I'm currently rebuilding an old Yerfdog 3206. Just finished painting it all this past week (for the most part, still need to finish the clearcoat on a few areas. That being said, I've also painted an old Cherokee with rattlecan Rust-Oleum.
I'd say, any rust spots (that aren't eaten through of course) wire wheel, sand, treat if needed, clean, dry well, paint, clearcoat.
With the Jeep I took it to bare metal, any rust spots I treated with a light mixture of white vinegar and warm water. Then soaped and rinsed it twice. Then I sanded it again before washing again. I painted it with 3 layers each of self-etching automotive primer, blue automotive matte finish enamel autopaint and finally enamel automotive matte clear coat. That was 3 years ago and (as long as its been washed recently) it looks good as it did when I finished it.
For this Yerf-Dog, I've done somewhat different. Cleaned it first, removed the old grip tape on the floor-pan, as well as any decals I could get off of it using a heat gun and a scraper. After that I treated the rust areas first with a wire wheel and then 80-120 sandpaper on an orbital/by hand. Since it is a go-kart I decided against going all out since its just going to get abused off road anyway. I sanded any rust spots I could find as best as I could then washed everything with water and dish-soap. Let it dry for a day or two after cleaning. Most of the original paint on this thing was sun faded and there was very little clear coat left on most of it. Except for the rust spots I decided against taking it all down to bare metal, instead I roughed everything up with 100-120 orbital/hand sanding, washed it all again, dried it, and then I used the same paint mentioned above (the 2x) and a couple cans of the self etching primer I had laying around. (I know the 2x has paint and primer but I did so anyway) Around 2 layers of each color paint and after letting it all dry for about a week in the sun. Its all hardened now and is holding nicely while I tackle all the mechanical stuff. I need to clean it again and then clear coat the floor-pan and roll bars I've not done yet but once said and done the entire thing will have 2 layers of paint and clear coat.
All that said, personally, when it comes to go-karts that I am likely to beat to hell off-roading in the woods, I'm way less prone to spend a ton of money on taking it all down to bare metal and using special paints. Its going to get pinstriped and chipped the first time I drive it anyway. I'd rather spend the money I save and spend more on the mechanical side of things.
Best of luck to you in painting!