- Step 1. Naming Your Kentucky LLC
- Step 2. Appoint a Registered Agent
- Step 3. File Your Articles of Organization
- Step 4. Create an Operating Agreement
- Step 5. Get an EIN/Tax ID Number
- Step 6. Keeping Your LLC Running
- Kentucky LLC Resources
- Kentucky LLC FAQs
Step 1. Naming Your Kentucky LLC
One of the most important first steps to take in starting your LLC is to name it. Your business will need to have a name that is distinct from all others in the state and follows certain Kentucky LLC naming rules.
Legally Required Designation
According to Kentucky LLC regulations, the name of your LLC must have the phrase “limited liability company” in it or contain one of the following approved abbreviations:
- Limited Company
- LTD CO.
In order to find a completely unique LLC name that doesn’t risk infringement on any other business in the state, you can perform a search using the Kentucky Secretary of State’s business name database.
Any available name that you find, you can reserve for up to 120 days by filing the Reservation of Name application with the Secretary of State. There is a $15 filing fee associated with this form, and you can file it online through the state’s Business One Stop Portal or by printing it out and mailing it to the address on the form.
Additionally, you may also want to perform an available domain name search while looking for your LLC name. Even if you don’t want a business website immediately, it is a good idea to purchase one ahead of time and reserve it for future use.
When choosing an LLC name, keep in mind that it should not include any words that may risk confusing your business with a state or federal government entity. This can include words like “FBI,” “Treasury,” “IRS,” or “State Department.”
You should also be aware that using words such as “bank,” “chiropractor,” or “attorney” may require the presence of a properly licensed individual in your LLC. These words may also categorize your LLC as a professional LLC in Kentucky, meaning that you will need to file slightly different paperwork during the LLC establishment process.
Using a Trade Name
You are allowed to use a trade name or DBA (doing business as) for your LLC in Kentucky. This type of name means that you will continue using your legally registered LLC name on all official documents (both state and federal), but will use the DBA name when interacting with the public.
To register your DBA name in Kentucky, you will need to file a Certificate of Assumed Name with the Secretary of State’s office. This form will reserve your chosen DBA name for five years before renewal is necessary. You can file the Certificate of Assumed Name either online or by printing it out and sending it to the address on the form; there is a $20 filing fee associated with the form.
Step 2. Appoint a Registered Agent
Every LLC operating in Kentucky must have a registered agent appointed. Your registered agent will be responsible for receiving all legal documents, government communications, and tax documents and will be acting as a contact point between your LLC and federal agencies or the state of Kentucky. They will also be the responsible party that is contacted in the event of a lawsuit against your LLC.
You can appoint any Kentucky resident (including a member of your LLC) or a business that is authorized to conduct operations in the state as your registered agent. As long as your appointee has a valid Kentucky street address, they are eligible to be your registered agent.
Step 3. File Your Articles of Organization
In order to legally establish your LLC, you will need to file your Articles of Organization with the Secretary of State’s office. Keep in mind that there are three versions of this form available – one for a traditional LLC, one for a non-profit LLC, and one for a professional LLC. The form you will need to select is Form KLC, for traditional LLCs.
On your Articles of Organization, you will need to include essential information about your LLC and its business. Below, you can get an idea of what is needed on this form.
- Your LLC’s name
- Your LLC’s principal office address
- Your LLC’s registered agent name and address
- If your LLC is member-managed or manager-managed
- The start dated (effective date) of your Articles, if not immediate
- Your LLC’s size and general business category
- Your registered agent’s signature
- The LLC’s organizer’s signature
You can file your Articles of Organization either online, in person, or through the mail. There is a $40 filing fee associated with the form.
If you want to file your Articles of Organization online, you will need to create an account with the Kentucky Business One Stop Portal. Once your account is established, you can follow the instructions to fill out and file your Articles of Organization; upon submittal, you will be asked to pay the $40 filing fee.
To file your Articles of Organization by mail, you will need to print out the Articles of Organization form and fill it in with dark ink. Place the completed form in a secure envelope with a check for the $40 filing fee made out to the Kentucky State Treasurer and then mail the envelope to the address below.
