Removing a Member from Kansas LLC | Things You Need to Know


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Remove Member From Kansas LLC

Limited Liability Companies (LLCs) are popular business structures in Kansas because they provide flexibility in management and taxation while offering personal liability protection for their members. However, there may come a time when a member of an LLC needs to be removed for various reasons, such as retirement, disputes, or other personal circumstances. Removing a member from an LLC in Kansas can be complicated, but understanding the legal requirements and following the proper steps can help ensure a smooth transition.

This article will guide you through Removing a Member from an LLC in Kansas by discussing the legal requirements, preparing necessary documents, and providing helpful tips to avoid potential pitfalls.

Webinarcare Editorial Team will help you understand the process of removing a member. It would be best if all the factors in this article guided you.

What is a Limited Liability Company?

An LLC, or Limited Liability Company, is a type of business structure that offers a mix of features from partnerships and corporations. It provides its owners, known as members, with limited liability about the company’s debts or potential lawsuits, much like a corporation. At the same time, an LLC provides flexibility in management and profit distribution, similar to a partnership or sole proprietorship. LLCs can be owned by one or more individuals, corporations, or other LLCs. However, taxation in an LLC is pass-through by default, which means the profits or losses are reported on the owners’ individual tax returns.

Before you start a removing a member, it is advised that you consult with a legal expert. They will be aware of what’s best for you and your business. You can always start an LLC in Kansas, if you wish to protect your personal assets from business debts.

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Reasons for Member Removal in Kansas LLC

There could be several reasons why a member needs to be removed from an LLC in Kansas:

  1. Breach of Agreement: All members are bound by the operating agreement of the LLC. If a member violates the agreed terms knowingly or unknowingly, this can be a reason for removal.
  2. Financial Mismanagement: If a member is found guilty of embezzling funds or other related financial misconduct, they should be removed to protect the company’s financial health.
  3. Criminal Activity: If a member is involved in criminal activity, this can put the entire company at risk. In such cases, removal is crucial to protect the LLC’s reputation and legality.
  4. Lack of Participation: If a member consistently fails to contribute to the business, either through capital, time, or expertise, they might be removed.
  5. Conflict of Interest: An LLC’s members must prioritize the business’s interests. If a member’s activities conflict with these interests, they might need to be removed.
  6. Irresolvable Disputes: Sometimes, members might have disputes that harm the company’s functioning. Removing one or more members involved might be necessary if such disputes cannot be resolved.
  7. Personal Reasons: Personal reasons such as bankruptcy, divorce, or incapacity can also necessitate removing a member from an LLC.

Removing a member from an LLC is a legal procedure. It may require a majority vote from the other members or depend on specific LLC operating agreement clauses. Legal advice from Kansas Business Attorney should be sought when considering this action.

How to Remove a Member from Kansas LLC

To remove a member from an LLC, you must follow the guidelines that include reviewing the operating agreement, consulting with a business attorney, obtaining the consent of the remaining members, preparing and executing a written agreement, updating the operating agreement, notifying the Kansas Secretary of State, and updating the tax and financial records. These are the basic ones, so read the whole article until the end. 

Step 1: Review the Kansas Operating Agreement

The first step in removing a member from an LLC in Kansas is carefully reviewing the Kansas Operating Agreement for your LLC. The operating agreement is the document that outlines how the Kansas LLC will be managed and governed, including provisions for the removal of members. If the operating agreement contains specific guidelines for removing a member, those guidelines must be followed. If the operating agreement does not address the removal of members, then the default provisions under Kansas law will apply.

The operating agreement includes information like-

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

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Step 2: Consult with an Attorney

Given the potential legal and financial consequences of removing a member from Kansas LLC, consulting with a Business Attorney in Kansas before taking any action is advisable. A business attorney experienced in Kansas LLC law can help you understand the legal requirements, ensure compliance, and avoid potential pitfalls.

