Many self-employed Kansas residents are eager to start their businesses. The simplest and most rational solution to this issue is to join the ranks of sole proprietors.
Organizing and managing a business in this format is the least difficult in America and has no service pitfalls. Although, future business owners will have to adhere to certain norms. Also, be prepared that you will have to face some restrictions regarding the functions of your sole proprietorship.
So, the main task of this manual is to help you answer the essential question – is the business format of an individual enterprise right for you? And, of course, we will tell you which aspects to pay attention to while opening a sole proprietorship and how to set up a business structure in this vein properly.
It is vital: business owners should be aware that a sole proprietorship is not a guarantor of the safety of personal assets. But with LLC, on the contrary – the assets will be safe. LLC is easy to organize by doing forming it yourself or hiring a cheap LLC service.
The Proper Way To Start Business As The Kansas Sole Proprietor
There is no algorithm for organizing the business work of an individual entrepreneur in Kansas as for LLC. In addition, the state does not charge additional service fees for the formation or management of this type of business or company. Are you looking to become an individual business owner and start a sole proprietorship in Kansas? – Just start working!
Though, you still have to go through several additional legal formalities. These service stages are optional. Although many sole proprietors prefer not to neglect them, compliance with these formalities guarantees the legal protection of their interests.
Applying For DBAs
Almost every company and business owner prefers doing business as a DBA. There are many benefits to running a business under an assumed name compared with an entity or LLC. We are talking primarily about creating the business image of your company. Potential clients and consumers will find this approach more professional and give you more confidence. It turns out that a company that uses the real name of its owner is often not competitive.
Let’s clarify that a company owned by sole proprietors can use the DBA to open and manage a business bank account. Customers will appreciate it as one more advantage in favor of the business owner, so they feel more comfortable.
The State of Kansas, unlike many other counties, has no statutes that require DBA licenses and clearances or other similar fictitious designations. Individuals doing business within the county are required to apply the full of the company name for personal official and including banking needs. Otherwise, you may apply unregistered names without formalizing them.
Clarification & Compliance with Tax Requirements
You can run your business in this format and not hire third-party employees. In this case, you do not need to obtain an EIN (Federal Tax Identification Number) because your Social Security number will replace it. Of course, it would be correct to take care of your confidentiality and still use the EIN and not the SSN.
The nature and the structure of the business activity of individual entrepreneurship determine the list of tax requirements that the state will put forward (as with LLC).
Although a sole proprietor’s earnings must ultimately be taxed through the owner’s income tax, the company may also be required to pay the approved types of other taxes related to the operation of the business. These include sales tax, self-employment tax, and use tax.
To get more info about the tax requirements for your sole proprietorship, visit the Business Taxation Page of the official Kansas Department of Revenue website. Use the Kansas Business Center system to register for business taxes online.
Business Licenses & Permits
There is no obligation for a sole proprietor to obtain a generally accepted business license in the State of Kansas, but based on the type of business your business is in, you may is needed other firmans and/or permits to operate under all the terms of state law.
Most of the Kansas County licenses and permits, that can take concerning your business are in a particular industry. What types of these licenses and approvals may be a required component for your business, in most cases, established based on the type of activity in which your sole proprietorship operates.
Fortunately for many, the state of Kansas has a comprehensive list of common business licenses, which will assist many business owners in determining their tax liability. Most of the firmans that are required to run a business can be submitted online through the Kansas Business Center system.
In addition, you need to verify that your business has certain types of local approvals and licenses.
In addition to complying with specific statewide licensing requirements and conditions, you will also need to check the standards of your county municipality for the license and permit in which your entire organization operates. Major cities such as Kansas City and Overland Park use their firmans at the local level to conduct business in the state.
Kansas Sole Proprietor: The Notion & Essence
A sole proprietor is not a legal entity! But any corporation and limited liability company (LLC) has this status. As a sole proprietor, you run the business alone (register and manage it on your behalf). It is worth noting that this gives the business owner advantages, though, imposes additional obligations and responsibilities on him.
Make Sure to Pay Attention to the Following Three Aspects
There are obligations to pay taxes to the state
A business owner and an individual entrepreneur are the same people. It means that filing tax returns is not a requirement, as with an entity or LLC. You need to declare your income and expenses and fill out the declaration of an individual;
Business owners who are registered as sole proprietors have the right to enter into contracts on their behalf, unlike an entity. Also, receiving profit from clients, in checks they can indicate their name in the recipient column;
Flexible terms of business management
The advantage difference between individual entrepreneurship and any entity is the ability to combine work and personal assets. Whereas corporations and LLCs must separate personal assets from company assets. It has several positive and negative aspects. For example, if you have financial difficulties, creditors can seize or confiscate your personal property (house, car, etc.). In the case of corporations and LLCs (or any entity), creditors do not have this freedom, as their powers only apply to business assets.
Of course, the structure of doing legal business as a sole proprietor is greatly simplified while in Kansas. You don’t even have to pay any commission fees provided for the entity or LLC. At the same time, based on the nature and structure of the business activity that you conduct, you will all have to go through a series of entity stages.
The issues of taxation, obtaining licenses, and permits require more detailed consideration. Also, pay attention to the possibility of obtaining and using DBA. These aspects are vital, as their omission can result in unnecessary legal penalties for you.
We have prepared this manual so that you can think over the structure of your business to the smallest detail. Manage it correctly and get more legal profit!