If you’ve decided to start a new business — congratulations! Creating your own company can be an exciting time. However, figuring out the legal requirements and steps you need to take to form your business officially can seem overwhelming at first.
Luckily, forming a limited liability company (LLC) in Kentucky is an affordable and relatively straightforward process once you understand all the steps you’ll need to take. Of course, you can always consult professional help along the way to take some burden off you.
To help, we’ve created this simple step-by-step guide to walk you through the LLC formation process in the Bluegrass State. We’ll discuss the steps you’ll need to take and direct you through each one in detail. We’ll also explain how the right LLC partner can help speed up the formation process, so you can have your Kentucky business up and running in no time.
We know that your priority as a new business owner is to grow and market your Kentucky LLC — so allow this guide to demystify the process for you.
To start your LLC in Kentucky, you’ll register your new company with the Secretary of State. This allows your business’s information to become public to Kentucky, allowing the government to reach out regarding new regulations or important business communications.
Before you can file this paperwork and register your LLC, you’ll need to do some legwork. You’ll start by deciding on your LLC’s official name. You’ll also want to choose a registered agent to receive legal notices, create an operating agreement to dictate your company’s operating structure, and set up your business with the IRS.
We’ll take you through each of these requirements and show you how to start an LLC in Kentucky.
Step 1: Name your Kentucky LLC
One of the most important decisions you’ll make when launching your Kentucky LLC is deciding on your company’s name. Your name needs to achieve a few goals: It should be distinct and memorable, quickly sum up what your product or service offers, and follow all Kentucky government regulations.
You may already have a name in mind. We recommend making a list of three to five names (or more) that you might like to use for your business. Even if you’re sold on one name, you’ll need to research to find out if another company in Kentucky has already secured this name.
Your LLC name must be unique in Kentucky, so you’ll need to check existing business names by conducting a business name search to ensure there are no conflicts. To do this, consult our Kentucky Business Entity Search page. Once you’ve found a name that’s available, move on to the next step.
In Kentucky, you must add an LLC designator to the end of your official company name. This means that you’ll need to add a designator like “LLC” or “Limited Liability Company” to the end of your business name. You can find a full list of all acceptable designators below.
- Limited Liability Company
- Limited Company
- LTD CO
Once you’ve decided on a name and designator, you have the option to reserve it to ensure that no one else registers it before you. Kentucky allows you to reserve a business name for 120 days for a fee. If you’d rather not deal with this process yourself, we have a business name reservation service that can handle it for you. As part of the service, we also check to see if your desired name is available.
You’ll likely want to use your LLC name on a website, too. Double-check through a domain name search on whether it’s available, and have someone like us reserve your website domain name once you’ve made your choice.
If you want your LLC to operate under a name other than its legal name, you’ll need a DBA or “Doing Business As” name. To see if the DBA in Kentucky you want is available, use the same process above. Then file a Certificate of Assumed Name with the Kentucky Secretary of State. Our DBA service can handle this for you.
Finally, to make sure you’re entirely in the clear with your desired business name, visit the United States Patent and Trademark Office website to make sure your business name or logo isn’t already federally trademarked. Trademarks can also happen at the state level, so you’ll also want to make sure that no state trademarks exist on your planned LLC name. To find out more and/or apply for a state trademark, go to the Kentucky Secretary of State website page for trademarks.
Step 2: Appoint a registered agent in Kentucky
Now that you’ve named your LLC, you’re ready to assign a Kentucky registered agent. Your registered agent will receive important legal notices (such as subpoenas) and also act as a third party between you and the Secretary of State’s office, passing along important communications and paperwork.
All Kentucky LLCs must assign a registered agent. You can work with an individual or company, as long as they have a registered office located in Kentucky and can be found during normal business hours. This must be a physical Kentucky address and not a P.O. box.
Sometimes, LLC members decide to act as their own registered agent. While that’s perfectly legal under Kentucky law, it’s not always recommended. Since registered agents can be served legal documents, like service of process, this means that when acting as your agent, you could receive a summons for a lawsuit in front of clients.
For these reasons, many LLCs decide to partner with an outside registered agent service that can receive paperwork on your company’s behalf. Hiring a registered agent in Kentucky is generally affordable, as well.
Some other benefits of working with an outside registered agent service like ours include:
- If you serve as your registered agent, you’re required to be available during standard business hours. If you plan to work outside the office or take business trips, this requirement could be problematic.
- If you provide your personal or business address as your registered agent address, you’ll need to update your registered agent paperwork with the state each time you move. At rapidly growing companies, it’s easy to see how this essential step could get overlooked.
Step 3: File Kentucky Articles of Organization
Now that you have your official LLC name and designated registered agent, you’re ready to register your business with Kentucky. Filing official government documents like this can be intimidating and/or complicated for many people, which is why we’re here. With our business formation plans, our professionals handle the filing for you to make sure it’s done quickly and correctly the first time. But, although we can handle this for you, we’ll show you how the process works below.