The qualities of an excellent business attorney can make a significant difference in the success and growth of your business. Here are some key qualities to look for when choosing a business attorney in Kansas:

  • Expertise in Kansas Business Law: The best business attorney should have a deep understanding of federal, state, and local laws and regulations governing businesses in Kansas. In terms of business laws and regulations, a business attorney should be familiar with forming of the Kansas Articles of Organization so that they will guide you in regulating the Kansas Secretary of State and other laws that need to abide by.
  • Experience In Your Industry: An attorney with experience working with businesses in your industry will be better equipped to understand your company’s unique challenges and opportunities. They will be familiar with industry-specific regulations and can provide more targeted and relevant advice.
  • Strong Communication Skills: Effective communication is critical to a successful attorney-client relationship. A top-notch business attorney should be able to explain complex legal concepts in clear, easy-to-understand language and be responsive to your questions and concerns.
  • Proven Track Record: A great business attorney should have a history of successful client outcomes. They should be able to provide references or case studies that demonstrate their ability to achieve favorable results for businesses like yours.
  • Strategic Thinking: The best business attorney can think strategically, helping your company proactively address potential legal issues and identify opportunities for growth and success.
  • Commitment to Client Success: A truly exceptional attorney is not just focused on billable hours but genuinely committed to helping your business succeed. They should be willing to invest time and effort in understanding your company’s goals and work diligently to help you achieve them.

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Step 3: Obtain Consent of the Remaining Members

In most cases, removing a member from Kansas LLC requires the consent of the remaining members. This is typically achieved through a vote of the members, with the required percentage of votes needed for approval varying based on Kansas’s operating agreement or Kansas law.

If the operating agreement does not specify the percentage of votes required, you should consult your business attorney or refer to the default provisions under Kansas law.

Step 4: Prepare and Execute a Written Agreement

Once the required consent has been obtained, the next step is to draft a written agreement outlining the terms of the member’s removal. This agreement should include, but is not limited to:

  • The effective date of the removal
  • The reason for the removal
  • The method of calculating the member’s buyout or distribution of assets
  • Any other relevant terms or conditions

All members, including the departing member, should sign the agreement. This written agreement is evidence of the removal and can be used to update the LLC’s records and filings with the Kansas Secretary of State.

Step 5: Update the Operating Agreement

After removing a member, Kansas LLC’s operating agreement should be updated to reflect the change in membership. This may include amending the list of members, updating the ownership percentages, and revising any other relevant provisions. It is crucial to ensure that the updated operating agreement accurately reflects the current structure and governance of the LLC.

Suppose you wonder what the Kansas operating agreement entails. It includes the following:

  • Name of the LLC: Your LLC’s name must include the words “Limited Liability Company” or the abbreviation “LLC” or “L.L.C.” and comply with the Kansas LLC naming requirements. In Kansas, if you do not wish to file your LLC right away but want to hold the name that you have decided on, then you can reserve your LLC name for 120 days. You must file a name reservation application with the Kansas Secretary of State to keep the name. The online name reservation fee costs $30, while the mail name reservation fee costs $30.
  • Principal Office Address: This is where your LLC’s primary business activities will be conducted.
  • Registered Agent Information: Your Registered Agent is a person or entity designated to receive legal documents on behalf of your LLC. The Registered Agent must have a physical street address in Kansas. 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 Registered Agent, appoint a friend or family member, or hire a Professional Kansas Registered Agent Services.
  • Purpose of the LLC: This section should describe the primary purpose of your LLC and the business activities it will engage in.
  • Duration of the LLC: You may choose to have your LLC exist for a specific period or continue indefinitely.

Step 6: Notify the Kansas Secretary of State

Depending on the specific circumstances and requirements under Kansas law, you may need to file a notice of the member’s removal with the Kansas Secretary of State. This could involve filing the Amended Kansas Articles of Organization or other appropriate documents. 

The filing fee for amending your Articles of Organization costs $165; however, it varies depending on your specific situation and the nature of the amendments. Consult your business attorney or refer to the Kansas Secretary of State’s website for further guidance.

Step 7: Update Tax and Financial Records

Finally, updating the Kansas LLC’s tax and financial records to reflect the member’s removal is essential. This may involve notifying the Internal Revenue Service (IRS) and the Kansas Department of Revenue and updating the bank accounts, bookkeeping, and other financial records. By profession, you can manage your finances using spreadsheets, accounting software, or becoming a CPA in Kansas.

Is It Important to Update the Operating Agreement?

