Small Business Payroll in Kansas

The Kansas State Capitol in Topeka stands as a reminder that small businesses in Kansas must navigate both federal and state payroll regulations to stay compliant. Running payroll for a small business in Kansas involves meeting federal requirements (like IRS tax withholdings and Social Security/Medicare taxes) as well as Kansas state obligations (such as state income tax withholding and unemployment insurance). This guide breaks down key aspects of Kansas payroll, including tax requirements, labor laws, compliance deadlines, payroll software options (with a focus on TimeTrex), common challenges, and cost considerations. Use the organized sections and tables below to quickly find the information you need.

Payroll Tax Requirements (Federal and Kansas)

Federal Payroll Taxes

Small business employers must handle several federal payroll taxes:

Tax Type	Details	Employer Rate (2025)	Employee Rate (2025)	Wage Base Limit (2025)
Federal Income Tax Withholding	Withheld from employee wages based on IRS Form W-4 and IRS tax tables. Deposited regularly with the IRS.	N/A (Withheld from Employee)	Varies	N/A
Social Security (FICA)	Funds retirement, disability, and survivor benefits.	6.2%	6.2%	$176,100 (SSA Source)
Medicare (FICA)	Funds hospital insurance. Additional 0.9% for high earners (employee-only) on income over $200,000.	1.45%	1.45% (+0.9% if applicable)	No Limit (SSA Source)
Federal Unemployment Tax (FUTA)	Funds unemployment benefits. Rate is 6.0% with a typical credit of 5.4% for state unemployment tax payments, resulting in a net 0.6% rate. Employer-paid only. Reported on Form 940.	0.6% (Net)	N/A	First $7,000 per employee (IRS Source)

Kansas State Payroll Taxes

In addition to federal taxes, Kansas employers must handle:

Tax Type	Details	Key Information (2025)
Kansas State Income Tax Withholding	Required whenever federal withholding applies. Employers use Kansas withholding tables/formulas. Employees complete Kansas K-4 form.	Rates: 3.10% to 5.70% (progressive, depends on income/filing status). Register with KS Dept. of Revenue. (Paylocity Source)
Kansas Unemployment Insurance (SUTA)	Employer-paid tax to fund state unemployment benefits.	Taxable Wage Base: $14,000 per employee/year. Experienced Employer Rates: 0.00% to 6.65%. New Employer Rate (non-construction, 2025): 1.75% (down from 2.7%).

Registration

New Kansas employers must register with both the IRS (for a Federal Employer ID Number - FEIN) and Kansas state agencies. You'll need to register with the Kansas Department of Revenue for withholding tax and the Kansas Department of Labor for unemployment insurance. Kansas requires businesses to file a “Status Report” (Form K-CNS 010) to establish an unemployment tax account within 15 days of hiring their first employee (KGI Source). State tax registration can often be done online.

Minimum Wage and Labor Laws in Kansas

Minimum Wage

Kansas’ minimum wage is $7.25 per hour, which is the same as the current federal minimum wage. Kansas has not raised its minimum wage above the federal level since 2010 (KS DOL Source). Tipped employees can be paid a base wage of $2.13 per hour, provided their tips bring their total earnings to at least $7.25 per hour (a $5.12 tip credit, mirroring federal law). The $7.25 rate applies to workers aged 18 or older.

Overtime Pay

Unusually, Kansas’s own overtime statute requires overtime pay after 46 hours in a workweek. However, most businesses must follow the federal Fair Labor Standards Act (FLSA) overtime rule, which mandates time-and-a-half pay after 40 hours in a workweek. In practice, almost all Kansas small businesses engaged in interstate commerce or with $500,000+ in annual sales must pay overtime after 40 hours under FLSA.

Other Wage and Hour Rules

Kansas follows many federal labor standards but has some state-specific provisions:

Rule	Kansas Requirement
Payment Frequency	At least once per calendar month on a regular, pre-designated payday.
Final Paychecks	Upon termination or quitting, all earned wages are due by the next regular payday, though specific conditions can apply.
Youth Labor	Aligns with federal rules. Minimum working age is 14. Hour restrictions for minors under 16 (e.g., no more than 3 hours on a school day). Work permits required for minors under 16 not in school.

Mandatory Posters

Kansas employers must display certain federal and state notices in the workplace (e.g., minimum wage, Equal Opportunity, OSHA). The Kansas Department of Labor provides these required workplace posters.

