How to Start a Used Car Dealership in Kansas: KDOR Dealer License, $50,000 Bond and Required Documents

If you want to sell used cars in Kansas, the license you need comes from the Kansas Department of Revenue (KDOR), not the Secretary of State. The Division of Vehicles Dealer Licensing issues used vehicle dealer licenses under K.S.A. 8-2404. The process also requires a $50,000 surety bond, an established place of business that passes inspection, a Kansas sales tax registration and proof of insurance. This guide lays out the order we would follow if we were opening a lot from scratch, with the fees we can verify today and the points you should confirm with the agency before you spend money.

This is informational content, not legal or tax advice. Dealer licensing touches entity formation, zoning, sales tax and insurance. Talk with a Kansas attorney and a CPA before you sign a lease, buy inventory or form a company.

Kansas Has No General Business License, So Know Which License You Need

Kansas does not issue a general statewide business license. Registering an LLC or corporation with the Kansas Secretary of State is a filing, not a license. Licensing in Kansas works by agency or trade. KDOR handles dealers, and the dealer license is the one that lets you sell vehicles. Your city or county may add its own permit or zoning approval on top of that.

Keep these two tracks separate in your planning. The Secretary of State handles your entity. KDOR handles your dealer license, your sales tax registration and your dealer plates. Mixing them up is one of the most common early mistakes.

Materials and Documents You Will Need

Gather these before you start the application. Missing one item usually means a second trip or a second round of paperwork.

• A chosen business structure. A sole proprietorship has no legal existence separate from you, so an LLC or corporation is often the choice for a dealership. Talk with an attorney before you pick.
• An established place of business in Kansas with a street address where you actually operate. KDOR inspects it.
• A $50,000 surety bond from a licensed surety company, or a deposit with the Kansas State Treasurer.
• A Kansas sales tax registration from the Department of Revenue.
• Proof of insurance. Confirm the required coverage with KDOR before you buy a policy.
• A resident agent with a Kansas street address, if you form an LLC or corporation. Kansas does not allow a PO box for the registered office.
• Funds for the license fees: $75 for the used vehicle dealer license, $25 for each salesperson license, $35 for each supplemental place of business and $275 for the first dealer plate each year.
• A list of every person who will sell vehicles for you, so you can confirm who needs a salesperson license.

Step 1: Form Your Business Entity With the Secretary of State

If you form an LLC, you file Articles of Organization, Domestic (Kansas) Limited Liability Company, which is Form DL. The filing fee is $85. You can file online through the Secretary of State's Customer Login at Kansas Secretary of State Business Services. Online filings process within minutes, and you can print the certified copy right away.

Your name must include L.L.C., L.C., LLC, LC, LIMITED LIABILITY COMPANY or LIMITED COMPANY under K.S.A. 17-7920. Search the registry at the Secretary of State business search before you file. If a similar name is already in use, you will need a Consent to Use of Similar Business Name (Form CN) under K.S.A. 17-7918 with your formation document.

If you want to hold a name while you prepare everything else, a name reservation costs $35 and lasts 120 days. Corporations file Articles of Incorporation, Domestic (Kansas) Corporation, Form AI, also at $85.

Two recurring items come after formation. The Information Report is filed every two years by April 15, with a $90 fee for LLCs and corporations, and it is not an annual filing. Kansas has no franchise tax and no state level DBA filing, so do not pay for either one.

Step 2: Confirm the Location Will Work

Kansas has 105 counties and 624 cities. Every incorporated place is legally a city, so your lot is either inside one of those cities or in unincorporated county territory. Zoning for car lots is decided locally, and the answer can change from one block to the next. Before you sign a lease, call the zoning or planning office for the address and ask whether used vehicle sales are permitted there, whether a conditional use permit is needed, and whether the city or county requires its own business license for vehicle sales.