It is important to update the operating agreement when you remove a member from your Kansas LLC. The operating agreement is a key document outlining your LLC’s rules, procedures, and ownership structure. When a member is removed, it is crucial to ensure that the updated operating agreement accurately reflects the current structure and governance of the LLC.

Updating the operating agreement after removing a member may include the following:

  • Amending the list of members to remove the departing member’s name
  • Updating the ownership percentages to reflect the change in membership
  • Revising any provisions related to the management, voting rights, and decision-making processes to account for the change in membership
  • Addressing any other relevant sections that may be affected by the member’s removal

By updating the operating agreement, you can maintain clear and accurate records of your LLC’s structure, which can be crucial for legal and financial reasons and the smooth operation and management of the business.

FAQs

How do I remove a member from an LLC in Kansas?
In order to remove a member from an LLC in Kansas, you will need to follow the guidelines outlined in the state’s LLC statutes and the LLC’s operating agreement.
What is the process for removing a member from an LLC in Kansas?
The process for removing a member from an LLC in Kansas will typically involve approval from the other members as well as fulfilling any legal requirements set forth in both the state’s LLC statutes and the LLC’s operating agreement.
Do I need to have a valid reason to remove a member from an LLC in Kansas?
Typically, a valid reason must exist in order to legally remove a member from an LLC in Kansas, but this can vary depending on the terms of the LLC’s operating agreement and the specifics of the situation.
Can I simply vote to remove a member from an LLC in Kansas and then let them go?
While members can generally vote to remove a member from an LLC in Kansas, there may be additional legal steps and requirements that must be fulfilled to ensure that the process is officially recognized.
Can I remove a member from an LLC in Kansas without their consent?
This will depend largely on the LLC’s operating agreement and the overall legal requirements in Kansas for removing members from LLCs. In some cases, consent may not be required, but in other cases, consent may be required before a member can be removed.
Do I need to consult with an attorney to remove a member from an LLC in Kansas?
While it’s not always necessary to consult with an attorney when removing a member from an LLC in Kansas, consulting with an attorney can be a good way to ensure that the process is executed legally and in accordance with the LLC’s operating agreement.
What if I don’t have an operating agreement for my LLC in Kansas?
Having an operating agreement is generally recommended for LLCs in Kansas since it sets out many important provisions related to the management and operation of the LLC, including procedures for handling situations like removing a member.
Are there any fees involved in removing a member from an LLC in Kansas?
Depending on the specifics of the situation, there may be fees and/or costs involved related to removing a member from an LLC in Kansas, such as filing fees or attorney’s fees.
Can a member be removed from an LLC in Kansas for non-payment of dues?
The answer to this question may depend on the terms of the LLC’s operating agreement, as well as the legal requirements for removing members from LLCs in Kansas.
What if a member in a Kansas LLC is causing problems for the business?
Members of an LLC in Kansas may be removed if they are causing problems for the business, but the specifics of the situation and the terms of the operating agreement will affect how this process is carried out.
Do I need to dissolve the entire LLC in Kansas if I want to remove a member?
It is generally not necessary to dissolve an entire LLC in Kansas if you want to remove a member, though the process of removing a member can be complex and may require consultation with outside parties like attorneys or business advisors.
What happens to the member’s share of ownership when they are removed from an LLC in Kansas?
When a member is removed from an LLC in Kansas, their share of ownership will generally be distributed to the remaining members unless otherwise stated in the operating agreement.
Can a member be removed from an LLC in Kansas for not meeting certain performance standards?
Depending on the specifics of the situation, a member may be removed from an LLC in Kansas for not meeting certain performance standards, but this may require documentation and approval from all members of the LLC.
Are there any legal implications to removing a member from an LLC in Kansas?
There may be legal implications to removing a member from an LLC in Kansas, including the potential for lawsuits or legal action related to breach of contract or other legal issues.
What happens to the member’s vested interest in the LLC when they are removed?
When a member is removed from an LLC in Kansas, their vested interest in the company will generally be distributed to the remaining members unless otherwise stated in the operating agreement.
How long does the process of removing a member from an LLC in Kansas typically take?
The process of removing a member from an LLC in Kansas can often take several months, depending on the specifics of the situation and any legal requirements or documentation that is necessary.
