Business Taxes Payable by Your Kansas LLC
There are a wide variety of business taxes that your Kansas LLC will need to pay. These include tax that’s payable to the Kansas government, like Kansas sales taxes and Kansas state tax. You will also need to pay federal, self-employment and possibly payroll tax to the IRS.
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How Your Kansas LLC Will Be Taxed
The profits of a Kansas LLC are not taxed at the business level, like those of C Corporations. Instead, tax for a Kansas LLC works as follows:
- Kansas LLC owners pay self-employment tax on business profits
- Kansas LLC owners pay KS state tax on any profits, less state allowances or deductions
- All LLC owners pay federal income tax on any profits less federal allowances or deductions
- Some KS LLCs pay Kansas sales tax on products
- Employers pay payroll tax on any salaries they pay to employees
- Employees pay federal, state and payroll tax on their earnings
Items 1, 2 and 3 are taxed as “pass-through” income for any LLC owners, managers or members who receive profits from the business. Any profits are reported on federal and Kansas personal tax returns, and that’s where you will pay those taxes.
Kansas Business Taxes Payable to the KS Government
There are two main types of tax that you will pay to the Kansas Department of Revenue: Kansas state income tax and Kansas state sales tax.
Kansas State Tax on Your LLC Earnings
As a Kansas business owner, you will need to pay KS state tax on any money you pay to yourself. These earnings flow through to your personal tax return, which is where you will pay Kansas income tax. You will be taxed at the standard rates for Kansas state taxes, and you will also get to apply regular allowances and deductions.
Any salaried employees will also need to pay personal Kansas state taxes.
Here are the Kansas state tax rates if you’re filing single:
- 2.7 percent on the first $15,000 of taxable income
- 4.6 percent on taxable income of $15,001 and more
If you’re married filing jointly, double the dollar amounts above.
Get more details on the Kansas state tax on on the KS SOS website.
Your Kansas LLC and KS Sales Taxes
If you sell physical products or certain types of services, you may need to collect sales tax (also known as sales and use tax) and then pay it to the KS Department of Revenue. Kansas sales tax is collected at the point of purchase. Kansas sales tax rates do vary depending on the region, county or city where you are located.
You will typically need to collect Kansas sales tax on:
- Tangible, personal property and goods that you sell like furniture, cars, electronics, appliances, books, raw materials, etc.
- Certain services that your Kansas business might provide
Most states do not levy sales tax on goods that are considered necessities, like food, medications, clothing or gas.
Get more details on sales tax in Kansas from the KS SOS.
Sales Tax Rates for Your Kansas LLC
Sales tax rates do vary between states, counties and cities. Typically, the state will set a base sales tax rate, then specific counties and cities may levy small additional sales tax amounts on top of that. Here are the sales tax rates for the major cities in Kansas:
- Wichita, KS sales tax rate is 7.5 percent
- Overland Park, KS sales tax rate is 9.6 percent
- Kansas City, KS sales tax rate is 9.125 percent
- Olathe, KS sales tax rate is 9.475 percent
Federal Taxes for Your Kansas LLC: Self-Employment and Income Taxes
There are a couple different federal taxes that every LLC will need to pay, including Kansas LLCs. These are self-employment tax and federal income tax, which are taxed as “pass-through” income via your tax return forms.
Kansas LLC Federal Self-Employment Tax
All Kansas LLC business members or managers who take profits out of the LLC will need to pay self-employment tax. This tax is also known as FICA, Social Security or Medicare tax. It applies to all the earnings you withdraw from your Kansas business. The current self-employment tax rate is 15.3 percent.
You will be able to deduct your business expenses from your income when working out how much self-employment tax you owe. Here are some examples of how much self-employment tax you may need to pay, depending on your earnings:
- On profits of $20,000, you would pay self-employment tax of $3,060
- On profits of $50,000, you would pay self-employment tax of $7,650
- On profits of $80,000, you would pay self-employment tax of $12,240
- On profits of $120,000, you would pay self-employment tax of $18,360
Pay Less Self-Employment Tax by Treating Your Kansas LLC as an S Corporation
The Internal Revenue Service allows LLCs to ask to be treated as an S Corporation for tax purposes. This can help you reduce the amount of self-employment tax that you pay by declaring some of your income as salary and other income as distributions or withdrawals.
You can do this by making an “S Corporation Tax Election” with the IRS using a form known as Form 2553. We can file your Form 2553 with the IRS on your behalf.
Speak to your accountant for more information on reducing your Kansas LLC self-employment tax through an S Corporation tax election.
Kansas LLC Federal Income Tax
You must also pay regular federal income tax on any earnings you take out of your Kansas LLC. The amount of income tax you pay depends on your earnings, current income tax brackets, deductions and how you file.
You only pay federal income tax on your Kansas LLC profits that you take out of the business, less certain deductions and allowances. This includes your tax-free amount, plus LLC business expenses and other deductions for areas such as healthcare and some retirement plans. Speak to your accountant for more information.
Employee and Employer Taxes for Your Kansas LLC
If you pay employees, there are some slightly different tax implications. Speak to your accountant to get clear guidance for your own unique situation.
Employer Payroll Tax Withholding for Your Kansas LLC
All employers must collect and withhold payroll tax from their employees when they receive their salaries. You would normally withhold 7.65 percent of the taxable salary that you pay to your employees.
Kansas LLC Federal and State Tax Withholding
You may also choose to withhold federal and Kansas state income tax on the wages you pay to employees. Speak to your accountant for more information.
Employees May Need to File Tax Returns
Regardless of whether you withhold federal and Kansas state income tax, your employees may need to file their own tax returns.
Kansas LLC Employee Insurance and Other Requirements
You may also need to pay insurance for any employees, like employee compensation insurance or unemployment tax. There will also be other requirements you have for employees.
Get more requirements from the Kansas Department of Labor website.
Other Taxes and Duties for Your Kansas LLC
Depending on the industry you are in, your Kansas LLC may be liable for certain other taxes and duties. For example, if you sell gasoline you may need to pay a tax on any fuel you sell. Likewise, if you import or export goods you may need to pay certain duties. Speak to your accountant about any other taxes you may need to withhold or pay.
Estimated Taxes for Your Kansas LLC
Most Kansas LLCs will need to pay estimated taxes throughout the year, depending on the amount of income and profit you expect to make. The most common types of estimated tax are:
- Federal income tax
- Federal self-employment tax
- Kansas state tax
Most Kansas LLCs will pay estimated taxes four times a year. Speak to your accountant for more information.
FAQs on Kansas LLC Business Taxes
Does Kansas Have Sales Tax?
Yes. Kansas does have a sales tax, which may vary among cities and counties. You can find more information above.
Does Kansas Have a State Tax?
Yes. Kansas does have a general state income tax. You can find more information above.
What Is the Sales Tax Rate in Kansas?
We have listed common sales tax rates in Kansas cities above.
Do I Need to Pay Estimated Taxes?
Yes. In most cases you must pay estimated taxes on your Kansas tax, federal income tax and self-employment tax. Speak to your accountant for more information.