How to Form a Professional Corporation in Kansas (2024 Guide)

Forming a Professional Corporation in Kansas

If you would like to start and learn how to form a corporation in Kansas, there are a few things that you should do now. However, in a professional corporation, professionals must create a special organizational structure to establish a professional or service corporation. Among the appropriate professions to organize a professional corporation in Kansas are accountants, physicians, engineers, architects, and attorneys.

Forming a professional corporation in Kansas or any business organization needs a certain number of steps. In this article, Webinarcare Editorial Team is going to share those steps. Keep in mind that these are general procedures. Depending on local law, it may be modified. For instance, your professional corporation may be subject to city or county-based rules.

What is a Professional Corporation in Kansas?

A professional service corporation (PSC), often known as a professional corporation (abbreviated as PC), is a particular type of organization that is permitted by state law to allow owners of specifically licensed professions to practice in the Kansas. A professional corporation’s owner is answerable for their own negligence or wrongdoing but is not held personally liable for the actions of other owners. The abbreviation PC or P.C. is frequently used to denote professional corporations.

This structure allows professionals to enjoy some of the benefits and protections of a traditional corporation while maintaining their professional status and abiding by the regulations of their respective licensing boards.

LegalZoom is the recommended corporation formation if you are thinking of forming a professional corporation from scratch. However, you can always start an LLC in Kansas, if you changed your mind.

WEBINARCARE EDITORIAL TEAM

How to Form a Professional Corporation in Kansas

To form a Professional Corporation in Kansas for the professional service you provide, you must follow a few steps that include verifying if you are qualified for a PC, naming your business, hiring a Registered Agent, filing the Articles of Incorporation, outlining an operating agreement, requesting for an EIN, opening a bank account, getting a business license, and filing for an Annual report and taxes.

Step 1: Verify If You Are Qualified for a Professional Corporation

In forming a professional corporation in Kansas, you should know if you are qualified. There are specific professions that are allowed to form a professional service corporation, including-

To provide your service, you must be qualified and have a license. In most cases, you can now form a professional corporation after finishing your studies, passing the exam, and receiving your license. If you work in an industry that does not provide a license or professional certification, you should consider starting an LLC or corporation.

Step 2: Name your Professional Corporation in Kansas

After you have decided to form a professional corporation in Kansas, you must choose a name for your corporation. Here are some pointers to consider when naming your professional corporation.

  • The business name should have the word PC, frequently followed by the name of the principal owner in place of Inc or LLC. (Example. John Doe, MD, PC)
  • Limit of restricted words that need a license.
  • A unique name is needed with no match
  • No confusion with a government entity name.

In Kansas, if you do not wish to file your professional corporation right away but want to hold the name that you have decided on, then you can reserve your corporation name for 120 days. You must file a name reservation application in the Kansas Secretary of State to keep the name.

If not already present, a professional corporation, professional association, service corporation, or professional service corporation must be included in the name. You may register your business under a different legal name if your preferred legal name is unavailable. Once you’ve decided on a name, you can apply for Kansas DBA (doing business as). This way, you can run a clinic or law firm under your name.

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Step 3: Choose the Kansas Registered Agent

The next step in forming a professional corporation is hiring a Registered Agent, who accepts legal paperwork for your business. This person or business will receive important tax forms, legal documents, all notices of lawsuits, and other official government correspondence in Kansas. Forming a professional corporation for your service will be easier if you have Registered Agent in Kansas.

Alternatively, you can serve as your own Registered Agent if you have the time. Usually, in Kansas, a Registered Agent costs is ranging from $50 – $150. To make it easier, you can hire Kansas Registered Agent Services for your professional corporation.

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Step 4: File the Articles of Incorporation in Kansas

After you hire a Registered Agent to form a professional corporation, the next step is to file the Kansas Articles of Incorporation. In writing the Articles of Incorporation, the business name, owner’s contact information, corporation address, and Registered Agent contact information, should be written. Include the names of all co-owners as well. All owners must demonstrate that they have the necessary licenses to practice the profession in question.

Filing the Articles of Incorporation in Kansas may be done with two ways, online and by mail. The Articles of Incorporation fee may vary from different state. However, in Kansas, it costs $90 for filing online and by mail. Create an account/Log in to the SOS site, get the online form, fill it, and submit online. For offline filing, Send the form by mail to Kansas Office of the Secretary of State, Memorial Hall, 1st Floor, 120 S.W. 10th Avenue, Topeka, KS 66612.