Watch the city names carefully. Kansas City, Kansas and Kansas City, Missouri are different cities in different states. Only Kansas City, Missouri has a city earnings tax, so a lot in Kansas City, Kansas does not carry that tax on the business location. Confirm how that applies to your own income with your CPA.

Step 3: Register for Kansas Sales Tax

A Kansas sales tax registration is part of the dealer licensing requirements. The state sales tax rate is 6.5 percent, and local rates are added on top, so the rate that applies depends on where your lot sits. Ask KDOR how sales tax applies to vehicle sales at your lot. You can register through the Department of Revenue at Kansas Department of Revenue business registration, or through the Customer Service Center. Our verified figures do not list a registration fee, so confirm with KDOR whether one applies.

The sales tax registration is also one of the documents the dealer license requires. Get it before you apply for the dealer license, not after.

Step 4: Set Up the $50,000 Surety Bond or Deposit

Under K.S.A. 8-2404, a Kansas dealer must post a $50,000 surety bond. You can meet the requirement with a corporate surety bond or with a deposit held by the Kansas State Treasurer.

A surety bond is a three-party arrangement. The surety company guarantees that you will meet your obligations to customers. If a valid claim is paid, you owe the surety company repayment. You pay the surety a premium to issue the bond. We do not have a verified premium figure, because it depends on your credit and your business profile, so get quotes from a surety agent. Confirm with KDOR the exact bond form it accepts and whether a deposit with the State Treasurer is practical for your cash position, since a deposit ties up $50,000 directly.

Step 5: Buy Insurance and Get Proof of Coverage

KDOR requires proof of insurance for the dealer license. Our verified figures do not state minimum limits or policy types. Ask KDOR which coverages it requires, and give your insurance agent the exact list before you buy anything. Ask the agent whether the policy covers your specific lot and operations, not only the office.

Step 6: Prepare for the Place of Business Inspection

KDOR inspects the place of business before it issues the license. The original inspection is free. Each re-inspection costs $30, so a lot that is not ready can cost you money and time. Ask KDOR for its physical requirements for the lot and office before you spend money on improvements, and confirm what it expects to see on inspection day.

Have your address, lease or deed, signage plan and office records ready. Keep your entity papers, sales tax registration and bond documents in one folder for the inspector.

Step 7: File the Used Vehicle Dealer License Application

The Division of Vehicles Dealer Licensing handles the application. You can reach the division at 785-296-3621. Start with the KDOR business page at Kansas Department of Revenue business resources to find the current application and forms.

The used vehicle dealer license costs $75 per calendar year and expires December 31. A salesperson license costs $25 for each person who sells vehicles for you. A supplemental place of business costs $35, which applies if you operate from more than one location. Under K.S.A. 8-2404(e) and (f), these are the fees that apply. Under K.S.A. 8-2404(e) the fee is for each calendar year or any part of it, and dealer licenses expire December 31, so confirm the timing of a mid-year application with KDOR.

Step 8: Get Your Dealer Plates

The first dealer plate costs $275 per year under K.S.A. 8-2406. Ask KDOR what the plate allows you to do and what conditions apply to its use. Do not assume the plate works like a registration for any particular vehicle until KDOR confirms it.

Step 9: Add Salespeople and Extra Locations

Each person who sells vehicles for you may need a salesperson license at $25. Confirm with KDOR which staff members must hold one before you hire them. If you open a second lot or a satellite location, you will need a supplemental place of business at $35 for each one, and you should confirm that the new site also passes inspection.

Not every vehicle business needs this license. KDOR exempts manufacturers, lenders and manufactured home dealers. If your business fits one of those categories, the used vehicle dealer license may not apply, so confirm that with KDOR before you file.

Step 10: Calendar Your Recurring Obligations

Once licensed, your dealer license expires December 31 each year, so plan your renewal in the fall. Keep your surety bond in force, since the license depends on it. File sales tax returns on the schedule KDOR assigns to you. If you formed an LLC or corporation, file the Information Report every two years by April 15 at $90. Renew any city or county permits your local government requires.

