How to get Foreign Qualification in Kansas

Do you own a limited liability company (LLC) created in a state other than Kansas, but you want to expand your business to the Sunflower State? If so, you’ll need to qualify your foreign LLC in order to transact business in Kansas.

What is a foreign qualification and how do foreign LLCs function within the state of Kansas? In this guide, we’ll answer these questions and more.

What Is a Foreign Qualification?

A foreign qualification enables your limited liability company to do business in the state of Kansas. It doesn’t matter which state you originally formed your business in ― or in other words, the state your domestic LLC is located in ― as the qualification process to register a foreign LLC in Kansas is the same regardless of where your domestic LLC is based.

The confusion surrounding foreign qualification usually centers on what it means to “do business” in a state outside of your primary state. This gets especially problematic considering some states don’t strictly define what it means to transact business in that state. However, Kansas state law does not define exactly what qualifies as “doing business in the state.”

What Qualifies as ‘Doing Business’ in Kansas

There is no set definition of doing business in Kansas, so each business is evaluated on a case-by-case basis. In general (but with certain exceptions), you’ll need to form a foreign LLC in Kansas if your business pursues one or more of the following activities in this state:

• Having a commercial domicile in the state
• Having one or more individuals performing services in the state
• Directing activities at Kansas customers for the purpose of selling them goods or services
• Deriving income from, or attributable to, sources within this state

What Does NOT Qualify as ‘Doing Business’ in Kansas

Kansas Statute 17-7932 lists the following activities that do not qualify as “doing business” in the state:

• “Maintaining, defending or settling an action or proceeding;
• Holding meetings or carrying on any other activity concerning its internal affairs;
• Maintaining bank accounts;
• Maintaining offices or agencies for the transfer, exchange or registration of the covered entity's own securities or maintaining trustees or depositories with respect to those securities;
• Selling through independent contractors;
• Soliciting or obtaining orders, whether by mail or through employees or agents or otherwise, if the orders require acceptance outside this state before they become contracts;
• Selling, by contract consummated outside the state of Kansas, and agreeing, by the contract, to deliver into the state of Kansas machinery, plants or equipment, the construction, erection or installation of which within the state requires the supervision of technical engineers or skilled employees performing services not generally available, and as part of the contract of sale agreeing to furnish such services, and such services only, to the vendee at the time of construction, erection or installation;
• Creating, as borrower or lender, or acquiring indebtedness with or without a mortgage or other security interest in property;
• Securing or collecting debts or foreclosing mortgages or other security interests in property securing the debts, and holding, protecting and maintaining property so acquired;
• Conducting an isolated transaction that is completed within 30 days and is not one in the course of similar transactions of like nature; and
• Transacting business in interstate commerce.
  • A person shall not be deemed to be doing business in the state of Kansas solely by reason of being a member, stockholder, limited partner or governor of a domestic covered entity or a foreign covered entity.
  • This section does not apply in determining whether a foreign covered entity is subject to service of process, taxation or regulation under any other law of this state.”

How to Get Foreign Qualification in Kansas

If you want to foreign qualify your LLC in Kansas, you’ll need to file an Application for Registration of Foreign Covered Entity with the Secretary of State. This application will allow you to obtain a Certificate of Authority to conduct business in Kansas. The form will require the following information:

• Type of business
• Company name
• State of formation
• Date of formation
• Certificate of Good Standing (must be obtained from the authorities in your state of formation)
• The date that business was first transacted in Kansas
• Name and address of your Kansas registered agent
• Nature of your business
• Signature

Filing Fee: $115 (Corporation), $165 (LLC/Limited Partnership), or $250 (Series LLC), with checks made payable to the “Secretary of State.”

What Is the Penalty for Not Getting Foreign Qualification in Kansas?

There are three major penalties for failing to qualify a foreign LLC in Kansas. First, you cannot bring a lawsuit against a third party in Kansas. Second, the state attorney general can bring a case to prevent you from doing any further business in the state. And third, you will be liable for any fees and penalties for the full period of time that your business operated in the state without a Certificate of Authority.

Should I Hire a Business Service Provider to File My Kansas Foreign Qualification?

If you don’t want to handle your foreign qualification on your own, you have options. Some entrepreneurs choose to hire a lawyer to prepare and file their Certificate of Authority, which can be a good option if you’re concerned about getting the job done right. However, attorney’s fees can be quite expensive.

The other option is to hire a business service provider like Incfile or ZenBusiness to register your foreign LLC with the state of Kansas.

These companies can typically get your foreign qualification done for a fraction of the price of an attorney. This is our preferred route if you don’t want to go with the DIY option.

Conclusion

The process for getting a foreign qualification in the state of Kansas isn’t particularly complicated compared to some other states. It just involves a two-page form and a processing fee. However, you will need to contact the proper authorities in your state of formation to obtain a Certificate of Good Standing.

Kansas’s rules and regulations regarding which LLCs need to foreign qualify are considerably looser than many states. Nonetheless, this is not a process that can be overlooked, because the penalties for not qualifying a foreign LLC in Kansas can be severe ― especially if your business is forbidden from operating in Kansas.

We hope this article managed to answer your questions about obtaining a Kansas foreign qualification, and we wish you a prosperous business future!