Step 5: Write an Operating Agreement in Kansas

An operating agreement in Kansas is a document that contains all of your company’s organizational details. It is optional to draft an operating agreement in most states. Yet, having one as an internal document is strongly advised. The operating agreement includes information like-

  • About Business
  • Members and management
  • Capital contribution
  • Profit Distribution
  • Change of membership
  • Dissolution

Step 6: Designate the PC Board of Directors in Kansas

The next step is to form the first board of directors for your PC in Kansas. All of the initial directors must provide the owner with their contact information. The owner must keep records and submit them by the Kansas Secretary of State. As a shareholder and owner, you must ensure that a provision for appointing a new director is included in the By-laws. In Kansas, you must have One directors in forming your Professional Corporation.

Step 7: Write the Corporate Bylaws

Now that you are done forming the team of the board of directors, the next step is to draft corporate bylaws. Corporate bylaws are the basic rules that control a corporation. It includes the organization’s structure, processes, laws, and rules. As a result, all personnel, managers, and corporation members must obey the firm’s rules.

Creating comprehensive corporate bylaws requires specific knowledge about the company, its structure, and operations. However, I can provide you with a general outline of what corporate bylaws usually include. It is crucial to consult with Kansas Business Attorney or a legal expert to ensure that your bylaws comply with the laws and regulations governing your jurisdiction and industry.

  • Name and Purpose of the Corporation
  • Registered Office and Agent
  • Shareholders
  • Board of Directors
  • Officers
  • Committees
  • Indemnification and Insurance
  • Conflict of Interest
  • Records and Reports
  • Amendments
  • Miscellaneous

Step 8: Hold the First Board of Directors’ Meeting

Gather the board of directors for the first meeting after drafting the corporate bylaws. This meeting will conclude with the appointment of directors to manage the company’s daily operations, approval of the bylaws, selection of the corporation’s financial reporting year, and approval of the stock issue. Minutes should be taken at all board meetings and kept with the company’s records.

Step 9: Request an EIN in Kansas.

After the operating agreement’s documentation, you should get or request an Employer Identification Number (EIN) in Kansas. The tax ID for your professional corporation will be an EIN. The Internal Revenue Service can provide an EIN (IRS). It has nine digits and is comparable to a social security number. Nevertheless, EIN is different from SSN. Only business-related tasks, primarily filing general taxes, are performed using it. The form needs to be filled out and submitted online to the IRS.

The application of an EIN in Kansas can be through the following:

  • Apply Online- The online EIN application is the preferred method for customers to apply for and obtain an EIN.
  • Apply by Fax- Taxpayers can fax the completed Form SS-4 application to the appropriate fax number), after ensuring that the Form SS-4 contains all of the required information.
  • Apply by Mail- The EIN application Form SS-4 can be filed via mail. The processing time frame to receive the mail is four weeks.
  • Apply by Telephone-International Applicants – International applicants may call 267-941-1099 (not a toll-free number) from 6 a.m. to 11 p.m. (Eastern Time) Monday through Friday to obtain their EIN.

After you have your EIN number, you can benefit in several ways. It will give your professional corporation the absolute advantage necessary to operate at full capacity without encountering legal or judicial issues.

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Step 10: Open a Bank Account and Prepare for Taxes.

You should open a business bank account as soon as you have applied for and received your Employer Identity Number because you will use this account for yourself, your clients, and your staff. Check out the Best Banks in Kansas for you to decide on which bank you are going to open an account.

Due to your organization’s increased legality and liquidity, having a US business bank account may make conducting business in Kansas easier. Most banks require an EIN for businesses other than sole proprietorships to open a business bank account. Also, keeping your accounts separate will prevent you from merging your personal and business finances. Also, filing taxes is simpler when you have an EIN. You can expect to pay employee and corporate taxes when you form a professional corporation.

Step 11: Get a Business License in Kansas

Before your professional corporation operates in Kansas, you must have Kansas Business License first. A business license is a formal document issued by a state government agency that allows you to conduct business in the geographic area governed by that agency. The cost of business licenses and permits in Kansas ranges from $50 – $300. You must check with the local authorities to see if any special licenses or permits are required.

Step 12: File Your Taxes in Kansas

Finally, you’ve arrived at the final process. Remember to file your taxes when you have obtained a business license and are ready to begin operations. To avoid a large tax bill, you should begin paying taxes quarterly as soon as possible. Each state has different tax requirements. Start examining the Kansas tax classification for the taxes that an LLC in Kansas must pay.

