Benefits of a corporation
A corporation’s liability is limited to the corporation’s assets, which means that a creditor cannot use the shareholders’ personal assets to satisfy the corporation’s financial obligations. There may be additional benefits to forming a corporation, such as tax savings.
Requirements for incorporating in Kansas
Preparing your articles of incorporation
To form a Kansas corporation, you must file articles of incorporation with the Secretary of State and pay a filing fee. As soon as you file the articles, the corporation exists as a legal entity. The articles of incorporation may contain many provisions, but they must contain the following:
- Name of the corporation
- Corporate purpose
- Stock structure
- Registered agent and registered office
- Names and addresses of incorporators
A corporation can have different types of stock, called classes or series. These types of stocks can have different advantages, for example, one can offer voting rights while another may not.
For the section of the articles pertaining to stock structure, you must include the following information:
- If there is only one class of stock, the articles of incorporation must state the total number of shares authorized and either the par value of those shares or that the shares have no par value. Par value is a minimum amount that must be paid for a share. Shares without a par value may be sold for any amount.
- If there is more than one class of stock, the articles must state the total number of shares, the number of shares in each class and, for each class, the par value of the shares or a statement that there is no par value. The articles must also state the designation, powers, preferences, rights, limitations and restrictions for each class of shares or state that the directors are authorized to determine these matters.
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Naming your corporation
Before you file articles of incorporation, you should check to see if your proposed corporation name is available. You can conduct a name availability search on the Secretary of State’s website.
A name can be reserved for 120 days by filing an application with the Secretary of State.
Your company’s name must meet the following requirements:
- It must contain one of the following words: “association,” “church,” “college,” “company,” “corporation,” “club,” “foundation,” “fund,” “incorporated,” “institute,” “society,” “union,” “university” or “syndicate,” or the abbreviations “corp.,” “inc.,” “co.,” or “ltd.”
- Your corporation’s name must be distinguishable from the names of other business entities on file with the Secretary of State, unless the other entity consents in writing to your use of the name.
A person or entity that files the articles with the Secretary of State is known as an incorporator. The articles of incorporation must list the incorporators’ names and addresses. An incorporator may be a person, partnership, association or corporation and does not have to reside or be incorporated in Kansas.
When specifying incorporators, you must meet the following requirements:
- Your corporation must have at least one incorporator.
- If the articles of incorporation do not name initial directors, the incorporators must hold an organizational meeting to name directors and approve bylaws. Once the directors have been chosen, the incorporators have no further responsibilities.
Corporate directors establish and implement corporate policies and strategies. Directors owe a duty to the corporation and its shareholders to always act in their best interests.
The articles of incorporation or bylaws may establish qualifications for directors in addition to the following:
- There must be at least one director.
- There is no maximum number of directors. The number of directors should be specified in the articles of incorporation or bylaws.
- A director must be a person.
Specifying a registered agent
A registered agent is a person or entity that receives legal documents and other official correspondence on behalf of the corporation. The registered office is the registered agent’s business address.
The following guidelines apply when specifying a registered agent:
- A registered agent may be an individual who resides in Kansas or a corporation, limited partnership, limited liability company, or business trust formed or authorized to do business in Kansas. A corporation can act as its own registered agent.
- The registered office address must be the same as the registered agent’s business address and must be open during normal business hours to accept documents.
Stating a corporate purpose
You can state your corporation’s purpose in general terms to provide your corporation with flexibility. The following general purpose clause is sufficient: “The purpose of the corporation is to engage in any lawful act or activity for which corporations may be organized under the Kansas general corporation code.”
Determining incorporation bylaws
Bylaws provide a guide to a corporation’s internal rules and operating procedures. Bylaws are not filed with the Secretary of State.
You must adhere to the following guidelines regarding incorporation bylaws:
- The incorporators or directors must meet to adopt bylaws.
- The bylaws can contain any provision for managing the corporation’s business and affairs.
- Bylaws cannot include anything that is inconsistent with the law or the articles of incorporation.
Costs of incorporating in Kansas
The Kansas Secretary of State requires a fee when filing articles of incorporation or reserving a corporation name. Corporations are also required to pay state and federal income taxes.
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