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Start an LLC in KentuckyStarting a business in Kentucky can be an exciting time. Before selling your product or service though, the nuts and bolts of licenses, registrations, and taxes must be completed.

The guide below will show you the DIY process of forming an LLC in Kentucky. However, you can also use an online LLC service handle the paperwork for you. We reviewed and ranked the 7 best available.

 

Step 1: Name Your LLC

Selecting a name for your Kentucky LLC is a first step, yet a very important one. A name that is unique and easy to remember is helpful in finding potential clients or retaining customers.

The name should indicate the product or service. It should also follow guidelines set forth by the state of Kentucky.

The name of an LLC will likely appear on business cards and stationary, marketing materials, a website, legal contracts, business bank accounts, invoices and/or a building directory.

Kentucky law requires that the business name includes the words/abbreviations “Limited Liability Company,” “Limited Company,” “LLC,” or “LC.” The abbreviations “Ltd.” and “Co.” may also be used.

The name must be different or “distinguishable” than other names already registered. The following are not considered distinguishable features:

  • The use of words of abbreviations that designate the type of business entity
  • The addition or deletion of articles, conjunctions, or punctuation
  • The exchange of lower and upper case letters

For Example

Let’s imagine that someone is considering opening a flower shop in Lexington, KY. The name she is considering, Flowers by Fanny, LLC is already in use. Instead, she decides to legally name her business Fanny’s Florals and Design, LLC.

Determine the Name is Available

Following the selection of a name but before filing the Articles of Organization, check to ensure that your name is unique on the Name Availability Search on the website of the Kentucky Secretary of State. You may also inquire by writing to the Secretary of State, or calling the Frankfort office, (502) 564-3490. Searching in other places, such as online, is also a good idea.

After you have determined that your chosen name is “distinguishable,” the name can be reserved in order that you have exclusive rights for 120 days.

Optional: Name Reservation

Sometimes a situation may arise where an individual wants a particular name but needs time to organize his/her company before filing paperwork to create an LLC. In this case, a name can be reserved for 120 days in the state of Kentucky with a 30-day renewal option available.

The downside is that it does cost $15 for the reservation. A Reservation of Reserved Name can be filed online, in person, or through the mail.

Applications can be mailed to the following address:

Alison Lundergan Grimes

Office of the Secretary of State

PO Box 718

Frankfort, KY 40602-0718

Applications can be delivered in person to the following address:

Room 154, Capitol Building  

700 Capital Avenue

Frankfort, KY 40601

Hours of Operation: 8:00 AM-4:30 PM ET

Documents are usually processed the day received but can take up to three days.

 

Step 2: Choose a Registered Agent

Every LLC in Kentucky is required to have a registered agent. This agent can be an individual or  a company.

The role of the registered agent is that of a contact person between the LLC and the state. As stated on the application for Articles of Organization, “the registered agent is the individual or business designated to receive service of process in the event the business is party to a legal action.”

Simply put, the process agent receives communications or documents from the state involving such things as taxes or lawsuits and communicates them to the LLC.

Some may wonder why an Alaska registered agent is necessary. The importance of the agent is to ensure that someone is always available to receive important documents even if the business owner leaves the office, goes on vacation, or is otherwise away. Also, having a registered agent is especially important if a physical office does not exist in Kentucky.

A Statement of Consent of Registered Agent must be filed with the Secretary of State. The statement does not require a filing fee. An option is to include a delayed effective date on the statement, up to 90 days from the filing date. The statement can be filed online, through the mail or in person. If mailing or delivering in person, a copy of the original document must also be submitted.

Individual as Registered Agent

Most importantly, the individual must be a resident of the state of Kentucky. An LLC cannot act as its own registered agent. However, a member or manager can act as the registered agent for the LLC. Using a third party ensures that nothing falls through the cracks. The third party can be an accountant, an attorney, or even a friend. The agent must have a physical and mailing address in Kentucky.

Registered Agent Service

If using a service, the registered agent must be a business or professional organization. We recommend either using an LLC formation service (like Incfile or Northwest Registered Agent) which gives you a free registered agent or ordering a registered agent service by yourself if you choose to DIY your Alaska LLC formation.

 

Step 3: File the Formation Documents with State

Let’s assume that fictional Fanny has selected both the name for her LLC and the registered agent. She is ready to complete the paperwork (called the Articles of Organization) that actually creates Fanny’s Florals and Design, LLC in Kentucky.

This step can be completed either online, by mail, or be delivering the application in person.  The filing fee is $40, payable to Kentucky State Treasurer. When you are ready, it is important to note a few details about each method to ensure that your application is fully completed.

Online Filing

In order to complete an online application, you will need to first set up an account with Kentucky Business One Stop Portal.

