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Kansas has the country’s highest economic investment per capita, making it a potentially ideal location to start your business venture. The Sunflower State has also been rated as the top business climate in the Great Plains region, outscoring Missouri, Nebraska, Iowa, Minnesota, South Dakota, and North Dakota. With ample space, affordable housing, and nationally recognized research universities, it’s easy to see why so many entrepreneurs are starting a business in Kansas. Here are the eight steps to make it happen.
Start a business in Kansas
1. Choose a business idea
Every business started as an idea. Some great business ideas center around a new product or service and others succeed by improving existing offerings. Ask yourself the following two questions before settling on a concept for your small business:
- Who is your customer? Have a clear understanding of who you’re selling to. Analyze the market and pay attention to customers who seem underserved by existing companies. You’re on your way to a long-term customer base if you can meet their needs.
- What is your projected profitability? Ensure your idea can generate enough income to sustain your business and draw a profit—if not in the short term, at least in the long run. At what point can you break even? How much do you need to sell to cover your costs? You may want to tweak your pricing, distribution model, or expenses to make it work.
2. Name your business
Every business needs a name. An effective business name shapes your customers’ first impressions and hints at your offerings. Keep the following in mind as you brainstorm a name for your Kansas business:
- Be unique. You can only register a name that another Kansas business hasn’t already picked. Search for existing names using the Kansas Secretary of State’s name availability tool.
- Include certain words. Depending on your business structure, you may be required to have certain words in your name. For example, Kansas LLC names must include the phrase “Limited Liability Company” or its abbreviations (“LLC” or “L.L.C.”). A Kansas corporation name must contain one of the following words: “Association,” “Church,” “College,” “Company,” “Corporation,” “Club,” “Foundation,” “Fund,” “Incorporated,” “Institute,” “Society,” “Syndicate,” “Union,” “University,” or the abbreviations “Corp.,” “Inc.,” “Co.” or “Ltd.”
- Register your business name. Once you have an unclaimed name, you can reserve it for up to 120 days before filing a request on the Kansas Secretary of State’s website. It costs $30 per name to register.
- Choose a DBA. DBA stands for “doing business as.” A DBA is another name a business entity assumes to interface with customers, different from its formal business name. Kansas law doesn’t allow you to register a DBA. You can still use a DBA in Kansas, but the state will not step in if another company also wants to use your DBA.
- Reserve a domain name and social media handles. Today’s customers expect to be able to find your business online. Help by choosing a domain name and social media handles that align with your business’s legal name or DBA. Struggling to find the right domain name? Try Shopify’s domain name generator tool.
3. Create a business plan
Business ownership is no walk in the park. It requires discipline and perseverance. Steer your business in the right direction with a comprehensive business plan. Carefully crafted business plans outline organizational objectives, chart growth, set financial goals, and establish metrics for success. If you need inspiration, consult a template or examples. Most include:
- An executive summary
- A company description and mission statement
- Financial plans, including forecasted business income and business expenses
- An operations and logistics plan
- An outline of the organizational and managerial structure
- A portfolio of products or services
- A customer segmentation report
- Market research and target market analysis
- A comprehensive marketing plan
4. Choose a business structure
Your Kansas-based business will likely take one of three business structures: a sole proprietorship, limited liability company (LLC), or C corporation. Each has its advantages, operational requirements, and tax rules. Here’s how they differ:
Sole proprietorships are informal business structures. They require no legal paperwork or special accounting systems, and owners keep all their profits. Sole proprietorships are not recognized as legal entities, so if the business is sued, for example, the owner could have to pay damages from their personal savings (which is why many sole proprietors have separate bank accounts for personal and business expenses). Kansas sole proprietorships are best suited for solo business owners in low-risk industries with no employees.
A limited liability company (LLC) is a formal business structure owned by a group of LLC members. LLCs provide personal asset protection, meaning owners’ personal assets are not at risk if the LLC is sued. Many small business owners favor LLCs because these legal business entities offer personal liability protection without the double taxation of a corporation. Most use an LLC operating agreement to lay out company procedures. You can also form a professional LLC if you provide a professional service like medicine, dentistry, or law. There are also limited partnerships and limited liability partnerships (LLPs) with nearly identical governance and filing requirements as LLCs. These are formed by professionals who work together in a similar trade, such as medicine or architecture.
A C corporation is a legal business entity owned by its shareholders. The corporate structure keeps business assets separate from owners’ personal assets, protecting them in case of lawsuits or bankruptcy. The shares-based corporate business structure makes it easier to raise capital for business expenses, bring in new shareholders, or sell the corporation to new owners. C corporations are taxed at a corporate rate, different from the personal income tax rate (Kansas business taxes range from 4% to 7%, depending on company income, employees, and where it does business). Corporations require more formalized accounting and tax filing than LLCs or sole proprietorships and must maintain corporate boards of directors, name corporate officers, and hold periodic meetings.
