Incorporator The Journal of U.S. Formation
Start Free Quiz
Editorial 7 MIN READ

Kansas in mid-2023: what the LLC actually costs to keep

A $160 formation, a $55 annual report, and a quiet set of tax mechanics that make the state cheaper than its reputation

The Editors
Staff, Incorporator.org
7 min read Updated
Contents 7 sections
  1. The mechanics
  2. The annual report, and why the date is weird
  3. What the state actually taxes
  4. Registered agent and compliance drag
  5. Kansas versus Delaware on the numbers
  6. Who Kansas makes sense for in 2023
  7. Sources

Kansas LLC costs $160 to form online, $165 if you mail paper, and $55 a year to keep current with the Secretary of State. Those are the three numbers that matter in 2023, and the gap between Kansas and the states people actually talk about is wider than most first-time founders assume.

This is a working guide for someone forming in the back half of 2023. It covers the fee schedule, the annual report rule, the 2022 pass-through election that reshaped mid-sized K-1 planning, and where the state sits against Delaware on the arithmetic that counts.

The mechanics

Kansas LLCs are authorized under the Kansas Revised Limited Liability Company Act, codified at the K.S.A. 17-76 series. Formation is a single filing: Articles of Organization, signed, with the registered office and resident agent address inside Kansas. The Secretary of State accepts the filing through the KanAccess business center online portal for $160, or by mail on the paper form for $165. The $5 delta is a paper-handling premium, not a service tier; online filings are processed faster and typically show the entity active within a business day.

The Articles are short. Name, principal office, resident agent, organizer signature. There is no requirement to disclose members or managers on the public record, which is useful if you care about that and immaterial if you do not. Kansas does not require an operating agreement to be filed and does not, in practice, ask to see one; you should still have one, and if the LLC has more than one member you should treat it as a contract rather than a formality.

An EIN from the IRS takes about ten minutes online through Form SS-4. Federal tax classification defaults to disregarded entity for a single-member LLC and partnership for multi-member, with an S-corp or C-corp election available on Form 2553 or 8832. Nothing in the Kansas filing changes that analysis.

The annual report, and why the date is weird

Kansas charges $55 per year for the LLC annual report (called an "information report" in the statute), filed with the Secretary of State. The due date is the 15th day of the 4th month after the close of the entity's tax year. For a calendar-year LLC that is April 15. For a fiscal-year entity ending June 30 it is October 15. The rule aligns with the federal and Kansas income-tax return dates, which is the point; the state would rather receive one piece of paperwork than two staggered ones.

File late and the entity moves to a forfeited status after 90 days past the deadline. Reinstatement is possible but costs the back reports plus a reinstatement fee, and in the intervening weeks the LLC technically lacks authority to do business in Kansas, which is the kind of fact that surfaces in a due diligence request at the worst possible moment.

There is no Kansas franchise tax. The state had one through 2010 and repealed it effective January 1, 2011 under HB 2014. A pass-through entity with no Kansas nexus beyond existence therefore pays $55 a year to stay on the rolls, which is roughly what a single lunch costs and an order of magnitude under Delaware's flat $300 LLC tax.

What the state actually taxes

The Kansas corporate income tax sits at 4% on the first $50,000 of taxable income and 7% on income above that, under K.S.A. 79-32,110. It is a dual-bracket structure, not a flat rate, and for small C-corps or LLCs electing C treatment the effective rate through the first $50,000 is genuinely 4%. The 7% tier is a surtax, applied only to the increment above the threshold.

Individual-level Kansas income tax runs on its own graduated schedule and applies to residents' pass-through income from LLCs treated as disregarded or as partnerships. This is where the 2022 legislature made the most interesting change to the LLC planning picture in years. HB 2239, signed in April 2022, enacted a Kansas pass-through entity tax election, commonly called the SALT-cap workaround, effective for tax years beginning on or after January 1, 2022. Eligible partnerships and S-corps can elect to pay Kansas income tax at the entity level, deduct the payment as a business expense against federal income, and pass a credit through to Kansas resident owners for the entity-level tax paid. The mechanics track the thirty-odd other state PTE regimes that have sprung up since IRS Notice 2020-75 blessed the structure in late 2020.

