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FAQs

What is an LLC, and what does it stand for?

An LLC, or Limited Liability Company, is a type of business structure that combines the limited liability protection of a corporation with the flexibility and simplicity of a partnership or sole proprietorship. In Kentucky, an LLC is a legal entity that is separate from the LLC owners (members), offering personal asset protection and allowing for pass-through taxation.

What is the State Fee for registering an LLC in Kentucky?

The State Filing Fee for registering an LLC in Kentucky is $40. This fee is mandatory and is paid when you submit your Articles of Organization to the Kentucky Secretary of State’s office.

How long does it take to form an LLC in Kentucky?

The processing time to form an LLC in Kentucky can vary. Typically, it takes around 7 to 10 business days for standard processing. However, if you require expedited processing, you can pay an additional fee for faster service.

Can I operate my LLC in Kentucky if I am not a U.S. citizen or resident?

Yes, non-U.S. citizens and non-residents can own and operate an LLC in Kentucky. Kentucky imposes no specific citizenship or residency requirements for forming or managing an LLC. However, it’s essential to comply with federal tax regulations and any visa or immigration requirements that may apply to you.

Can I change the ownership structure or management of my Kentucky LLC after formation?

Yes, you can change the ownership structure or management of your Kentucky LLC after formation. This can be done by amending your LLC’s operating agreement, updating member or manager information, or even admitting new members.

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When starting a new company, choosing a business entity is the most important decision that the founders must make. For most businesses with more than one founding member, forming as an LLC is often the best option for a number of reasons.

An LLC is an uncomplicated business structure that affords business owners legal protection by separating personal assets from business debts. Moreover, LLCs often enjoy a lower tax rate than corporations. Nevertheless, creating an LLC can get complicated depending on where you are based, with the formation process, filing fees, and continuing legal obligations differing from state to state.

1. Select a name for your Kentucky LLC

Follow naming requirements

There are 2 major guidelines to follow when naming your LLC in the state of Kentucky:

  1. An LLC’s name must be distinguishable from the names of existing businesses on file with the Kentucky Secretary of State.
  2. An LLC’s name must contain one of the following phrases or abbreviations: “Limited Liability Company”, “Limited Company”,  “LLC”, or “LC.” The words “Limited Company” may be abbreviated as “LTD CO.”

Need help coming up with a business name? Check out our free business name generator.

Reserve your LLC name with the Kentucky Secretary of State

After selecting a name for your LLC, you can reserve it with the Kentucky Secretary of State for up to 120 days to ensure that it’s still available when you are ready to file your LLC’s Articles of Organization.

First, check the Kentucky FastTrack Business Organization Search to confirm that your chosen LLC name is available for use in the state. If the name is open to be used, file a Reservation or Renewal of Reserved Name application online or by postal mail. The filing fee is $15.

2. Designate a registered agent

As in every U.S. state, forming an LLC in Kentucky requires the appointment of a registered agent service to handle state and federal legal documents and service of process on the business’s behalf.

The registered agent must either be a state resident or business entity with a street address in Kentucky OR if the individual or business is based out-of-state, they must have a business office in Kentucky.

Our picks of the best registered agent services

  • Northwest Registered Agent: Starting a business requires a lot of state-mandated paperwork, which can be confusing for new business owners. Northwest offers business services that can help entrepreneurs find the right documentation, fill it out, and file it on time with the right government agency. In addition to helping you set up an LLC, Northwest has a host of additional services, like registered agent services, that new owners will find useful too.
  • ZenBusiness: There’s no need to stress about filing paperwork when you work with ZenBusiness. This company offers a great variety of LLC services, the focus of which is to ensure your business is set up correctly with the proper paperwork filled out and delivered to the right branch of your state government. Of course, ZenBusiness does charge for their services, but customers say they get the most bang for their buck.
  • Harbor Compliance is a great fit for organizations that register in multiple states and for those who don’t want to pay excessive service fees. With their network and electronic document delivery, they help ensure your business never misses a legal notification.

FAQs

What is an LLC, and what does it stand for?

An LLC, or Limited Liability Company, is a type of business structure that combines the limited liability protection of a corporation with the flexibility and simplicity of a partnership or sole proprietorship. In Kentucky, an LLC is a legal entity that is separate from the LLC owners (members), offering personal asset protection and allowing for pass-through taxation.

What is the State Fee for registering an LLC in Kentucky?

