Kansas LLC Foreign Qualification: Here’s What to do
Your business is growing, and you’re planning an expansion to other states. It’s a good problem to have! But it’s not quite as simple as choosing another location. Because each state has different rules and requirements for business operations, you may need a “foreign qualification” in each state you plan to do business.
It’s a common misconception that foreign qualification is only for businesses operating outside the U.S. But in this case, “foreign” refers to any business operating in a state that isn’t the state where the LLC was originally formed.
For example, if your LLC is registered in Washington and you are looking to open a second location in Kansas, you may need to complete a foreign qualification in Kansas before you can expand there.
What happens if I fail to foreign qualify before doing business in Kansas?
Foreign qualifying is essentially asking permission to do business in the state of Kansas. And the notion that “it’s easier to ask forgiveness than permission” doesn’t apply here. Failing to foreign qualify before starting a business in Kansas yields consequences that are far costlier than registering in the first place.
If you fail to foreign qualify, your LLC will be prohibited from bringing any action or lawsuit to Kansas courts. Additionally, you will be liable for all the fees and penalties your LLC would have paid during its time in Kansas had it been properly registered.
But transacting unauthorized business won’t completely cut you off from activity in Kansas. For example, you would still be allowed to defend an action in court, and your existing in-state contracts would still be considered valid.
Still, penalties and fees can add up over the years and being left without any legal standing is a scary prospect, so it’s best to avoid the risk and foreign qualify right away.
Read over the Kansas LLC Act, Section 17-76,126 for more information.
What is considered “doing business” in Kansas?
We’ve established why you shouldn’t do business without a foreign qualification. But what exactly does it mean to “do business” in Kansas? The state’s LLC Act doesn’t give specific direction on the topic, but other state and tax laws consider an LLC to be “doing business” and required to foreign qualify if:
- Your LLC maintains offices, warehouses, stores, or any other type of physical presence in the state.
- There are representatives, like salespersons or agents, operating on behalf of your LLC in the state.
Taxes are unavoidable. And depending on your LLC’s size and income, you may be required to pay specific business taxes in Kansas. By foreign qualifying, you’re letting the state know you could be eligible for these taxes. While it might seem like a fiscally-wise idea to avoid as many taxes as possible, failing to foreign qualify could lead to larger tax-related fines down the line.
If you’re unsure whether or not you need to file for foreign qualification in Kansas, we suggest seeking legal counsel.
Could I be exempt from foreign qualifying in Kansas?
The foreign qualification, however, isn’t a hard and fast rule for all LLCs performing any kind of action in Kansas. Certain actions do not qualify as “doing business” and therefore don’t require a foreign qualification. Some examples are:
- Defending or settling an action or proceeding in a Kansas court
- Any activity concerning internal affairs, like holding manager or shareholder meetings
- Maintaining bank accounts
- Selling products or services through independent contractors.
- Facilitating orders taking place outside the state before they turn into contracts
- Creating or acquiring indebtedness, or collecting debts
- Transacting business in interstate commerce
- One isolated transaction – not in a series of similar transactions – completed within 30 days.
After examining this list (as well as the more detailed one in Section 17-7303 of the Kansas Statutes) check to see if your business activities in Kansas appear there. If your only activities are present, you likely won’t have to foreign qualify. But if you’re unsure, it’s best to seek legal advice.
How to Foreign Qualify your LLC in Kansas
Foreign qualification in Kansas is simple if you know where to find and send your forms. If you or your legal counsel has decided to foreign qualify your LLC in Kansas, make your way to the Secretary of State Business Forms page. The one you’re looking for is Form FA: Application for Registration of Foreign Covered Entity.
You’ll notice that there’s no option for online filing. This means you’ll need to download the form and fill it out electronically (using Adobe Acrobat) or by hand. The form itself contains detailed instructions for its completion, but for a quick reference, here’s the info you’ll need:
- Your LLC name (exactly as it appears in the records of your home state)
- State where your LLC was formed and its date of formation
- Date you began doing business in Kansas (if different from filing date)
- Kansas resident agent name and address
- Fiscal year earnings
- Nature of your business activity in Kansas
Also required is a Certificate of Existence (or Certificate of Good Standing) from the state where you formed your LLC. To obtain one, contact the state government.
Have your checkbook ready, too. The fee for foreign qualification in Kansas is $165. Along with your finished form and Certificate of Existence, include a check or money order made payable to “Kansas Secretary of State.”
Additional fees might apply as well. Depending on how long you’ve been doing business in Kansas at the time of the filing, you may owe annual report fees. See page 3 of the form for more information.
Once you’ve gathered all the necessary information and materials, package it up and mail or hand deliver it to:
Kansas Secretary of State
Memorial Hall, 1st Floor
120 S.W. 10th Ave.
Topeka, Kansas 66612-1594
You may also fax your documents to (785) 296-4570, but it will cost you another $20.
After your form is in and your fee is paid, sit back, take a deep breath, and pat yourself on the back. Your LLC is foreign qualified and you’re embarking on another chapter in the life of your business.
Name Requirements to Remember
As you work to meet all of the Kansas foreign qualification requirements, don’t lose sight of their business name restrictions. If your name isn’t compliant, you won’t be able to register and do business there. Your LLC name must:
- Use a term that’s indicative of its business type, like “limited liability company,” “limited company,” “L.L.C.,” “L.C.,” “LLC,” or “LC”
- Be distinguishable from every other business entity name on record with the Kansas Secretary of State.
Need to save time?
Let’s face it, there’s never enough time in the day, especially when you’re running a company. And properly registering your LLC in Kansas involves research and time, time that you could be using to continue growing your business.
If the thought of paperwork, fees and state correspondence makes your head spin, consider using a service like Northwest Registered Agent to foreign qualify your business. Services like Northwest ensure that your forms are filed correctly and on-time, potentially saving you thousands of dollars in penalties, not to mention a bunch of time and stress.
And as a bonus, they include a free registered agent service for one year to keep your business compliant and in good standing with the state of Kansas. For a $100 service fee, they’ll handle that paperwork so you don’t have to.