Document and Fee Checklist

Item	Agency	Verified cost	Notes
Articles of Organization (LLC, Form DL)	Secretary of State	$85	Filed online through Customer Login
Articles of Incorporation (Form AI)	Secretary of State	$85	Corporations only
Name reservation	Secretary of State	$35	Lasts 120 days
Information Report	Secretary of State	$90	Every two years by April 15
Sales tax registration	KDOR	Confirm with KDOR	State rate 6.5 percent plus local rates
Surety bond or deposit	Surety company or State Treasurer	$50,000 bond amount	Premium varies; get quotes
Proof of insurance	Your insurer	Confirm with KDOR	Required coverage not listed in verified figures
Used vehicle dealer license	KDOR Division of Vehicles	$75 per year	Expires December 31
Salesperson license	KDOR Division of Vehicles	$25 each	One per salesperson
Supplemental place of business	KDOR Division of Vehicles	$35 each	One per extra location
Original place of business inspection	KDOR Division of Vehicles	Free	Re-inspection costs $30
First dealer plate	KDOR Division of Vehicles	$275 per year	K.S.A. 8-2406

Common Mistakes to Avoid

• Treating the Secretary of State filing as the dealer license. Forming an LLC does not authorize you to sell vehicles. You still need the KDOR license.
• Signing a lease before the zoning check. Zoning is local and can rule out a site after you have committed to it.
• Using a PO box for the resident agent. Kansas requires a Kansas street address where the resident agent can be regularly present.
• Forgetting staff licenses. A $25 salesperson license per person is cheap, but skipping it creates a compliance problem from day one.
• Opening a second lot without a supplemental place of business. Each additional location needs its own $35 supplemental license and its own inspection.
• Assuming the bond is a one-time cost. The bond supports your license, so its premium and its status are ongoing obligations.
• Confusing the two Kansas Cities. Kansas City, Kansas and Kansas City, Missouri are separate cities. Check which one your lot is in before you plan local taxes.

Tips for a Smoother Application

• Call the KDOR Division of Vehicles Dealer Licensing at 785-296-3621 before you file, and write down the name of the person you speak with and what they tell you.
• Ask KDOR to confirm each figure in this guide before you pay. Fees and rules can change, and the agency's answer controls.
• Get your surety bond quote and your insurance quote in the same week, so you can compare the total cost of getting licensed.
• Keep every filing confirmation, bond form and inspection report in one folder, both paper and digital.
• Set a renewal reminder for the fall, well before the December 31 expiration.

What to Expect When You Finish

Dealers who complete these steps in order may find that the application has fewer gaps and fewer return trips. A complete file, a ready lot and a bond already in place can make the inspection and review simpler for everyone involved. Our verified figures do not include a processing time for the KDOR dealer license, so ask the division for its current timeline and plan your opening date around the answer, not around a guess.

A licensed dealership still has ongoing duties: bond maintenance, sales tax filings, annual renewal and any city or county requirements. Plan for those costs and deadlines from the start, and you are less likely to lose your license over a missed form.

Official Resources

• Kansas Department of Revenue, Division of Vehicles Dealer Licensing: https://www.ksrevenue.gov/business.html, phone 785-296-3621
• Kansas Department of Revenue business registration: https://www.ksrevenue.gov/busregistration.html
• Kansas Secretary of State business information: https://sos.ks.gov/business/business.html
• Kansas Secretary of State business search: https://www.sos.ks.gov/eforms/BusinessEntity/Search.aspx
• Kansas Small Business Development Center: https://www.kansassbdc.net/

Final Note

This article is informational and is not legal or tax advice. Confirm every figure with the agency that administers it before you act. Because a dealership involves entity choice, zoning, sales tax, bonding and insurance all at once, consult a qualified Kansas attorney and a CPA before you commit money to a lease, inventory or a bond.