The State Filing Fee for registering an LLC in Kentucky is $40. This fee is mandatory and is paid when you submit your Articles of Organization to the Kentucky Secretary of State’s office.

How long does it take to form an LLC in Kentucky?

The processing time to form an LLC in Kentucky can vary. Typically, it takes around 7 to 10 business days for standard processing. However, if you require expedited processing, you can pay an additional fee for faster service.

Can I operate my LLC in Kentucky if I am not a U.S. citizen or resident?

Yes, non-U.S. citizens and non-residents can own and operate an LLC in Kentucky. Kentucky imposes no specific citizenship or residency requirements for forming or managing an LLC. However, it’s essential to comply with federal tax regulations and any visa or immigration requirements that may apply to you.

Can I change the ownership structure or management of my Kentucky LLC after formation?

Yes, you can change the ownership structure or management of your Kentucky LLC after formation. This can be done by amending your LLC’s operating agreement, updating member or manager information, or even admitting new members.

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3. File Articles of Organization

An LLC is formed in Kentucky through the filing of Articles of Organization for a Limited Liability Company with the Kentucky Secretary of State. You can file the articles online (after creating a Kentucky Online Gateway (KOG) account) or via postal mail. The filing fee is $40 and payment can be made by check or credit card.

Your Kentucky LLC’s Articles of Organization must provide the following information:

  • LLC name and address
  • Registered agent’s name, address, and signature
  • LLC principal office mailing address
  • The date that the articles are filed
  • Clarify whether an LLC is member-managed or manager-managed
  • Information on the LLC’s type of business
  • LLC organizer signature

4. Create an operating agreement

Although not a legally mandated step for forming an LLC in Kentucky, drafting a comprehensive LLC operating agreement is strongly recommended for all nascent limited liability companies.

The operating agreement should do the following:

  1. Describe the LLC’s business structure
  2. Establish the individual responsibilities and obligations of LLC members
  3. Detail how the LLC will be run

Without an operating agreement clarifying the specific duties of its members, an LLC may face significant legal and operational difficulties.

5. Obtain an IRS Employer Identification Number (EIN)

All newly formed LLCs in the United States must acquire an Employer Identification Number (EIN) from the Internal Revenue Service (with the exception of single-member LLCs). The nine-digit EIN is like a social security number for a business and is necessary to pay income tax, file tax returns, open business bank accounts, and perform many other important functions.

You can apply for an EIN online on the IRS website without paying a filing fee.

6. Fulfill your legal obligations

Once an LLC is registered, its members must devote attention to fulfilling legal requirements that apply for the duration of the company’s existence.

File Annual Reports

All LLCs active in Kentucky are required to file an Annual Report with the Secretary of State every year. The first report is due by June 30th the calendar year after the LLC was formed, and then by June 30th every following year.

You can file your annual reports online or by mail. The filing fee is $15.

Obtain business licenses and permits

When it comes to business licenses for an LLC in Kentucky, it’s important to note that the state does not have a general business license requirement. However, some other licenses and permits may be necessary depending on your business activities and location within the state.

  • Get a Seller’s Permit: One common type of license you may need is a Seller’s Permit, also known as a Kentucky Sales and Use Tax Permit. This permit is essential if your LLC will be involved in selling tangible goods or certain professional services subject to sales tax. It allows you to collect and remit sales tax to the Kentucky Department of Revenue.
  • Check into Occupation Licensing: In addition to Seller’s Permits, some businesses in Kentucky may require Occupation Licensing. Certain professions and occupations, such as doctors, lawyers, contractors, and real estate agents, may need specific licenses or certifications to operate legally within the state. It’s essential to research whether your specific occupation requires licensing and to comply with the relevant licensing requirements to ensure your LLC operates within the bounds of the law.
  • Check into local licensing requirements too: Furthermore, local licensing requirements can vary from one city or county to another within Kentucky. Depending on where your LLC is located or conducts business, you may need to obtain local licenses or permits. These local licenses can encompass a wide range of activities, including zoning permits, health permits, and other regulatory approvals specific to your area.

For information on local licensing regulations, contact a clerk or local government representative in the city or county where your LLC is based. You can find detailed Kentucky state business license information on the Kentucky One Stop Business Portal: Occupational Licenses/Permits page.

Understand state taxes

Kentucky’s state tax regulations for LLCs are closely tied to how your LLC is taxed for federal purposes. The default tax treatment for most Kentucky LLCs is pass-through taxation.

Under this arrangement, the LLC itself does not pay income tax; instead, the profits and losses “pass-through” to the individual members, who then report these on their personal income tax returns.

