How to set up an LLC for your rental property in Kansas

If you’re a landlord or real estate investor in Kansas, you’ve probably heard about the benefits of holding rental properties in a limited liability company (LLC). Setting up an LLC for your rental property can provide important protections and may simplify your business operations. But how do you actually start an LLC in Kansas? What are the costs, the paperwork, and the ongoing requirements? 

In this guide, we’ll walk through everything you need to know about how to set up an LLC for a rental property in Kansas — from filing your articles of organization to understanding your annual report obligations. Along the way, we’ll cover key topics like what an LLC protects you from, whether you need a lawyer, and how an LLC compares to other options like an S corp or umbrella insurance.

Why landlords in Kansas consider an LLC for rental property

Many landlords choose to form an LLC to separate their personal assets from their rental properties. In Kansas, an LLC can offer a layer of liability protection, helping shield your personal finances if your rental property faces legal claims or debts. An LLC may help protect your personal assets in many cases, but protection is not absolute and depends on specific circumstances.

Besides liability protection, an LLC can also provide flexibility in management and tax reporting, making it a popular choice for landlords in the Sunflower State.

If you’re wondering more broadly about the benefits and considerations, check out our general guide on should landlords use an LLC.

What is an LLC and what does it protect you from?

An LLC, or limited liability company, is a business entity recognized by the state of Kansas that combines aspects of a corporation and a partnership. It offers liability protection, meaning it can help protect you from being personally responsible for business debts or lawsuits related to your rental property.

However, it’s important to understand what an LLC can and cannot protect you from. While it can help protect your personal assets from most rental-related liabilities, it won’t shield you if you personally guarantee a loan or engage in illegal activities. Also, proper management and separation of business and personal funds are critical to maintain that protection.

For an in-depth comparison of liability options, you might also want to review our article on LLC vs umbrella insurance, which explains how these protections work together.

Step-by-step: how to set up an LLC for a rental property in Kansas

Now let’s get into the practical steps. Here’s a straightforward approach to setting up an LLC in Kansas to hold your rental property:

1. Choose a name for your LLC

Your LLC’s name must be unique and include “Limited Liability Company,” “LLC,” or “L.L.C.” It cannot be misleading or imply association with a government agency. You can check name availability on the Kansas Secretary of State business name search page.

2. Designate a registered agent

Kansas requires your LLC to have a registered agent with a physical address in the state who can receive legal documents on behalf of the LLC. This can be yourself, another individual, or a professional service.

3. Prepare and file articles of organization

The articles of organization is the official document that forms your LLC (more on this below). You’ll file this with the Kansas Secretary of State.

4. Pay the LLC filing fee

​According to LLC University, the filing fee in Kansas is $160, meaning the payment required when signing up for the first time (either online or by mail – there is a $5 convenience fee for filing online). There is also an annual fee of $50 to keep your LLC active.

More details on the fees required below.

5. Create an operating agreement (optional but recommended)

While Kansas does not require an operating agreement, it’s a good idea to draft one. This document outlines ownership percentages, management structure, and operating procedures for your LLC.

6. Obtain an EIN from the IRS

Most LLCs typically need an Employer Identification Number (EIN) for tax purposes, even if you don’t have employees. It’s a good idea to consult IRS guidance or a tax professional to determine if your LLC requires one.

7. Comply with ongoing requirements

Kansas requires annual reports and fees for LLCs (details below), so mark your calendar to stay compliant.

How much does it cost to set up an LLC in Kansas?

One of the first questions landlords ask is, “how much does it cost to set up an LLC?” In Kansas, here’s what you can expect:

• LLC filing fee: The fee to file your articles of organization with the Kansas Secretary of State is $165 if filed online, or $160 if filed by mail. 
• Annual report fee: Kansas requires LLCs to file an annual report with a $50 fee every year.
• Registered agent fees: If you use a professional registered agent service, expect to pay around $100–$300 annually.
• Operating agreement: You can draft this yourself or use a service, which may cost $50–$200 if you hire a professional.

Altogether, initial costs to set up your LLC typically run between $165 and $400+, depending on your choices.

How long does it take to set up an LLC in Kansas?

The processing time for your LLC depends on how you file:

• Online filings: Usually processed within 1–3 business days.
• Mail filings: Typically take 7–10 business days.

Kansas offers expedited services for an additional fee if you need faster processing. Given this, you can often have your LLC formed within a week if you file online.