Main Characteristics of a Professional Corporation

In forming a Professional Corporation, the main characteristics must be distinguished before forming it. These are the general characteristics of forming a Professional Corporation in Kansas.

  • Limited Liability Protection: A professional corporation provides its owners, shareholders, or members limited liability protection like a regular corporation. This means the shareholders’ personal assets are generally protected from business debts, obligations, and lawsuits, except in malpractice or professional negligence cases.
  • Kansas Licensing Requirements: All shareholders must typically be licensed professionals in the same field in a professional corporation. The corporation must also comply with specific state regulations and licensing requirements that govern the profession.
  • Governance and Management: A professional corporation is governed by a board of directors, who the shareholders elect. The board appoints officers to manage the day-to-day operations of the corporation. All directors and officers must be licensed professionals in the same field as the corporation.
  • Taxation: Professional corporations are taxed as C corporations, where the corporation pays taxes on its income, and shareholders pay taxes on dividends received from the corporation. However, some professional corporations may be eligible for S corporation status, allowing pass-through taxation. Income, losses, deductions, and credits flow to the shareholders, who report this information on their income tax returns.
  • Restrictions on Ownership and Transfer of Shares: Professional corporations often restrict the ownership and transfer of shares to ensure that only licensed professionals in the same field can become shareholders. This helps maintain the professional nature of the corporation and adheres to state licensing requirements.
  • Malpractice Liability: While a professional corporation provides limited liability protection for general business debts and obligations, it does not shield shareholders from liability for their own malpractice or professional negligence. Shareholders can still be personally liable for their actions in providing professional services.

In summary, a professional corporation is a specialized corporate structure designed for licensed professionals, offering limited liability protection and a formal governance structure while adhering to state licensing requirements and regulations.

Maintain Professional and Business License in Kansas

You must maintain or renew your professional license regularly now that you have established your professional corporation. Even if your company is well-established, it is only meaningful if you have a valid operating license. And it makes no difference if your professional license is still valid for a year or two, but your business license has already expired.

Make time at least once a year to check the status of your licenses. You won’t miss anything important this way. You can address any issues that arise.

Filing Annual Report in Kansas

In Kansas, you must submit a report. The owners’ and Registered Agent’s names and contact details are listed in the Annual Report. Also, it should include all of your yearly financial activity. You must submit the report every 1 year in the Kansas Secretary of State.

