Kansas LLC Taxes

Understanding the tax landscape for your Kansas LLC involves comprehending various tax obligations at multiple governmental levels. Each LLC has unique tax responsibilities, which are shaped by factors like its structure, location, and the nature of its activities.

This Kansas LLC Taxes guide explores which federal, state and local taxes may impact your business, as well as how to go about filing them. 

Recommended: Schedule a free consultation with 1-800Accountant to stay on top of your taxes. 

How Is an LLC Taxed in Kansas?

Taxation in Kansas isn’t applied in the same way to all LLCs – instead, it varies depending on a number of factors, such as an LLC’s nature, locality, and tax election.

While LLCs typically benefit from pass-through taxation by default, they can elect to be taxed as one of the following:

• C Corporations: The LLC is treated as a separate entity to its owners, paying corporate income tax rates on its total profit while the owners also pay personal income taxes on any distributions they take.
• S Corporations: In return for paying owners a “reasonable salary,” the LLC’s remaining profits are distributed among members without a need to pay FICA or self-employment taxes on them.

The following sections go into the various tax responsibilities of your LLC at local, state, and federal levels in Kansas to help you ensure your LLC navigates them effectively.

Kansas Local Taxes

For LLCs operating in Kansas, local tax requirements vary considerably across different regions of the state.

Here is an overview of the most common local taxes that your Kansas LLC might encounter:

Sales and Use Taxes

LLCs operating in Kansas may potentially face local sales and use taxes, which are set through voter approval and vary depending on the locality. These local taxes are in addition to the state retailers' sales and use tax of 6.5%, and can include:

• Local Retailers' Sales Tax: For counties, the tax rate can be up to 2.25% for general purposes and 2% for special purposes. Cities may impose up to 3% for general purposes and 2% for special purposes.
• Local Use Sales Tax: This mirrors the local retailers' sales tax rates, with counties having a maximum of 2.25% general and 2% special tax and cities having up to 3% general and 2% special tax.

For example, in a city where the local sales tax is at the maximum of 3% for general purposes, this rate would be added to the state's 6.5% sales tax. Thus, the LLC would need to apply a combined tax rate of 9.5% on applicable transactions

Note: For a comprehensive overview of local sales tax rates, see the Local Sales Tax Rates by Jurisdiction document on the Kansas Department of Revenue’s website. 

Transient Guest Taxes

Kansas law permits counties and cities to impose a transient guest tax, which is levied on establishments with more than two bedrooms and on accommodation brokers with at least two rooms. 

The transient guest tax rate varies by locality, but can reach up to 4% (of each room rental’s revenue). If applicable, this is added on top of the standard sales tax.

Note: This tax does not apply to room rentals that exceed 28 consecutive days for the same guest.

Property Tax

Property taxes in Kansas encompass both tangible and intangible property, with varying rates and regulations depending on the type of property and the local jurisdiction.

Tangible Property Tax

Tangible property, which consists of real estate and physical personal assets, is subject to ad valorem taxation in Kansas. 

The applicable tax rates hinge on the property's appraised value, which may differ across various localities. Local taxing districts, including cities and counties, impose their own specific levies, thereby affecting the overall tax rate. 

Intangible Property Tax

Intangible property tax in Kansas applies to assets like money, stocks, bonds, and other financial instruments. Counties have a maximum tax rate of 0.75%, and cities and townships can levy up to 2.25%, with the overall tax burden capped at 3%. That being said, many local governments in Kansas choose not to impose this tax.

Note: LLCs in Kansas can pay their local property taxes through the Kansas Property Tax Payment Online Portal.

Recommended Service: Schedule a free consultation with 1-800Accountant to ensure your business remains legally compliant. 

Kansas State Taxes

Every state has its own regulations and rules that dictate how it taxes individuals and businesses. Below is a list of the most relevant state-level taxes for LLCs in Kansas. 

Sales-Related Taxes

The state sales tax rate for LLCs operating in Kansas is set at 6.5%, with potential increases due to additional local taxes from cities and counties. Food, food ingredients, and certain prepared foods are taxed at 4%.

Note: To calculate the total state and local sales tax your LLC is responsible for, use Kansas' Sales and Use Tax Rate Locator.

Individual Income Tax

Most LLC members will have to pay state individual income taxes on their share of business income. 

