How to Start a Limited Partnership in Kansas | A Step-by-Step Guide

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Start a Limited Partnership in Kansas

A limited partnership is an attractive business structure for those who want to start an LLC in Kansas. It combines the best of both worlds, offering limited liability protection for limited partners and the ability to manage the business for general partners actively. This article will outline the steps on How to Start a Limited Partnership in Kansas, covering everything from researching and preparing to registering your limited partnership with the Kansas government and beyond.

Webinarcare Editorial Team will help you gain knowledge through thorough research and market study. Before starting your Kansas Limited Partnership, all the steps in this article must guide you.

Steps in Starting a Limited Partnership in Kansas

What is a Limited Partnership?

A Limited Partnership (LP) is a business structure comprising two types of partners: general and limited. It is a legal entity distinct from its partners and combines certain features of partnerships and corporations.

General partners are responsible for the day-to-day management of the business, make decisions on behalf of the partnership, and have unlimited liability for the partnership’s debts and obligations. This means their assets can be seized to cover the partnership’s liabilities if necessary.

Limited partners, on the other hand, are passive investors who do not participate in business management. They provide capital to the partnership and receive a share of the profits in return. Their liability is limited to the amount they have invested in the partnership, meaning that their assets are generally not at risk for the partnership’s debts beyond their investment.

It is suggested that you speak with a legal professional before you begin setting up your limited partnership in Kansas. They’ll understand what’s best for you and your company. To safeguard your personal assets from business debts, you can always start an LLC rather than a limited partnership.

– WEBINARCARE EDITORIAL TEAM

Steps in Starting a Limited Partnership in Kansas

To form a limited partnership in Kansas, you must consider following the below guidelines that, include research and preparation, establishing the limited partnership structure, drafting the limited partnership agreement, registering the limited partnership, complying with additional Kansas requirements, and ongoing management and compliance and reporting requirements. 

Step 1: Research and Preparation

Before starting a limited partnership in Kansas, you must familiarize yourself with this business structure’s laws and regulations. In the United States, limited partnerships are primarily governed by the Uniform Limited Partnership Act (ULPA). However, each state has its laws and regulations, so it’s essential to know the specific rules that apply in Kansas.

While researching, consider whether a limited partnership is the most suitable structure for your business needs. Limited partnerships are ideal for businesses with one or more passive investors who want to avoid taking on the business’s day-to-day responsibilities. Consider alternative structures like Kansas Corporations if a limited partnership doesn’t seem right.

Step 2: Establishing The Limited Partnership Structure

Once you’ve determined that a limited partnership is the right choice for your business, the next step is to establish the structure of your partnership. This involves choosing a name, hiring a Registered Agent, and determining the roles of the partners.

Choose a Name for the Limited Partnership

The name you choose for your limited partnership is essential to your business identity. In Kansas, there are specific requirements that your limited partnership name must meet, such as including the words “Limited Partnership” or the abbreviation “LP.” Before settling on a name, conduct Kansas Business Name Search through the Kansas Secretary of State Business Entity to ensure the name you’ve chosen is available and not already used by another business.

Naming requirements for a Limited Partnership in Kansas may include:

  • The name must be unique and distinguishable from other business entities registered in the state.
  • The name must include the words “Limited Partnership,” “L.P.,” or “LP.”
  • Certain words and phrases may be restricted or require additional approval from Kansas.

If the limited partnership name is available, you may choose to reserve it for a specific period of 120 days by filing a name reservation application and paying the online name reservation fee of $30 and mail name reservation fee of $30. If your corporation plans to operate under a name other than its legal name, you may also need to register a fictitious or “doing business as” (DBA) name. 

The DBA filing can be done by N/A, which costs around $0 (not required). In addition, the DBA’s validity in Kansas is N/A, which you can file in Kansas Secretary of State.

You can check out how to file a DBA in Kansas for clearer understanding.

