Starting a Business

Starting a business in Kansas?  Below is some information that might help you as you navigate this process.  To get started, you might want to try the new Kansas Busienss Startup Wizard or use the new Kansas Business Starter Kit below:

Kansas Business Startup Wizard      Business Starter Kit

Would you like assistance with any of this?  Click below to get started!

Small Business Support Request

(select the Pittsburg office so that we are notified of your support request!)

 

Planning

Choose and Obtain Your Business Name

Choosing a business name is another important decision to make when creating a new business. Most people think about the product or service they will be providing, but it’s important to consider legal aspects of choosing a business name.

An important distinction to understand is the difference between the legal name of your business and the name you will use when conducting business.

Business Entity Name

  • If you choose to create an entity that is legally separate from the individuals who own or operate the business, you will need to form a business entity. A business entity name is simply that, a name, a way to identify a business entity. A business entity is legally a “person” under the law. It’s important to understand that the business entity name may or may not be the same name as your Fictitious/DBA name.
  • Kansas law requires that all business entity names must be “distinguishable on the record”. In other words, the name must be different enough from other names on file with the Secretary of State’s office that one entity can be identified from the other. It’s important to understand that Kansas law doesn’t preclude the name of one business entity from being “deceptively similar” from another entity. The “name availability guidelines” clarify that distinction. (Link for name availability guidelines: https://www.kansas.gov/businesscenter/index.html?link=name_avail)
  • Remember, the creation of a legal entity is a method to separate an individual person from the individuals who own the entity. Just because someone can give their business entity a name that is deceptively similar to the name of your business entity, doesn’t mean they have a right to advertise or hold themselves out to the public with that name. Issues such as trademark name may limit the use of the name you select for your business entity.

Check Name Availability

  • You should not begin using a business name until you are certain that it is available for use. A business name is not available if it is already being used by an existing business on file with the Office of the Kansas Secretary of State.
  • Once you have an idea of what name you want for your business, you may check to see if it is already taken by performing a name availability search.
  • A name may also be reserved to ensure availability. A name reservation is not required and is effective for 120 days from the date of filing.

Fictitious or Doing Business As (DBA) Name

The name you use in general commerce is often referred to as your Fictitious name or DBA (Doing Business As) name. You can think of this as the name you would put on the signage of a storefront. Kansas does not have a law requiring you to register your DBA name.

Choose Your Business Structure

Choosing the legal structure for your company is one of the most important decisions you’ll make when starting a business. Learn more about different business entity types, their registration requirements, and the advantages and disadvantages of each structure.

Sole Proprietorship

A sole proprietorship is easy to form and gives you complete control of your business. You're automatically considered to be a sole proprietorship if you do business activities but don't register as any other kind of business. Sole proprietorships do not produce a separate business entity. This means your business assets and liabilities are not separate from your personal assets and liabilities. You can be held personally liable for the debts and obligations of the business. Sole proprietors are still able to get a trade name. It can also be hard to raise money because you can't sell stock, and banks are hesitant to lend to sole proprietorships. Sole proprietorships can be a good choice for low-risk businesses and owners who want to test their business idea before forming a more formal business.

Kansas has no state requirements to register or file the business name of a sole proprietorship.

Limited Liability Company

An LLC lets you take advantage of the benefits of both the corporation and partnership business structures.

LLCs protect you from personal liability in most instances, your personal assets — like your vehicle, house, and savings accounts — won't be at risk in case your LLC faces bankruptcy or lawsuits. Profits and losses can get passed through to your personal income without facing corporate taxes. However, members of an LLC are considered self-employed and must pay self-employment tax contributions towards Medicare and Social Security. LLCs can have a limited life in many states. When a member joins or leaves an LLC, some states may require the LLC to be dissolved and re-formed with new membership — unless there's already an agreement in place within the LLC for buying, selling, and transferring ownership.

LLCs can be a good choice for medium- or higher-risk businesses, owners with significant personal assets they want to be protected, and owners who want to pay a lower tax rate than they would with a corporation.

  • An LLC must maintain a resident agent and file Annual Reports.
  • Members of an LLC may be involved in the management of the business without incurring personal liability.
  • If properly structured, an LLC may receive pass-through income tax treatment similar to a partnership.
  • Registration with the Office of the Secretary of State is required.
  • The professional limited liability company is comprised of a single professional or group of professionals, who file both Articles of Organization and a certificate from their specific professional regulatory board with the Office of the Secretary of State. The certificate must state that each member is duly licensed and that the company name has been approved. If the limited liability company is organized to exercise the powers of a professional association or corporation, each such profession shall be stated.
  • A domestic LLC, one formed in Kansas, must file Articles of Organization.
  • A foreign LLC, one formed in another country, state or jurisdiction other than Kansas, must file a Certificate for Authority to Engage in Business in Kansas/Foreign Limited Liability Company Application.
  • It may be necessary for the limited liability company interests to be registered with the Office of the Securities Commissioner.

Corporation

C corp

A corporation, sometimes called a C corp, is a legal entity that's separate from its owners. Corporations can make a profit, be taxed, and can be held legally liable. Corporations offer the strongest protection to its owners from personal liability, but the cost to form a corporation is higher than other structures. Corporations also require more extensive record-keeping, operational processes, and reporting.

