Kansas business advocates impressed the importance of minimizing startup costs for businesses after a recent study ranked Kansas the ninth most expensive state in which to start a business.
The research study — published in April by Simplify LLC — analyzed workforce expenses, worker availability, corporate tax rates, leasing expenses, costs of utilities and the health of the business environment in all 50 states.
“The Kansas Chamber and business advocates throughout the state need to take a hard look at the true costs of starting a business in Kansas and make sure that it’s not a barrier to economic growth,” said Kansas Chamber President & CEO Alan Cobb. “These types of rankings are certainly something to be mindful of. There’s nothing about them that’s definitive, but a No. 9 ranking is not good.”
Although countrywide rankings from research studies comparing differences in business environments can be useful, Kansas’s No. 9 ranking may not be fully representative of the state’s situation concerning business costs, according to Center for Economic Development and Business Research Director Jeremy Hill.
“Indexes are helpful in that they give us a perspective, especially when you rank from one state to the next,” Hill explained. “They force us to say, ‘What’s the difference?’ They help us be reflective of what’s going on. However, indexes — even the ones that we create — never fully capture the details of everything that’s going on.”
According to the research study, LLC filing costs were comparatively high in Kansas in 2021 — a detail Hill says may be less worrisome when one looks at the big picture.
“I only see Kansas showing up in the top 10 of one individual “worst” list from the study, and that’s for Kansas’ startup cost of $165,” Hill observed. “When you look at the variation and costs, it’s not that significant. It’s a marginal change between us and the very next one. Maine’s startup cost is $175 and then it goes up significantly from there. I don’t think that’s necessarily an alarming issue. The study shows that as a state and as individual communities within the state we should think about costs, because making it a friendly business environment is beneficial to everybody.”
Despite its potential for a comparatively harsh impression of Kansas’ business startup costs, Cobb says business advocates in Kansas should take such findings seriously and think of it as motivation for their continuing efforts to reduce business costs in the state.
“We’re constantly looking at tax burden, energy costs and reducing regulatory burdens in Kansas. Filing a business startup has a regulatory burden,” Alan said. “For example, property taxes are a component of the cost to lease a business space. That’s something we’ve had success with and need to keep working on. The transmission delivery charge bill we worked on this year — recently passed into law — will impact utility costs in a positive way. And we’re constantly working on availability and quality of workforce in Kansas. These efforts have an immeasurable impact on lowering business costs in Kansas, but it’s clear there’s still work to be done.”
The study comparing costs of forming an LLC by state can be found here.