Is there a certain percentage of votes required to remove a member from an LLC in Kansas?
Depending on the provisions of the operating agreement, a certain percentage of votes may be required in order to remove a member from an LLC in Kansas.
What if the operating agreement conflicts with the state’s LLC statutes in Kansas?
In the case of conflict between the operating agreement and the state’s LLC statutes in Kansas, the state’s laws will generally take precedence.
Can a member be removed from an LLC in Kansas for breaching the terms of the operating agreement?
Members may be removed from an LLC in Kansas if they breach the terms of the operating agreement, but the specifics of the process may vary depending on the nature and severity of the breach.
What if we can’t reach an agreement on removing a member from our LLC in Kansas?
In cases where agreement cannot be reached on removing a member from an LLC in Kansas, legal action or negotiation may be necessary to resolve the issues.
What if the member files a lawsuit against the LLC after being removed?
Members of an LLC in Kansas who are removed may choose to file a lawsuit against the LLC for a variety of reasons, but the specific approach and outcome will depend on the individual case.
Can members of an LLC in Kansas be held personally liable for debts and obligations of the company?
Depending on the terms of the operating agreement and the specifics of the legal structure, members of LLCs in Kansas may or may not be held personally liable for debts and obligations of the company.
Is there a limit to the number of members an LLC can have in Kansas?
There is no limit to the number of members an LLC can have in Kansas, though some restrictions and guidelines exist related to management and ownership structures.
Do I need to provide legal notice to the member before removing them from an LLC in Kansas?
Generally speaking, legal notice will need to be provided to members who are being removed from an LLC in Kansas in order to ensure that the process is conducted legally and in accordance with legal requirements.
Can a member who has been removed from an LLC in Kansas challenge the process in court?
Members who are removed from an LLC in Kansas may challenge the process in court or through legal action, though the specifics of the case will depend on the details of the situation and the legal requirements involved.
Can we have a provision in our operating agreement that allows for immediate removal of a member in certain circumstances?
It is possible to have a provision in the operating agreement for an LLC in Kansas that allows for immediate or expedited removal of a member, but this will depend on the specifics of the operating agreement and legal requirements.
Is an LLC in Kansas required to have an operating agreement?
While an operating agreement is not mandatory for LLCs in Kansas, most LLCs have an operating agreement due to the many benefits it can provide in terms of clarifying roles and responsibilities, streamlining decision-making, and more.
Can I remove myself as a member from an LLC in Kansas?
Members of LLCs in Kansas can remove themselves as members, but the specifics of the process will depend on the terms of the operating agreement and legal requirements.
Can a member be removed from an LLC without their consent in Kansas?
Kansas law allows members to be removed without their consent if certain circumstances occur, such as the member’s death, resignation, or expulsion.
What are the grounds for expelling a member from an LLC in Kansas?
Grounds for expelling a member from an LLC in Kansas may be outlined in the operating agreement, but generally, reasons for expulsion include failure to uphold responsibilities, misconduct or criminal activity, or breach of fiduciary duty.
How can an LLC member be expelled in Kansas?
To expel a member from an LLC in Kansas, a vote must be conducted among the remaining members. The operating agreement controls the procedures for how this vote occurs.
Can a member voluntarily withdraw from an LLC in Kansas?
Yes, a member can typically choose to withdraw from an LLC in Kansas by giving written notice.
Will a member receive their original capital contribution upon withdrawal from an LLC in Kansas?
This will depend on the terms of the operating agreement.
Are there any consequences for a member withdrawing from an LLC in Kansas?
It will depend on the terms of the operating agreement, but usually there are some consqequences such as tax implications as well as other restrictions provided under the agreement.
Are there any tax implications when removing a member from an LLC in Kansas?
Consult a tax lawyer or an accountant for identification of tax implications of the withdrawal.
Can a member be removed from an LLC in Kansas for simply being difficult to work with?
It depends on the provisions given upon their membership by the operating agreement. If their actions constitute a breach of fiduciary duty or other assigned responsibility, removal is possible.
Is it possible to remove a member of a foreign LLC from a Kansas LLC?
In such cases, the foreign LLC’s policies and procedures that govern the very corresponding matter throughout the assorted jurisdiction will know exactly how it will happen.
Does an LLC need to notify the state of Kansas if a member is removed from the company?
This depends on the requirement of other government regulators an other memberships present in the state.