FAQs

What is a professional corporation in Kansas?
A professional corporation (PC) in Kansas is a type of corporation that is formed by licensed professionals such as doctors, lawyers, and accountants to limit personal liability.
Can anyone form a professional corporation in Kansas?
No, only licensed professionals who meet the specific education and experience requirements can form a professional corporation in Kansas.
What type of professionals can form a professional corporation in Kansas?
Professionals such as doctors, lawyers, dentists, chiropractors, architects, engineers, and accountants can form a professional corporation in Kansas.
What are the benefits of forming a professional corporation in Kansas?
Forming a professional corporation can limit personal liability, provide tax benefits, and offer more credibility to your business.
Is there a minimum number of shareholders required to form a professional corporation in Kansas?
Yes, there must be at least one shareholder to form a professional corporation in Kansas.
Can a professional corporation in Kansas issue stock?
Yes, a professional corporation in Kansas can issue stock to its shareholders.
What are the filing fees for forming a professional corporation in Kansas?
The filing fee to form a professional corporation in Kansas is $20.
Do all shareholders in a professional corporation have to be licensed professionals in Kansas?
No, not all shareholders in a professional corporation have to be licensed professionals in Kansas, but at least one must hold a professional license.
Can a professional corporation in Kansas participate in activities outside of its specific field of expertise?
No, a professional corporation in Kansas can only engage in activities that are related to the specific field of expertise of its shareholders.
Can a professional corporation in Kansas have outside investors?
No, a professional corporation in Kansas can only have investors who are licensed professionals in the specific field of expertise.
How long does it take to form a professional corporation in Kansas?
The time it takes to form a professional corporation in Kansas depends on various factors such as how quickly the necessary documents can be completed and submitted.
What are the requirements to maintain a professional corporation in Kansas?
A professional corporation in Kansas must file annual reports and maintain the required licenses and permits specific to its field of expertise.
Does a professional corporation in Kansas have to file a tax return?
Yes, a professional corporation in Kansas must file an annual tax return with the state.
Are there any restrictions on the types of clients a professional corporation in Kansas can serve?
No, as long as a professional corporation in Kansas is licensed and qualified to provide the specific services, it can serve any client.
Can a professional corporation in Kansas be a non-profit organization?
No, a professional corporation in Kansas cannot be a non-profit organization; it must exist for profit and be taxed accordingly.
Can a professional corporation in Kansas convert to a different business entity in the future?
Yes, a professional corporation in Kansas can convert to another business entity, such as an LLC or a partnership in the future.
Are the shareholders of a professional corporation in Kansas personally liable for the corporation’s debts and obligations?
No, the shareholders of a professional corporation in Kansas are typically only liable for the corporation’s debts up to the amount of their investment in the corporation.
Does a professional corporation in Kansas require a Board of Directors?
Not necessarily, but it must have at least one shareholder who serves as president, officer, or director in the corporation.
Is there a limit on the number of shareholders in a professional corporation in Kansas?
No, there is no limit on the number of shareholders in a professional corporation in Kansas.
Can a professional corporation in Kansas have its shares publicly traded?
No, a professional corporation in Kansas cannot have its shares publicly traded; they can only be owned by licensed professionals.
Can a professional corporation in Kansas hold assets such as real estate or intellectual property?
Yes, a professional corporation in Kansas can hold assets such as real estate and intellectual property in its name.
Does a professional corporation in Kansas have perpetual existence?
Yes, a professional corporation in Kansas can have perpetual existence, meaning it can continue to exist even if its shareholders change.
What are the key differences between a professional corporation and a regular corporation in Kansas?
The key difference between a professional corporation and a regular corporation in Kansas is that a professional corporation is formed exclusively by licensed professionals for the purpose of providing professional services.
Can a professional corporation in Kansas have only one shareholder?
Yes, a professional corporation in Kansas can have only one shareholder who is a licensed professional in the field of expertise.
Can a limited liability partnership (LLP) be converted to a professional corporation in Kansas?
Yes, a limited liability partnership can be converted to a professional corporation in Kansas through a formal conversion process.
Can a professional corporation in Kansas be structured as an S corporation for tax purposes?
Yes, a professional corporation in Kansas can elect to be structured as an S corporation for tax purposes if it meets specific requirements.
What happens if a shareholder of a professional corporation in Kansas passes away or leaves the corporation?
If a shareholder passes away or leaves the corporation, their shares may be transferred or sold to another licensed professional to maintain the corporation’s qualified status.
What is an annual report, and why do professional corporations in Kansas have to file one?
An annual report is a document that provides current and accurate information required by the Kansas Secretary of State to update the state’s records. All professional corporations in Kansas must file an annual report to maintain their business standing in the state.
How do I form a professional corporation in Kansas?
You must file professional articles of incorporation and meet all Kansas statutory requirements.
What professions are eligible to form a professional corporation in Kansas?
Medical doctors, osteopathic physicians, dentists, optometrists, podiatrists, chiropractors, and psychologists.
Is there a minimum number of people needed to form a professional corporation in Kansas?
No, you can form a professional corporation with only one person.
Can I use an acronym for the name of my professional corporation in Kansas?
You can use an acronym as long as it includes your name or the name of an owner or employee of the corporation.
Is there a limit to the number of owners of a professional corporation in Kansas?
No, there is no limit to the number of owners.
Can a professional corporation in Kansas have more than one profession?
No, a Kansas professional corporation can only engage in one profession.
How much does it cost to form a professional corporation in Kansas?
The fee is $90 to file the articles of incorporation with the Kansas Secretary of State.
Do I need to apply for any special licenses or permits in Kansas to form a professional corporation?
No, but you must obtain any necessary professional licenses for your specific profession.
Can a non-Kansas resident own a professional corporation in Kansas?
Yes, a non-Kansas resident can own a professional corporation as long as they meet all the requirements.
How can I check if the name I want for my professional corporation is available?
You can search the Kansas Secretary of State’s business entity database.
Can a professional corporation in Kansas be taxed as an S Corporation?
Yes, but it must meet the S Corporation requirements and file the appropriate forms with the Internal Revenue Service.
Are there any annual reporting requirements for a professional corporation in Kansas?
Yes, you must file an annual report and pay the filing fee with the Kansas Secretary of State.
Can I change the name of my professional corporation in Kansas after it’s formed?
Yes, you can file an amendment to your articles of incorporation to change the name.
What happens if I forget to file my annual report for my professional corporation in Kansas?
Your corporation may fall out of good standing and face penalties or even dissolution.
Can a professional corporation in Kansas have a board of directors?
Yes, but it must meet all the requirements for a Kansas specific profession professional corporation.
Can a professional corporation operate in multiple states with one registration in Kansas?
No, you must register your Kansas professional corporation in each state in which you operate.
Can my professional corporation in Kansas offer general services like a regular corporation?
No, it can only engage in the specific profession for which it was formed.
Can I dissolve my professional corporation in Kansas if I no longer wish to operate as a professional entity?
Yes, you can file articles of dissolution with the Kansas Secretary of State.
Can a professional corporation in Kansas hire employees?
Yes, a Kansas business no matter the type can legally hire an employee in Kansas with some understanding with the Kansas employment law.
What are the professional liability implications for a Kansas professional corporation?
Legal protection may generally need to obtain as different professions allowing different limitations.
Is there any difference between a professional corporation and a professional association in Kansas?
Yes, professional corporations are formed as a corporation and follow state corporate law. A Professional Association/ Partnership is a type of business entity governed by the provisions of the entity type statute.
Is there a residency or citizenship requirement for forming a professional corporation for Kansas?
No, there are no residency or citizenship requirements for forming a professional corporation in Kansas.
Can I be both the sole owner and the only employee of my professional corporation in Kansas?
Yes, as long as you meet all state legal requirements necessary while doing so.
Can my Kansas professional corporation own real estate or other assets?
Answer:- Yes, you are limited to the profession-specific legally while operating as a business.
Do professional corporations in Kansas require more paperwork and formalities than regular corporations?
Yes, because professional corporations are highly regulated in Kansas.
Can I operate a professional corporation in Kansas out of my home?
Yes, however, there are some legal-related requirements & regulations of your home-based for-business activities and zoning laws.
Can a Kansas professional corporation give back to society via tax-exempted charities?
Yes, the corporation and/or the employee profile can undoubtedly make Charitable Donations, BUT the law tends to differ depending on the profession forming the professional corporation.