Office of the Secretary of State
PO Box 718
Frankfort, KY 40602
If you want to submit your Articles of Organization in person, you will need to print out and complete the Articles of Organization form. Then, bring the completed form and a method of payment to the address below between the hours of 8:30 am and 4:30 pm EST, Monday through Friday.
Room 154, Capitol Building
700 Capital Avenue
Frankfort, KY 40601
Step 4. Create an Operating Agreement
Your LLC is not required to have an operating agreement in Kentucky, but it is a good idea to create one for your business anyway. Your operating agreement should set guidelines for exactly how your LLC is managed, define the rights of members and managers, and will give instructions on how to conduct dissolution operations. It should also define what to do in the case of a lawsuit against your LLC. Keep in mind if you don’t set these guidelines ahead of time, Kentucky LLC law will determine how your business is handled in the case of disputes, and this might not be in your favor.
Additionally, if you are applying for LLC financing, you will find that most business bank accounts, loan applications, and other business services will require you to send a copy of your operating agreement along with your application in order to demonstrate your LLC as a separately operating business entity.
Step 5. Get an EIN/Tax ID Number
After your Articles of Organization have been filed and processed, you will need to apply for a Tax ID number, also known as an employer identification number (EIN), through the IRS. Any LLC that has more than one member, or any single-member LLC that wants to either hire employees or be taxed as a corporation, is required to apply for an EIN.
Your EIN will be used to identify your business to the IRS on all tax documents and necessary government filings; the number acts much like a social security number for your LLC. If you want to hire employees, file federal taxes, open business bank or credit accounts or apply for business funding, you will need an EIN.
It is free to apply for your EIN with the IRS, and you can file the application online or by mailing it in. Keep in mind that if you are a foreign filer or do not have a social security number, you will need to file for your EIN through the mail.
The quickest and easiest way to apply for your EIN is online; you will receive your number once your application is completed. Visit the IRS website to apply for your EIN for free.
You will need to fill out this form when applying for your LLC by mail. If you are a foreign filer or do not have a social security number, leave section 7b blank. Mail the completed form to the address below. You can follow up on any questions with the IRS at (267) 941-1099.
Internal Revenue Service
Attn: EIN Operation
Cincinnati, OH 45999
Step 6. Keeping Your LLC Running
Once you have obtained your EIN and your LLC is fully operating in Kentucky, there are still some items you will need to keep up with if you want your LLC to stay running smoothly.
File Annual Reports
Every LLC that is operating in Kentucky is required to file an annual report with the Secretary of State’s office. This report is due by June 30th of every year (but can be filed as early as January 1st) and will need to include information such as the names and addresses of LLC members and managers, the LLC’s principal office address, the registered agent’s name, and necessary signatures. Any changes to this information will need to be filed using the proper forms retrieved from the Secretary of State’s website.
You can file your annual report online, or you can return the annual report postcard that the Secretary of State mails your LLC in January. You can also print out the report form from their website and mail it to the address listed on the form. There is a $15 filing fee associated with the annual report.
Separate Your Business Finances
It is not required in Kentucky that your LLC possesses a separate bank account, but you may want to consider obtaining one anyway. A business credit or debit account can help keep your LLC’s finances separate from any personal ones, fully establishing your LLC as an independently operating business. This is especially helpful in the case of lawsuits or other legal issues surrounding your LLC.
When opening a debit or credit account for your LLC, you will most likely need to show your Articles of Organization, Operating Agreement, EIN, or other LLC documents. You should also make an effort to compare all of your banking options before making a choice on where to open an account; different banks will have varying minimum required balances or credit spending limits, and you want to be sure that you select something that is the best for your LLC’s needs.
Keep Up With Federal and State Taxes
While your LLC is operating in Kentucky, it is important to keep up with both federal and state taxation requirements in order to avoid any significant penalties or fines.
Federal Tax Requirements
There are several different tax structures you can choose from for your LLC that can meet different company needs, as each tax structure comes with its own unique type of federal taxation requirements. This article can help you gain an in-depth understanding of the differences between each type of tax structure and help you decide which is best for you.