What is the voting process for removing a member from an LLC in Kansas?
Typically, a vote must be conducted by the remaining members of the LLC according to the guidelines specified in the operating agreement.
Can an LLC member be removed in the absence of a signed operating agreement in Kansas?
Yes, this shall typically be considered by the actions within that multiple protocol signed by an existing affiliated member of the LLC.
Are there any liabilities associated with removing a member from an LLC in Kansas?
Consult with legal and financial professionals regarding same.
Can an expelled member file a lawsuit against the LLC after they have been removed in Kansas?
It is likely for this to happen. Including this possibility into the formulation of the operating agreement and the removal procedure lays out options and contingencies to mitigate conflicts and transitions.
Are there any other steps that need to be taken once a member is removed from an LLC in Kansas?
Any undertakings that need to be proactively addressed for the benefit of all members must be discussed, indicated within the protocol, and taken by the prevailing members under advisement done by professionals.
What happens to an expelled member’s ownership interest in the LLC once they are removed?
That member’s ownership interest shall depend upon the terms of the LLC Operating Agreement, but there may be potential restrictions of the removed member’s initial membership purchased.
Can a removed member still have liability for the actions of the LLC after they have been removed in Kansas?
Prior to final removal being applied, there are opportunities given to integrate the process within legal guidelines with responsibilities made known and accounted for.
Can a minority member be removed from an LLC in Kansas?
It will depend on what policies shape the relevant operating agreement again.
Can a Kansas LLC expel a member for criminal activity that does not relate to the LLC?
Membership expulsion in an LLC for circumstances like such is typically not based solely on non-related criminal behavior. The protocols for offences and situation in the governing policy are vigilant applications.
Are any restrictions imposed on a removed member of an LLC in Kansas?
If in case of the breach of the agreement caused a removal of membership, subsequently there would be more stringent restrictions on the member in terms by the LLC Operating Agreement.
Can a removed member of an LLC compete with the LLC in Kansas after being expelled?
Provision on restriction contracts maybe added to an operating agreement is to restricting such engagement or agreements with other dealings affecting competence and interests towards the LLC.
Can a member be removed immediately in Kansas?
It shall depend on how emergency provisions within the agreed upon policies that will best serve the members of the LLC.
Is there a difference between expelling a member versus letting a member resign from the LLC in Kansas?
Any differences shall stem to the reasons for resignation rather than expulsion as the obligations and procedures amongst the members of an LLC remains the same.
How much time – if any – must pass between expulsion votes for a single member in Kansas?
Any such determinations on interim discussions and timelines is subjected per the agreed terms and conditions between all the current members.
How does the process for removing a member from a multiple-member LLC in Kansas compares with a LLC with a sole member?
Process involved in removing a member in LLC with sole-member would vary exceedingly compared to multiple-membered LLCs. Proper vetting by a legal professional of the current situation for comprehension is key to elucidating any possible complications concerning .the different types of ownership entities.
How many members must remain in an LLC in Kansas after expulsion to keep it active?
This will depend on the other membership structures in the governance agreement and validation facts brought near issue at the time of separation. Other types of corporations’ rules or acts may exist separately that that dispute expenses like these.
Must the reason for a members’ removal disclosed in Kansas?
Total disclosures may be situational thus the matter calls for legal advice, although items such as misconduct and other obligations stipulated therein will have effect amongst the concerned members of the LLC.
Is it common practice for a Kansas LLC to adjust the ownership percentages/gaining capitalization when removing a member?
Comparatively new participants without long-term outlooks for the company that become too time-limited are issues mainly needed to remove or otherwise appease their situation financially until company level goals can be determined by those within position of ensuring the CFC relevance. Remunerations upon necessary revisions from underlying knowledge acquired based on discretion done by specialist multidisciplinary advisers shall be reintegrated accordingly into such pending plans of action.

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Conclusion

Removing a member from an LLC in Kansas can be complex and requires careful attention to detail. By following these steps and consulting with an experienced attorney, you can ensure that your LLC remains compliant with Kansas law and continues to operate smoothly during this transition.

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