Exemptions

Most Kansas wage laws defer to federal law coverage. If an employee is exempt from overtime under federal law (e.g., salaried managerial employees meeting FLSA criteria), then no overtime is due. Generally, all employees in Kansas must be paid at least $7.25 per hour. Kansas does not have local minimum wage rates beyond the statewide $7.25.

Compliance and Reporting Obligations

Keeping up with payroll compliance involves routine filings, deposits, and reports. Missing deadlines can result in penalties.

Federal Filing and Deposit Schedule

Requirement	Details	Frequency/Deadline
IRS Tax Deposits (Income Tax & FICA)	Monthly or semi-weekly schedule, determined by tax liability lookback. Deposits via EFTPS. (IRS EFTPS Info)	Monthly: 15th of next month. Semi-weekly: varies.
Quarterly Form 941	Reports wages paid and federal taxes (income, Social Security, Medicare).	Quarterly: Apr 30, Jul 31, Oct 31, Jan 31.
Annual Form 940 (FUTA)	Reports FUTA unemployment taxes. Deposits quarterly if >$500.	Annually: Jan 31 (Feb 10 if all deposits made on time).
W-2 and W-3 Forms	Wage and Tax Statements for employees (W-2) and transmittal form (W-3). File with SSA and provide to employees. Kansas also requires W-2 data.	Annually: Jan 31 to employees and SSA.
1099 Forms (e.g., 1099-NEC)	For independent contractors paid $600 or more.	Annually: Jan 31 to contractors and IRS.

Kansas Filing and Payment Obligations

Requirement	Forms	Frequency/Deadline
Kansas Withholding Tax Returns	KW-5 (deposit/payment), KW-3 (annual reconciliation). (TimeTrex Help Source)	Varies (annually, quarterly, monthly, semi-monthly, quad-monthly) based on withholding amount. KW-3 due Jan 31. File electronically. File zero KW-5 if no tax due.
Kansas Unemployment Quarterly Reports (SUTA)	K-CNS 100 (wage report).	Quarterly: Apr 30, Jul 31, Oct 31, Jan 31. File and pay electronically via Kansas Employer online system.

New Hire Reporting

Kansas employers must report all newly hired or rehired employees to the Kansas New Hire Directory within 20 days of hire. This can be done online or by submitting a copy of the employee’s W-4.

Other Kansas Reports

Businesses in specific industries might have additional state reporting requirements (e.g., certificates of compliance for contractors).

Penalties for Noncompliance

Both IRS and Kansas authorities can impose penalties for late filings or payments.

Noncompliance Type (Federal)	Potential Penalty
Late Federal Tax Deposits	2% to 15% of the unpaid amount, depending on lateness.
Failure to File Required Federal Returns (941, 940, etc.)	5% per month of the balance due (up to 25% maximum).

Kansas can also assess its own penalties and interest for late withholding or unemployment contributions, and for late W-2/KW-3 filings.

Avoiding Issues

Mark all payroll tax deadlines, use automated systems, keep good records, and reconcile accounts quarterly. In Kansas, remember to file a zero KW-5 for any period with no withholding, rather than skipping it.

Payroll Software and Services (TimeTrex vs. Competitors)

Using the right payroll software or service can greatly simplify compliance.

TimeTrex Overview

TimeTrex is an all-in-one workforce management platform including payroll processing, time & attendance, scheduling, and HR tools. It automates calculations and supports direct deposit and tax form generation. TimeTrex maintains up-to-date tax tables, including Kansas state withholding formulas (TimeTrex Help Source), ensuring accurate Kansas tax calculations.

TimeTrex offers a free, self-hostable Community Edition, as well as cloud-based paid editions. Even the free edition includes core payroll, time tracking, and direct deposit features (SoftwareSuggest Source), making it a cost-effective option for Kansas small businesses.

Kansas Suitability

TimeTrex is well-suited for Kansas businesses as it handles state-specific needs like generating Kansas withholding reports (KW-5/KW-3) and unemployment filings, or exporting data for these forms. Its compliance features help track deadlines and ensure proper tax remittance.

Comparison of Payroll Solutions

Comparison of payroll software/services for small businesses in Kansas.

