How to Form a LLC in Kansas

A limited liability company (LLC) is a single-member or multiple-member business that limits the personal liability of the members. Business owners organize their businesses as LLCs to protect themselves and their personal assets from being reached to satisfy the company’s legal debts and obligations.

What Are the Requirements for an LLC?

An LLC is made up of one or more owners called “members.” State law has several requirements for setting up an LLC in Kansas:

• The LLC must pick a name for its business that is not already registered with the Kansas Secretary of State;
• The LLC must file Articles of Organization (Articles) with the Kansas Secretary of State;
• The LLC must specify an agent for service of process, i.e., to receive legal notice on behalf of the LLC, who is a resident of Kansas; and
• The business office address for the registered agent must be the same as the address for the LLC.

Kansas law requires that the LLC include at the end of the business name one of the following words or abbreviations:

• Limited company;
• Limited liability company;
• LC;
• L.C.;
• LLC; or
• L.L.C.

What Paperwork Do I Need to Form an LLC?

To establish an LLC in Kansas, a person must complete and file an Articles of Organization form. A person can download this form from the Kansas government web page for the Secretary of State.

The articles must contain the following information:

• The name of the company;
• The name of the resident agent for service of process on behalf of the LLC;
• The Kansas street address of the business office of the registered agent’s business office;
• The business mailing address for receiving official mail from the Kansas Secretary of State;
• The signature of the organizer, i.e., the person authorized to form the LLC; and
• The date the business officially becomes an LLC.

The LLC can choose whether the business becomes an LLC at the time of filing the Articles. Or it is possible to delay the start to a later time.

If the LLC Articles are filed by mail, the filing fee is $165, and it is approved within 3 to 5 business days. If the Articles are filed online, the filing fee is $160, and the approval time is 24 hours or less.

After a Kansas LLC has been approved, the organizer should get a Federal Tax ID number from the Internal Revenue Service (IRS). Next, they want to investigate whether their LLC needs a Kansas business license or other licenses and permits. In order to keep a Kansas LLC in compliance with state law, the LLC must file a Kansas LLC Annual Report every year. The fee is $55 if it is filed by mail and $50 if filed online.

Does My LLC Need an Operating Agreement?

A Kansas LLC Operating Agreement is a written contract between the members of an LLC, much like a partnership agreement between its partners. It is a legal document that contains detailed information about an LLC’s ownership structure, the owners’ identities, and provisions regarding how the members plan to manage the LLC.

Both single-member LLCs and multi-member LLCs should have operating agreements drafted. It should be maintained in their business records, and a copy should be given to all members. Ideally, all members would be involved to some degree in preparing the operating agreement.

Of course, an LLC operating agreement is the kind of thing for which templates are available online. But it might be better to have an experienced Kansas business lawyer draft an agreement customized to meet the specific needs of the LLC that a person or group of people are setting up.

Among the topics that an LLC’s members might want to address in the operating agreement are the following:

• The responsibilities of each of the members;
• The voting rights of each of the members;
• Each member’s duties and powers;
• How profits and losses are to be distributed among the members;
• The rules about how meetings and votes are conducted:
• How the LLC is to be managed, whether by a member or members or a professional manager;
• What happens when a member wants to leave and sell their share;
• What happens when a member passes away.

LLC operating agreements should also define the terms used in the agreement, the purpose of the business, whether and how it can take on new members, how it plans to be taxed, and where it operates.

What Benefits Does Kansas Give to an LLC?

The main advantage of an LLC is that it protects a member’s personal assets from being accessed by anyone to whom the LLC owes money.

Limited liability companies generally do not pay federal or state taxes on their profits. They can pass their profits on to the individual members. The members pay state and federal income tax on the profits of the LLC as income to them. For example, if an LLC has only two members who own equal shares of the business, each member is responsible for paying income tax on whatever portion of the profits is distributed to them. This might be one-half of the LLC’s profits. Or, the members may have agreed on a different distribution.

A person can set up an LLC with just one person as its single member. Whether the LLC has one or more members, each member of an LLC enjoys the benefit of owning and managing the LLC without having personal liability for the debts and other legal obligations of the LLC. Under state law, the LLC is separate from its members. Therefore, the law also protects the LLC from its members’ personal debts and obligations.

A Kansas LLC can continue forever. Kansas law states that an LLC continues even if one of the members dies. When a member dies, their estate or personal representative takes over their interest in the LLC and manages the LLC as if the member were still alive. Of course, an LLC membership interest can also be transferred in other ways.

What Disadvantages Are There for an LLC in Kansas?

If a person is the only member of their LLC, they are responsible for paying taxes on all of the business’s profits as they would be distributed to the person as the sole member. If a Kansas LLC has more than one member, all members must agree and vote for the member to transfer their ownership share.

When a member of an LLC has a personal debt or a legal obligation, their creditor can go to court and get a charging order against the member. The charging order secures payment of the debt and allows the creditor to receive the member’s financial distribution from the LLC to satisfy the debt.

The debtor member is still responsible for their share of taxes on the distribution of profits that they receive from the LLC. The other members of the LLC may have to wait to receive their financial share until after the creditor receives the amount they are owed from the debtor member.

Where Can You Find the Right Lawyer?

If you need help forming an LLC, you want to consult an experienced local Kansas corporate lawyer today to understand what steps to take. You can also discuss having your lawyer draft an operating agreement and how that can help your LLC.