LLC vs S-Corp in Kansas


Steve Bennett
Steve Bennett
Business Formation Expert
Steve runs LLCBuddy, helping entrepreneurs set up their LLCs easily. He offers clear guides, articles, and FAQs to simplify the process. His team keeps everything accurate and current, focusing on state rules, registered agents, and compliance. Steve’s passion for helping businesses grow makes LLCBuddy a go-to resource for starting and managing an LLC.

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LLC vs. S Corp in Kansas

Making choices as an entrepreneur is a big challenge, especially when choosing what business structure to form in Kansas. When it comes to a business structure, you can choose whether to have a C-corporation, S-corporation, Sole Proprietorship or an LLC in Kansas. Before you start Kansas LLC filing, you must compare which structure suits you. You might be considering two popular options: a Limited Liability Company (LLC) or an S Corporation (S-Corp). Both of these structures offer distinct advantages and protections, but selecting the right one depends on various factors, including your business goals, tax preferences, and management style.

If you are confused with Kansas LLC vs. S-Corporation, and thinking which one is better and more suitable for the business that you will form, there are a few things that you should consider. Before we get through this article, you should understand what an LLC and S-Corporation mean in Kansas.

LLC vs. S-Corp: Definition

While forming an LLC, you must follow some major steps. It is a business structure that protects your personal assets from getting affected by business liabilities. On the other hand, the S Corp is not a conventional business structure, but it is tax status that your can file with the IRS. S Corp does not provide personal asset protection like an LLC. Here are the detailed definitions of the two-

What is an LLC in Kansas?

A limited liability company (LLC) is a formal business structure that provides personal asset protection. Under this structure, the LLC owner/member can save his/her personal assets in case the business is in debt or is being targeted with a lawsuit. In some special cases, if your company is legally sued, the other party can go after your personal assets. This is called piercing the corporate veil, where you become personally liable for the company’s debt.

Forming an LLC in Kansas gives you a pass-through tax benefit where you don’t have to pay an income tax based on your business revenue; instead, the income tax will be calculated based on your personal income.

What is an S-Corp in Kansas?

An S-Corporation (S-corp) is not a type of corporate entity, unlike a limited liability company (LLC) or other business structures. It’s a tax classification that might result in significant financial savings for corporations and LLCs but in different ways. S-Corporation is similar to LLC, except that the IRS treats it as a corporation for tax purposes.

S-corp is a prominent alternative to the LLC. Unlike a conventional C-corp, S-corp is more suitable for small and medium businesses, such as businesses with 100 shareholders.

LLC Vs. S-Corporation: Which is More Preferable in Kansas?

In Kansas, forming a business is crucial since you need to be adequate in your decision, especially when you think if Kansas LLC or an S-Corporation in Kansas is preferable. An S-Corporation is a tax classification that some small businesses are qualified for, whereas an LLC is a legitimate company form. By submitting a document to the Internal Revenue Sector (IRS), corporations and LLCs can choose S-Corporation taxation. An S-Corporation can be less formal than forming an LLC and doesn’t normally provide the same protection. Also, unlike LLC, S-Corporation in Kansas doesn’t provide the same protections entrepreneurs seek from an LLC. It’s important to consider your options when launching a business from a legal and tax point of view.

It is better to consult a legal professional before you set up an LLC or S-corp. We shared basic differences and how you can form an LLC and S-corp. But it is always recommended to consult a professional before making any decision.

LLCBuddy Editorial Team

Tax Difference Between Kansas LLC and S-Corp in Kansas

There is a difference between LLC and S-Corporation when it comes to paying taxes. Based on Federal and State Tax differences between the two, you can determine if S-Corporation or LLC in Kansas is suitable for your business.

Federal Taxes: There are a few federal tax factors to consider when selecting whether to operate an LLC or S-Corporation in Kansas. Tax differs in terms of Pass-Through Taxes and Self-Employment Taxes.

