How To Start An LLC In Kentucky
To start an LLC in Kentucky, you must file Articles of Organization with the Kentucky Division of Business Filings, pay a $40 filing fee, and get an EIN from the IRS. The complete steps to forming a Kentucky LLC are as follows:
- File Kentucky LLC Articles of Organization
- Pay the Kentucky Division of Business Filings $40
- Once approved, download and print a copy of your approved Articles
- Get a Federal EIN tax ID for the LLC
- Create a Kentucky LLC Operating Agreement
- Take these documents to the bank and get a Kentucky LLC bank account
How to File Kentucky LLC Articles of Organization
To form a Kentucky LLC, you file Articles of Organization by following these steps:
- Choose a name for your new LLC
- Decide if you want to hire a registered agent service to minimize public disclosures
- Decide what address you’d like to list publicly
- Choose if your LLC will be managed by members or managers
- Choose when you’d like your LLC to start
- File online and pay $40 with a credit card (fastest) or mail to the Division of Business Filings at PO Box 718, Frankfort KY 40602 with a check or money order for $40
HOW LONG DOES IT TAKE TO START A KENTUCKY LLC?
It can take up to 3 or 4 business days for the state to process your Articles of Organization (although the majority of online filings are processed the same day).
WHAT IS THE COST OF A KENTUCKY LLC?
The Kentucky Secretary of State charges a $40 filing fee for Kentucky LLCs.
Hire Northwest and your total, out-the-door cost is $265, including state filing fees and a full year of registered agent service.
How much does an LLC in Kentucky cost each year?
Your Kentucky LLC’s Annual Report has a filing fee of $15.
What is a Kentucky LLC Annual Report?
Every year, you have to fork over $15 to submit a Kentucky LLC Annual Report. This report updates the state with your LLC’s ownership information and confirms your business’s contact details. (You can’t update contact details in your report—if your principal office or registered agent’s address changes, you have to submit a Statement of Change, which will cost you an additional 10 bucks.)
Don’t be tempted to ignore or put off filing your report. While there aren’t any late fees, the state can revoke your business registration or dissolve your LLC if your report remains unfiled. At Northwest, we want you to stay in good standing. When you hire us, we’ll send you report reminders. Still nervous you’ll forget? Hire us to file your reports for you and cross that off your annual “to do” list.
What are the Kentucky LLC taxes?
The Kentucky personal net income tax rates are:
2%: $0 to $2,999
3%: $3,000 to $3,999
4%: $4,000 to $4,999
5%: $5,000 to $7,999
5.8%: $8,000 to $74,999
The sales tax in Kentucky is a flat 6%. Unlike many other states, Kentucky’s cities and counties don’t tack on additional local sales taxes.
Kentucky also has a unique tax called the Limited Liability Entity Tax (LLET), a tax on gross receipts. This tax applies to both corporations and “pass-through” entities, like LLCs and LPs. The minimum LLET is $175 for gross receipts under $3 million.
Kentucky taxes aren’t all bad news though—Kentucky has one of the lowest property taxes in the US (an average of 0.72% of assessed value). Thinking about investing in property? Your accountant will likely suggest setting up an LLC. An LLC limits your liability and can help you maintain your privacy by keeping your name out of public records. At Northwest, we can form your Kentucky LLC for just $265.
IS A KENTUCKY LLC REGISTERED AGENT REQUIRED?
Yes, the State of Kentucky requires your LLC to have and maintain a Kentucky registered agent. This doesn’t mean you have to hire someone. You could be your own registered agent—although you’d take a few hits to your privacy and availability. You’d have to publicly list the street address where you’d be available during business hours to accept legal notices. This information then becomes part of the permanent record of your Kentucky LLC. You would also have to actually be available during business hours (and who wants to be tied to their desk?).
When you hire Northwest, you can use our address and information in your Articles of Organization. No need to worry about updating multiple addresses as your business grows and changes. No need to worry about junk mail and unwanted visitors on your doorstep. No need to worry about missing legal notifications on the one day you slept in (or ducked out to watch March Madness).
DO I NEED A TAX ID NUMBER (EIN) FOR A KENTUCKY LLC?