  • Kentucky tax rates: Kentucky imposes a flat personal income tax rate of 5%, which applies to the taxable income distributed to LLC member, or members in a multi-member LLC.
  • Limited Liability Entity Tax: In addition to personal income tax, all LLCs in Kentucky, regardless of their federal tax status, are subject to the Limited Liability Entity Tax (KY LLET). The KY LLET is calculated based on the lower of either 0.095% of Kentucky gross receipts or 0.75% of Kentucky gross profits. There is also a minimum annual KY LLET fee of $175. This tax ensures that all LLCs contribute to the state’s revenue, even those with no or minimal profits.
  • Kentucky LLCs categorized as C-Corporations: If your LLC decides to elect C-corporation taxation, it will be treated as a separate legal entity for tax purposes in Kentucky. In this case, your LLC will be subject to the Kentucky Corporate Income Tax, which imposes a flat tax rate of 5% on the net income of the corporation. Additionally, even C-corporations are required to pay the KY LLET, following the same calculation as described above.
  • Register with the Kentucky Department of Revenue: Many Kentucky LLCs are required to register with the state’s Department of Revenue, including LLCs that collect sales tax on retail goods and services as well as those with employees. You can register with the Kentucky DOR online or by turning in a completed paper application.

Understand BOI reporting

As a part of the Corporate Transparency Act (CTA), there is a new federal law surrounding Beneficial Ownership Information (BOI) reporting.

Under this rule, companies are mandated to report information pertaining to their beneficial owners—individuals who ultimately own or control the company.

  • Information you’ll provide: The reporting obligation encompasses details such as the names, addresses, dates of birth, Social Security numbers of beneficial owners, and specific identifying information about the company itself.
  • How to submit the report: To comply with the rule, reports must be submitted electronically through FinCEN’s secure portal. The reporting deadlines vary based on the company’s formation date: those established before January 1, 2024, have until January 1, 2025, for their initial report, while those formed in 2024 have 90 days after formation notification to file, and companies formed on or after January 1, 2025, must file within 30 days of formation. Nearly every LLC will need to file this report.

Learn more about BOI Reporting.

LegalZoom can help you file a compliant and stress-free BOI Report for only $149.

FAQs

What is an LLC, and what does it stand for?

An LLC, or Limited Liability Company, is a type of business structure that combines the limited liability protection of a corporation with the flexibility and simplicity of a partnership or sole proprietorship. In Kentucky, an LLC is a legal entity that is separate from the LLC owners (members), offering personal asset protection and allowing for pass-through taxation.

What is the State Fee for registering an LLC in Kentucky?

The State Filing Fee for registering an LLC in Kentucky is $40. This fee is mandatory and is paid when you submit your Articles of Organization to the Kentucky Secretary of State’s office.

How long does it take to form an LLC in Kentucky?

The processing time to form an LLC in Kentucky can vary. Typically, it takes around 7 to 10 business days for standard processing. However, if you require expedited processing, you can pay an additional fee for faster service.

Can I operate my LLC in Kentucky if I am not a U.S. citizen or resident?

Yes, non-U.S. citizens and non-residents can own and operate an LLC in Kentucky. Kentucky imposes no specific citizenship or residency requirements for forming or managing an LLC. However, it’s essential to comply with federal tax regulations and any visa or immigration requirements that may apply to you.

Can I change the ownership structure or management of my Kentucky LLC after formation?

Yes, you can change the ownership structure or management of your Kentucky LLC after formation. This can be done by amending your LLC’s operating agreement, updating member or manager information, or even admitting new members.

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Post LLC tasks

Set up business bank accounts

In nearly all circumstances, it is highly advisable for an LLC to establish a dedicated business bank account, even if your LLC operates as a single-member entity. Most importantly, maintaining a separate business bank account is crucial in preserving the limited liability protection that an LLC affords its members.

Mixing personal and business finances in a single account can jeopardize this protection. By having a dedicated account, you clearly delineate your personal assets from those of the business, reinforcing the separation between the two.

There can also be potential tax benefits associated with using a business bank account. Some banks offer credit cards with rewards programs that allow you to earn points or cash back on business expenses, which can subsequently translate into valuable tax deductions. You can consider these options:

  • Found provides banking services, such as savings and checking accounts, loans, and investment opportunities, specifically for entrepreneurs and small businesses.
  • Relay aims to streamline financial operations and enhance efficiency in business management.
  • Mercury is designed for startups and small businesses, offering features like business checking accounts, payment processing, and expense tracking.