To officially register your LLC, you’ll need to fill out the Kentucky Articles of Organization form. You’ll need to provide the below information:
- Your LLC Name. This is your company’s official name with the LLC designator.
- Your Registered Agent’s Address and Name. This is your registered agent’s office address (must be in Kentucky) and their legal name.
- Your LLC Operating Address. This is your LLC’s primary operating address (it can be the office address or your residence).
- Management Structure. This is where you’ll indicate if your LLC is run by managers or members. Member-managed LLCs are run by the members (owners) of the LLC. Manager-managed LLCs are run by a manager (a designated owner or outside party) who is appointed by the members.
- County of Operation. This refers to the county where your office address is located.
- Your LLC Size. You’ll select the estimated size of your company and employees.
- Your LLC Industry. You’ll indicate the industry your LLC operates within.
- Partner Signature. This is where you’ll sign the form. Up to two members can sign.
- Registered Agent Signature. This is where your registered agent will sign.
You’ll also need to pay a fee when filing online or via the mail. For those who choose to mail it in, you can send it to:
Office of the Secretary of State
P.O. Box 718
Frankfort, KY 40602
If you have us handle filing your Articles of Organization, once the state approves your LLC, your paperwork will be available from your ZenBusiness dashboard, where you can keep it and other important paperwork digitally organized.
Once you get your physical paperwork back from the state approving your new LLC, you’ll want to keep it in a safe location along with your other important documents, such as your operating agreement, member certificates, contracts, compliance checklists, transfer ledger, etc. We offer a customized business kit to help you keep these important documents organized and looking professional.
By now you’re realizing how often you’ll need to supply an address for your new business. That can be unsettling for some business owners, especially those running their business from home. In instances where you’re not required to give the registered agent address or official principal address for your business, a virtual business address can come in handy.
With our virtual business address service, we supply you with a physical street address where you can have your mail sent without divulging your real address to more people than necessary. Then we can send that mail to the address of your choice.
Step 4: Create an operating agreement
In Kentucky, operating agreements are highly recommended but are not required. Your operating agreement clearly defines how your LLC is owned and structured, detailing how financial decisions are made and how employees are managed.
Even if you’re forming an LLC where you’re the sole member, it might be good to construct an operating agreement. This agreement can help protect you if you’re incapacitated or unable to run your business for any reason. Without an agreement, you’ll default to Kentucky LLC law, which might not reflect your LLC’s best interests.
Let’s look at a few other key benefits of creating an operating agreement for your LLC.
- Your LLC operating agreement better separates your company’s liability and assets from your personal assets and liability in the eyes of the courts.
- Your Kentucky operating agreement allows new investors or owners to review how the company is managed before making any commitments.
- Conflicts can typically be resolved quickly by consulting your operating agreement — member disputes and voting structures should be detailed in your agreement.
While you don’t have to file your operating agreement with Kentucky, you should still make sure it covers all your bases. If you’re unsure as to how to begin creating an operating agreement for your LLC, we offer a customizable template to help get you started.
Step 5: Apply for an EIN
Now that you’ve registered your LLC in Kentucky and created your operating agreement, you’re ready to register with the Internal Revenue Service (IRS). You’ll start this process by registering for an Employer Identification Number (EIN).
Think of your LLC’s EIN as your company’s Social Security number. It allows your LLC to be easily identified by the government and lets you file taxes, hire new employees, and open business bank accounts.
Sometimes a single-member LLC with no employees isn’t required to secure an EIN, providing they fall within the IRS’s parameters. But even those who aren’t legally required to have an EIN can benefit from having one because using an EIN can build business credit and help protect against identity theft, as you won’t be using your Social Security number for business purposes. Banks often require you to have an EIN to open a business bank account.
You can get your LLC’s EIN through the IRS website, by mail, or by fax, but if you’re unfond of dealing with that particular government agency, we can get it for you. Our EIN service is quick and eliminates the hassle.
Once you’ve secured an EIN, you’ll be able to open a business bank account. Having separate accounts for your business and your personal banking is critical for sorting out your finances at tax time and helps you avoid commingling funds. Commingling funds can not only make your taxes more difficult, but it could also be used against you if someone takes you to court to challenge whether you and your LLC are truly separate entities (i.e., they want to sue you for not just your business assets, but also your personal assets).
We offer a discounted bank account for your new business. This allows for unlimited transactions, online banking, a debit card, and more. When you want to authorize others in your business to use the account, we offer a banking resolution template to simplify the process.
For further help managing your new business’s finances, try the ZenBusiness Money App. It can help you create invoices, receive payments, transfer money, and manage clients all in one place.
Kentucky LLC FAQs
How much does it cost to start an LLC in Kentucky?
The state fees for forming a Kentucky LLC can range from $40 to $55, depending on factors such as whether you choose to reserve your business name. Note that fees change over time, so check the Kentucky Secretary of State website for the most recent fees.