Your LLC is required to get an EIN if you have employees or file federal excise taxes like Alcohol/Tobacco/Firearms returns. Even if you aren’t required to get an EIN, there are many situations where you’ll be asked for one, especially when you first start your business. When you open a business bank account, the bank will request your EIN. When you go to establish credit with new vendors, they will often request your EIN. You may even need your EIN for local tax filings. You can get an EIN for free from the IRS. Can’t bear to fill out one more application? Hire Northwest to apply for your EIN for you.
DOES A KENTUCKY LLC NEED A BUSINESS LICENSE?
It depends on where you’re located—Kentucky itself doesn’t have a general business license, but some cities and counties have local business license requirements. Franklin County, for example, requires those conducting business in the county to obtain a business license.
KENTUCKY LLC VERSUS KENTUCKY CORPORATION:
In Kentucky, it costs more to start a corporation than an LLC. While the base filing fee for Articles is $40 for either business type, corporations also have to pay an “Organization Tax Fee” upon filing, which is a minimum of $10 (the price increases along with the number of authorized shares).
Maintaining a corporation or an LLC costs the same—both pay $15 to file Annual Reports. Taxes can be similar or very different. Taxes are based on tax election, and both corporations and LLCs have multiple tax choices. For example, both corporations and LLCs can choose to be taxed as S corporations. With costs being fairly even for LLCs and corporations, the differences really come down to function. For most business owners, LLCs are simple to operate. Members can self-manage, and there’s no need for formalities like annual meetings. Unless you need a corporation (say, for example, your ultimate goal is to become a publicly-traded corporation), an LLC is often a good choice, particularly for small businesses and new business owners. Considering a corporation? Here is information on Kentucky incorporation.
DOES A KENTUCKY LLC NEED AN OPERATING AGREEMENT?
Yes! It may not be legally required, but every LLC should have an operating agreement. It’s your LLC’s most important internal document. Your operating agreement explains how your business functions. It lists how much each person invested, how profits and losses are allocated, how decisions are made and more. Arguing with investors or partners? Shutting the whole business down? You don’t have to worry about how to handle dark times when they come up (and bad times will occasionally happen, as assuredly as allergy season). Your operating agreement spells out what will happen in these situations.
Even if you’re the only person in your LLC, there are still plenty of reasons to have an operating agreement. Your bank will want to see it when you go to open a business bank account or take on debt. Future partners and investors will definitely want to review your operating agreement. Anyone can form an LLC, and people need evidence that your business has its act together.
You don’t have to start from scratch. When you hire Northwest, we give you a free operating agreement, specific to your management style. Along with forming and filing your Articles and providing you registered agent service, our formation service includes free forms, from operating agreements to resolutions. We’re proud of our forms. We’ve spent years refining them—and over a million LLCs have used our free LLC forms to help form and maintain their businesses.
WHAT IS THE KENTUCKY LLC STATUTE?
KENTUCKY LLC ARTICLES OF ORGANIZATION REQUIREMENTS:
- Company Name: You must include one of the following in your name: Limited Liability Company, Limited Company, LTD CO, LLC or LC. Most companies go with “LLC.”
- Registered Office: This street address in Kentucky will become part of the permanent public record. Hire Northwest and our address will go here.
- Registered Agent: You can list the name of a person or a service like Northwest. The Kentucky Secretary of State requires you to include the signature of the registered agent in your Articles. This is to prove the agent consented to the position (so no signing up your brother without telling him). When you hire Northwest, our signature goes here.
- Principal Office: This is where the state of Kentucky will send you any official mail (besides legal notifications). Want to keep things simple with one address? When you hire Northwest, you can list our address as your principal office.
- Effective Date: When do you want your LLC to start? Most businesses start upon filing, but if you want to begin a little later (maybe the next fiscal year is about to begin), you can put an effective date up to 90 days in the future.
- LLC Management: You’ll need to decide who will manage the LLC: members or managers. Most LLCs are managed by members. However, if you don’t plan to run the day-to-day operations of your business, you can turn over the decision-making powers to managers.
- Kentucky LLC Organizer: Your organizer is the person who completes, signs, and submits your Articles of Organization. An organizer doesn’t have to be a member or manager. When you hire Northwest, we’ll be your organizer.