For a Kansas LLC taxed as a partnership with two resident members and $400,000 of ordinary income, the PTE election can recover several thousand dollars of federal deduction that the $10,000 SALT cap would otherwise disallow. For a single-member LLC below the SALT cap's practical bite, or for a Kansas LLC with no Kansas-resident members, the election rarely pencils. It is a mid-six-figures-of-income, resident- members workaround, not a universal win.

Kansas does not impose a state sales tax on services. It does tax tangible personal property at a 6.5% state rate with local add-ons that push the combined rate into the high 8s in parts of Sedgwick and Johnson Counties. If the LLC sells goods, register for a sales tax permit through the Department of Revenue's Customer Service Center; if it sells time, the sales tax registration is a non-issue.

Registered agent and compliance drag

Every Kansas LLC needs a resident agent with a physical Kansas street address. The commercial market runs roughly $50 to $200 a year, with the usual spread between a mailbox-forwarding agent and one that will actually read the registered mail and tell you what it says. For a first Kansas entity held by an out-of-state founder, pay nearer the top of the range; the cost of one missed service of process exceeds several years of premium agent fees.

The compliance calendar for a calendar-year Kansas LLC is short. April 15 for the state information report and the federal and Kansas income tax returns. Sales tax filings monthly, quarterly, or annually depending on volume. No franchise tax. No biennial report. No publication requirement of the sort New York imposes on its LLCs. If the entity has no Kansas payroll and no Kansas sales tax obligation, the April 15 filing is the entire state-level year.

Kansas versus Delaware on the numbers

Delaware charges $90 to form an LLC and $300 a year in flat franchise tax. Kansas charges $160 to form and $55 a year. Over a five-year hold, Delaware costs $1,590 and Kansas costs $435, a difference of about $1,155. That is not the interesting comparison in isolation, because the reason people pick Delaware is almost never the fee schedule. It is the Court of Chancery and the venture-capital default.

The comparison matters for the cases where Chancery is not load-bearing. A single-member LLC holding a rental property, a consulting S-corp with one owner-employee, a family-investment LLC whose members are all related, a small operating business with no fundraising plans: none of these benefit materially from Delaware's case law. All of them pay the $300 flat tax forever regardless. Kansas gives up the case law, charges $245 less per year after formation, and loses very little that a non-Chancery LLC would ever have used.

The counterweight is that a Kansas LLC doing business outside Kansas still has to foreign-qualify in the operating state, and a Delaware LLC doing business in Kansas has to foreign-qualify here. Foreign qualification in Kansas runs $165 for the Application for Authority plus the same $55 annual report, so the "form Delaware, operate in Kansas" stack costs both sets of fees: $90 plus $300 in Delaware, $165 plus $55 in Kansas, for $610 a year rather than Delaware's $390 or Kansas's $55 alone. For entities that will only ever operate in Kansas, forming in Delaware is a $555-a-year tax on prestige.

Who Kansas makes sense for in 2023

The state is underrated for three kinds of entity.

The first is a Kansas resident's operating LLC. Forming at home avoids foreign qualification, keeps the registered agent local and cheap, and captures the PTE election without needing to run two state-level calculations.

The second is a rental or real-estate holding LLC owning Kansas property. Title work is simpler when the owning entity is domestic, and the $55 annual cost makes it rational to put each property in its own LLC for liability segmentation without the multiplier turning punitive.

The third is a small professional practice that does not intend to raise outside capital. Law firms, accounting practices, small medical groups, and the like benefit from the low recurring cost and the straightforward statute, and the PTE election closes most of the federal-deduction gap that historically pushed these practices toward S-corp structures.

Where Kansas does not belong: anything that will raise institutional capital, anything that expects to end up in Delaware eventually, and anything where the operating agreement will be heavily negotiated against a Chancery-literate counterparty. The Kansas statute is fine, but it is not the statute investors' counsel reads in their sleep, and that familiarity has dollar value at the term sheet.

If you are forming this quarter, the entity is operational, and the business is inside Kansas, file online, pay the $160, pick a working agent, and put April 15 on the calendar. The rest of the state's mechanics stay out of your way until you go looking for them.

Sources

Keep reading

More from the journal.