Hire a Registered Agent

A Registered Agent is a person or entity responsible for receiving legal documents and official notices on behalf of your LP. In Kansas, your Registered Agent must:

  • Be a resident of Kansas or a business entity authorized to do business in the state
  • Have a physical address in Kansas (P.O. boxes are not acceptable)

Choosing a reliable and responsible Registered Agent is essential, as failure to receive and respond to legal documents can seriously affect your business. 

You can serve as your own Registered Agent or appoint a friend or family member, or hire a professional Kansas Registered Agent Services. With that, we reviewed some of the best-registered agent services and provided features as an add-on with their formation packages for you to check out.

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Determine the Roles of the Partners

A limited partnership consists of two types of partners: general and limited. General partners are responsible for the day-to-day management of the business and have unlimited liability for the partnership’s debts and obligations. Limited partners, on the other hand, are passive investors who don’t participate in the management of the business and have limited liability up to the amount they’ve invested in the partnership.

As you structure your partnership, carefully consider who will take on the roles of general and limited partners. Remember that general partners will have more responsibility and potential liability, so choose those individuals wisely.

Step 3: Drafting the Limited Partnership Agreement

With the partnership structure established, the next step is to draft a limited partnership agreement. This document sets forth the partnership’s terms and conditions and should be carefully crafted to ensure it meets all legal requirements in Kansas.

Include Essential Elements

A well-drafted limited partnership agreement should include the following essential elements:

  •  Name of the limited partnership
  •  Purpose of the limited partnership
  •  Duration of the limited partnership
  •  Names and addresses of general and limited partners
  •  Capital contributions of each partner
  •  Allocation of profits and losses
  •  Management and decision-making structure
  •  Process for admitting new partners

Address Optional Elements

In addition to the essential elements, it’s a good idea to address the following optional elements in your limited partnership agreement:

  •   Transfer of partnership interests
  •   Withdrawal or removal of partners
  •   Dissolution and winding up the process

To ensure your limited partnership agreement is legally sound and compliant with Kansas laws and regulations, it’s advisable to seek legal advice from a Business Attorney in Kansas with experience in limited partnerships.

Step 4: Registering the Limited Partnership

Once your limited partnership agreement is in place, the next step is to register your limited partnership with the Kansas government. This process typically involves filing a Certificate of Limited Partnership with the Kansas Secretary of State’s office.

Prepare and File the Certificate of Limited Partnership

To file the Certificate of Limited Partnership, complete the required forms, which can typically be found on the Kansas Secretary of State. Include all necessary information and signatures, and pay the filing fee of $165.

Obtain an Employer Identification Number (EIN) from the IRS

After registering your limited partnership with the Kansas government, you’ll need to obtain Kansas Employer Identification Number (EIN) from the Internal Revenue Service (IRS). This number is used to identify your partnership for tax purposes and is required for filing federal and state tax returns.

The application of an EIN 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 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, you can benefit in several ways. It will give your LLP the absolute advantage necessary to operate at full capacity without encountering legal or judicial issues.

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Register For Kansas Taxes

Depending on your business activities and location, you may need to register for certain Kansas taxes. Check with the Kansas Department of Revenue or a tax professional to determine which taxes apply to your limited partnership.

Step 5: Complying With Additional Kansas Requirements

In addition to registering your limited partnership with the Kansas government, there may be other requirements you need to meet to operate your business legally. These may include obtaining business licenses or permits, filing annual reports with the Kansas Secretary of State, and maintaining proper records and documentation.

Obtain Any Necessary Business Licenses or Permits.

Depending on the nature of your business, you may need to obtain various licenses or permits from state or local authorities. Check with the Kansas Department of Business and Industry or a licensing professional to determine which licenses and permits apply to your limited partnership. However, in Kansas, the costs of Kansas Business Licenses range from $50 – $300.

You can check out the United States Business License & Licensing Fee Resources for more information about the costs in Kansas.

File Annual Reports 

Kansas require limited partnerships to file Annual Reports with the Kansas Secretary of State’s office. These reports typically include updated information about the partnership, such as the names and addresses of partners and any changes to the partnership agreement. 

