Articles of Organization

Achieving official status for your Kansas LLC means filing articles of organization with the Kansas Secretary of State. The articles of organization should include the name of the LLC, the address of its registered office, and the name and address of the registered agent. The articles may also include any other provisions that the member(s) want to include, so long as they are not contrary to state law.

Your LLC is considered "organized" once the articles of organization and one duplicate copy are delivered to the secretary of state and found to be in compliance with state requirements. The articles must be executed (signed) by at least one authorized person, who does not have to be a member or manager of the LLC. In fact, any person or legal entity can form an LLC-they just have to be capable of legally entering into a contract. The articles must also be accompanied by the $165 filing fee ($160 if filed online).

One certified copy of the articles of organization will be issued, and the other certified copy will be returned to the organizer or members.

Registered Agent and Office

All Kansas LLCs must have a registered agent designated to receive official state legal and administrative correspondence. A Kansas LLC's registered agent might be an individual state resident whose business office is the same as the registered office, or it may be a business entity that's authorized to conduct business in Kansas-again, whose business office is the same as the registered office.

Operating Agreement

The operating agreement is another very important document for an LLC. It can be amended or repealed as allowed by the agreement itself or applicable law. Having an operating agreement isn't specifically required by the state, but it's a key internal document that officially records and explains how the LLC will conduct its operations.

The operating agreement normally lists the LLC's members, how much each has invested, how profits are to be divided, and how much weight each member has when voting. It may also lay out meeting requirements and similar considerations, but is not required to do so. The operating agreement may also include rules and concepts already laid out in state law.

Unless otherwise stated in the articles of organization or the operating agreement, a unanimous vote of members is required to amend either the articles or the operating agreement.

Membership in the LLC

An LLC has to have at least one member; a member may be a natural person or a legal or business entity.

To become a member, an individual normally makes a contribution of some sort. Members' contributions can be in cash, property, promissory notes, services previously or to be rendered, or some other obligation to contribute.

A member of an LLC can resign from it, but only in accordance with the articles of organization or operating agreement. These documents also usually specify a minimum period of time a member can be a member before being allowed to resign. The resigned member is not released, however, from any liability to the LLC, and LLCs can pursue remedies for damages to the company that result from a member's resignation.

Ongoing Requirements

All Kansas LLCs are required to file an annual report with the Kansas Secretary of State by the last day of their tax year that lists the LLC's name and all members owning at least five percent of the LLC's capital. The annual report must be signed by an LLC member.

Further, each Kansas LLC is required to keep the following types of records open for inspection at its office:

• Full information about the LLC's status and financial condition
• A copy of all federal, state and local income tax returns for each year
• A current listing of all member(s) and manager(s) and their last known business, residence, or mailing address
• The date on which each member joined the LLC
• A copy of the operating agreement
• A copy of the articles of organization, along with any amendments and related powers of attorney
• The amount of cash on hand and a statement of the agreed-upon value of any other property or services contributed or to be contributed in the future by each member
• Other relevant information about the LLC's operations

It's also advisable for your LLC to keep minutes of the members' or managers' proceedings and committee meetings.

Dissolution

Unless otherwise stated in the articles of organization or the operating agreement, a Kansas LLC is dissolved when any one of the following events occurs:

• Event(s) or a time specified in the articles of organization or operating agreement that require dissolution
• Written consent of the members to dissolve; if there is more than one class or group of members, then more than half of the members who own more than 50 percent of the then-current percentage or other interest in the LLC owned by all of the members or by the members in each class or group, as applicable
• When there is no member left, unless the representative of the last remaining member agrees in writing to continue the LLC and admit a member within 90 days of the termination of the last membership
• A court order is handed down requiring dissolution

Taxes

An LLC offers tax advantages over a corporation, mostly because an LLC is not required to be a separate tax entity like a corporation. Instead, it can be a "pass-through entity" for tax purposes, so LLC owners show business losses or profits on their personal tax returns, instead of the LLC being taxed as a separate entity and the members' incomes from the LLC being taxed a second time at their individual level.