Pass-Through Taxes: LLC and S-Corporation in Kansas are the same in terms of pass-through taxation at the federal level. LLCs and S-Corporations do not pay federal income taxes as separate legal entities because of pass-through taxation. Only their owners are required to pay federal income taxes on their portions of the business income. The company does not pay twice the tax in this kind of taxation. Unlike LLCs and S-Corporations, C-Corporations in Kansas are mandated to have double taxation. It means that they must pay federal taxes at the entity level.

Self-Employment Taxes: Most LLC owners choose S-corporation taxation in Kansas to reduce their self-employment taxes. This is because if you own an S-corporation, you are not required to be self-employed. Instead, you can join the company as an employee and receive regular salary benefits. On the other hand, an LLC member must include their guaranteed payments and a portion of the LLC’s earnings in calculating their self-employment tax. Distribution of shares defines S-Corporation shareholders in terms of their corporate incomes.

Consider the scenario where you are the only owner of an LLC in Kansas with a $150,000 annual profit. And let’s say that $100,000 is a fair wage in your location for someone doing the same job as you. Under the default LLC taxation, you must pay self-employment taxes on the entire $150,000 profit. But, if your company is taxed as a Kansas S-Corp, you will only be responsible for paying payroll taxes on the standard wage of $100,000. Income tax will still apply to the remaining $50,000.

Kansas State Taxes: At the state level, there aren’t any significant tax differences between regular LLCs and S Corporation LLCs. In terms of the annual LLC fee in Kansas, it costs $25 online and $27.5 by mail that can be paid to the KY Secretary of State. Of course, before forming the whole LLC, you must pay the initial fee of $165 (by mail and $160 online) .

On the other hand, you also need to pay taxes if you form an S-Corporation in Kansas; besides, you must pay the S-Corp filing fee and an annual report fee after a year of establishing your S-Corp. You must also go to the KY Secretary of State to pay this.

How do Kansas LLCs and S-Corporations Handle Liability Protection?

In Kansas, you have no personal responsibility for the financial and legal liabilities of an LLC you will form. An S-Corporation does not provide liability protection because it is a tax designation rather than a distinct business entity. Whatever liability defense an S-Corporation provides is provided by the underlying business entity that chose the tax status. You will have the liability protection the LLC offers if it chooses S-Corporation status for tax purposes.

LLC Vs. S Corporation Ownership Requirements Comparison

Strict ownership requirements exist for LLCs and S-Corporations in Kansas. LLC ownership regulations are strict because a new member can only be accepted with the approval of all existing members. On the other hand, S-Corporation ownership regulations are also strict because only specific people are permitted to become shareholders. Also, an S-Corporation can’t have more than 100 shareholders and needs one class of stock.

The following are the reasons why some cannot be shareholders in the S-Corporation in Kansas.

  • Insurance business
  • Domestic and International sales corporations
  • Partnerships
  • Corporations
  • Unauthorized Immigrants
  • Certain financial institutions

Although you know most of the reasons regarding the ownership requirements of both LLC and S-Corporation, you should still seek legal advice in preparation for your business and it is best to visit LLCBuddy for your Kansas LLC or Kansas S-Corp.

Which is Easier to File in Kansas: LLCs or S-Corporations?

Filing an LLC or S-Corporation in Kansas takes time and preparation. Even though it is not as easy as it seems, something manageable still makes it not difficult. LLC and S-Corporation can be filed by Kansas Registered Agent. However, in order to establish an LLC in Kansas, you must submit a Articles of Organization to the Kansas Secretary of State. Your Articles of Organization must contain information for your LLC, along with payment of the associated filing fee.

In addition, you need to submit more papers to make the Kansas S-Corporation election. File a Form 8832 to inform the Internal Revenue Sector (IRS) that you prefer to tax your LLC as a corporation rather than a partnership. Then you will then submit Form 2553 to choose S-Corporation status.

Do not forget that you must submit annual tax returns and reports after creating your LLC in order to maintain legal compliance.

Important Information

Who Pays More Taxes, an LLC or S-Corporation?