Payroll Solution	Features & Benefits	Starting Cost (approx.)
TimeTrex (Community & Cloud)	Comprehensive (payroll, time tracking, scheduling, HR). Automatic tax calculations for all states (Kansas included). Direct deposit, tax form filing. Open-source Community Edition.	Free (self-hosted); Paid cloud plans vary (quote-based).
Gusto	Full-service online payroll with federal/state tax filing. Benefits administration integration. User-friendly interface.	$49/mo + $6/employee (Simple plan).
QuickBooks Payroll	Seamless integration with QuickBooks accounting. Automated tax payments/filings with accuracy guarantee. Same-day/next-day direct deposit options.	~$55/mo + $6/employee (Core plan).
ADP (Run by ADP)	Scalable payroll with HR add-ons. Dedicated support and compliance expertise. Mobile app.	Custom pricing (quote-based, e.g., ~$59/mo + $4/employee).
Paychex (Flex)	Robust payroll with HR and benefits integration. Flexible service levels. Strong support for growing businesses.	Custom pricing (quote-based).

TimeTrex Pricing Model

The TimeTrex Community Edition is free for self-hosting. Paid cloud editions (Professional, Corporate, Enterprise) are hosted by TimeTrex and typically involve a monthly subscription or one-time license, often proving cheaper overall than per-employee fee models for growing businesses.

Competitor Considerations

Gusto and QuickBooks Payroll are popular for their simplicity and handling of tax filings. ADP and Paychex offer more extensive HR services and support, often at a higher cost. All mentioned services can handle Kansas-specific payroll needs. TimeTrex's advantages lie in its cost-effectiveness (especially the free version) and flexibility.

Common Payroll Challenges for Small Businesses in Kansas

Kansas small businesses often face these payroll challenges:

• Staying Compliant with Tax Laws: Keeping up with changing federal and Kansas tax rates (e.g., Kansas SUTA rate adjustments for 2025) and complex deposit schedules can be difficult. Errors can lead to significant fines.
• Time-Consuming Manual Processes: Manual payroll can take 5-10 hours a week and increases error risk.
• Maintaining Accuracy: Misclassifying workers, incorrect SSNs, or overtime miscalculations can cause compliance issues. For example, failing to withhold Kansas tax for a Kansas resident working in Kansas but living in Missouri (no tax reciprocity) is a common error.
• Handling Multi-State or Remote Employees: Kansas has no reciprocal tax agreements, complicating withholding and unemployment for employees working across state lines.
• Understanding Labor Law Nuances: Knowing when FLSA's 40-hour overtime rule supersedes Kansas's 46-hour state rule, or rules on breaks and final pay, can be challenging.
• Payroll System Transitions and Records: Switching systems and maintaining payroll records for required periods (federal law mandates 3-4 years) can be problematic.
• Cash Flow for Tax Payments: Managing funds for timely payroll and tax remittances, especially with Kansas’s varied deposit schedules, can strain cash flow.

Overcoming Challenges

Many small businesses turn to payroll services, accountants, or PEOs. Automation through software like TimeTrex or Gusto significantly reduces time and errors. Staying educated via Kansas Department of Labor and Revenue resources and networking with other businesses is also key.

Cost Considerations for Payroll

Processing payroll involves several costs for employers:

• Payroll Service/Software Fees: Range from free (TimeTrex Community Edition) to monthly subscriptions ($50-$150+ for 5 employees with services like Gusto).
• Employer Tax Expenses: Approximately 8-10%+ of gross payroll. For 2025:
  • Social Security: 6.2% (up to $176,100)
  • Medicare: 1.45% (all wages)
  • FUTA: 0.6% (on first $7,000)
  • Kansas SUTA: Varies (e.g., 1.75% for new non-construction employers on first $14,000) - about $245/employee/year at this rate.
• Workers’ Compensation Insurance: Required for most Kansas employers; premiums vary by risk (can be <1% to 5%+ of wages).
• Employee Benefits and Extras: Health insurance, retirement plan contributions, etc.
• Payroll Administration and HR Compliance Costs: Staff time, CPA fees, training.
• Frequency of Pay and Banking Fees: More frequent payroll can mean higher processing/banking fees.
• Opportunity Cost of Errors: Penalties, back wages, legal fees from noncompliance.

Summary of Costs

The "fully burdened" cost of an employee can be 1.2 to 1.4 times their base salary. Small businesses should also explore Kansas-specific incentives like PEAK (Promoting Employment Across Kansas), which can refund a portion of payroll withholding tax for eligible expanding businesses. Check with the Kansas Department of Commerce for current programs.

Conclusion

Managing payroll in Kansas requires attention to detail and knowledge of both federal and state rules. By understanding tax obligations, labor laws, and the tools available, small businesses can pay their employees accurately and on time while avoiding penalties. Whether you choose a DIY software like TimeTrex or a full-service provider, ensure that Kansas requirements are properly handled. Stay updated with the Kansas Department of Labor and Department of Revenue for any changes, and don’t hesitate to seek professional help for complex issues.