Of course, these fees don’t take into consideration the time or effort you’ll need to spend filing them and making sure your information is correct. You will also need to file your Kentucky annual report each year, which should be submitted with a filing fee.
We can help you with your annual report in a couple of ways. Our annual report service will help you file your annual report, and our Worry Free Compliance service not only helps with filing your annual report, but also sends you other important compliance reminders and helps you with two amendment filings each year.
What are the benefits of an LLC in Kentucky?
LLCs are a popular business structure for many reasons. This type of business allows for flexibility in management while offering personal financial and legal protections. LLCs are also fairly straightforward to set up.
Here are a few reasons forming an LLC in Kentucky is an excellent choice:
- LLCs offer separation between your personal liability and debts and your business liability and debts.
- LLCs allow you to manage your company as you see fit and have fewer rules and regulations to adhere to than corporations.
- LLCs are exempt from double taxation. This means you’ll only pay taxes on your LLC profits when filing your personal tax return versus paying taxes on both your corporate tax return and your personal tax return.
- LLCs have fewer reporting requirements than business structures like corporations.
Want to learn more about the benefits of forming an LLC? Check out our LLC guide for more information.
How is a Kentucky LLC taxed?
As already noted, Kentucky LLC owners are exempt from double taxation. Of course, there are other tax requirements you’ll need to be aware of. An experienced accountant or tax specialist can come in handy here to ensure you make the best tax decisions and are tax-compliant.
Here are a few additional tax requirements you’ll need to keep in mind.
- Self-employment tax: LLC members aren’t employees, so Social Security and Medicare contributions aren’t withheld from their paychecks. Instead, most LLC owners are required to make those contributions as “self-employment taxes” and pay them directly to the IRS on their tax returns.
- If you choose to be taxed as a corporation: Though most new LLCs prefer to be taxed the default way (as a sole proprietorship or partnership), for some LLCs (particularly those with very high earnings), it may be advantageous to be taxed as a corporation, either a C corporation or an S corporation. These options can have some distinct advantages, which you can learn more about here. To file as a C corporation, you’ll need to file an 8832 tax form with the IRS. For an S corporation, you’ll need Form 1120-S. Your personal taxes will be filed separately. Before deciding, consult a qualified accountant.
- To avoid tax penalties: You’ll be responsible for making sure your LLC pays estimated quarterly taxes each year. These payments must be made for both your Kentucky and federal taxes. If you have employees, you’ll also be required to withhold taxes from their paychecks. You’ll need to apply for a withholding account in Kentucky and submit these withholdings to the IRS regularly. Employers must also register for the Unemployment Insurance Tax with the Kentucky Office of Unemployment Insurance.
- To satisfy sales tax requirements: If your company sells items/services and collects sales tax, you need to fill out sales tax forms, depending on your industry, via the Kentucky Department of Revenue.
- To stay compliant: You need to pay a Limited Liability Entity Tax (LLET) each year. This tax is a minimum of $175 (or an amount computed by their formula, whichever is higher).
Those who purchase any of our plans get a free accounting consultation and tax assessment from our specialists to receive helpful resources and no-obligation recommendations around your bookkeeping, accounting, and tax needs.
What is the processing time to form my Kentucky LLC?
If you file your Articles of Organization online with the commonwealth of Kentucky, your request is generally processed within minutes and active within 24 hours. If you file through the mail, your request may take longer to process.
Do I need to file an operating agreement with the state of Kentucky?
No, you are not required to file an operating agreement in Kentucky, although the law strongly encourages all LLCs to create one.
What tax structure should I choose for my Kentucky LLC?
Most LLC owners decide to have their business taxed the default way, which is as a sole proprietorship (for single-member LLCs) or a partnership (for multi-member LLCs). This method only requires members to pay taxes on their percentage of their profits on their personal tax returns. The LLC itself is not taxed. This avoids the “double taxation” that corporate shareholders pay, in which profits are taxed both at the business level and the personal level.
If your LLC is large or has particularly high earnings, it may make sense to file your taxes as a corporation instead. It’s important to understand the tax distinctions before making this decision. You should reach out to an experienced accountant.
Does Kentucky allow a Series LLC?
Kentucky does not allow you to form a Series LLC. A Series LLC, which is essentially several child LLCs operating under one parent LLC, is an intriguing business structure for many entrepreneurs. Still, many states in the U.S. do not allow for this type of company.
Which licenses and permits are required for an LLC in Kentucky?
While Kentucky does not require a general business license for your LLC to operate, some industries have different requirements. You’ll need to make sure your LLC has all the licenses and permits it’s required to have by law. Unfortunately, because licensing varies by industry and location and can occur on the federal, state, and local levels, there’s no central place to check to see if you have all the licenses and permits you need. You’ll have to do some research.
If you don’t have the time or inclination to do all this research, or if you just want the peace of mind to know that your business has all the licenses and permits it’s legally required to have, our business license report service can do the work for you.