Filing by Mail

Applications and payments can be sent to the following address:

Alison Lundergan Grimes

Office of the Secretary of State

Division of Business Filings

PO Box 718

Frankfort, KY 40602 – 0718

Filing in Person

Applications and payments can be delivered to the following address:

Room 154, Capitol Building  

700 Capital Avenue

Frankfort, KY 40601

Hours of Operation: 8:00 AM-4:30 PM ET

Documents are typically processed the same day they are received. However, processing can take up to three days.

 

Step 4: Create an Operating Agreement

An operating agreement in the state of Kentucky is recommended though not required. The agreement is a contract that defines the operations of the LLC, includes terms and conditions, states the responsibilities of its members, and ensures legal protections of its members.

All owners of the LLC must be in agreement of the terms in the agreement and sign before a notary public.

The operating agreement is useful for both multi-member and single-owner LLCs. In both cases, the agreement provides protections.

For example, in the case of the multi-owner LLC, the terms can stipulate what should happen if a death or divorce occurs among one of its members. In the case of the single-owner LLC, the agreement could be used in court as evidence that the LLC is separate from the individual owner.

The operating agreement can be created in two ways. Some individuals may choose to write the agreement on their own, using an online template. In this case, forms are available that are specific to state. Be sure to use the correct multi-member or single-member form.

The alternative is hiring an attorney to create the document. The benefits of using an attorney are ensuring the document doesn’t exclude any important information, adheres to state law, and invalidates default provisions that may not be what you wish.

 

Step 5: Get an EIN

An EIN is an Employer Identification Number. Anyone who runs their business as a corporation or partnership must file for this 9-digit number in order to identify the tax accounts of a business. The number can be applied for in one of the following three ways:

Online

Applying online is the quickest method. The process can be completed between 7 a.m. and 10 p.m. EST, Monday through Friday. When the form is completed, the information will be immediately validated and a number issued while you are still online. In order to apply online, a valid individual taxpayer number, such as a Social Security number, is required.

Fax

Form SS-4 can be downloaded, completed and faxed to 855-641-6935, twenty-four hours, seven days per week. The EIN will be provided within four business days.

Mail

If either of the above methods are unavailable, Form SS-4 can be mailed, though processing will take approximately four weeks. The form can be mailed to the following address:

Internal Revenue Service Operation

Attn: EIN Operation

Cincinnati, OH 45999

Think you’re ready to open up shop now? Guess again!

 

Step 6: Taxes, Licensing & Income Reporting

Businesses like Fanny’s Florals and Design, LLC may be official after completing the above steps, but it is important not to overlook a few critical details.

Taxes

On the federal level, most LLCs do not pay taxes directly to the government. Instead, they report income and losses on the owner’s personal 1040 tax returns. Schedule C is often used for reporting. Unless the LLC chooses to be taxed as a corporation, a single-member LLC is

taxed as a Sole Proprietorship and a multi-member LLC is taxed as a Partnership.

Similarly, most LLCs will pay state tax on pass-through income via their personal income tax returns. The exception is if an election is made to tax the LLC as a corporation.

Some LLCs in Kentucky will be required to pay a Limited Liability Entity Tax (LLET). This tax applies to those LLCs with an annual gross profit of more than $3 million. The LLET has a minimum tax of $175.

In addition, if your LLC has employees, you may need to pay a withholding and unemployment tax. Businesses that sell merchandise will need to pay a sales or use tax.

In order to register your LLC to pay these required taxes, registration with the Department of Revenue is necessary either online or using Form 10A100.

Finally, an LLC may need to file and pay a local tax to a city, municipality, or county.

Licensing

In some cases, an occupational license or permit is needed before a business can begin operations.

In order to determine if a license or permit is required of your business, use the search database on the Kentucky One Stop Business Portal.

Reporting

After an LLC is formed, an annual report must be filed with the state of Kentucky by June 30 each year. An annual reminder postcard will be sent in January. The LLC will have until June 30 to complete and return the postcard to the Office of the Secretary of State or file the report online. The filing fee is $15.

If the report is late, the LLC will be listed in bad standing with the state. If not filed by August 31, the LLC risks dissolution or revocation of authority to do business in Kentucky.

When all of the mechanics of setting up an LLC in Kentucky have been completed, someone like Fanny can get down to the business of setting up a website, creating a logo…or purchasing flowers!

 

Need Help Creating Your LLC?

We recommend LLC formation services because it allows you to knock off an important thing off your checklist so you can focus all your energy on actually starting a business.

Can you do it yourself? Absolutely.

However, a service that forms an LLC for you will help with ongoing maintenance and keep you notified of any requirements you should adhere to.

As we mentioned earlier, IncFile and Northwest Registered Agent are the top LLC services available. If you’re not familiar with them, as a point-of-reference many of our readers like to compare them to the most well known LLC service, LegalZoom.

IncFile vs LegalZoom or Northwest Registered Agent vs LegalZoom