How To Start An LLC In Kentucky 2023?
If you need to know how to get an LLC in Kentucky, you’ve come to the right place. It can be a difficult road to finally establishing your new LLC, but it’s an essential step toward legitimacy if you want to succeed as a business and limit your liability regarding your new business.
Each state has its own unique requirements when starting an LLC. Some require a state filing fee to be paid, some require a registered agent to be appointed. We’ll dive into what requirements are placed upon LLCs in Kentucky in this article.
6 Basic Steps To Start an LLC in Kentucky 2023
- Choose a name for your LLC
- Choose a registered agent
- File articles of organization
- Create an LLC operating agreement
- Obtain an EIN
- Annual Tax
How To Start An LLC In Kentucky?
If you don’t know where to begin, here are 6 tried and true steps to start your Kentucky business off on the right foot as an LLC.
Choose A Name For Your LLC In Kentucky
In Kentucky, your business name has to be unique and not yet coined by another business owner. Naming your business won’t be as simple as just thinking of a catchy name and buying a website.
Before you start brainstorming what to name your new business, make sure you follow the state rules for LLC naming. First, you’ll need to check the Kentucky Secretary of State website and make sure your desired name is available, then proceed with coming up with and using your new business name.
Naming Rules In Kentucky
First of all, your LLC name must meet the requirements listed by the Kentucky secretary of state. Make sure you include the right abbreviations and follow the rules for naming your LLC listed.
There are several rules for forming LLCs in Kentucky, including naming requirements, requirements for any government agency, requirements for a foreign LLC, and more. Make sure you check out every article of requirement before proceeding with starting a domestic or foreign LLC in Kentucky.
Searching Available Name In Kentucky
Once you’ve checked through these requirements, you can settle on your business name by searching the LLC name database provided by the Kentucky Secretary of State. It’s an easy-to-use search bar that will help you determine if your business name idea is already taken.
Choose A Registered Agent In Kentucky
Next, you’ll have to appoint a registered agent for your Kentucky business. You can use registered agent services and provide registered agent services information, or you can appoint someone within your business (including yourself) to act as the registered agent or legal liaison.
File Organizational Paperwork With The State
To properly establish an LLC, articles of formation must be completed and submitted to the secretary of state. These articles include details like your business size, location, and name.
Prepare An LLC Operating Agreement
An operating agreement is exactly what it sounds like, it’s a document that includes the details of your business functions and who is responsible for them. A comprehensive operating agreement is an internal document that can be filed away or used daily.
You don’t technically need an operating agreement to start your limited liability company in Kentucky. Still, it’s a good idea to draw an operating agreement and have a conversation about who is in charge of what business function, and what each function entails to ensure that your business entity is running properly. Take our word for it and make sure you complete an operating agreement before starting your LLC.
Obtain An EIN For Your LLC In Kentucky
If you have a single-member LLC, or a sole proprietorship (aka if your business is under you as an individual or business entity), you’ll need to secure an employer identification number. This will assist you in the case that you hire employees and have to secure a federal tax identification number.
The employer identification number application can be found and completed online by single-member LLCs. This is an essential part of doing business in the US, and it’s necessary for many business operations.
In the state of Kentucky, each LLC is required to pay a limited liability entity tax annually. Depending on your company’s income, you’ll have to pay either a flat tax or a variable tax computed by the state (it can be found here). LLC members, whether domestic or international, are liable to this tax and must pay it to the state.
Think of it as a “sales tax” for doing business in Kentucky. This sales tax ensures that you can legally do business in Kentucky year after year, and the Kentucky Department of Revenue will collect “sales tax” from you annually. LLC members can set reminders to pay this tax when they file their annual reports.
What Is An LLC?
Just as the name indicates, a limited liability company is a business entity that enables LLC owners to limit their liability for their small businesses. In the case of a business failure, lawsuit, or unpaid business debts, an LLC protects the business owner from ruin or full liability that might in another case require that their personal assets be seized.
On the other hand, an LLC is different from an S corp because the income you make through your LLC will be subject to the tax structure your personal income is taxed with. You must submit and pay taxes on your LLC at the same time you file your personal income taxes.
What Is An LLC In Kentucky?
In Kentucky, business owners have unique responsibilities when they start an LLC. Like some other states, they must choose a unique name for their Kentucky LLC, designate a registered agent, and file articles of organization.
Then, while you’re submitting your articles of organization for your Kentucky LLC, you’ll have to pay the state filing fee of $40. Compared to other states’ filing fees, this is very inexpensive.
Types Of Kentucky LLCs
There are three main types of Kentucky LLCs: general LLCs, professional LLCs, and nonprofit LLCs. Each type has its own unique advantages and disadvantages.
General LLCs are the most common type of LLC in Kentucky. They offer a high degree of flexibility and pass-through taxation, but the members are personally liable for the debts and liabilities of the LLC.
Professional LLCs are designed for professionals who are licensed to practice in Kentucky. They offer the same liability protection as general LLCs, but they also have additional restrictions on the types of businesses that can be formed as PLLCs.
Nonprofit LLCs are formed for charitable or other nonprofit purposes. They are exempt from federal and state taxes, but they are subject to more regulations than other types of LLCs.
Benefits Of Getting An LLC In Kentucky
As we mentioned before, the filing fee for LLC formation in Kentucky is lower than in most states. It’s truly a great price to be able to do business in Kentucky. Another benefit to starting your domestic LLC in Kentucky is the fact that you’ll have limited liability to do business in the state of Kentucky.
If you currently own a business or have a business concept in Kentucky, Kentucky LLCs are the way to go. Limited liability provides you with personal asset protection in the case of any issues with your business.
