A series LLC in Kansas is a special type of business structure that consists of a master company and one or more series/divisions established under it.
The main advantage of a series LLC is the ability for businesses to segregate separate parts of the company into separate series, thereby isolating the liabilities of each one from the others.
For now, series LLCs are only available in certain states, and Kansas is one of them. This structure is still relatively new but is becoming increasingly popular in the U.S. Yet, it raises many questions, including how to start a series LLC in Kansas.
That's why we decided to create a step-by-step guide to study this question in detail.
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The good news is that starting a series LLC in Kansas is a simple task. You can register your own business if you want to.
In theory, such a venture is a solution that makes sense in many cases. However, this type of business entity has both its advantages and disadvantages. That's why we recommend that you consult with a lawyer before you start registering.
And if you are already confident you've made the right decision, let's figure out right now how to form a series LLC in Kansas.
As with a regular company, creating a series LLC in Kansas begins with choosing a business name. In doing so, you must be sure to comply with standard naming rules and requirements in Kansas.
Additionally, each "cell" must contain the full name of the master company and be distinct from other names in your venture.
You will also need to file a Certificate of Designation (a form to record the names of the cells) for each subsidiary series after you pass the main registration.
Basic Kansas company naming guidelines:
To make the name of your venture more uniform and understandable, use these tips:
This way, the public, business partners, and creditors will better understand which of your divisions are involved in what activities.
Before you begin Kansas series LLC registration, you absolutely need to choose a registered agent ("resident agent" in Kansas or simply RA). Note that your RA for the parent company will also be the same for each cell.
An RA is an individual or entity who will receive all important correspondence on behalf of your series LLC, including legal/tax government documents and service of process (in case of a lawsuit filed against your company).
An RA can be:
If you wish, you can appoint a person you trust (e.g. a family member, friend, colleague, etc.) to be your RA or act as your own statutory agent. However, it's much more convenient and cost-efficient to hire a professional RA service for the job.
This way, you will be able to save time on paperwork, avoid mistakes/errors, and stay up to date with all important documents/notifications from the state, related to your business.
Now we finally get to one of the most important questions in this guide: how to register a series LLC in Kansas? You have to file the Articles of Organization in the state of Kansas. You can do it online or submit a completed paper copy to the Secretary of State by mail.
The Articles of Organization form for a series LLC is not much different from the same one for a regular company. However, in this case, we recommend that you consult an attorney prior to filing.
The cost of filing the Articles of Organization in Kansas is:
To record the subsidiary series’ name, you will also need to file a Certificate of Designation for each cell. This document is similar to LLC Articles of Organization but it reflects the fact that the company is a subsidiary.
The cost of filing a Certificate of Designation is $35 per subsidiary cell.
When creating a series LLC in Kansas, you will need to prepare an Operating Agreement. This document governs the ownership, profit sharing, and operating procedures of the venture.
Your OA is not filed with the state, but this document is essential even for a regular company with more than one member.
In the case of Kansas series LLC, having a clear and unambiguous operating agreement between the members, which regulates all the nuances of operation and distribution of property, is especially important.
This also includes the fact that your OA sets out limitations of liability (asset protection) of individual cells. That's why it should be drafted with the help of an attorney.
If you plan to start a series LLC in Kansas, you should definitely get an Employer Identification Number (EIN or FEIN), a 9-digit number that is similar to a regular SSN for individuals but designed for organizations.
In some cases, regular LLCs can operate without an EIN, but these cases are not appropriate for series ventures.
Why you need an EIN:
Since series LLCs only operate in some states, for now, the IRS does not give any separate guidance on creating an EIN for these subsidiaries. Use your entity’s name in conjunction with the subsidiary series name for each additional EIN.
The easiest and fastest way to get an EIN is to fill out an application form on the IRS website. In this case, you will receive your individual number in just a few minutes.
You can also mail the application to the following address:
Internal Revenue Service
Attn: EIN Operation
Cincinnati, OH 45999
Another method you can use is to apply by fax:
Fax: (855) 641-6935
Any business owner can get an EIN from the IRS for free. But if you apply by mail or fax, you will have to wait longer for a response.
When it comes to the series LLC Kansas cost, one usually examines the cost of registration as well as some other important types of payments.
|Filing your LLC's Articles of Organization||$160|
|Filing a Certificate of Designation for each cell||$35|
|Reserving a business name||$35 by mail$30 online|
|Filing your annual report||$55 by mail$50 online|
The total cost will depend on your business industry, exact location, and business specifics. It's also worth researching whether your business requires state/local licenses or permits.
Now it's time to learn a few additional steps you'll need to take to make your business successful.
You'll need a separate bank account for each subsidiary cell. Otherwise, they are not protected from liabilities incurred by another cell or the master company.
Only if you completely segregate all assets of each series from each other and your parent LLC, can you enjoy the benefits of the corporate veil and liability segregation.
Separate bookkeeping will help ensure that the courts will never allow a creditor or plaintiff to breach the corporate veil. It's highly advisable to hire a professional accountant who will help you manage your books.
Bookkeeping for your series of LLCs should be done by a professional accountant or by a firm that is familiar with all peculiarities of operating such a venture. It also makes sense to use special automation software to simplify the overall management of your business.
In some cases, costs can be shared between cells. For example, a series LLC may have a common office space, and the rent for it will be distributed among all the cells. Make sure to do this in a logical way so that you can defend your business in court if necessary.
Once you complete your Kansas series LLC registration and get everything you need to get started, it's important to keep your business in good standing. This requires:
We've already mentioned that the Kansas series LLC cost includes a fee for filing an annual report. Under Kansas law, such a report must be yearly submitted to the Secretary of State by each business entity operating in the state.
As for a series entity, an annual report is filed by the parent company on behalf of all the entities that make up the SLLC.
An annual report can be submitted online at the Kansas Secretary of State's website or by regular mail.
The fee for sending an annual report:
The deadline to send the reports and pay the fee is by the 15th day of the fourth month after the close of the company tax month. For example, your last tax month is December, so you must submit your annual report by April 15.
If you fail to file on time, Kansas will liquidate your company by administrative action.
Income reporting for your series LLC is best handled by an accountant who is familiar with the LLC series tax code.
If you forget to submit your annual report on time or your RA is unavailable to receive/forward important legal/tax documents/notifications from the state, you risk heavy fines.
In some cases, it can end up with the automatic dissolution of the LLC series.
A reliable RA service ensures that you avoid such problems. Especially, if the company offers to send reminders about important business dates.