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Maintain Proper Records and Documentation

As a limited partnership, it’s essential to maintain proper records and documentation, including copies of your limited partnership agreement, tax returns, financial statements, and any other relevant documents. These records should be kept in a safe and accessible location and may be required in the event of an audit or legal dispute.

Step 6: Ongoing Management and Compliance

Starting a limited partnership in Kansas is the beginning. To ensure the ongoing success of your business, it’s crucial to stay on top of management and compliance tasks. It is better to have regular meetings with your partners to ensure everyone is on the same page regarding the direction and performance of your business. These meetings can also help identify and address issues or concerns before they become more significant problems.

As a limited partnership, you must file annual tax returns and pay any required taxes at the federal and state levels. Consult with a tax professional to ensure you comply with all tax laws and deadlines.

Advantages of Limited Partnerships in Kansas

Here are some key advantages of forming a limited partnership in Kansas:

  • Limited Liability for Limited Partners: One of the main benefits of a limited partnership is that limited partners enjoy limited liability protection. This means their assets are generally not at risk for the partnership’s debts and obligations beyond their investment in the partnership. This limited liability can be attractive for investors who want to participate in a business venture without taking on the same level of risk as general partners.
  • Pass-through Taxation: Limited partnerships are typically subject to pass-through taxation, meaning the partnership’s profits and losses flow to the partners’ individual tax returns. This structure avoids double taxation, as the partnership is generally not subject to federal income tax. Instead, each partner is responsible for paying taxes on their share of the partnership’s income at their individual tax rate.
  • Flexibility: A limited partnership allows for flexibility in the management structure. General partners have the authority to make decisions and manage the business, while limited partners can remain passive investors. This division of responsibilities and decision-making power can appeal to both parties. It allows general partners to maintain control over the business operations and limited partners to invest without being involved in day-to-day management.
  • Ease of Formation: A limited partnership is typically less complicated and expensive than a corporation. Limited partnerships generally require filing a Certificate of Limited Partnership with the state and creating a limited partnership agreement, which is less complex than the documentation required for a corporation.
  • Attracting Capital: Limited partnerships can attract capital from investors who want to participate in a business venture without taking on the responsibilities and risks of being a general partner. This structure can help businesses secure funding while allowing limited partners to benefit from the partnership’s profits.
  • Continuity of the Partnership: In Kansas, limited partnerships can continue to exist even if one of the general partners dies, withdraws, or is replaced, as long as there is at least one remaining general partner. This continuity can provide stability and help ensure the ongoing success of the partnership.

Can a Foreign Limited Partnership Do Business in Kansas?

Yes, a foreign Limited Partnership can do business in Kansas by registering as a foreign LP with the Kansas Secretary of State or appropriate state agency. The foreign LP must provide a certificate of good standing from its home state and pay any required registration fees.

What are the Tax Implications of Forming a Limited Partnership in Kansas?

Limited Partnerships are generally considered pass-through entities for tax purposes, meaning that the profits and losses of the business are passed through to the individual partners, who report them on their personal income tax returns. However, specific tax implications may vary depending on the state and the nature of your business. It is recommended to consult with a tax professional to determine your specific tax obligations.

