Shifting the focus to the tax issues, it is essential that an owner of an LLC in Kansas knows how to cover these complexities and issues in a viable manner.
Knowing the obligations of both local and federal taxes allows the owner to stay within legal boundaries while also reducing tax burdens.
In this article, we will discuss the process of IRS tax return filing for Kansas LLC, focusing on classifying the taxes, reporting the taxes, deadlines, and other relevant details.
Understanding Kansas LLC Taxation
From the federal side, there is no taxation imposed at the entity level on LLCs in Kansas. This means that the IRS taxes LLCs depending on how they are structured and what tax elections they make.
Single-Member Llc (Sole Proprietorship)
For single-member LLCs, the IRS assumes that they are treated as separate entities automatically, which means the business does not receive its federal tax ID.
All income, expenses, and tax credits of the business flow through the owner’s tax return. The individual is required to declare all income and costs from the business including self-employment income tax, along with expenses as included in Schedule C (Form 1040).
Moreover, the owner also pays self-employment tax for the net earnings which includes payment to Social Security and Medicare. This tax is also reported using Schedule SE (Self-Employment Tax).
Multi-Member LLC (Partnership)
Just like that, a Multi-member LLC also has a classification and partnership is its default classification for tax purposes. While classification as a partnership is automatic, more IRS documentation is required.
It must also file a Form 1065 (U.S. Return of Partnership Income) with the IRS. Each partner gets a Schedule K-1, which indicates income, deductions, and credits from the partnership.
The schedule is pivotal for the partners to report their share of profits (or indicate losses) during individual tax filings.
LLC Electing Corporate Taxation
But, in some cases, an LLC chooses to be taxed as either a C-Corporation or S-Corporation by filing an election form.
- C-Corporation: Form 8832, Entity Classification Election
- S-Corporation: Form 2553, Election by a Small Business Corporation.
An LLC categorized as a C-Corporation must/file Form 1120 (U.S. Corporation Income Tax Return). This type of company must also pay corporate income taxes.
The S-Corporation LLC, on the other hand, files Form 1120S (U.S. Income Tax Return for an S-Corporation), and there is no need for the corporation to be taxed at the corporate rate. Now, the profits and losses can be divided equally among shareholders.
Federal Tax Filing Requirements for Kansas LLCs
Kansas LLCs, just like all the other states, have a filing criterion for taxes which revolves much around the classification system:
- Single-Member LLC: Attach Form 1040 with a Schedule C detailing income and expenses.
- Multi-Member LLC: A Form 1065 must be filed along with issuing a Schedule K-1 for every member.
- C-Corporation LLC: similar to other states, must file Form 1120 and also deal with corporate taxes.
- S-Corporation LLC: Complete Form 1120S and assign Schedule K-1 to shareholders.
Kansas State Tax Filing Requirements
Kansas LLCs have the following tax obligations to observe:
Individual Income Tax
In the case of an LLC taxed as a sole proprietorship or a partnership, the members shall report their portion of the profit on the Kansas Individual Income Tax Return Form K-40.
Corporate Income Tax
An LLC that opts for corporate taxation will need to file the Kansas Corporate Income Tax Return Form K-120 and remit payment for state corporate income taxes.
Sales and Use Tax
Any LLC conducting business by selling taxable products or services in the state of Kansas is required to apply for a sales tax permit. The LLC will also need to collect sales tax from the customers and periodically file sales tax returns with the Kansas Department of Revenue.
Withholding Tax
An LLC that has employees is required to collect state income tax from employee earnings and send it to the Kansas Department of Revenue along with a Kansas withholding tax form.
Important Tax Forms for Kansas LLC Owners
Being mindful of the following forms is important for having a hassle-free filing experience:
- Form 1040 – Individual Income Tax Return
- Schedule C – Profit or Loss from Business (for single-member LLCs)
- Form 1065 – Partnership Return (for multi-member LLCs)
- Schedule K-1 – Partner’s Share of Income, Deductions, Credits
- Form 1120/1120S – Corporate Tax Returns (if elected)
- Form K-40 – Kansas Individual Income Tax Return
- Form K-120 – Kansas Corporate Income Tax Return
- Sales Tax Return – If collecting sales tax
- Withholding Tax Forms – For LLCs with employees
Filing Deadlines and Compliance
It is important to stick to deadlines for filing to avoid penalties:
Federal Tax Deadlines
- Return of Individual Income Tax (Form 1040). This form is due by the 15th of April.
