Kentucky boasts a rich heritage of bourbon and bluegrass. It is experiencing a significant growth in new business ventures. Entrepreneurs will find support from government and private organizations when starting an LLC in Kentucky. Consider starting a Kentucky LLC now with the state’s recent 21% surge in new businesses in 2021. To help you turn your dream into reality, we have gathered essential tips and created a complete guide on how to start an LLC in Kentucky.
If you want to start an LLC in Kentucky, follow these steps:
#1: Name Your Kentucky LLC
#2: Choose a Kentucky Resident Agent
#3: File Articles of Organization
#4: Receive a Certificate From Kentucky State
#5: Create an Operating Agreement
#6: Get an Employer Identification Number
#7: Register With the Tax Authorities
#8: Fulfill Your Obligations
How To Start an LLC in Kentucky: 8 Easy Steps
Filing will be easy if you’ve researched and have a business plan ready. Kentucky offers a One Stop business portal via the Secretary of State for all your filings, starting with setting up an account.
Another helpful step is checking out the Kentucky LLC startup checklist before filing. It covers pre- and post-filing considerations like necessary insurance and your responsibilities towards employees.
1. Name Your Kentucky LLC
Your LLC’s name matters legally—it shouldn’t be closely similar to another business in Kentucky. Check and search LLC name availability through a Kentucky business portal or by contacting the Secretary of State at 502-564-3490.
It’s essential to consider the following key requirements:
- Include “limited liability company,” “LLC,” or “L.L.C.” in your business name.
- Ensure it’s distinct from existing state businesses. Check availability on the Secretary of State’s site.
- Avoid terms reserved for government agencies (e.g., State Department, CIA).
- Some words (bank, lawyer, etc.) may need extra paperwork and licenses.
Reserve Your Business Name
After selecting an available business name, you can reserve it for future use if you’re not prepared to finalize the filing immediately. This secures the name from being claimed by others while you’re in the planning phase for your Kentucky LLC. Reserve your LLC name by submitting a reservation or renewal of the reserved name through the secretary of state using one of the following ways:
- Online portal
- By mail
- Address: Secretary of State Office, P.O. Box 718, Frankfort, KY 40602
- In-person
- Look for Room 154, Capitol Building, 700 Capital Avenue, Frankfort, KY 40601 (8:00 a.m. and 4:30 p.m.)
Pay the $15 filing fee online or by check to “Kentucky State Treasurer.” This reserves the name for 120 days from the filing date.
Additional considerations:
URL availability: Consider getting a domain name now, even if you’re unsure about needing a webpage. Keeping this option open for the future is wise. Before settling on your LLC name, ensure the URL availability.
Naming Your Kentucky LLC
A catchy name is great but think ahead for your business. If you want to expand services, consider a less specific name for flexibility.
Check your online presence: Does your business name match an available domain? Easy online access gives you a higher chance of success.
You’re not required to use your original business name. Apply for a certificate of assumed name (DBA) through the business portal—it’s an alias for your business.
2. Choose a Kentucky Resident Agent
After you choose your business name, the state needs your contact information. A registered agent in Kentucky with a physical address (not a P.O. box) is necessary for legal documents. Many firms provide this service for a yearly fee. A registered agent can be you, an employee, or a service entity.
The registered agent needs to meet these requirements:
- They must be 18 years or older.
- The agent should be authorized to operate in Kentucky if the agent is an entity.
- A physical office address in Kentucky is necessary, not a P.O. box.
- They must provide a written agreement to serve as your registered agent.
In Kentucky, an LLC can’t act as its own registered agent. Your agent must sign the articles of organization or give written authorization for you to list them as the registered agent in the next step.
3. File Articles of Organization
The most essential document you’ll file is the articles of organization. File your LLC’s articles of organization to establish it with the state officially. Submit basic information to the Kentucky Secretary of State online or by mail. You’ll typically need the following details for this document:
- LLC name and street address
- Registered agent’s name and address
- The mailing address of the principal office
- Duration of LLC (if specified)
- Nature of business and LLC size
- Management structure (managers or members)
- Effective date of articles of organization
- Signatures of LLC’s founder and registered agent (required in Kentucky)
For any changes during operations, update your details by filing the relevant form with the secretary of state. Additionally, you can amend your articles of organization promptly after filing for immediate changes.
