Operating Agreement LLC Kansas

A Kansas Operating Agreement (OA) is the internal contract that governs how a Limited Liability Company (LLC) is owned and managed. It acts as the company’s legal blueprint by establishing rules and procedures for daily operations. The document is adopted by the member or members, and by managers when applicable, and it guides how the LLC conducts its business.

What Defines a Kansas Operating Agreement

Under the Kansas Revised Limited Liability Company Act, an Operating Agreement is defined broadly as any agreement of the members concerning the LLC’s affairs. It may be written, oral, or implied. The law allows the OA to be referred to as an operating agreement, a limited liability company agreement, or by another name.

The OA is important because it documents the structural and operational foundation of a domestic Kansas LLC. It commonly includes:

• A list of all members and their ownership interest percentages
• The management structure and voting procedures
• Initial member contributions, including cash, property, or services
• Rules for profit and loss allocation and distribution of assets
• Procedures for resolving disputes, buying out members, and dissolving the company

A member, manager, or assignee is bound by the OA even if they did not sign it. Kansas law also states that the OA is not subject to the statute of frauds, which allows oral or implied agreements to be enforceable. This applies even when the LLC has only one member.

Is an Operating Agreement Required in Kansas

Kansas requires each LLC to have an Operating Agreement in some form. Under K.S.A. §17-7673(c), an OA must “be entered into or otherwise existing” before, after, or at the time the Articles of Organization are filed. The law does not require the agreement to be written or filed with the state.

A written OA is strongly recommended because it provides clarity for members and avoids reliance on the state’s default statutes, found in K.S.A. §17-7662 through §17-76,155. These statutes may not reflect the members’ intended ownership or management choices.

Protecting Limited Liability Status

A written OA helps demonstrate that the LLC operates as a separate legal entity. This supports limited liability protection for both single-member and multi-member LLCs. Without a written agreement, courts may find that the business is not distinct from its owners, which can increase the risk of personal liability under veil-piercing or alter-ego theories.

Filing and Government Entities

The Operating Agreement is an internal document and is not filed with the Kansas Secretary of State (KSSO). This provides privacy and simplifies formation. However, the LLC must still file its Articles of Organization with the KSSO to legally register the business.

Members must also comply with requirements from other government agencies. This includes preparing and submitting any required returns, notices, statements, or reports to the Internal Revenue Service (IRS) and other state or federal authorities.

Although the OA is not filed with the state, a signed copy should be kept with the LLC’s business records. Members should also keep personal copies. Courts, auditors, and government agencies may request the agreement during legal disputes or reviews. Banks, lenders, and title companies often require it when opening accounts or approving financing.

Execution Details

An Operating Agreement becomes legally binding once all members sign it. Kansas does not require notarization. When changes are needed, members create a new agreement with the amended provisions. After signing, the new version becomes the governing document. Both old and new versions should be kept in the company’s records.