rural states, but you’ll still need to understand the full cost of running a business in order to flourish. To do this, you can add up your fixed expenses (like insurance premiums and building rent), variable expenses (like business taxes or inventory costs), and one-time expenses (like specialized equipment and office furniture). 

Once you have a clear financial picture, you can look into your funding options. Though you can use a business credit card for smaller one-time purchases, some small businesses will still need to turn toward business loans or grants. The Small Business Administration (SBA) and NetWork Kansas can help you determine your funding options. Kansas’s business portal also has information about the state’s business incentive programs. Every dollar helps.

Step 4: Create a business name

A great business name is simple enough that you can easily craft an online presence through social media and your web domain. It also has to be distinct enough that it’s not already taken by any other business in the state or trademarked, lest you face legal repercussions. Besides, don’t you want to stand out? 

Before you decide on a name, use the Kansas Secretary of State’s name availability search engine to make sure it’s not already being used. Some businesses, particularly single-member LLCs and sole proprietors, may prefer to use a trade name or DBA (doing business as) name. Unlike other states, Kansas doesn’t have a formal DBA filing process, but you’ll still want to make sure your fictitious name isn’t violating any state or federal trademarks.

Step 5: Register your Kansas business and open financial accounts

Apply for an Employer Identification Number (EIN)

Once you’ve given a name to your Kansas business, you’ll need to handle the rest of the paperwork. This could include opening a business bank account, obtaining a federal employer identification number (EIN) from the Internal Revenue Service (IRS) for your tax ID and hiring purposes, and registering your LLC or corporation on Kansas.gov. Note that a sole proprietor without employees may be able to use their Social Security number as a tax ID instead of acquiring an EIN, though this can leave them more vulnerable to identity theft.

Business License

Beyond that, you’ll need to obtain the proper licenses and permits before you can start. Not all Kansas businesses require licensing, but check with your city and/or county clerk to determine what’s necessary. Kansas.gov also has a list of common business licenses and the associated organization to apply to.

Be aware that licenses and permits can be industry-specific and happen on the federal, state, and local levels, so you’ll have to do some research to determine what your business needs. Our business license report can do the work for you.

Business Insurance

Additionally, your new company may need various business insurance policies. If you hire employees, you’ll need workers’ compensation insurance. You may also need specialized insurance. For example, wheat farmers typically get some type of crop insurance.

Step 6: Market your Kansas business

Marketing is what will help take your business to the next level and bring in brand-new customers. In today’s age, that largely includes digital marketing, though print campaigns and word of mouth also help.

You may want to consider developing a cross-platform social media plan using platforms like Twitter, Facebook, and Instagram. You’ll also probably want to ramp up your website’s SEO (search engine optimization) and register for Yelp, Angie’s List, Google My Business, and other local business registrations if you have a physical location.

If you’re not sure where to start, it may be worthwhile to connect with a local marketing agency.

Examples of Good Businesses to Start in Kansas

You’d never guess some of the best places to start a business in the United States. It largely depends on the industry. When you think of businesses that thrive in Kansas, they generally center on farming, livestock, manufacturing, and energy (like oil, gas, and mining).

Still, the Sunflower State has so much more to offer. Kansas has a huge healthcare sector and plenty of traditional retail businesses. You can start a farming business, or you could open up an Etsy shop and sell custom T-shirts out of your home.

Bottom Line

Kansas has a lot of incentives that make it a great place to start a new business, particularly if you’re opening a business that needs a lot of space. While the process of getting started is similar to other states, you can opt to use a business formation service like ours to deal with some of the hassles.

Top Kansas Cities to Form Businesses

Wichita: Major hub for the aerospace industry, home to facilities of companies like Spirit AeroSystems and Textron Aviation. Growing service sector and tech scene, supported by resources like the e2e Accelerator. Offers a skilled workforce and a supportive environment for manufacturing and engineering.

Overland Park: Part of the Kansas City metropolitan area, strong in telecommunications, health technology, and professional services. High quality of life with excellent educational resources.

Attractive for businesses seeking suburban convenience with urban amenities.

Kansas City, KS: Benefits from the economic diversity of the larger Kansas City metro area, including logistics, manufacturing, and services. Undergoing significant redevelopment efforts in downtown and waterfront areas. Opportunities for retail and commercial businesses amidst urban renewal.

Topeka: State capital offering a stable economic environment with a strong government presence. Growing sectors include health care and education. Central location and good infrastructure, ideal for logistics and distribution businesses.

Lawrence: Home to the University of Kansas, with a vibrant cultural scene and young, educated population. Suitable for startups in arts, education, and research. Benefits from proximity to Kansas City, enhancing access to regional resources.

These cities provide a mix of industrial strengths, strategic locations, and supportive business environments, making them suitable for a range of business ventures in Kansas.