Taxes differ for LLC and S-Corporation in Kansas because it depends on the tax purposes and how much profit will be generated. Usually, LLCs are frequently taxed at personal rates and LLC owners can elect to be treated as a separate company with its own federal tax identification number.

On the other hand, owners of S-Corporations must receive a salary that includes Social Security and Medicare taxes. The owner, however, can get dividend income or some of the leftover profits, but not as an employee; thus, they won’t be subject to Social Security and Medicare taxes on that money.

Should I Convert an LLC to S-Corporation?

Since your business assets are separated from your personal assets if you’re a sole proprietor, it may be advisable to form an LLC. You are not restricted to modifying the structure of your LLC to an S-Corporation. Although an S-corporation must have a board of directors, a maximum of 100 shareholders, and adhere to more regulations, it would be ideal for more companies with more shareholders.

How to Structure an LLC to S-Corporation?

To structure an LLC to S-Corporation in Kansas, you must submit Form 2553, Election by a Small Business Corporation, to the IRS in order to choose S-corp taxation. Filing a form 2553 should be done 75 days after the formation of your S-Corp, or not more than 75 days after the beginning of the tax year in which the election is to take effect.

If your LLS-Corp has passed the deadline of 75 days, you must also file Form 8832, Entity Classification Election, in order to opt to be taxed as a corporation. Then you would send Form 2553 and Form 8832 jointly by certified mail from the USPS. In Kansas, you can file your form 2553 in the Department of the Treasury Internal Revenue Service Center – Ogden, UT 84201 Fax: 855-214-7520 .

