Forming an LLC in Kentucky
Kentucky LLCs (limited liability companies) are popular with business owners because they protect personal assets from lawsuits and bankruptcy while also offering simplified taxation and a flexible management structure. To form an LLC in Kentucky, you’ll need to choose a business name, appoint a registered agent, and file Articles of Organization with Kentucky’s Division of Business Filings. The articles cost $40 to file, and you can mail them in, file online, or submit them in person to the Secretary of State. Starting an LLC may seem like a big step, but if you follow our step-by-step guide, you’ll emerge from the whole process unscathed and ready to do business.
Ready to Form an LLC in Kentucky?
Get Started
Name Your LLC
Designate a Registered Agent
Submit LLC Articles of Organization
Write an LLC Operating Agreement
Get an EIN
Open a Bank Account
Fund the LLC
File reports + taxes
1. Name Your LLC
First thing’s first, your LLC needs a name. While it’s important to choose the right name for your business, it must meet state law requirements as outlined in KY Rev Stat § 14A.3-010. Your LLC’s name must:
- Include “limited liability company” or “limited company” or the abbreviation “LLC” or “LC.”
- Not include words or abbreviations to make it sound like the LLC is another kind of entity, like “corp” or “limited partnership.”
- Be unique among approved business names in Kentucky.
Already have a business name? Check to see if it’s available.
Can I reserve a business name in Kentucky?
You certainly can. Kentucky lets you reserve your chosen business name for 120 days. Your request must be made in writing—no online name reservation is available. This means that you’ll need to file the Reservation or Renewal of Reserved Name form either by mail or in person with the Division of Business Filings and pay the $15 fee via check.
What’s the difference between my LLC’s name and a trade name?
Your LLC’s name is the one listed on the legal paperwork you file with Kentucky. Your trade name, or DBA, is just a name for your business that is different from the one registered with the state. DBA stands for “doing business as.” DBAs are also referred to as trade names, fictitious names or assumed names.
DBAs can be used when the legal name doesn’t quite match up with the actual business name. For instance, John Doe, LLC may be a registered business name, but a DBA like “Doe’s Dog Walking” does a better job of defining what the LLC does. Instead of having to go through the time consuming and sometimes costly process of registering a new LLC, your original LLC can simply operate under a DBA.
Kentucky requires DBAs to be registered with the state. To get a DBA in Kentucky, simply fill out a Certificate of Assumed Name form and then file it with the Secretary of State. The form costs $20 to file and you can mail or walk it in.
Thinking about using a trade name? Learn How to Get a DBA.
2. Designate a Registered Agent
Next, you’ll need to designate a Kentucky registered agent. A registered agent is someone (yourself, another individual, or a company like us) that is tasked with accepting important legal mail on behalf of the LLC. In Kentucky, all LLCs are required to have a registered agent. You’ll need to have your registered agent’s name and address ready before you fill out your Articles of Organization.
Learn why the pros use a registered agent service.
What does a registered agent do?
The requirements for a registered agent in Kentucky are outlined in KY Rev Stat § 14A.4-010. At a minimum, your registered agent must:
- Have a physical address (no PO boxes or virtual offices) in the state of Kentucky.
- Keep regular business hours.
- Accept legal mail and correspondence from the Kentucky Division of Business Filings on behalf of your business and get them to you fast.
Can you be your own registered agent in Kentucky?
Darn tootin’. That is, if you aren’t against the idea of listing your name and address all over the Kentucky public record, which is what happens when you act as your own registered agent. What’s more, you’ll be required to keep regular business hours at your registered address and be available to accept legal mail in person. This doesn’t always work well with business owners who are on the go.
Can I change my registered agent after I start an LLC?
You definitely can. In fact, you have the ability to change your registered agent in Kentucky anytime you want by filing the “Statement of Change of Registered Agent” form with the Kentucky Secretary of State. You can submit the form by mail, in person, or online. Total cost for changing your registered agent is just $10.
3. Submit LLC Articles of Organization
Filing the Articles of Organization with the state of Kentucky is the step that officially creates your LLC. When the form is completed, you’ll submit it to the Kentucky Division of Business Filings.
Note: All of the information on this form will become part of the public record.
Provide the following information about your LLC in order to successfully fill out your articles:
- Company name. Write your legal company name and include an indicator like “LLC.”
- Registered office. The physical address in Kentucky where your registered agent is present during regular office hours.
- Registered agent. The person or business that will accept official mail on behalf of your LLC.
- Principal office. Address where the state will send official mail (besides legal notifications).
- Effective date. This is the date the LLC will begin its life, or you can delay the start by 90 days.
- LLC management. Indicate whether the LLC will be member-managed or manager-managed.
- Veteran-owned. If the LLC is owned by a veteran, check this box.
- LLC organizer. This is the person who completes, signs, and submits the articles. It can be someone outside of your LLC.
When you’re done, you can submit the document and your $40 payment online, in person, or by mail. The state processes online and in-person filings on the day they’re received. Mailing your paperwork is also acceptable, but it will take two or three additional days to be processed, not including time for mailing.
How can I keep my personal information off the public record?
Junk mail and unwanted sales calls are a modern day scourge for business owners. Short of living on a private island or hiding in a cave, the only way to keep your information off public record is to hire a reputable registered agent that will put their information on all public documents. It’s really as simple as that.
What’s the difference between a member-managed and manager-managed LLC?
Member-managed LLCs are LLCs that are managed by their members (owners). This means that all of the day-to-day operations are handled by one or all of the LLC members. Manager-managed LLCs are businesses wherein the members choose to hire a manager (or managers) who takes responsibility for the daily operations of the LLC. Most LLCs are member-managed, but if you’d prefer to be a passive owner, a manager-managed LLC is probably more your speed.