In general, most LLCs are taxed as sole proprietorships or partnerships. This means that you will be expected to file Schedule C and your individual income tax return to declare any income you receive through your LLC (your LLC is acting as a pass-through entity in this situation). When using this tax structure, you should keep in mind that you will most likely need to pay self-employment tax (which has a rate of 15.3%), in addition to any income tax. You may also need to make quarterly estimated tax payments to avoid any IRS fines; the IRS website gives more details on this.
If you want, you can choose to have your LLC taxed as a corporation, like an S Corporation or a C Corporation. You will need to fill out IRS Form 8832 and IRS Form 2553 to declare this. After these forms have been processed, your LLC will be treated as a corporation and expected to file a separate corporate tax return with the IRS.
Kentucky Business Taxes
There is not a general business tax in Kentucky, but you may find that you are liable for corporation taxes or the state’s limited liability entity tax. The corporate tax only applies to LLCs that are being taxed as an S or C corporation, and the limited liability entity tax applies to limited liability partnerships.
If you are treating your LLC as a pass-through entity, such as a sole proprietorship, then your business income will be reported on your individual state income tax return each year. You can read more about Kentucky tax rates and rules here.
Sales and Use Taxes
If your LLC will be selling certain goods or services, you may be liable to pay Kentucky sales and use tax. This tax is registered for and paid through the Kentucky Department of Revenue. You can also find information about calculating taxes and estimated payment dates using the department’s website.
State Employer Taxes
State employer taxes include withholding and unemployment insurance taxes. They are required if your LLC will have employees in any type of way. Withholding taxes are registered and paid for through the Kentucky Department of Revenue, while unemployment insurance taxes are registered and paid for through the Kentucky Office of Unemployment Insurance.
Acquire Necessary Permits and Licenses
Kentucky does not have a general business license requirement, but your LLC may be required to obtain permits and licenses on a county or city level or depending on the type of business you are running. You can use this search tool on the Kentucky One Stop Portal to determine if your LLC needs to obtain any specific types of permits.
You should also keep in mind that professional licensing rules differ from state to state, and you may be required to meet certain benchmarks or other filing requirements to offer a professional service with your LLC. More information on that can be found here.
Additionally, your LLC may need to obtain permits or licenses on a federal level, though whether this is needed or not depends on the type of business you are running. For help determining if you need to meet additional federal requirements, you can use the licensing directory on the U.S. Small Business Administration’s website.
Kentucky LLC Resources
The full list of resources below can help you with every step in the process of setting up your LLC in Kentucky.
- Available LLC name search
- Available domain name search
- Reserve an LLC name
- Register a DBA name
- Articles of Organization form
- Kentucky Business One Stop Portal
- IRS EIN free online application
- List of Kentucky business forms
- Annual Report online filing
- Kentucky tax rate information
- Kentucky Department of Revenue
- Kentucky Office of Unemployment Insurance
- Business license search tool
- Kentucky Department of Professional Licensing
- S. Small Business Administration
Kentucky LLC FAQs
The answers to these frequently asked questions can help you understand more about the LLC establishment process in Kentucky.
In Kentucky, it will cost you $40 to file your Articles of Organization either online or through the mail. You may also end up paying $15 to reserve an LLC name ahead of time or $20 to register a DBA name in the state.
The cheapest way to start your LLC in Kentucky is to file your Articles of Organization either online, in person, or through the mail without reserving an LLC name ahead of time or registering a DBA name in the state. Doing it this way will only cost you $40 to establish your LLC.
How much your Kentucky LLC pays in taxes depends on the individual tax structure you have set up. Keep in mind that in addition to federal taxes, you may also need to pay Kentucky corporate tax, state employer taxes, or sales and use taxes.
In Kentucky, you will need to file state reports annually. The report is due between January 1st and June 30th of each year, and there is a $15 filing fee associated with it. Failure to file your annual report could result in an involuntary dissolution of your LLC.
If you are finished conducting operations with your LLC, you will need to file Articles of Dissolution with the Secretary of State’s office. There is a $40 filing fee for this form, and it can be filed either online or through the mail.
You should also consult with your operating agreement (if you have one) and proceed with the agreed-upon terms for shutting down the operations of your LLC.