FAQs

What are the benefits of forming an LLC in Kansas?
The main benefits of forming an LLC in Kansas include limited personal liability for owners, flexibility in management and taxation, and simplicity in formation and administration.
Are there any tax benefits to forming an LLC in Kansas?
Yes, forming an LLC in Kansas may provide certain tax benefits. LLCs are generally pass-through entities, meaning that any profits the business earns flow directly through to the owners and are taxed on the individual’s personal tax returns. This is called “pass-through taxation.”
What is the process for forming an LLC in Kansas?
The process for forming an LLC in Kansas involves filing appropriate paperwork with the Kansas Secretary of State’s office. This includes filing Articles of Organization and paying the required filing fee. There may also be other additional requirements, such as obtaining a business license or registering with the Kansas Department of Revenue.
Is an LLC a separate legal entity in Kansas?
Yes, an LLC is a separate legal entity in Kansas. This means that the LLC is treated as its own legal entity, separate from its owners. This provides liability protection for the owners, as their personal assets are not at risk for any liabilities incurred by the LLC.
What is the difference between an LLC and an S-Corp in Kansas?
The main difference between an LLC and an S-Corp in Kansas is the taxation structure. An LLC is a pass-through entity, meaning that profits are passed directly through to the owners and taxed on their personal tax returns. An S-Corp is a separate legal entity, and profits are taxed at the corporate level and then distributed to shareholders.
What are the requirements to form an S-Corp in Kansas?
To form an S-Corp in Kansas, you must file Articles of Incorporation with the Kansas Secretary of State, obtain a federal employer identification number (EIN), and obtain a business license or register with the Kansas Department of Revenue. Additionally, you must file an S-Corp election with the IRS.
Are there any advantages to forming an S-Corp in Kansas?
Yes, there are several advantages to forming an S-Corp in Kansas. These include limited personal liability for owners, potential tax benefits, and the ability to sell shares of the company.
What is the cost to form an LLC or S-Corp in Kansas?
The cost to form an LLC or S-Corp in Kansas varies depending on the type of entity being formed and the filing fees associated with it. Generally, the cost to form an LLC in Kansas is between $50 and $200. The cost to form an S-Corp in Kansas is usually between $100 and $500.
What happens if I don’t file the required paperwork to form an LLC or S-Corp in Kansas?
If you fail to file the required paperwork to form an LLC or S-Corp in Kansas, your business could be subject to penalties and fines. Additionally, your business could be at risk of being dissolved by the state.
Do I need to obtain a business license to form an LLC or S-Corp in Kansas?
Yes, you must typically obtain a business license or register with the Kansas Department of Revenue in order to form an LLC or S-Corp in Kansas.
Do I need to obtain a federal employer identification number (EIN) to form an LLC or S-Corp in Kansas?
Yes, you must obtain a federal employer identification number (EIN) in order to form an LLC or S-Corp in Kansas. This number is used to identify your business for tax and other legal purposes.
What are the tax filing requirements for an LLC or S-Corp in Kansas?
LLCs and S-Corps in Kansas must file annual income tax returns with the Kansas Department of Revenue. Additionally, LLCs must also file an annual report with the Kansas Secretary of State.
Are there any other filing requirements for an LLC or S-Corp in Kansas?
Yes, there may be other filing requirements for an LLC or S-Corp in Kansas, depending on the type of business and the activities it is engaged in. For example, businesses may need to file for a sales tax permit or other licenses.
What are the fees associated with filing taxes for an LLC or S-Corp in Kansas?
The fees associated with filing taxes for an LLC or S-Corp in Kansas vary depending on the type of entity and the amount of income being reported. Generally, businesses are charged a flat fee for filing taxes.
What are the requirements for maintaining an LLC or S-Corp in Kansas?
The requirements for maintaining an LLC or S-Corp in Kansas include filing annual reports and tax returns, maintaining proper documentation and records, and keeping the business in compliance with applicable laws and regulations.
Are there any other costs associated with maintaining an LLC or S-Corp in Kansas?
Yes, there may be other costs associated with maintaining an LLC or S-Corp in Kansas, such as business licensing fees and professional services fees.
Can I form an LLC or S-Corp in Kansas online?
Yes, you can form an LLC or S-Corp in Kansas online through the Kansas Secretary of State’s website.
What is the difference between a limited liability company (LLC) and a corporation (S-Corp) in Kansas?
The main difference between a limited liability company (LLC) and a corporation (S-Corp) in Kansas is the taxation structure. An LLC is a pass-through entity and profits are passed directly through to the owners and taxed on their personal tax returns. An S-Corp is a separate legal entity and profits are taxed at the corporate level and then distributed to shareholders.
How long does it take to form an LLC or S-Corp in Kansas?
The time it takes to form an LLC or S-Corp in Kansas depends on the type of entity being formed and the paperwork involved. Generally, it takes 4-6 weeks to form an LLC or S-Corp in Kansas.
Are there any special requirements for forming an LLC or S-Corp in Kansas?
Yes, there may be additional requirements to form an LLC or S-Corp in Kansas, such as obtaining a business license or registering with the Kansas Department of Revenue.
What is the difference between a single-member LLC and a multi-member LLC in Kansas?
The main difference between a single-member LLC and a multi-member LLC in Kansas is the taxation structure. A single-member LLC is treated as a disregarded entity for tax purposes and the profits are passed through to the owner and taxed on their personal tax return. A multi-member LLC is treated as a partnership and the profits are passed through to the owners and taxed on their personal tax returns.
What are the reporting requirements for an LLC or S-Corp in Kansas?
The reporting requirements for an LLC or S-Corp in Kansas vary depending on the type of entity. Generally, LLCs must file an annual report with the Kansas Secretary of State and an income tax return with the Kansas Department of Revenue. S-Corps must file an income tax return with the Kansas Department of Revenue.
Do I need to obtain a Kansas business license to form an LLC or S-Corp in Kansas?
Yes, you must typically obtain a business license or register with the Kansas Department of Revenue in order to form an LLC or S-Corp in Kansas.
Is there a requirement for an LLC or S-Corp to file an annual report in Kansas?
Yes, LLCs must file an annual report with the Kansas Secretary of State. S-Corps do not need to file an annual report in Kansas.
What is the process for dissolving an LLC or S-Corp in Kansas?
To dissolve an LLC or S-Corp in Kansas, you must file appropriate paperwork with the Kansas Secretary of State’s office. This includes filing Articles of Dissolution and paying the required filing fee. Additionally, you must complete any other applicable state or federal requirements.
What are the advantages of forming an LLC in Kansas?
An LLC in Kansas offers protection from personal liability, a flexible management structure, and pass-through taxation. It also offers a simpler setup process than other business entities.
What are the advantages of forming an S-Corp in Kansas?
An S-Corp in Kansas offers protection from personal liability, more flexibility in structuring ownership, and potential tax savings. It also has more formal setup requirements than an LLC.
Is there a difference between LLCs and S-Corps in Kansas in terms of taxation?
Yes, LLCs in Kansas are subject to pass-through taxation, while S-Corps are subject to double taxation.
Is there a difference between LLCs and S-Corps in Kansas in terms of ownership?
Yes, LLCs in Kansas can have any number of owners, while S-Corps are limited to 100 shareholders.
What are the filing requirements for LLCs and S-Corps in Kansas?
LLCs in Kansas must file Articles of Organization with the Secretary of State, while S-Corps must file Articles of Incorporation. Additionally, LLCs must file an annual report and S-Corps must file a biennial report.
Do LLCs and S-Corps in Kansas have to pay annual fees?
Yes, both LLCs and S-Corps in Kansas are required to pay an annual filing fee.
Are LLCs and S-Corps in Kansas subject to taxation by the state?
Yes, both LLCs and S-Corps in Kansas are subject to taxation by the state.
Are LLCs and S-Corps in Kansas required to have directors and officers?
Yes, both LLCs and S-Corps in Kansas are required to have directors and officers.
Do LLCs and S-Corps in Kansas need to keep records?
Yes, both LLCs and S-Corps in Kansas are required to keep records of their activities.