Below we’ve broken down the rates in two different categories: 

Married Filing Jointly:

• Up to $30,000: 3.1%
• $30,000-$60,000: Base tax of $930, plus an additional 5.25% on any amount over $30,000.
• $60,000 and Over: Base tax of $2,505, plus 5.7% on any amount over $60,000.

Other Filers:

• Up to $15,000: 3.1%
• $15,000-$30,000: Base tax of $465, plus 5.25% on any amount over $15,000.
• $30,000 and Over: Base tax of $1,252.50, plus 5.7% on any amount over $30,000.

Corporate Income Taxes

LLCs in Kansas that choose to be taxed as corporations must pay corporate income tax, which stands at 4% on net income, with an additional surtax of 3% on income exceeding $50,000. For LLCs operating both in and outside of Kansas, taxable income calculation involves a three-factor formula based on the proportion of sales, property, and payroll within the state. In some cases, an alternative two-factor formula focusing solely on sales and property may be used.

Larger entities, like investment fund service companies headquartered in Kansas with 100 or more full-time employees, face unique tax considerations. These companies are taxed solely on income earned from managing funds for Kansas residents. This income is determined through a single-factor formula. To retain this tax calculation method, these companies must maintain at least 95% of their workforce in Kansas. 

Business Privilege Taxes

The Kansas privilege tax, which targets financial institutions such as national banking associations, banks, trust companies, and savings and loan associations, is calculated based on each institution's net earnings. All of these entities must file a Business Privilege Tax Return each year with the Department of Revenue. 

These companies may also qualify for a tax deduction on net interest income that comes from Kansas-based agricultural real estate loans as well as Kansas-based single-family residence loans.

Federal Taxes

Regardless of where your business is located, if you run an LLC in the US, there are a number of federal taxes you’ll need to pay. Below are some of the main types your LLC may be required to pay for federal tax purposes:

Income Tax

By default, the IRS will not treat single and multi-member LLCs as a separate entity from you for tax purposes. What this means is that you’ll need to report your share of your LLC’s profits on your individual tax returns and pay federal income tax on them at the personal rate of your tax bracket.

Having said that, keep in mind that LLCs can also elect to be taxed as C corps or S corps, which changes how these taxes are levied in different ways.

Self-Employment Tax

In addition to income tax, members of single- and multi-member LLCs will need to pay self-employment tax on the share of the business’s profits that they report on their personal tax return at the end of the year.

This tax is levied at a flat rate of 15.3% against businesses with net earnings that exceed $400, though it is applied slightly differently to LLCs that have elected to be taxed as S corps or C corps.

Employment Tax

If your LLC hires any employees, it will need to withhold a portion of their salaries to cover various types of taxes on your employees’ behalf – including Social Security, Medicare (FICA), and payroll taxes.

Furthermore, the members of any LLCs that have elected to be taxed as an S corp will be required to pay employment taxes on their salaries. However, in return for this, the remainder of the business’s profit after these salaries have been distributed will be safe from both self-employment and FICA taxes.

Excise Tax

If your LLC engages in certain types of business (such as the sale of alcohol and tobacco or operating a heavy highway vehicle, among others), it may need to pay federal excise taxes in order to do so legally. Each excise tax comes with its own set of rules, rates, and filing obligations you’ll need to be aware of.

Understanding and fulfilling these federal tax obligations is crucial for keeping your LLC compliant and avoiding unnecessary financial penalties and/or fines.

How to File LLC Taxes in Kansas

Below, we’ve outlined the general process an LLC in Kansas will need to follow in order to file their tax return correctly. Note that the specificities of each step will vary slightly depending on how your LLC is organized and the specific locality it’s based in. 

Step 1: Gather Your Documentation

To ensure accurate tax filing, thorough record-keeping is essential. Begin by collecting your personal information, including:

• You and your partner’s Social Security number, date of birth, and residential address
• The previous year’s tax returns
• Your LLC’s Employer Identification Number (EIN)

Then, you’ll need to gather all documentation related to your business’s income, such as:

• Invoices you’ve issued
• Sales transaction logs
• Electronic payment reports from services like PayPal or Stripe

Lastly, assemble all records pertaining to your business expenses, which should cover:

• Lease receipts for your business premises
• Bills for utilities
• Records of office supplies purchases
• Documentation of business-related travel
• Payroll records for employees

Note: Depending on how your LLC is organized and its tax election, you may need different information for your tax return.

