Kansas offers many opportunities for aspiring entrepreneurs, but starting a business is more complicated than most people realize. Before you can start your business and begin making sales, you’ll need to make sure you have the right legal requirements in place, including a federal tax ID number. Kansas is a welcoming state for entrepreneurs, given that their economy depends so heavily on small businesses. Currently, Kansas is in the bottom third of states in terms of population, but there are a few densely populated cities where startup entrepreneurs can gain access to resources and make new business connection. Wichita, Kansas City, Topeka, and Lawrence are all popular spots in the space.
Steps to Get a Tax ID Number and Forming a Business in Kansas
- Forming a Business in Kansas
- Federal Tax ID (EIN) Number Obtainment
- Kansas State Tax ID Number
- Localized Licenses and Permits in Kansas
Before you get far in the business planning process, you’ll need to choose how to structure your business. There are a few main types of business structures to choose from, including:
- Sole proprietorships and partnerships. First, you could create a sole proprietorship. This is the simplest type of business to create since it doesn’t require much paperwork or many complex considerations. Taxes are simple; you’ll be taxed as an individual on any money you make in the business. However, you’ll face the downside of being personally exposed to any liabilities in the business. Partnerships are more or less the same, with the main exception being the number of people in charge of the business. As partners, you’ll split expenses, pay taxes as individuals, and may both be exposed to liability issues.
- Limited liability companies (LLCs). As the name suggests limited liability companies (LLCs) provide their owners with at least some liability protection. They’re treated as separate legal entities, which means they can take on debts of their own and can be held liable for actions taken by the business. They’re also considered pass-through entities in terms of taxes; they don’t necessarily pay taxes on income generated by the business, but business owners will pay taxes as individuals on any money they take as profits or salary from the business. In Kansas, LLCs are required to file an annual report for their for-profit LLCs, and pay a flat fee of $50.
- Corporations. Corporations are the most complex type of business. They’re subject to much stricter rules and regulations because they can raise funds by issuing public shares. This makes them advantageous, if not necessary, for most businesses looking to scale to a national level. Like LLCs, corporations are treated as separate legal entities, and they provide even more liability protection to their owners. However, the downside of corporations is that their corporate income is taxed, in addition to individual owners and shareholders paying taxes on any money they take from the business. In Kansas, the corporate tax rate is a flat 4 percent, but there’s an additional 3 percent surtax on income in excess of $50,000.
It’s possible to change your business structure over time, but it’s much better to choose a structure that’s going to support your corporation long-term.
The majority of Kansas businesses will find themselves in need of getting a federal tax ID number. This is a unique, 9-digit number assigned to your business when you register with the federal government. It’s also called an employer identification number, or EIN. You’ll need an EIN if your business has multiple partners, like in a partnership, LLC, or corporation, or if you’re going to hire any employees. You’ll also need an EIN if you’re going to open a business bank account, apply for a loan, or apply for a business license or permit.
It’s ideal to get your tax ID as quickly as possible, so you can start your business sooner. Our federal tax ID number obtainment services can help you finish that process as quickly as possible. Simply fill out our online questionnaire about your business, and you’ll have your EIN in less than an hour.
Most Kansas businesses in will also need a Kansas state tax ID number. While similar in name to your federal tax ID number, this number serves a different purpose. It’s a unique identification number, like your federal tax ID, but it’s given to you when you register your business with the state government. You’ll need it if you’re hiring employees in Kansas, if you’re selling taxable goods and services in the state, or if you’re going to owe excise taxes on regulated goods like alcohol or tobacco.
If you want to get your Kansas state ID number conveniently, use our Kansas state tax ID number obtainment services. After finishing our online questionnaire, you should get your Kansas state tax ID number in 4 to 6 weeks.
In Kansas, there is no universal "business license" that’s required of all businesses. However, there are hundreds, if not thousands of potential licenses, permits, and other forms of certification you may need, depending on your industry and location. These certifications are regulated at the local level, so it’s important that you speak with your local Chamber of Commerce to see which forms you may need before starting your business. Note that you’ll need to have a federal tax ID number in place before applying for any of these.
Currently, there are more than 251,000 small businesses in the state of Kansas, employing more than 606,000 people and representing 99.1 percent of all businesses in the state. The overall economic growth rate in Kansas has been slightly slower than the overall national rate, but the unemployment rate has been decreasing steadily, and is currently below the national unemployment rate. Some of the most common industries in the state of Kansas include healthcare and social assistance, accommodation and food services, manufacturing, retail trade, and construction. However, a diversity of industries are represented.
After you have your business plan written, you’ll need to get your tax ID numbers as quickly as possible. Make use of our federal tax ID number and Kansas state tax ID number obtainment services today.