Also Read

How to Save Money While Forming Kansas Professional Corporation

One of the first steps in saving money while forming a Kansas Professional Corporation is to do your research. Make sure you understand the laws and regulations surrounding Professional Corporations in Kansas, as well as any specific requirements for your industry. This will help you avoid costly mistakes and unnecessary expenses.

Another way to save money is to handle as much of the paperwork and filing yourself as possible. While it may be tempting to hire a lawyer or consultant to assist with the process, doing it yourself can save you hundreds or even thousands of dollars. There are many online resources and guides available to help you navigate the paperwork and filing requirements for forming a Professional Corporation in Kansas.

When it comes to choosing a registered agent for your Professional Corporation, shop around for the best price. While it is important to select a reputable and reliable registered agent, there are many affordable options available that can save you money in the long run.

Consider choosing a simple name for your Professional Corporation to save on branding and marketing expenses. A straightforward name that clearly communicates your business’s focus and services can be just as effective as a flashy or clever name, without the high cost of branding and advertising.

Another way to save money while forming a Professional Corporation in Kansas is to carefully consider your business structure and financial plan. Choose a business structure that aligns with your long-term goals and objectives, and create a realistic financial plan that ensures you can meet your financial obligations without overspending.

It is also important to minimize unnecessary expenses during the formation process. Avoid unnecessary legal fees, consultations, and services that may not be essential to your business’s success.

Lastly, network with other Professional Corporation owners and entrepreneurs to learn from their experiences and gather valuable insights. Building relationships with other business owners can help you identify cost-saving strategies and resources that you may not have considered on your own.

In conclusion, forming a Kansas Professional Corporation does not have to break the bank. With careful planning, research, and diligence, you can save money and still create a successful and sustainable business. By following these tips, you can start your Professional Corporation off on the right foot financially and set yourself up for long-term success.

Conclusion

In conclusion, forming a professional corporation in Kansas is a strategic decision for licensed professionals who seek to combine their expertise and services under a single corporate entity. This business structure offers limited liability protection, a formal governance structure, and compliance with state licensing requirements. However, it also comes with certain restrictions on ownership, transfer of shares, and personal liability for professional malpractice. By carefully considering the advantages and disadvantages of a professional corporation, professionals can determine whether this structure aligns with their business goals, regulatory requirements, and risk management needs, ultimately contributing to a more organized, secure, and compliant professional practice.

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