Step 2: Find The Right Tax Forms

Once you've gathered all necessary documents, the next step is to select the correct tax forms for your LLC based on its organization:

• Single-Member LLCs: The business’s total income and expenses are reported on a Schedule C form, which is attached to the owner’s personal tax return and due by April 15 or the following business day if it lands on a weekend or holiday.
• Multi-Member LLCs: File an information return using Form 1065. Members must fill out a Schedule K-1 showing their individual earnings or losses by March 15 or the next business day.
• C Corporations: File a corporate tax return using Form 1120 by the April 15 deadline or on the next business day if it's a weekend or holiday.
• S Corporations: Use Form 1120-S for the corporate tax return and distribute Schedule K-1 forms to shareholders for reporting their shares of profits or losses. The deadline for filing taxes using 1120-S is March 15 or the following business day.

Since state and local taxes will have their own individual forms and requirements, we recommend contacting your municipality or hiring an accountant for guidance.

With the appropriate documentation gathered and the correct tax forms for your business entity on hand, you’ll be ready to fill them out and submit them.

Step 3: File Your Taxes

The majority of businesses choose electronic filing for its speed, enhanced security, and reliability compared to paper filing, which can be slower and more prone to errors. Here’s how it works:

• Federal Tax Returns: The IRS provides two electronic services for tax submission: Free File for businesses with an AGI below $72,000 and Free Fillable Forms for those above the threshold.
• State Tax Returns: If your LLC is operating in Kansas, file state tax returns electronically through the Kansas Department of Revenue's online filing system. This platform is designed to offer a secure, accurate, and faster alternative to paper filing. 
• Local Tax Returns: For local taxes that apply to your LLC, such as those specific to cities or counties in Kansas, use the electronic filing services provided by local tax authorities. These services vary based on your LLC’s location, so check with your local tax office for the appropriate e-filing options. 

Note: These electronic filing tools are best suited for those who are already confident in handling their LLC taxes as if filling out a paper form. 

For new business owners, we recommend opting for the expertise of a tax professional in order to ensure both accuracy and compliance in your tax filings. 

Recommended: Schedule a free consultation with 1-800Accountant to stay on top of your taxes. 

Keep Your Kansas LLC Compliant

While LLCs are generally easier to maintain than corporations, there are certain state and local formalities your LLC must satisfy in order to remain compliant. 

Kansas LLC Annual Report

Kansas’ annual report allows LLCs to update their basic business information, including their members’ names and addresses, their principal office address, and their resident agent information. The filiing fee is $53 for online submissions and $55 for paper submissions.

Annual report filing deadlines for Kansas LLCs are based on their tax period. If your LLC follows a calendar year, you can file the report any time between January 1 and April 15. For those operating on a fiscal year, the deadline is the 15th day of the fourth month after the tax period ends. 

While Kansas doesn't provide extensions for these filings, there is a 90-day grace period after the due date to avoid forfeiture risks.

Licensure and Tax Requirements

In Kansas, almost all businesses are required to obtain various licenses and permits at the local, state, and federal levels. Below, we’ve broken down three of the most common types your LLC may need:

• Sales Tax Licenses: If your LLC is involved in selling goods or providing taxable services in Kansas, you are required to obtain a Sales Tax License. This is essential for collecting and remitting sales tax to the state. To acquire this license, you'll need to register with the Kansas Department of Revenue. Once registered, you will receive a sales tax number, allowing you to conduct taxable sales legally within the state.
• Professional Licenses: Certain professions in Kansas require specific licenses to operate legally and vary based on the industry and profession. For example, healthcare providers, attorneys, accountants, and real estate agents must obtain professional licenses from the respective state regulatory boards. Check with the Kansas Department of Commerce or relevant professional licensing boards to understand the specific requirements for your LLC’s field of operation.
• Environmental Permits: If your LLC's operations have potential environmental impacts, such as emissions or waste disposal, you may need to obtain environmental permits. These permits are typically managed by the Kansas Department of Health and Environment. Depending on your LLC’s activities, you might need air, water, or waste permits to comply with state and federal environmental regulations.  

Note: To access a comprehensive overview of all state-required licenses and permits that may apply to your LLC in Kansas, visit the Kansas Business Center website. 

Kansas LLC Taxes FAQs