We’d highly recommend forming a limited liability company in Kentucky if you need legal protection for your business and you plan on doing business in the state of Kentucky.
Requirements To Get An LLC In Kentucky
Let’s break down the steps to forming your Kentucky LLC a bit more in-depth. You’ll have to complete the key steps below to ensure your Kentucky LLC is formed legitimately.
Appoint A Registered Agent
First of all, it is required in the state of Kentucky to designate a registered agent for your Kentucky LLC. You can act as your own registered agent or appoint a third-party registered agent service to receive and send official legal documents on your behalf.
The registered agent must have a physical mailing address in the state of Kentucky, and it can be your business address (just no PO boxes).
What is a registered agent? In short, a registered agent will receive and send legal correspondence. They should have some knowledge of legal proceedings, to avoid misunderstanding legal documents and missing important deadlines.
As mentioned before, you can appoint yourself as the Kentucky registered agent, you can appoint someone within your business, or you can hire a professional registered agent service. You’ll provide the details for the registered agent you decide upon in your articles of organization for your Kentucky LLC.
The LLC’s Name Must Be Different From An Existing Business
In some states, new LLCs must choose a name that is unique and has never been registered before. In Kentucky, this is the case.
Make sure your name is available before filing your articles of formation for your Kentucky LLC. If not, you might need to rethink your LLC name. When checking out the name availability, you can go online to the Kentucky Secretary of State’s website and use their business name searching feature to see if yours is available.
Make sure to follow these important Kentucky LLC naming guidelines or your LLC application won’t be approved. This is an essential part of forming an LLC in Kentucky.
How Much Does An LLC Cost In Kentucky?
In Kentucky, it costs $40 to form a new LLC with the Kentucky secretary of state. If you use an LLC formation service, it might cost more than this to have assistance when filing your Kentucky LLC articles of organization.
Top 2 LLC Services In Kentucky
|Name||ZenBusiness||Northwest Registered Agent|
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ZenBusiness offers several similar packages and features. They’ll help you navigate the murky waters of business formation, give you all the user-friendly tools you’ll need to conduct business, and give you some great free pointers along the way.
They also offer registered agent Kentucky services to their customers, if they need a professional to help with legal issues. We’d highly recommend Zenbusiness for its plethora of features and ease of use, as well as pricing.
Northwest Registered Agent
Northwest has several different options for new business owners to start their own LLC. You can use their free forms to do it yourself or hire them to complete all the paperwork for you. They offer world-class customer service, and they also provide a registered agent service for those who need them.
Northwest is unmatched in its ability to provide an excellent customer experience, and we’d highly recommend it for its helpful team and quality services.
What Do You Do After You Register Your LLC In Kentucky?
After registering your LLC in Kentucky, there are several steps you should take to ensure that your business is set up properly and legally.
Here are some of the key things to do:
- Submit an Annual Report: All Kentucky LLCs operating within the state must hand in a yearly report.
- Build a Website: Having a website can help your business establish an online presence and attract customers.
- Obtain an Employer Identification Number (EIN): An EIN is a unique nine-digit number the IRS assigns to identify your business for tax purposes.
- Pay the Limited Liability Entity Tax (LLET): Kentucky LLCs are required to pay an annual tax of $175.
- Create an LLC Operating Agreement: Although not required by law, an operating agreement can help establish the rules and procedures for your LLC.
Your LLC must also be officially registered with the Kentucky Secretary of State and the Kentucky Department of Revenue.
You must also select a registered agent and a registered office, as required by Kentucky law. Finally, to conduct your business in Kentucky, you will need to get the essential licenses or permissions.
If you’re looking to start an LLC in Kentucky, the whole process might seem a bit confusing. If you follow our simple steps and start an LLC by adhering to the state requirements. Your Kentucky limited liability company will be set up for success if you choose an exclusive name, designate a qualified registered agent, carefully write up a Kentucky LLC operating agreement, and pay your taxes to the state and the Internal Revenue Service.
Starting a business can be hard enough, but with a careful mapping of the steps and requirements that are necessary, the process is simplified.
Frequently Asked Questions (FAQs)
Yes, we highly recommend using a separate business credit card to keep your personal and business assets separate when filing an annual report and reporting to the Internal Revenue Service.
Yes, we’d also recommend that if you incorporate or form an LLC, you use a business bank account and a separate bank account for your personal income. This way, you can keep your business revenue and expenses separate from your personal finances. Business licenses are also easier to secure if you can clearly show your business operations to get the business licenses.
If you plan on doing any business with the risk involved, we’d recommend securing at least general liability insurance under a business insurance policy. If you plan on hiring anyone for your LLC, you might consider securing worker’s compensation insurance as well. You, as the LLC member and owner, will have to decide if your operating agreements require personnel and protection for this personnel under insurance.
No, the Kentucky Secretary of the State is responsible for all Kentucky LLC filing operations.
Generally, members of LLCs filing Partnership Returns pay self-employment tax on their share of partnership earnings. If the LLC is a corporation, normal corporate tax rules will apply to the LLC and it should file a Form 1120, U.S. Corporation Income Tax Return.
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- Ky.gov. (2019). Corporation Income and Limited Liability Entity Tax – Department of Revenue. [online] Available at: https://revenue.ky.gov/Business/Corporation-Income-and-Limited-Liability-Entity-Tax/Pages/default.aspx.
- Ky.gov. (2019). Fees – Secretary of State. [online] Available at: https://www.sos.ky.gov/bus/business-filings/Pages/Fees.aspx.