Kansas Startup

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

A 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 corporation.

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

An 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

A Kansas 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.

Kansas LLC

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.

A 501c3 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.