Unlike sole proprietors, partnerships, and LLCs, corporations pay income tax on their profits. In some cases, corporate profits are taxed twice — first, when the company makes a profit, and again when dividends are paid to shareholders on their personal tax returns. Corporations have a completely independent life separate from its shareholders. If a shareholder leaves the company or sells his or her shares, the C corp can continue doing business relatively undisturbed.

Corporations have an advantage when it comes to raising capital because they can raise funds through the sale of stock, which can also be a benefit in attracting employees. Corporations can be a good choice for medium- or higher-risk businesses, businesses that need to raise money, and businesses that plan to "go public" or eventually be sold.

S corp

An S corporation, sometimes called an S corp, is a special type of corporation that's designed to avoid the double taxation drawback of regular C corps. S corps allow profits, and some losses, to be passed through directly to owners' personal income without ever being subject to corporate tax rates.

Not all states tax S corps equally, but most recognize them the same way the federal government does and taxes the shareholders accordingly. Some states tax S corps on profits above a specified limit and other states don't recognize the S corp election at all, simply treating the business as a C corp.

S corps must file with the IRS to get S corp status, a different process from registering with their state.

There are special limits on S corps. S corps can't have more than 100 shareholders, and all shareholders must be U.S. citizens. You'll still have to follow strict filing and operational processes of a C corp.

S corps also have an independent life, just like C corps. If a shareholder leaves the company or sells his or her shares, the S corp can continue doing business relatively undisturbed.

S corps can be a good choice for a businesses that would otherwise be a C corp, but meet the criteria to file as an S corp.

B corp

A benefit corporation, sometimes called a B corp, is a for-profit corporation recognized by a majority of U.S. states. B corps are different from C corps in purpose, accountability, and transparency, but aren't different in how they're taxed.

B corps are driven by both mission and profit. Shareholders hold the company accountable to produce some sort of public benefit in addition to a financial profit. Some states require B corps to submit annual benefit reports that demonstrate their contribution to the public good.

There are several third-party B corp certification services, but none are required for a company to be legally considered a B corp in a state where the legal status is available.

Close corporation

Close corporations resemble B corps but have a less traditional corporate structure. These shed many formalities that typically govern corporations and apply to smaller companies. 

State rules vary, but shares are usually barred from public trading. Close corporations can be run by a small group of shareholders without a board of directors.

Nonprofit corporation

Nonprofit corporations are organized to do charity, education, religious, literary, or scientific work. Because their work benefits the public, nonprofits can receive tax-exempt status, meaning they don't pay state or federal taxes income taxes on any profits it makes.

Nonprofits must file with the IRS to get tax exemption, a different process from registering with their state.

Nonprofit corporations need to follow organizational rules very similar to a regular C corp. They also need to follow special rules about what they do with any profits they earn. For example, they can't distribute profits to members or political campaigns.

Nonprofits are often called 501(c)(3) corporations — a reference to the section of the Internal Revenue Code that is most commonly used to grant tax-exempt status.

Draft a Comprehensive Business Plan

A business plan defines your business, goals and serves as a written roadmap for the businessperson to determine where the company is, where it wants to be and how it plans to get there. A comprehensive, thoughtful business plan can be essential in obtaining outside funding, credit from suppliers, finance marketing for your business, management of your operation and achievement of your goals and objectives.

You can utilize the MCAC Loan Application to help build your business plan, or sign up for Small Business Development Center Services (look for the Pittsburg State service center).  You can also start with the SBDC guidelines for building a Business Plan:

Business Plan Template for a Startup Business

Understand Your Market

Retail Marketplace Reports:

By signing up for SBDC assistance the MCAC staff is able to provide you with a Market Analysis for your individual type of business.  To get a more in-depth view of your line of business, contact Lisa Kuehn-Small Business & Marketing Specialist.

 

Business Tax Registration

Understanding the taxes that will be applicable to your business at the Federal, State, and local level is a critical part of planning for success. The activities of your business, the business structure you choose, and whether or not your business will qualify as an employer are likely to impact the types of taxes your business will be subject to.

The link below will help you determine if you will be required to obtain a Federal Employer Identification Number (FEIN) and lead to more information about employer and business-related taxes. Or you may choose to go directly to register for a FEIN and/or state taxes.

Federal Business Tax Registration

 

To find more resources with the State of Kansas, visit the following site to file your Business Formation Documents, Change your Name or Address or Request a Certificate of Good Standing.

State of Kansas Resources

Finance Your Business

Identifying potential sources of investment capital is an important part of starting and growing your business. We want to help Montgomery County businesses be successful by providing the right resources at the right time. How do you know if you’re ready for funding? Do you have an idea for a business? Do you currently own a business and need capital to expand? What is the right option for you? What options are available to you, based on your business stage and collateral?

MCAC can help you find out which resources may fit your business.  The below programs are frequently used in Montgomery County to start a new business or expand an existing business.

Small Business Loans

Common Permits needed for Businesses

The State of Kansas has listed common businesses or areas that require registration/ licensing/ permits with specific agencies/commissions.

State of Kansas

New businesses should also check with their local city and county clerk to determine if either municipality requires any licenses/permits/zoning requirements.

City of Caney- Fred Gress

City of Cherryvale- Jonathan Booe

City of Coffeyville- Allison Pryor

City of Independence- Kelly Passeur

 

 

 

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