Upon submission of your articles, the secretary of state will assess the filing. Upon approval, your LLC becomes a legal business entity.
Member-Managed vs. Manager-Managed LLCs
Consider this decision carefully before proceeding with filing. In a member-managed LLC, all members jointly participate in managing the business. However, in a manager-managed LLC, management duties are assigned to either a hired manager or selected members. These managers have the authority to represent the LLC, such as entering contracts, making purchases, making staff decisions, and borrowing money.
4. Receive a Certificate From Kentucky State
Upon filing and approval of your Kentucky LLC’s formation documents, the state will provide a certificate verifying the formal existence of the LLC.
This certificate enables the LLC to acquire an Employer Identification Number (EIN), business licenses and open a business bank account.
5. Create an Operating Agreement
While Kentucky doesn’t mandate an operating agreement, it’s crucial for your business. An operating agreement outlines how your business operates. This legally binding document prevents future confusion. A written agreement, easily accessible, helps settle disputes and potential litigation over financial agreements. Without it, courts rely on state law, potentially disregarding the LLC and its members’ best interests.
The operating agreement includes the following:
- LLC’s name and primary address
- Duration of the LLC
- Registered agent’s name and address
- Details from the articles of organization
- Business purpose
- Member details and contributions
- Profit/loss distribution
- Process for new and departing members
- LLC management
- Indemnification and liability clauses
6. Get an Employer Identification Number
The IRS assigns a nine-digit Employer Identification Number (EIN) to identify your LLC for tax purposes. You can acquire your EIN via mail or online through the IRS.
An EIN serves these purposes:
- Handling state and federal tax filings
- Opening a business bank account
- Employing individuals.
7. Register With the Tax Authorities
Secure federal and state tax identification to fulfill your Kentucky LLC’s tax obligations.
Federal:
Obtain a free EIN from the IRS online, facilitating employment tax payments and business transactions, like opening a bank account. (Single-member LLCs without employees may opt for an EIN to avoid using their Social Security number.)
KY Department of Revenue:
Register your business online to obtain a unique 10-digit Commonwealth Business Identifier (CBI) from the KY Department of Revenue, necessary for state tax payments.
8. Fulfill Your Obligations
Your next step involves assessing your yearly obligations based on your business type. Kentucky’s business filing information page provides a solid starting point for this process.
Each year, by June 30, every business is required to submit an annual report. You can file by mail or online, with a filing fee of $15. The initial report should verify the names and addresses of your entity’s officers, members, managers, or equivalent personnel.
Amendments to annual reports are permissible if needed. Any alterations to registered agents or principal office addresses require submitting relevant forms to the Secretary of State.
Explore the following to ensure you’re informed about your LLC’s responsibilities:
- Check occupational license details by county and city.
- Understand Kentucky’s regulatory licensing needs.
- Reach out to your county clerk for county permit details.
- Contact municipal officials for city permits and licensing.
- Assess if Kentucky unemployment insurance is necessary.
- Review whether filing for Kentucky workers’ compensation is required.
Follow this complete guide on how to start an LLC in Kentucky to launch your business quickly. Familiarizing yourself with these steps can simplify the establishment of your LLC and set it on the right track.
LLC State Guides
How To Start an LLC in Kentucky FAQs
Although not mandatory, creating an operating agreement is highly advised to establish ownership, profit distribution, and member responsibilities.
Kentucky offers various LLC types, including Single-member LLCs, Multimember LLCs (Manager-managed/Member-managed), L3C (Low-Profit Liability Company), Series LLCs, PLLCs (Professional LLCs), and Restricted LLCs, each catering to distinct needs and preferences.
· Initial Costs: The filing fee begins at $40, with additional expenses for legal assistance, licenses, permits, and business name registration, typically totaling between $300 and $500.
· Ongoing Expenses: Besides the annual $15 filing fee, consider other costs like self-employment taxes, legal/accounting support, leasing, insurance, and basic operational expenses.
· Affordable Filing Fee: The filing fee to establish an LLC in Kentucky starts at just $40.
· Tax Exemptions: Kentucky exempts LLCs from corporate income tax, potentially leading to significant savings.
· Customized Management: Kentucky allows for personalized management structures within LLCs, offering flexibility in operations.
Members might be subject to income tax at individual and entity levels, impacting financial obligations. You must file an annual report and pay a $15 fee to maintain your Kentucky LLC status, adding to operational expenses.