What are articles of organization and how to file them in Kansas

The articles of organization are the foundational paperwork that officially creates your LLC. In Kansas, this document includes:

• The LLC’s name
• The registered agent’s name and address
• The principal office address of the LLC
• The duration of the LLC (usually perpetual)
• The organizer’s information

You file the articles of organization with the Kansas Secretary of State either online or by mail. You can find the form and instructions on the Kansas Secretary of State’s website.

Filing these articles and paying the filing fee formally establishes your LLC.

Do I need a lawyer to start an LLC in Kansas?

Many landlords wonder, “do I need a lawyer to start an LLC?” The answer is: not necessarily. Kansas makes it fairly straightforward to form an LLC yourself using online resources and forms from the Secretary of State.

Some individuals may choose to handle the formation themselves but should consider consulting a lawyer if unsure. If your rental business is complex or you want to ensure your operating agreement and tax structure are optimized, consulting a lawyer or a qualified professional can be helpful.

How to get an EIN for an LLC that owns rental property

An Employer Identification Number (EIN) is essentially a Social Security number for your LLC. Most LLCs typically need an EIN to open business bank accounts, file taxes, and hire employees (if applicable), but requirements can vary. It’s advisable to consult IRS guidance or a tax professional for your specific situation.

Getting an EIN is free and easy through the IRS website. You can apply online and receive your EIN immediately. Visit the IRS EIN application page to get started.

Do LLCs need annual reports and other ongoing compliance in Kansas?

Yes. Kansas requires LLCs to file an annual report with the Secretary of State. Here are the details:

• Annual report deadline: The report is due by the 15th day of the fourth month after the LLC’s formation anniversary (usually April 15 for many LLCs).
• Fee: $55 per year.
• Filing: You can file the annual report online through the Kansas Secretary of State portal.

Failure to file the annual report and pay the fee may lead to administrative dissolution, so it’s important to stay on top of these requirements and confirm current rules.

S corp vs LLC for landlords: a quick overview

Some landlords consider electing S corporation status for their LLCs to potentially reduce self-employment taxes. Here’s a quick rundown:

• LLC: By default, a single-member LLC is taxed as a sole proprietorship, and multi-member LLCs as partnerships. It offers flexibility and simplicity.
• S corp election: An LLC can elect to be taxed as an S corporation by filing IRS Form 2553. This may allow landlords to pay themselves a reasonable salary and take additional profits as distributions, potentially lowering self-employment taxes.

However, S corps require payroll administration, more IRS paperwork, and stricter rules. 

Since tax situations vary greatly, it’s a good idea to consult a tax professional to see if an S corp election makes sense for your Kansas rental business.

LLC vs umbrella insurance for rental property risk management

An LLC provides a legal shield for your personal assets, but it doesn’t cover all risks. That’s where insurance comes in.

An umbrella insurance policy supplements your existing landlord insurance by providing extra liability coverage beyond policy limits. While an LLC helps protect your personal assets legally, umbrella insurance protects you financially from large claims.

For Kansas landlords, combining an LLC with robust landlord insurance in Kansas and possibly umbrella coverage is often the best way to manage risk.

When does setting up an LLC make sense for landlords in Kansas?

Forming an LLC may be beneficial in situations such as owning multiple rental properties or seeking asset protection, but individual needs vary. For example, it may make sense if you:

• Own one or more rental properties and want to protect personal assets
• Plan to grow your rental portfolio
• Want to simplify transferring ownership interests
• Desire separation between personal and business finances

However, if you only own a single property with low risk and minimal tenants, an LLC may add complexity and costs you don’t need. Also, remember that an LLC does not replace good insurance or proper property management.

Every landlord’s situation is unique, so weigh the benefits and costs carefully.

Next steps: review your insurance and business setup

If you’re thinking about how to set up an LLC for a rental property in Kansas, remember it’s just one piece of your risk management strategy. Be sure to also review your insurance protections and understand how they work alongside your LLC.

For more insights on liability protection, check out our posts on should landlords use an LLC and LLC vs umbrella insurance. And if you’re shopping for coverage, don’t forget to explore landlord insurance in Kansas.

Remember, this article provides a general overview but does not replace professional legal or tax advice. For guidance tailored to your rental property business, consider consulting a qualified attorney or tax advisor in Kansas.