Starting a Business in Kansas
In recent years, the state of Kansas has experienced growth in many ways. Kansas has a robust economic environment and a diverse industries list that includes aircraft systems, agricultural companies, gas and oil companies and manufacturing businesses. Large tax cuts put in place years ago have set the stage for workforce expansion and a low unemployment rate. After starting a business in Kansas some other tasks must be attended to such as trying to pay Kansas sales tax or looking up a Kansas sales tax rate, posting your business license in a conspicuous place, and checking on form CR-16. Kansas companies can take advantage of many available opportunities. The most common are incentives that are given through tax credits, exemptions, grant programs, and benefits to companies who reside inside a Kansas Opportunity Zone.
STEPS TO STARTING A BUSINESS IN KANSASThe Kansas Department of Revenue oversees tax collection and all of its associated procedures while the Kansas Secretary of State administers entity formations. Once you have selected a business name and setup a company, you can register online for a Kansas Sales Tax Permit. You will want to apply this way as the paper form is quite cumbersome. You must also look into finding the appropriate Business Licenses needed to remain compliant. A lot of Kansas businesses have become tech savvy and expanded their operations to the digital world. While this has given them the opportunity to reach customers far beyond their local area, it has also added the liability of multi-state sales tax collection. If this situation applies to you and you have made sales into other states, this may deem you a remote seller. In this case you may be responsible for sales tax obligations. If you meet certain requirements, you can apply for an SST streamlined sales tax certificate for Kansas. Once you have complied with all other administrative obligations, you can look at the following valuable incentive programs that businesses can benefit from in Kansas. Here are some of the incentive programs provided:
- In an effort to facilitate research and development, a tax credit is offered to a business for R & D investments that it expends. Credits are taken as a percentage (6.5%) above the average R & D expenses that the company incurs in the current tax year as well as the two previous tax years. This credit is only applicable to C corporations taken against their corporate income tax and is not available to any pass through entities such as an LLC.
- Kansas has two workforce development programs used to help a company with its employee training expenses. These are known as the Kansas Industrial Training and the Kansas Industrial Retraining Programs. As the names imply, the first is used towards new employee training expenses and the second is used towards current employee expenses. Funds can be used towards such things as training supplies, materials and equipment and the salaries that are paid to teachers and instructors.
- The Kansas Rural Opportunity Zone Program was created to help promote economic expansion into economically vulnerable areas. The objective is to cultivate human capital in these underdeveloped areas. With this specific program, compensation is offered directly to workers in two ways. For those individuals relocating to Kansas from out of State, an income tax exemption is offered for up to five years. The second compensation incentive is in the form of student loan forgiveness. A person can take up to $3000 off their loans with a maximum benefit of $15,000 off total loans. Even though this program benefits individuals directly, a business can benefit indirectly from the saved marketing and human resource expenses spent for finding new employees.
- Kansas offers various tax incentives and Sales Tax Exemptions to a business engaged in certain functions. These include a Kansas Sales Tax Exemption on utilities such as natural gas, water, and electrical power of consumed tangible personal property. A Sales Tax Exemption can be taken against tangible personal property that is a component of a final product. Another Sales Tax Exemption is available on new equipment used in the manufacturing and distribution process. For all the sales tax exemptions, a seller’s permit would be required. A property tax exemption is offered on qualified equipment and machinery used in a new facility or in the expansion of an existing one. Additionally, a one-time expense deduction can be taken for the equipment and machinery in the year that it is placed into service.