Also Read

Why Kansas LLC Vs S Corp is So Important

The primary reason why the decision between a Kansas LLC and an S Corp is so important lies in the differences between the two structures. When forming an LLC, business owners benefit from limited liability protection, allowing them to shield their personal assets from business debts and liabilities. An LLC also offers flexibility in how the business is managed and taxed, making it a popular choice for many small businesses. On the other hand, an S Corp has advantages in terms of tax benefits and potential savings, as well as the opportunity for business owners to pay themselves a salary and dividends.

Another crucial consideration is how each structure is taxed. An LLC is a pass-through entity, meaning that profits and losses are passed through to the owners’ personal tax returns, avoiding double taxation. However, an S Corp provides an opportunity for owners to save on self-employment taxes by paying themselves a reasonable salary and then distributing profits as dividends. Understanding the tax implications of each structure is essential for making an informed decision that aligns with the financial goals of the business.

Additionally, the ability to attract potential investors and secure funding can vary depending on the business structure chosen. While an S Corp may be more appealing to investors due to the opportunity for stock ownership and potential growth, an LLC offers simplicity in ownership and management structures, making it easier to operate with fewer formalities and requirements.

Furthermore, the legal responsibilities and ongoing compliance requirements associated with each structure should not be overlooked. Business owners must consider the level of administrative burden, reporting requirements, and ongoing maintenance costs when choosing between a Kansas LLC and an S Corp. Ensuring that the chosen structure aligns with the long-term goals and growth plans of the business is essential for setting the right foundation for success.

In conclusion, the decision between a Kansas LLC and an S Corp is a critical choice that can have far-reaching implications on how a business operates, grows, and deals with legal and financial matters. Understanding the advantages and disadvantages of each structure, as well as considering factors such as tax implications, investor appeal, and ongoing compliance requirements, is essential for making the right decision that aligns with the vision and goals of the business. It is crucial for entrepreneurs in Kansas to carefully weigh their options and consult with legal and financial professionals to ensure that they select the best structure for their business needs.

Conclusion

Even though you can choose a different corporate structure, consider whether it will primarily assist your organization. Striking the perfect balance between corporate benefits and legal protection that suits your particular needs is important. In forming an LLC or S-Corp in Kansas, you must be aware that every detail is well-formed so that starting your business will be successful. And, if you would like us to help you form a Kansas LLC and S-Corp in Kansas, read our other business guides.

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