FAQs

What is a limited partnership in Kansas?
A limited partnership in Kansas is a type of business entity formed by at least one general partner and one limited partner for the purpose of operating a business.
How do I start a limited partnership in Kansas?
To start a limited partnership in Kansas, you need to file a certificate of limited partnership with the Kansas Secretary of State.
Who can form a limited partnership in Kansas?
Anyone can form a limited partnership in Kansas as long as they comply with the state’s requirements and regulations.
How much does it cost to start a limited partnership in Kansas?
The filing fee for a certificate of limited partnership in Kansas is $165.
What are the advantages of forming a limited partnership in Kansas?
The primary advantage of forming a limited partnership in Kansas is that the limited partners have limited liability for the partnership’s debts and obligations.
What are the disadvantages of forming a limited partnership in Kansas?
The primary disadvantage of forming a limited partnership in Kansas is that the general partners have unlimited liability for the partnership’s debts and obligations.
Do I need a lawyer to start a limited partnership in Kansas?
You are not required to have a lawyer to start a limited partnership in Kansas, but it is recommended that you consult with an attorney to ensure compliance with state laws and regulations.
What is the difference between a general partner and a limited partner in a limited partnership in Kansas?
A general partner in Kansas has unlimited liability for the debts and obligations of the partnership, while a limited partner has limited liability.
Can a limited partner be a member of the management team in a limited partnership in Kansas?
Under Kansas law, limited partners in a limited partnership can participate in certain activities related to the partnership’s management without becoming a general partner, but they must not be involved in day-to-day operations.
What is the duration of a limited partnership in Kansas?
The duration of a limited partnership in Kansas is typically set out in the certificate of limited partnership, which may be for a specific term or perpetual.
Do I need to file an annual report for my limited partnership in Kansas?
Yes, limited partnerships in Kansas are required to file an annual report with the Kansas Secretary of State to maintain their good standing.
Can a limited partner withdraw from a limited partnership in Kansas?
A limited partner in Kansas can withdraw from a limited partnership at any time, subject to the terms of the partnership agreement.
How are profits and losses of a limited partnership distributed in Kansas?
Profits and losses of a limited partnership in Kansas are typically distributed based on the partnership agreement.
What is the tax treatment of a limited partnership in Kansas?
As a pass-through entity, a limited partnership in Kansas is not subject to state income tax. However, the partners themselves are responsible for paying taxes on their share of the partnership’s income.
Are there any restrictions on where I can form a limited partnership in Kansas?
There are no geographic restrictions on where you can form a limited partnership in Kansas.
Are there any ongoing requirements for maintaining a limited partnership in Kansas?
Limited partnerships in Kansas must file an annual report with the state, maintain accurate records and books, and comply with state laws and regulations.
Can a limited partnership in Kansas sue or be sued?
Yes, a limited partnership in Kansas can sue and be sued on behalf of the partnership.
What is a registered agent, and do I need one to start a limited partnership in Kansas?
A registered agent is a person or entity authorized to accept legal documents on behalf of a business. All limited partnerships in Kansas are required to appoint and maintain a registered agent.
Can I change the name of my limited partnership in Kansas?
Yes, you can change the name of your limited partnership in Kansas by filing an amendment to the certificate of limited partnership.
What happens if a general partner dies or becomes incapacitated in Kansas?
If a general partner dies or becomes incapacitated, the limited partnership can continue with the remaining general partner(s) or by appointing a successor.
What happens if a limited partner dies in Kansas?
If a limited partner dies, their interest in the limited partnership will generally be transferred to their beneficiary or estate, subject to the partnership agreement.
Are limited partnerships in Kansas subject to state regulation?
Yes, limited partnerships in Kansas are subject to state regulations, including registration and reporting requirements.
Can a limited partnership in Kansas be converted to another entity type?
Yes, limited partnerships in Kansas can be converted into other business entity types, subject to the requirements of state law.
Is Kansas a good place to form a limited partnership?
Kansas can be a good place to form a limited partnership because of its business-friendly regulatory environment.
How long does it take to register a limited partnership in Kansas?
The processing time for registering a limited partnership in Kansas varies but can take up to 20 business days.
Are there any restrictions on the types of businesses that can form a limited partnership in Kansas?
No, any type of business can form a limited partnership in Kansas.
Can a limited partner participate in the management of a limited partnership in Kansas?
Limited partners in Kansas are typically passive investors and have limited say in the management of the partnership. However, they can participate in certain activities related to the partnership’s management without becoming a general partner.
Can I choose to form a Kansas-based limited partnership even if I’m living in a different state or country?