Obtain a Certificate of Good Standing

A Kentucky Certificate of Good Standing, also referred to as a Certificate of Existence (COE), is an official document issued by the Kentucky Secretary of State’s office. This certificate confirms the legal existence of a registered business entity and its compliance with state regulations.

The purpose of the certificate: The Certificate of Good Standing verifies that the company is in good standing under Kentucky law, has fulfilled all necessary financial obligations to the state, is authorized to conduct business within Kentucky’s borders, and adheres to all pertinent state laws and regulations.

When do you need it: This document is often required for activities such as opening a business bank account, obtaining specific licenses or permits, qualifying for business loans or grants, and demonstrating the commitment to maintaining a reputable and legally compliant business entity.

How to get it: To obtain a Certificate of Good Standing in Kentucky, you can request it through various means, including online, by mail, in person, or by fax, directly from the Kentucky Secretary of State’s website. There is typically a $10 fee for standard processing, with expedited options available for an additional cost.

Build a website

When you’ve secured a business name, one of the first things you should do is purchase the domain name that goes along with it. Then, you can begin to build a website for your small business. Even if you do not operate as an online store, your website can serve as a way to advertise that your LLC exists and share contact information. This also ensures no one can pretend to be your business or speak on your behalf.

Follow these steps to get started:

  1. Search for and purchase a domain name.
  2. Sign up for web hosting.
  3. Pick a web builder like Domain.com or GoDaddy to create a site with no coding experience necessary.
  4. Tailor your site to your customers, adding appropriate pages, content, and images.
  5. If you’re selling goods, add an e-commerce section to your site.
  6. Review, test, and publish your site.

Cost to set up an LLC in Kentucky

Average cost to set up an LLC in this state: $55-$255

Setting up an LLC in Kentucky involves several set-up fees.

  • Incorporation fees: First, there is a mandatory State Filing Fee of $40, which is required to file your Kentucky Articles of Organization with the Kentucky Secretary of State, and you can choose to submit this either online or via mail. If you need expedited processing, there are further fees.
  • Annual Report filing fees: Every year, including your first year in business, you must file an Annual Report with the state. When you do so, you’ll pay a filing fee of $15.
  • Registered agent service fees (optional): You may also choose to contract a registered agent service, which will typically range from $50 to $200 per year, depending on their level of service. While an owner, employee, or friend can serve as your company’s registered agent, some entrepreneurs prefer to use a professional service that will collect official documents for the company.

Foreign LLCs doing business in Kentucky

An LLC formed outside of Kentucky intending to do business in the state must register with the Kentucky Secretary of State.

Follow these steps to do business in Kentucky as a foreign LLC:

  1. Comply with Kentucky LLC naming guidelines and make sure that the LLC name is available for use in the state with the Kentucky FastTrack Business Organization Search.
  2. Appoint a Kentucky registered agent.
  3. File a Certificate of Authority with the Kentucky Secretary of State online (KOG account required) or by postal mail.  The filing fee is $90.

FAQs

What is an LLC, and what does it stand for?

An LLC, or Limited Liability Company, is a type of business structure that combines the limited liability protection of a corporation with the flexibility and simplicity of a partnership or sole proprietorship. In Kentucky, an LLC is a legal entity that is separate from the LLC owners (members), offering personal asset protection and allowing for pass-through taxation.

What is the State Fee for registering an LLC in Kentucky?

The State Filing Fee for registering an LLC in Kentucky is $40. This fee is mandatory and is paid when you submit your Articles of Organization to the Kentucky Secretary of State’s office.

How long does it take to form an LLC in Kentucky?

The processing time to form an LLC in Kentucky can vary. Typically, it takes around 7 to 10 business days for standard processing. However, if you require expedited processing, you can pay an additional fee for faster service.

Can I operate my LLC in Kentucky if I am not a U.S. citizen or resident?

Yes, non-U.S. citizens and non-residents can own and operate an LLC in Kentucky. Kentucky imposes no specific citizenship or residency requirements for forming or managing an LLC. However, it’s essential to comply with federal tax regulations and any visa or immigration requirements that may apply to you.

Can I change the ownership structure or management of my Kentucky LLC after formation?

Yes, you can change the ownership structure or management of your Kentucky LLC after formation. This can be done by amending your LLC’s operating agreement, updating member or manager information, or even admitting new members.

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