Kansas’ economy and industry began to expand long before the state was formed. The state rapidly earned a reputation for its agriculture, and various related industries, including milling, sprung up as a result. Railroads linked the state to the east, and agricultural goods were exported from Kansas as raw materials. Kansas, situated at the heart of the country, became a crossroads for transportation sectors and the home of several significant corporations.
In the 21st century, small businesses are the cornerstone of the Sunflower State’s economy. Kansas has consistently ranked as one of the best states to start a business over the past several years due to the state government’s pro-business incentives, great infrastructure, low and competitive tax incentives, high quality of life, and cost of living that is among the best in the Midwest.
Here are a few interesting facts about small businesses in the state of Kentucky.
Quick Kansas Small Business Statistics for Entrepreneurs
- Small businesses in Kansas account for 99.1% of all businesses in the state.
- About half of all Jayhawks work for small businesses.
- Veterans make up 5.9% of workers and own 7.3% of businesses.
- Racial minorities represent 12.6% of employees and own 6.9% of businesses.
- In the 2021 CNBC “Best States for Business” report, Kansas ranks 28th.
- The per capita disposable income in Kansas is $51,471.
- Between March 2019 and March 2020, 7,780 Kansas businesses were established and 7,954 closed down.
- Retail trade enterprises account for the second-highest number of small businesses in Kansas (27,720).
- Kansas small business owners can enjoy limited liability protection, similar to what a corporation enjoys.
- Kansas is the 10th-least tax-friendly state and the 3rd-least tax-friendly state for retirees.
Kansas Small Business Statistics
1. What is a small business in Kansas?
According to the Small Business Administration (SBA), a small business is a partnership, sole proprietorship or privately owned corporation. It has less revenue than larger corporations or bigger businesses and fewer than 500 employees.
That means that the corner wine store in your neighborhood and the local manufacturer that employs 400 workers have one thing in common—they are both small businesses.
There are currently 258,012 small businesses in Kansas that represent 99.1% of all businesses in the state.
2. How many Kansans are employed by small businesses?
Approximately 601,550 Kansas residents work for small businesses. That’s 50% of all employees in the state.
Kansas’ minimum wage is the same as the federal minimum wage, which is $7.25 per hour. This salary is applicable to all workers with the exception of the following:
- Tipped employees, who must be paid a minimum of $2.13 per hour. A tipped employee in Kansas is someone who receives more than $20 in tips per month.
- Student employees and interns can be paid up to 20 hours per week at 85% of the minimum wage rate, or $6.16 per hour.
- For the first 90 days of employment, any new employee under the age of 20 can be given a training salary of $4.25 per hour.
3. Kansas small business statistics by industry
The professional, scientific, and technical services sectors are collectively the largest industries in Kansas in terms of small business investment, with 32,174. There are 25,959 small businesses in this sector that have no employees, another 5,738 with 19 or fewer workers, and 477 small businesses with 20–499 employees.
There are 164 small businesses in the utilities sector, making it the smallest industry in the state.
4. Kansas small business ownership by ethnicity
The Kansas population currently stands at 2,934,582 residents. White/Caucasian Americans make up the largest ethnic group representing 86.3% of the population, followed by Hispanic/Latino Americans (12.2%), Black/African Americans (6.1%), Asian Americans (3.2%), American Indians or Alaska Natives (1.2%), and Native Hawaiians and Other Pacific Islanders (0.1%).
Small business ownership is distributed among these groups as follows:
- White/Caucasian — 231,421
- Hispanic/Latino — 29,411
- Black/African American — 8,188
- Asian — 7,812
- American Indian and Alaska Native — 864
- Native Hawaiian and Other Pacific Islander — 100
5. Kansas small business ownership by gender
Men own a total of 142,970 small businesses in Kansas. Of these, 111,000 are nonemployer businesses and 31,970 have employees. Women own 89,853 small businesses, 81,000 of which are nonemployer businesses and another 8,853 have no employees.
6. Business taxes in Kansas
Kansas is ranked #22 on the Tax Foundation’s 2022 index. The following is a breakdown of Kansas’ rating this year:
- 22nd-best overall tax system in the country
- 18th-best individual income tax structure
- 28th-best property tax structure
- 30th-best sales tax structure
- 9th-best unemployment insurance tax system
- 38th-best corporate tax structure
Kansas corporations are subject to a regular corporate income tax of 4%, plus a 3% surtax on earnings over $50,000.
Standard limited liability companies (LLCs) are pass-through businesses (revenue is dispersed among owners and each individual member is subject to federal and state taxes on his or her portion of the income) and are not obliged to pay federal or state income taxes.
You can, however, choose to have your LLC categorized as a corporation. The LLC would be liable to Kansas’ corporate income tax in this situation.
In order to stay in compliance with your business taxes in Kansas, it’s highly advisable to find a reputable registered agent in the state who will help you with your tax reporting issues. Read my review of the best registered agents in Kansas to find out which company is best for you.
7. Small business financing in Kansas
According to aggregate statistics from the Community Reinvestment Act, reporting banks in Kansas provided $691.3 million in loans to firms with revenues of $1 million or less in 2019.
Total reported new lending to companies via loans of $100,000 or less was $578.2 million, with $2 billion in reported new lending to businesses through loans of $1 million or less.
8. Kansas small business export statistics
In 2019, 3,354 recognized enterprises exported items worth $10.4 billion from Kansas. Small businesses accounted for 2,753 (or 82.1%) of those exporters. Small businesses shipped commodities totaling $2.3 billion, accounting for 21.8% of all recognized business exports.
The Final Word
Site Selection magazine named Kansas the best business climate in the west north central region of the United States in 2021, rising three positions from the previous year. This improvement reflects an increasingly vibrant entrepreneurial scene in the state.
To small- and medium-sized enterprises, Kansas provides a great transportation infrastructure, a competent workforce, several forms of grants and loans, tax credits, low energy costs, historically underutilized Business Zones (HUBZone) programs, and much more.
- US Small Business Administration
- Center on Budget and Policy Priorities
- Kansas State University
- CNBC – Top States for Business
- US Census Bureau
- Startland News
- Rich States, Poor States
- Kansas Department of Commerce
- Tax Foundation