- Partnership Return, Form 1065 is due on the 15th of March.
- Returns on Corporation Tax (Form 1120/1120S).
- C-Corporation: Due April 15
- S-Corporation: Due March 15
Kansas State Tax Deadlines
- Form (K-40) for Individuals must be done by the 15th of April.
- Form K-120 for Corporate tax is also due on the 15th of April.
Penalties for Late Filing
Not being on time with filing, or paying taxes will incur penalties and interest, unless you plan on going over budget.
- Late filing penalty: 5% of the unpaid tax per month, up to 25%.
- Late payment penalty: 1% per month on the unpaid tax.
- Failure to file sales tax returns: Additional fines and possible license revocation.
Common Tax Deductions for Kansas LLCs
These Kansas LLCs may claim multiple deductions to decrease their taxable income:
Business Expenses: Rent, utility bills, office supplies, and advertising.
Employee Salaries and Benefits: Salary, medical insurance, and retirement plans.
Vehicle Expenses: Mileage or actual costs of the use of the business vehicle.
Depreciation: Deduction concerning business equipment and assets’ value overload.
Home Office Deduction: For LLCs based at home.
Legal and Professional Fees: Paid to accountants, attorneys, and other consultants/contractors.
Steps to File Your Kansas LLC Tax Return
Identify Your LLC’s Tax Classification: Find out if your LLC is taxed as a sole proprietor, partnership, or corporation.
Gather Financial Records: Prepare the income reports, expense reports, and tax-related paperwork.
Complete Federal Tax Form: Enter the tax forms pertinent to the IRS that cater to your LLC kind.
Kansas State Tax Returns: State tax papers corresponding to Kansas ought to be filed with the Department of Revenue.
Settle Taxes Due: Federal and state tax obligations must be met within deadlines to evade penalties.
How EasyFiling Can Help Owners of LLCs in Kansas
For owners of LLCs in Kansas, EasyFiling takes the hassle out of tax compliance. Here is how we assist:
- LLC Formation and Compliance: We focus on the formation of LLCs as well as compliance at the state level on an ongoing basis.
- Bookkeeping and Accounting: We have a team of certified bookkeepers who will ensure your books and records are accurate and current.
- Tax Preparation and Filing Assistance: We assist in the preparation and filing of both federal and state taxes. With our assistance, your LLC will never miss a deadline.
- Registered Agent Services: We serve as your registered agent and receive various important legal and tax documents for your LLC.
- Expert Guidance and Support: Our seasoned team provides the necessary guidance and assistance to resolve tax strategies and compliance concerns.
With EasyFiling watching over your LLC’s taxes and compliance requirements, you have more time to grow your business. Contact us today and get started!
Frequently Asked Questions (FAQs)
Am I required to submit a different state tax return for a Kansas LLC?
Yes, you must do so when an LLC is taxed as a sole proprietor or partnership. Your share of the income from the LLC has to be included on a Kansas Individual Income Tax Return (Form K-40). When the LLC is taxed as a corporation, the Kansas Corporate Income Tax Return (Form K-120) has to be submitted.
What’s the federal tax deadline for LLCs registered in Kansas?
- Single-Member LLCs (Sole Proprietorship): Due on April 15, attach Schedule C to Form 1040.
- Multi-Member LLCs (Partnerships): Due by March 15, use Form 1065.
- C-Corporation LLC: Due on April 15, attached Form 1120.
- S-Corporation LLC: Due on March 15, uses Form 1120S.
What are the repercussions for not submitting an LLC tax return on time?
Penalties include:
- A 5% late filing penalty of the unpaid taxes due each month, not to exceed 25%.
- A late payment fee of 1% per month on the unpaid balance.
- Not filing sales tax returns may incur other penalties and possibly losing your license.
Can I write off business expenses on my Kansas LLC tax return?
Yes, rent, utilities, office supplies, advertising, employee salary, health insurance, vehicle expenses, asset depreciation, as well as legal and other professional services payments are some of the business expenditures that Kansas LLCs may write off. You must document every write-off incurred.
What services does EasyFiling provide regarding Kansas LLC tax filing?
EasyFiling provides services like LLC formation, bookkeeping and accounting, tax preparation and filing, and registered agent services. We make certain you maintain compliance with both federal and state taxes, enabling you to concentrate on expanding your business.
Nabin Adhikari
