Are you looking to form a professional limited liability company (PLLC) in Kansas, but you’re not sure how the formation process works? There are several important steps when it comes to creating a Kansas PLLC that is compliant and able to do business in the state.
The professional limited liability company (PLLC) is a specialized type of LLC that is intended for licensed professionals to offer their unique services. A professional LLC in Kansas is an LLC organized to exercise the powers of a professional corporation (also known in Kansas as a professional association). Professional corporations in Kansas are corporations formed to render professional services that can only be rendered by a person duly licensed by the state of Kansas. Professions that may form a professional PLLC in Kansas include, among others, accountants, architects, attorneys, dentists, engineers, pharmacists, and nurses.
The Kansas PLLC is typically more popular than a professional corporation (PC) because it’s a more flexible business type, but it still includes the personal asset protection and professional qualifications that make the PSC valuable.
PLLCs in Kansas have relatively simple formation and maintenance requirements, several options for how they want to be taxed, and flexible management. From one-person businesses to multi-member PLLCs with several owners, the PLLC is a popular choice for a reason.
An important detail of the PLLC that differs from a traditional LLC is that liability protection is not shared across all members of the company. For example, if you operate a PLLC for physicians, your business structure does not shield each individual member from malpractice suits. Instead, each member is liable for their own malpractice insurance, and no member is liable for another member’s malpractice.
Your PLLC’s name is often the first impression you get to make on potential customers, and therefore it goes without saying that this is an important step. There are a few different aspects to take into consideration when selecting a name for your business:
In Kansas, professional limited liability companies do not use the designation “PLLC.” Instead, they must use one of the general limited liability company name endings provided for by law: “Limited Company,” “Limited Liability Company,” or the abbreviation “L.C.,” “L.L.C.,” “LC” or “LLC.” As described below in step three, you will also need to obtain a certificate from your profession’s licensing body that the name you have chosen has been approved.
Another aspect to consider is including language that explains what your business does. For example, if you’re a doctor, put the word “physician” or the initials “MD” in your PLLC name. Additionally, if your business has strong values like being environmentally friendly, you can indicate that by including the word “green.”
At the end of the day, this is your business, and you should choose a name that makes you proud. You should also make sure your PLLC name both sounds good when spoken out loud, and looks good when written down.
The most important consideration for naming a PLLC is to not get too attached to any one business name until you know that it is available for use. The Kansas Business Center website provides a name availability search tool that you can use to confirm if a name is available. To ensure no one else takes your chosen name during the formation process, you can reserve your chosen name online for 120 days for a fee of $30.
Every PLLC in Kansas is required to designate a registered agent, which is the individual or business entity that receives government correspondence on behalf of your business, then forwards those documents to you.
In Kansas, your registered agent (sometimes also referred to as a “resident agent”) can be an individual, a Kansas business entity, or a foreign business entity authorized to do business in Kansas. Your registered agent’s office address will also serve as your registered office address. Note that this address must be a street, rural route, or highway address in Kansas.
Without a registered agent, you could lose your good standing with the state of Kansas, and the state also has the right to dissolve your PLLC if they decide to. In a worst-case scenario, the state could fail to alert you regarding a lawsuit against your company, which could even lead to a judgment against your business because you didn’t defend yourself.
At the end of the day, we recommend hiring a dedicated registered agent service to handle these requirements. Doing so will help eliminate junk mail and more importantly, keep your personal and/or business address off public record.
Once you are ready to form your Kansas professional limited liability company, you will fill out the Articles of Organization.
This is THE document that will register your PLLC with the state. You’ll want to ensure all of the following information is correct on the form:
Once completed, you’ll need to mail your Articles of Organization to the Kansas Secretary of State with the filing fee. Note that upon filing your Articles of Organization, you must also file with the Kansas Secretary of State a certificate by the licensing body of the profession for which your business is formed stating that (i) each of the members is duly licensed to practice that profession, and (ii) the proposed company name has been approved.
The filing fee for the Articles of Organization is $165.
The Kansas Secretary of State generally take 2-3 business days to process a filing, assuming such filing is complete and correct.