Yes, you can choose to form a Kansas-based limited partnership even if you’re living in a different state or country, but you must comply with state laws and regulations.
Who can be a general partner in a Kansas limited partnership?
Anyone can be a general partner in a Kansas limited partnership, including individuals, corporations, and other entities.
How is a Kansas limited partnership taxed?
A Kansas limited partnership is typically treated as a pass-through entity for tax purposes, meaning that profits and losses pass through to the partners’ personal tax returns.
What are the filing requirements for a Kansas limited partnership?
In Kansas, you will need to file a certificate of limited partnership with the Secretary of State in order to establish a limited partnership.
What are the annual filing requirements for a Kansas limited partnership?
In Kansas, limited partnerships are required to file an annual report with the Secretary of State.
How much does it cost to establish a limited partnership in Kansas?
The cost to establish a limited partnership in Kansas will depend on various factors, including filing fees and legal fees.
Are there any residency requirements for owners of a Kansas limited partnership?
There are no residency requirements for owners of a Kansas limited partnership.
What are the benefits of a Kansas limited partnership?
The benefits of a limited partnership in Kansas include limited liability, pass-through taxation, and flexibility in management.
Can a limited partnership in Kansas have a single general partner?
Yes, a limited partnership in Kansas can have a single general partner.
How many partners are required to start a limited partnership in Kansas?
At least two partners are required to start a limited partnership in Kansas.
Can a limited partnership in Kansas be owned solely by corporations?
Yes, a limited partnership in Kansas can be owned solely by corporations.
Can a Kansas limited partnership be dissolved voluntarily?
Yes, a Kansas limited partnership can be dissolved voluntarily with the agreement of all partners.
Can a Kansas limited partnership be sued for the debts of the general partner?
The limited partners are not liable for the debts of the general partner in a Kansas limited partnership.
Can a Kansas limited partnership own property?
Yes, a Kansas limited partnership can own property.
Can a limited partner have input in the day-to-day running of a Kansas limited partnership?
No, a limited partner is only liable for the debts of the partnership up to the amount of their investment and generally has no management control or authority.
Are there any age requirements for owners of a limited partnership in Kansas?
There are no age requirements for owners of a limited partnership in Kansas.
What happens if a general partner in a Kansas limited partnership dies?
The death of a general partner does not necessarily require the dissolution of the partnership. The partnership agreement will determine what should happen to the partnership.
Is it necessary to have a lawyer to start a limited partnership in Kansas?
While not necessarily required, it is highly recommended to consult with a lawyer when starting a limited partnership in Kansas.
Why is it important to have a partnership agreement in a Kansas limited partnership?
A partnership agreement outlines the terms and conditions of the partnership and governs the relationship between the partners.
Can a Kansas limited partnership file bankruptcy?
Yes, a Kansas limited partnership can file for bankruptcy.
What is the difference between a general partner and a limited partner in a Kansas limited partnership?
A general partner has unlimited personal liability for the debt and liabilities of the partnership, while a limited partner is only liable up to the amount of their investment.
Can a Kansas limited partnership issue stocks and bonds?
No, a Kansas limited partnership cannot issue stocks and bonds.
How are business decisions made in a Kansas limited partnership?
Decisions in a Kansas limited partnership are typically made by the general partner or partners.
What is the process for adding or removing partners in a Kansas limited partnership?
The process for adding or removing partners will be outlined in the partnership agreement.
Can a Kansas limited partnership have an office or presence outside Kansas?
Yes, a Kansas limited partnership can have offices or locations outside of Kansas.
Can a partnership interest in a Kansas limited partnership be transferred?
Yes, ownership interest in a Kansas limited partnership can be transferred, unless prohibited by the partnership agreement.
Do all partners in a Kansas limited partnership need to contribute capital?
No, each partner in a limited partnership is not required to contribute an equal amount of capital.
What are the record-keeping requirements for a Kansas limited partnership?
A Kansas limited partnership is required to maintain detailed records of financial transactions, minutes of meetings, and any other business documentation required by law.
What happens if a Kansas limited partnership fails to meet its tax obligations?
If a Kansas limited partnership fails to meet its tax obligations, it may be subject to penalties and interest fees.

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Conclusion

Starting a limited partnership in Kansas can be a rewarding experience, providing you with the benefits of limited liability protection for passive investors and the opportunity to manage your business actively. By following the steps outlined in this article and staying on top of ongoing management and compliance tasks, you can establish a successful limited partnership and enjoy the benefits of this unique business structure.

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