Determining what type of Kansas startup business to form is an important decision
that impacts your personal liability, taxes, and filing costs. Here, we explain
corporations, LLCs, and other common business types to help decide what business
to form in Kansas.
Note: Kansas has no requirement or procedure to file DBAs such as sole proprietorships
neither at the state level nor the county level. To form an unincorporated business
structure in Kansas, consult your attorney or legal advisor.
Incorporate in Kansas
A business wishing to
incorporate in Kansas will choose one of two tax classifications at the
federal level: C corporation, or S corporation.
Both a C corporation and an S corporation should be formed by drafting and filing
a form called the Articles of Incorporation, which will contain basic information
about your business: your corporate name, including corporate ending; the name and
address of your registered agent, which must be a physical street address; your
corporation's mailing address; the tax closing month; your business purpose; the
total amount of authorized shares, as well as any information on multiple classes;
the names and addresses of both the incorporator and the board of directors; and
the duration of the corporation, in addition to any other information you wish to
include in your Articles.
All corporations are also responsible for filing an annual report. The due date
of this annual report corresponds to the fiscal year end for your corporation.
C corporation is the default type of corporation; no further action is required
(other than your regular compliance requirements, of course) in order to be a C
A C corporation has a good deal of flexibility with respect to its owners: there
is no limit on the amount of shareholders a C corporation can have, and these owners
are allowed to be either individuals (of any citizenship) or business entities themselves,
such as corporations or LLCs. But a C corporation must pay a corporate income tax,
sometimes referred to as "double taxation" (since owners will also pay an individual
income tax on that corporate income when it is distributed).
S corporation is formed in the same way—by filing Articles of Incorporation—but
it must file an S Corporation Election Form with the IRS in order to be taxed as
an S corporation and avoid the double taxation of a C corporation.
But S corporations have ownership limitations that C corporations do not: they cannot
be owned by business entities or individuals who are not US citizens or resident
aliens, and the corporation can have no more than 100 shareholders.
Kansas Foreign Corporation
foreign corporation is a type of business registration for existing corporations
that have formed in another state; this filing gives them to the legal authority
to conduct business in Kansas.
Along with the Kansas foreign corporation application, an applying corporation must
include a Certificate of Good Standing from its initial state of registration, dated
within 90 days, showing that it is in good standing or existence with that state.
An LLC is formed
by filing Articles of Organization, a document similar to its corporation counterpart,
the Articles of Incorporation. Similar information is provided about the business.
Once registered, a Kansas LLC must elect how it would like to be taxed, as the IRS
does not accept "LLC" as a tax classification. Depending on the amount of owners,
your LLC could elect to be taxed as a single-member LLC, a corporation, or a multiple-member
LLC. It's important to discuss your options with your lawyer to be sure you are
selecting the most advantageous tax structure for your particular business situation.
Kansas Nonprofit Corporation
Forming a nonprofit corporation is a simple matter: just draft and submit the nonprofit
version of the Articles of Incorporation, which is a document similar to the for-profit
Articles. But depending on the goals and needs of your organization, simply registering
as a Kansas nonprofit corporation may not be sufficient.
nonprofit corporation is one that has first registered at the state level (by filing
nonprofit Articles) and then applied for tax exemption from the IRS under section
501c3. This tax exemption enables qualifying organizations (those formed for 5013
purposes, such as religious, educational, or literary) to accept tax-deductible
donations, take advantage of reduced postage, and other federal benefits.