Obtaining an EIN
Kansas employers must obtain a federal employer identification number (EIN) through the Internal Revenue Service. An EIN is your business’s federal tax identification number—think of it as the business equivalent of a Social Security number. It enables you to hire employees and set up a business bank account. Once you’ve got your federal EIN, you can obtain a business tax license from the Kansas Department of Revenue, which lets you legally conduct sales in the state.
Incorporating in Kansas
To incorporate your business in Kansas, you must file Articles of Incorporation with the Secretary of State online or by mail—both options cost $90. Among other elements, your Articles of Incorporation must include:
- The corporation’s name and mailing address
- The resident agent’s—i.e., registered agent’s—name and address, which must be in Kansas. A 2012 statute lays out the full rules for registered agents in Kansas
- The corporation’s purpose
- The name and address of each incorporator
- Stock issuance statements
- The name and address of each corporation’s board of directors member
5. Obtain a business license and permits
Kansas does not issue a general business license. However, the state and its counties and cities subject many professions to licensing requirements depending on their specific industries. Some permits are issued at the state level, while local county clerks or city managers issue others. The state maintains a small business website to help determine the appropriate licenses and permits for your company.
6. Examine business insurance options in Kansas
LLCs, LLPs, and corporations are structured to protect their owners’ assets, but these companies still need insurance policies to protect business accounts and assets. The Kansas Department of Insurance regulates insurance offerings in the state. Standard business insurance policies include:
- Workers’ compensation insurance. All Kansas employers must purchase workers’ compensation insurance to cover their employees’ on-the-job injuries. Note that workers’ compensation does not cover independent contractors.
- Professional liability insurance. A professional liability insurance policy protects your company against claims that your services or advice harmed a customer, client, or patient.
- General liability insurance. General liability insurance can protect your company if it’s found liable for property damage, libel, slander, misleading advertising, or bodily injury.
- Unemployment insurance. Kansas employers pay an unemployment insurance tax to the state’s unemployment insurance fund for laid-off workers.
- Commercial automobile insurance. All Kansas automobiles must be covered by vehicle insurance, whether they’re for commercial or personal purposes.
7. Understand financial considerations
Your new business stands to spend a lot on startup costs. You may need to seek out small business loans, lines of credit, investments, grants, and special tax benefits. Start a business banking account at a commercial bank or a credit union to obtain everything from business credit cards to small business loans. If your business has subsidiaries, open business bank accounts for each separate legal entity.
The Kansas Business Center One Stop, which focuses on tax credits and loan assistance (with a special emphasis on agriculture), can connect you to state-based financial resources. At the federal level, the US Small Business Administration offers micro-loans and connects business owners to various financing resources. The SBA serves eastern Kansas via its Kansas City, Missouri office and the rest of the state through its Wichita office. You can also connect to commercial lenders and investors through merchant support services like Shopify Capital.
8. Market your business
Marketing campaigns help you find customers for your business. Craft logos, slogans, color schemes, and fonts that align with your message—and find ways to share these qualities with a target audience. Once you’ve articulated your brand identity, reach out to potential customers online, over the airwaves, and in person with:
- TV and radio ads
- Pay-per-click (PPC) web ads
- Awareness content (blog posts, videos, newsletters) and search engine optimization (SEO)
- Store displays
- Social media
- Influencer campaigns
Starting a business in Kansas FAQ
How much does it cost to register a business in Kansas?
It costs $30 to reserve your company name in Kansas. If you’re starting an LLC, you’ll pay $165 to file Articles of Organization (or establish a foreign LLC in Kansas). If you’re starting a corporation, you’ll pay $90 to file Articles of Incorporation. If you’re starting a sole proprietorship, you don’t need to file formation documents.
What do I need to start a business in Kansas?
You must file certain documents with the Kansas state government to reserve a name and establish your business as an LLC or corporation. Any Kansas business that hires workers needs a federal employer identification number (EIN) for tax identification business banking. You must also register with the Kansas Department of Revenue (DOR) and submit business tax payments (unless your company is an LLC with a pass-through tax structure).
Is Kansas a good place to start a business?
Kansas has worked hard to cultivate a strong business climate and boasts the most economic investment per capita in the United States. The corporate tax rate in Kansas ranges between 4% and 7%, depending on company revenue, number of employees, and location. Despite its pro-business climate, Kansas is not considered a regional business hub, with large cities close by in states like Colorado, Missouri, and Texas. But if you’re drawn to space and a low cost of living, Kansas may be the right fit.
Do I need a seller’s permit in Kansas?
You must collect and remit Kansas’s sales tax if you engage in retail sales. You can set up all your tax accounts by filing Form CR-16 (a business tax application) with the Kansas Department of Revenue (DOR). Once your application is processed, the DOR will send you a Retailer’s Sales Tax Registration Certificate, which serves as your Kansas seller’s permit.