How to Form an LLC in Kentucky

Starting a new business in the state of Kentucky? You will have a choice between sole proprietorship, LLC, or corporation. For most businesses, LLCs present a great option, as they have excellent liability protection, while being less involved and difficult to set up compared to a corporation.

Starting an LLC in Kentucky involves several steps, but it doesn’t need to be a complicated process. This guide breaks down everything you need to know about forming a limited liability company in Kentucky. Let’s get started! 

1. Consider utilizing an LLC formation service

For the quickest, smoothest experience, it’s worthwhile to use a professional LLC formation service to help you start your new company. Services like ZenBusiness and Northwest Registered Agent are excellent options, and quite affordable – ZenBusiness starts at just $39. 

These services help walk you through the entire process of starting your business. They help you satisfy all state requirements, while also guiding you through the various optional steps you can (and should!) take. Everything is handled efficiently and professionally, and in general, using a service makes the LLC formation process much easier. 

Northwest Registered Agent and ZenBusiness can also offer other benefits. Either can serve as your Registered Agent, a role which is required to appoint (see step #3 below). They also offer other tools, features and services to help your business thrive. 

Using a service like ZenBusiness is not required, but it can help save you a lot of hassle and time – making it well worth the investment for many business owners. 

Check out our roundup of the Best LLC Services

2. Name your new company

Selecting a name for your business is the first actual step to tackle. You will need to know the name before you fill out any paperwork or apply for anything. 

In choosing a name for your company, you will need to satisfy certain requirements, including:

  • Unique – The name must be unique (distinguishable) from other businesses in the state of Kentucky. You can use the business entity search feature on the Secretary of State’s website to confirm availability. 
  • Contains “LLC” – The name must contain “LLC”, “L.L.C.”, or “Limited Liability Company”. For example, “ABC, LLC” is an acceptable business name, but simply “ABC” is not. 
  • Does not contain restricted words – Certain words and phrases are restricted, and either cannot be used or may require special permission. This includes terms from protected industries, like “bank” or “lawyer”, as well as government-related words. 

Once you have found a name that meets all these requirements, you can move on to step #3. 

Using a Trade Name in Kentucky

Kentucky businesses are also allowed to use a trade name, otherwise known as an assumed name or “doing business as” name. This allows existing companies to register additional names, which they can then operate under. 

3. Appoint a Registered Agent

Every LLC in Kentucky must appoint what is called a Registered Agent. This agent is responsible for accepting important documents on behalf of the business, including tax forms and notice of lawsuits. 

A registered agent must be either:

a.) A resident of Kentucky, or 

b.) A company licensed to do business in Kentucky

This means that, if you live in KY, you can be your own registered agent (or you can appoint an employee). The downside of this approach is that your address will become public record, as it is required to list the mailing address of the agent on the business’ registration. 

A good option is to use a professional service. This protects your privacy, and also ensures that everything is handled correctly. Both Northwest Registered Agent and ZenBusiness are great options if you choose to go this route. 

Check out our roundup of the Best Registered Agent Services

4. File LLC Articles of Organization

The Articles of Organization are the main formation documents that you will need to file in order to start a new LLC. This can be done online, by mail, or in person. The cost is $40 and is nonrefundable. 

To file online – Register an account with the Kentucky One Stop Business Portal, and follow the steps required to form a new business entity. The filing cost will be $40, payable by credit or debit card. 

To file by mail – Fill out and print the Articles of Organization for Kentucky, following the instructions carefully. Mail this, and a check for $40 to “Kentucky State Treasurer”, to:

Michael Adams

Office of the Secretary of State

P.O. Box 718

Frankfurt, KY 40602-0718

Once this document has been submitted, you will need to wait for Kentucky to process your application. This typically takes 6-7 business days if filed online, and a bit longer if filed by mail.

5. Create an operating agreement

Note: This step is optional, but recommended.

Most LLCs should have an operating agreement, although this step is technically optional. What is an operating agreement? It’s basically a document that establishes important details about the operating procedures and ownership structure of your new business. It’s the ownership information that is particularly important, for any company with multiple owners. This document can help reduce the risk of future ownership disputes, as it clearly establishes who owns what. 

Operating agreements are internal documents that are simply kept on file by businesses. They do not need to be submitted to any government agency. To create one, use a service like ZenBusiness, or hire an attorney to help draft a custom agreement. 

6. Apply for business licenses & permits

The Articles of Organization will establish your LLC as a legal entity, but there are other requirements to actually do business in the state of Kentucky. 

Kentucky does not have a statewide business license requirement for all businesses – but companies in certain industries must require state permits or licenses in order to operate. Environmental permits may also be required. You can find more information on step #5 here

Additionally, you will need to satisfy various local requirements in the county or city where you plan to operate. Each local government has its own rules, but most require a business license and potentially a specialized permit, depending on the industry. You can find more information here

7. Apply for an EIN

If you plan to hire employees, you must also apply for an Employer Identification Number (EIN) with the IRS. This is a federal tax ID number, so it’s only used for federal tax filings and correspondence (it has nothing to do with the state of Kentucky). That said, Kentucky LLCs should still apply for one, particularly if they plan to hire employees. It is required to hire employees, and it’s also useful for various business activities like opening business banking products and accounts. 

It is very easy to apply for an EIN. Simply fill out this application on the IRS website. There is no cost to apply, and the application is simple and quick. 

8. Open a business checking account

Businesses should strive to keep their business finances separate from the finances of their owner(s). The best way to do this is to separate banking activities completely, from day one. By this, we mean that you should open a business bank account, and use this account for all business activities and purchases. You may also wish to get a business credit card or line of credit. 

This will not only help you keep your bookkeeping efforts straight, but it will also protect your personal assets from liability related to your company. 

Most banks and credit unions offer small business checking accounts. You can shop around to see which financial institution offers the best deal. Banks will have different requirements for what you’ll need to open the account – call ahead to discuss requirements before stopping by to open an account. 

9. Keep your business in good standing

Once your business is formed and operating, there are still various ongoing requirements that you will need to meet. You must keep your business in good standing with federal, state and local governments. This means filing tax returns on time, renewing permits, submitting annual reports, and satisfying all other requirements on every level of government. 

Companies like ZenBusiness and Northwest Registered Agent can help with this by reminding you of key due dates and helping with certain filings. If you choose to do the work on your own, here are just a few of the things you will need to stay on top of:

  • Kentucky Annual Reports – due every year for all LLCs in the state
  • Various Kentucky business taxes – due for many businesses in various industries (requirements and rates vary depending on the type of business)
  • Federal business tax returns
  • Federal and state employer tax returns (payroll taxes)
  • Local tax returns (city/county) in some areas
  • Business license renewals
  • Permit renewals 
  • Registered Agent – required for the life of your business 

This list is not exhaustive, as the requirements do vary depending on the type of business and the location(s) of business operations. We recommend that you thoroughly research all your requirements now, and set reminders in your calendar so that you don’t miss any due dates. If you’re proactive in this approach, it will be easier to stay on track and keep your business running smoothly. 

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