What is included in an Kansas LLC Operating Agreement?
Your operating agreement lays out the big-picture plan for your Kansas LLC. Technically, anything not prohibited by Kansas law can be included in your operating agreement. Make sure you include the following topics:
- Activities of your LLC
- Transfer of membership interest
- Voting rights and decision-making powers
- Initial contributions
- Profits, losses, and distributions
- Management
- Compensation
- Bookkeeping procedures
- Dissolution
What information do I need for Northwest’s free Kansas LLC operating agreement?
Want to focus on your business and leave the legal hullabaloo to us? Our lawyers have drafted a comprehensive operating agreement you can use for free. You can even fill it out on this page, save it in a free account for later, and download a completed draft to sign.
In order to fill out our free operating agreement template, you’ll need your:
This must be your business’ legal entity name, or the name you put on your LLC Articles of Organization.
Did an LLC member contribute $500? $5k? A storefront? Put that here.
You’ll just write in 16 here since our version has a set amount of pages.
Remember, this is an internal document, so you won’t have to submit these names to the state just because they’re on here. However, you might need to add these people to your BOI Report.
Include any initial contributions, even if it’s only a small percentage.
While we recommend having a business bank account, some banks like to actually see the operating agreement before you open the account. If that’s the case, you can leave this blank for now.
This is the place your business operates from.
You can add this in later if you aren’t sure when your meeting will be held.
There are a few spots in our template where you’ll need a signature from one or more members.
Why should a Kansas LLC have an operating agreement?
A Kansas LLC should have an operating agreement because a company cannot act for itself. In order to operate, LLCs require real humans (and other entities) to carry out company operations.
There is no Kansas state law requiring an operating agreement. However, under Kansas Statute § 17-76,134, the law gives “maximum effect” to the “enforceability of operating agreements” — meaning that if you do have an operating agreement, it can wield a lot of power. There are plenty of reasons why it’s a good idea to have a written operating agreement. Here are a few of them:
1. Your operating agreement proves you own your LLC.
LLC members names and addresses aren’t required for a Kansas Articles of Organization. This is great for privacy protection, but can make it difficult to prove who owns the LLC, and you’ll need to do that to open a business bank account. An operating agreement lists all members’ names and addresses, so you can show it to a bank as proof of ownership.
2. An operating agreement can help reinforce your limited liability status.
To maintain limited liability status, an LLC must be able to prove that it’s legally separate from its owners. One way to show this is by having your LLC’s rules and protocols formalized in your operating agreement. If you’re ever faced with a lawsuit, the strength of your operating agreement could make all the difference in your case.
3. An operating agreement can help prevent unnecessary conflict.
When two or more people go into business together, they’re not going to agree on everything. By deciding on paper how you’re going to handle major situations, you can head off a lot of misunderstandings down the road.
4. An operating agreement can override Kansas’s default laws.
In the absence of an operating agreement, your LLC will be subject to Kansas’s default LLC laws. These laws might not perfectly suit your business. That’s why it benefits you to have an operating agreement that is customized to your LLC’s needs.
Kansas Case Law
We asked our lawyers for an example of how an operating agreement can make or break your LLC. Here’s what they said.*
“Consider the case of Investcorp v Simpson Investment Company, where a business disagreement among family members snowballed into full blown extensive and expensive litigation. This case is an excellent example of the importance that courts place on operating agreements when adjudicating intra-company disputes. While the underlying facts of the Investcorp dispute are lengthy and complex, this case also reveals the importance of fully thinking through the life cycle of an LLC, and planning accordingly.
“For these reasons (and more), a reasonably prudent business owner would (and should) adopt and maintain an operating agreement.”
FAQs
There is no Kansas law requiring an LLC to adopt an operating agreement, but without one, the Kansas Revised Limited Liability Company Act will govern your company. You’ll also need an operating agreement to open a bank account and defend your limited liability status during legal action.
No, the operating agreement is an internal document that doesn’t need to be filed with the Kansas Secretary of State. You should keep your operating agreement on file at your place of business.
Yes. While it might seem odd to sign a contract with yourself, an operating agreement is still important for a single-member LLC. The most important reason being that if your LLC is ever sued, a written operating agreement helps show that your LLC is a distinct legal entity with limited liability status.
*This is informational commentary, not advice. This information is intended strictly for informational purposes and does not constitute legal advice or a substitute for legal counsel. This information is not intended to create, nor does your receipt, viewing, or use of it constitute, an attorney-client relationship. More information is available in our Terms of Service.