According to the Kansas Department of Commerce, the state’s top industries include agriculture, biotech, energy, advanced manufacturing, and logistics and distribution. More particularly, Kansas is known as a leader in aerospace and defense manufacturing as well as food processing and manufacturing. Basically, the state has a lot of space and knows how to use it.
If you’re wondering how to start a business in Kansas, this guide can help put you on the right path.
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 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.”
In addition, 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 state sales tax exemption to businesses that pay higher than average wages and make a sizable investment in employee training.
Start an Entity in Kansas
- Kansas Limited Liability Company (LLC)
- Kansas Professional Corporation
- Kansas Corporation
- Kansas Nonprofit Corporation
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 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, most businesses follow similar steps prior to their launch. This checklist can help guide you along:
Kansas Business Startup Checklist
- Create a business plan
- Choose a business structure
- Determine your business costs
- Create a business name
- Register your Kansas business and open financial accounts
- Market your Kansas business
1: Create a business plan
Writing a business plan is a vital step for many startups and brand new businesses. Not only does it 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 to be profitable?
- Search for tax breaks, local grants, and other government resources
2: Choose a business structure
All businesses have to choose a business structure, whether they opt to operate as a corporation, general partnership, LLC, or sole proprietorship. Let’s take a quick look at the pros and cons of each type of company.
Corporations are one business structure option. They 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 is taxed twice — once at the level of the corporation, and again on the personal tax returns of its shareholders.
S corporations offer similar liability protection but avoid the double taxation issue. Their income is only taxed one time, on the shareholders’ personal tax returns. S corporations come with more restrictions and are harder to qualify for, though.
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 liability protection on their personal assets, which is important in the event of a lawsuit 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 proprietorships and general partnerships are the cheapest types of entities with the least amount of paperwork. They don’t have to craft an operating agreement or create bylaws. They don’t even need to hire a registered agent. 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.
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 should 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, the majority of 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.
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 taken by any other business, 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 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.
5: Register your Kansas business and open financial accounts
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 IRS for your tax ID and hiring purposes, and registering your LLC or corporation on Kansas.gov. Note that a sole proprietor can use their social security number as a tax ID instead of acquiring an EIN, though this can leave them more vulnerable to identity theft.
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.
Additionally, your business may need insurance. 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.
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’ll 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 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 all 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.
Kansas has a number 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 ZenBusiness to deal with some of the hassles.
Kansas Business FAQs
What is a good city to start a business in Kansas?
Wichita is the state’s largest city, which means you have access to a lot of customers. If you’re planning to run a business that doesn’t rely on local traffic (like ecommerce or national manufacturing) you can set up shop just about anywhere.
How much does it cost to open an LLC in Kansas?
It costs $160 to file your Articles of Organization through the Kansas Secretary of State’s website. If you opt to file by mail, it costs $165.
How much do business owners generally make in Kansas?
The Bureau of Labor Statistics doesn’t have a category specifically for business owners, but those in management occupations make an annual mean wage of more than $105,000 per year. Chief executives make an average mean wage of more than $164,000 per year.
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