For help with deciding which management structure will work for you, see our page on LLC Member Vs Manager.
How do I file the Kentucky Articles of Organization?
You can submit your articles online by mail, or in person. If you plan on paying the filing fees by check, they should be made payable to the “Kentucky State Treasurer.”
Mail:
Michael Adams
Office of the Secretary of State
P.O. Box 718
Frankfort, KY 40602-0718
In person:
Capitol Building
Room 154
700 Capital Avenue
Frankfort, KY 40601
Online:
4. Write an LLC Operating Agreement
Operating agreements may seem like another annoying complication in the exhausting work of forming a business, but in reality, next to your Articles of Organization, they are probably your LLC’s most important document. That’s because operating agreements dictate how the LLC will conduct internal business, up to and including how profits will be shared, how members can leave or join, who contributes what and how much, and how the LLC will be dissolved.
Check out our attorney-drafted Kentucky LLC Operating Agreement.
Does Kentucky require an LLC to have an operating agreement?
Kentucky doesn’t legally require your LLC to file or even adopt an operating agreement. However, according to KY Rev State § 275.003, without an operating agreement, the default setting for your LLC will be to adhere to the rules set forth in the Kentucky Limited Liability Company Act. Plus, your LLC will need a guiding document to help resolve internal conflicts and—should it ever become necessary—defend its limited liability status in court.
Because of this, it is absolutely vital for your LLC to have a solid operating agreement in writing. It’s an internal document, which means you don’t have to file it with the state, but you will need to keep it with all of your LLC’s most important documents.
What should be included in an operating agreement?
When you think about what should go into your operating agreement, think long and hard about all the big picture issues you and the other members need to hash out before going into business together. Here are some common topics covered by operating agreements:
- initial funding of the LLCs
- distribution of profits and losses
- voting rights, decision-making powers, and management
- how to add new members
- transfer of membership interest
- dissolving the business
Does a single-member LLC need an operating agreement?
Yes, you do. While you probably won’t disagree with yourself and how you run your LLC, most banks will want to see an operating agreement before you open a bank account. A business bank account helps to establish your LLC’s liability protections.
5. Get an EIN
Obtaining an employer identification number (EIN) should be a top priority during the formation stages of your LLC. An EIN is a distinct nine-digit number that the IRS assigns to business entities in the US. Your EIN is integral for tax filings and for opening a bank account. You are required to have an EIN if you plan to hire employees. Having an EIN helps keep your business and personal finances separate, which reduces the risk of identity theft.
Do I need an EIN for my Kentucky LLC?
Yes. Legally, you only need an EIN if you have employees or are taxed as a corporation. But just about every bank requires an EIN to open a business bank account. You’ll be able to list your EIN on every form, payment, and document that your business files with the IRS. If you work with clients or hire contractors to complete work for your LLC, you’ll need to give them records of sales or expenditures for their bookkeeping. If you don’t have an EIN you’ll be handing over your personal Social Security Number. Having an EIN means you can avoid giving out your Social Security Number to people you do business with.
What To Do After Forming Your Kentucky LLC
6. Open a Bank Account
Your LLC is a separate entity from you and the other members, so it only makes sense to open a separate bank account for your business. Keeping business and personal accounts separate makes for easier record keeping, which in turn strengthens your LLC’s liability protections. Opening a business bank account also shows vendors and customers that your business is serious and professional.
To open a bank account for your Kentucky LLC, you’ll need to bring the following to the bank:
- Kentucky LLC Articles of Organization (a copy is fine)
- the LLC’s operating agreement
- the LLC’s EIN
- an LLC Resolution to Open a Bank Account (if your LLC has more than one member).
If your LLC has more than one member, use our free LLC Resolution to Open a Bank Account.
7. Fund the LLC
Funding the LLC is an important step in preparing to do business. Typically, each member writes a check to the LLC to pay for membership interest. Members can also contribute property or services to the LLC in exchange for membership interest. This can result in tax events based on the value of the services or property provided.
What is LLC membership interest?
Membership interest is the percentage of ownership in the LLC. If you are rolling solo in a single member LLC, you hold 100% of the membership interest, which means you don’t have to share profits or voting rights with anyone.
Things can get a bit more complicated as you add members. In general, membership interest is determined by how much each member puts into the LLC. For example, if the four members of the LLC each invest $25,000, each member receives 25% membership interest. Typically, membership interest and voting rights increase or decrease depending on the amount of money each member puts into the LLC’s coffers.
8. File State Reports & Taxes
Kentucky requires LLCs to file an annual report each year. Your LLC’s annual report is basically a simple information update that lets the state know of any changes to the contact information or management of your business. The annual report only costs $15 to file.
Afraid you’ll forget? Let us file your annual report for you.
When is the Kentucky Annual Report due?
Your first annual report is due by June 30th every year, starting the year after you form your LLC. So if your LLC was formed in January of 2022, you’ll need to file the annual report by June 30th of 2023 and every year after that. But watch out, Kentucky don’t play. LLCs that fail to file by June 30th are administratively dissolved. Reinstating your LLC is a long process, which means it is important that you pay attention to due dates.
How are Kentucky LLCs taxed?
In general, unless your Kentucky LLC files paperwork with the IRS and elects to be taxed as an S-corp or C-corp, your LLC will be taxed as a pass-through entity. This means that profits earned from the business will “pass through” the LLC itself, and onto the personal tax filings of each LLC member. Members then report the profits as earnings on their personal tax filings. A Kentucky LLC’s profits are subject to the federal self-employment tax of 15.3%.
Learn more about S-Corp Vs LLC tax designation.