After you register a PLLC in Kansas, create a detailed outline that explains how you will run and manage your new business. Even though it doesn’t need to be filed with the state, put one together and keep it for your records.
When you open a bank account, you may be asked for a copy of this document. You’ll also want to keep in mind that any future business partners or managing members may also be interested in seeing your operating agreement before joining your company. After all, this document essentially serves as your overall plan for success.
An attorney can help you outline your operating agreement, or you can create one from a free template online. You can read more about operating agreements here, but some of the basic information you’ll want to have includes:
The vast majority of PLLCs require a federal tax ID number, or EIN. An EIN is basically the business version of a social security number, and it’s used for a variety of important PLLC functions.
For instance, you’ll need an EIN if you want to hire any employees, and many banks require them to open business bank accounts as well. You’ll also need one for tax purposes, hence the name federal tax ID number. Get an EIN for your LLC for free through the IRS.
Depending on how you elect to treat your Kansas professional LLC, the state may impose a corporate income tax on your business. Other taxes, such as sales and use tax, may also apply to your business. You should review the Kansas Department of Revenue, Taxation Division’s website for more information about state-level taxation requirements. You will also need to register with the Kansas Department of Revenue Customer Service Center, where you can fill out a questionnaire to determine which business taxes are required for your professional LLC.
Depending on where in Kansas your business is located, you may also need to pay some local taxes. You should contact your city and county to determine your local tax obligations. The four largest cities in Kansas provide resources for businesses on their websites: Wichita, Overland Park, Olathe, and Kansas City.
Unlike some states, Kansas does not require companies to obtain a general business license. Instead, you’ll likely need to obtain a license or permit from one of the various agencies and commissions in the state. The Kansas Business Center website provides information on the most common licenses and permits for businesses in Kansas. You should also check with your city and county to confirm if you need any additional local licenses, permits, or registrations.
If you would prefer to have a professional handle the paperwork for you, consider hiring an online business formation service.
Because of the often-complex nature of professional limited liability companies, some of our favorite service providers don’t offer PLLC formations, but there are still plenty of quality companies that do provide this service. A couple of our favorites for PLLC formation are LegalZoom and MyCorporation.
Another option would be to hire a business attorney to handle your PLLC formation. While this is certainly a more expensive route than using an online formation service, a lawyer’s expertise could come in handy when you’re forming a specialized business structure like this.
We highly recommend that you establish a separate business banking account so that your business and personal finances are maintained completely separate. This is important because it helps protect your personal assets and also makes filing taxes much easier. Once you receive your EIN from the IRS, you’ll be able to use it to establish an account at the bank or credit union of your choice.
If you plan to hire employees, note that Kansas generally requires employers to obtain a workers’ compensation insurance policy. See the Kansas Department of Labor’s website for additional information about workers’ compensation and your responsibilities as an employer. Though not required, it’s probably also a good idea to pursue general liability insurance, as well as some industry-specific policies pertaining to the profession practiced by your PLLC.
Income reporting is just what it sounds like – reporting the income you made from your business. It’s important to note that you must file this form whether you made or lost money over the course of the year.
Income tax forms for your business are available on the Kansas Department of Revenue’s website.
Your professional LLC will be required to file an annual report with the Kansas Secretary of State to report certain basic information about your business, such as member information. If you need to find the due date for your business, you can search the Business Entity Database. Annual reports may be filed either online through the Kansas Business Center or by submitting a paper form to the Secretary of State with the filing fee.
We don’t recommend that you attempt to manage your business finances without the help of a professional. There is too much room for error, and a professional can ultimately save you time and money by guiding you on how to best manage your business finances. At a minimum, enlist professional help to set you up with software and the steps for keeping up with your finances on a regular basis. Then, consult back with your accountant at least a couple of times per year – and especially at tax time – to ensure you’re keeping track of everything correctly.
Disclaimer: The content on this page is for information purposes only and does not constitute legal, tax, or accounting advice. If you have specific questions about any of these topics, seek the counsel of a licensed professional.
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