The LLC tax rate for Kansas varies based on Kansas taxable net income. However, Kansas LLCs are subject to the state's franchise tax on net capital accounts.

Articles of Incorporation

Kansas state law requires that new corporations file articles of incorporation with the Kansas Secretary of State, which also requires a $90 filing fee ($84 if done online). These articles must meet the requirements of the Kansas General Corporation Code, which is in Chapter 17 of the Kansas Statutes, Articles 60-75.

The State of Kansas allows corporations to be formed for any lawful business activity. However, the nature of the corporation's business or its purpose-or a general statement that the corporation may engage in any lawful act-must be included in the articles of incorporation.

At least one person (usually an initial director or officer) must sign the articles as incorporator. The incorporator's primary duty is to deliver the articles of incorporation to the Kansas Secretary of State.

The articles must list the name and address of all incorporators, the names and addresses of the initial directors (if the powers of the incorporators will end after the articles are filed), and the classes-as well as par value and number of shares of each class-that the corporation is authorized to issue.

You can authorize shares with a stated par value or without par value; the most common practice is to issue shares without par value. The filing fee is not based on the number of authorized shares, so you can authorize as many as desired. Most incorporators authorize common shares with equal voting, dividend, and liquidation rights, and no special restrictions.

It's also allowable to include other optional provisions into the articles of incorporation for those who want to formalize additional criteria, such as:

• Limitation of director liability to the corporation or its shareholders in certain situations
• Regulation of the powers of the corporation, as well as its board of directors and shareholders
• Personal shareholder liability for corporate debts in certain situations
• Preemptive shareholder rights
• A time limit on the corporation's existence
• The manner of adoption, alteration, or repeal of bylaws

Registered Agent and Office

The articles of incorporation should also include the name and address of your corporation's initial registered agent-the person you designate to receive official legal and administrative correspondence on behalf of your corporation. The registered agent must be either an individual who lives in Kansas and whose business office is the same as the registered office, or a domestic corporation with a business office that is the same as the registered office.

Bylaws

Corporations should keep a copy of their bylaws at their principal executive office, but they are not required to file those bylaws with the state. At the new corporation's initial meeting, the incorporators or board of directors should adopt corporate bylaws and then keep them updated as time goes on. Bylaws are a critically important document describing the corporation's basic managerial and legal operating principles regarding such issues as:

• Shareholders' and directors' meetings
• The authority, number, and tenure of directors in the board of directors
• Voting procedures
• The duties, responsibilities, and tenure of officers
• How stock is issued
• How and when annual financial information is provided to shareholders

Officers of the new corporation can either be listed in the bylaws or elected by the board in compliance with those bylaws. The right to adopt, amend, or repeal bylaws is vested in the board, subject to the articles of incorporation and the stockholders.

Directors and Officers

The corporation's business is managed by its board of directors. There must be at least one director, and all directors must be natural persons of at least 18 years of age. The board must consist of one or more members as specified by the bylaws or by action of the shareholders.

Directors are generally elected at each annual shareholder meeting to hold office until the next annual meeting. The bylaws may prescribe additional qualifications for directors that are consistent with the articles of incorporation.

Corporate officers can either be listed in the bylaws or elected by the board in compliance with those bylaws. Officers may appoint other officers as needed for the operation of the corporation, in accordance with the bylaws. There must be one officer who is responsible for preparing and maintaining records of the proceedings of director and shareholder meetings.

Any number of offices may be held by the same person unless the articles or bylaws state otherwise.

Required Reports

Each Kansas corporation must file a report with the Kansas Secretary of State's office every year every year when it files its state income tax return. The annual report must include:

• The corporation's name
• The location of its principal office
• The nature and type of business in which the corporation is engaged
• The addresses of stockholders who own at least five percent of the corporation's capital stock
• The number of shares of (and amount paid up in) capital stock
• The names and addresses of the president, secretary, treasurer, and members of the board of directors
• Information about agricultural land held by the corporation

Taxes

The corporate tax rate for Kansas varies based on taxable net income. Kansas does, however, impose an annual franchise tax and a corporate income tax, plus a surtax on corporate taxable income over $50,000.