Planting your Kansas rental property in an LLC cultivates a field of legal safeguard and financial nutrients, harvesting success in the Sunflower State’s fertile real estate plains.
Starts at $0 + Kansas state fees and only takes 5-10 minutes
Whether you have a vacation rental, residential home, or apartment building, you might not think of yourself as a business when you’re considering renting a property out to someone else. But the truth is you’ll be entering into contracts, collecting revenue, and managing expenses. Your tenants can sue you if things go wrong, just like any business. It’s a good idea to take advantage of legal protections, such as forming a limited liability company (LLC).
The benefits of forming an LLC are immense for real estate investors for a fairly low cost. When you use our services to form your Kansas LLC, we can make the process quick and easy. And after formation, our other products and services can help make running your rental property business as smooth as possible.
You can use our LLC Formation Services to effortlessly set up your Kansas LLC. We use a straightforward process so you can get your LLC up and running fast. Our typical Formation Services follow these five easy steps:
One of the key benefits of forming a limited liability company is right there in the name, limited liability. An LLC typically operates as a separate “person” for liability purposes. So a property that’s put into the LLC will likely belong to the LLC and not you personally. This can be a big benefit, as the limitation on liability will likely keep you from being held responsible for the debts and liabilities of the company.
Another advantage of an LLC is that it’s subject to pass-through taxation. Pass-through taxation can keep the taxes of your business relatively simple and straightforward. When you form a corporation, for example, the corporation is usually taxed at the corporate level for the income of the business. A separate tax is then levied on subsequent payments (dividends) paid from the business to the owners. This can lead to double taxation, which is clearly not ideal. Most LLCs shouldn’t have this issue. Typically, LLCs are pass-through entities, so the profits pass directly to the owners. This ensures that the income of the business is only taxed once.
An LLC can help you keep your business and personal assets separated. Not only does this serve an important liability purpose, but it has other possible benefits as well. Separating your business assets can keep the line between business and personal expenses clear when filing your taxes. It can also help protect against claims of misappropriation of your business funds.
You may not have to hold all your properties under one Kansas real estate LLC. Kansas allows for the creation of something referred to as “series LLCs.” A series LLC is a unique way of adding additional subsidiaries for your company. Normally, if you want to add a subsidiary, you need to go through the entire formation process again. A series LLC allows you to use a streamlined process for adding each new subsidiary. For real estate investors, this may allow you to hold each investment property in a legally separate entity.
Creating an LLC can be an essential step for Kansas real estate investors. A limited liability company is often one of the best options for investment properties due to its simplicity. Don’t let that simplicity fool you though, an LLC can be a very powerful tool for managing your rental properties.
When selecting a name for your LLC, be sure to choose one that meets state requirements. We can do a business name search for you to see if the business name you want is available. If it is, let us reserve the name while you get the filing paperwork together.
Businesses in the state are required to appoint a registered agent. This person is responsible for receiving important documents on behalf of the LLC, such as state correspondence and legal notices. If you need a Kansas registered agent, we can help you find one.
To officially form your rental property LLC, you need to file a Certificate of Organization with the right state office and include the appropriate filing fee.
Your LLC’s Operating Agreement is one of your most important business documents. It governs how your LLC runs and provides instructions for anything from voting procedures to dissolve the company. If you’re not sure how to create an Operating Agreement, we offer templates that can serve as a guide.
The IRS assigns businesses a nine-digit EIN that is used to identify their enterprise. Having one is necessary for certain business matters, such as opening a business bank account, hiring employees, and getting financing. You can apply for an EIN yourself on the IRS’s website, or we can do it for you with our EIN service.
If you own an existing investment property, you may need to transfer the deed to the LLC. This is usually done by filing a new deed in the Recorder of Deed’s office for the County the property is located in. For example, if you have an investment property in Kansas City, you would likely file the deed in the Wyandotte County Recorder of Deed’s Office. In some cases, you may need to pay a mortgage registration fee.
If you have an existing mortgage or loan on your investment property, it’s probably a good idea to inform the lender of the transfer. Your lender may need you to execute some additional paperwork and the transfer could change the terms or rate of your loan.
If you haven’t yet rented your investment property out, you may just need to update any lease or rental agreements you use. If you do have tenants, it might be necessary to inform them of the change in ownership. You may also need to update their existing lease or rental agreement or ask them to execute a new one.
The short answer is that an LLC is a good option for most real estate investors. An LLC can be a simple and effective method of protecting your real estate investments. The flexibility and liability protection offered by an LLC can be useful for separating your investments from your personal assets and from each other.
The best time to form an LLC is usually before you purchase an investment property, but the second-best time could be now. The reason it’s ideal to form your LLC first is that the new property can be deeded to the LLC at the time of purchase. Adding an existing investment to the LLC may require some additional steps. Still, the benefits of an LLC often outweigh any burden involved with transferring the assets.
Once you have formed your LLC following the five steps mentioned above, you may also need to take a few additional steps to transfer existing property into your new company.
We understand that the process of setting up a rental property LLC in Kansas can seem confusing at first. We want to make this process as easy as we can for you, so you can focus on your business. But easy doesn’t mean incomplete. After we help you get your LLC started, we want to help you keep it running as well. In addition to our formation services, we can help you write your business plan using our Business Plan Template. We also offer our Worry-Free Compliance Service to assist you in staying on top of your reporting obligations. No matter what stage your business is in, we’re here to help.
Kansas LLC for Rental Property FAQs
Some of the many benefits of using an LLC for rental properties include limited liability, pass-through taxation, and the ability to hold multiple properties in separate series.
You can name your LLC almost anything you want. There are a few restrictions, one being that there must be some sort of variation of “limited liability company” in the name.
This will probably depend on if your Kansas LLC is doing business in your home state. If not, then you may not have to register it, but check your home state’s laws to be sure.
Disclaimer: The content on this page is for information purposes only and does not constitute legal, tax, or accounting advice. If you have specific questions about any of these topics, seek the counsel of a licensed professional.
Written by Team ZenBusiness
ZenBusiness has helped people start, run, and grow over 700,000 dream companies. The editorial team at ZenBusiness has over 20 years of collective small business publishing experience and is composed of business formation experts who are dedicated to empowering and educating entrepreneurs about owning a company.
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