STEP 1: Name your LLC
Choosing a company name is the first and most important step in starting your LLC. Be sure to choose a name that complies with Kentucky naming requirements and is easily searchable by potential clients.
1. Follow the naming guidelines:
- Your name must include the phrase “limited liability company,” or one of its abbreviations (LLC or L.L.C.).
- Your name cannot include words that could confuse your LLC with a government agency (FBI, Treasury, State Department, etc.).
- Restricted words (e.g. Bank, Attorney, University) may require additional paperwork and a licensed individual, such as a doctor or lawyer, to be part of your LLC.
For more information, read the State of Kentucky's naming guidelines.
2. Is the name available in Kentucky? Make sure the name you want isn't already taken by doing a name search on the State of Kentucky website.
3. Is the URL available? We recommend that you check to see if your business name is available as a web domain. Even if you don't plan to make a business website today, you may want to buy the URL in order to prevent others from acquiring it.
After registering a domain name, consider setting up a professional email account (@yourcompany.com). Google's G Suite offers a business email service that comes with other useful tools, including word processing, spreadsheets, and more. Try it for free
FAQ: Naming an LLC
What is an LLC?
Do I need to get a DBA or Trade Name for my business?
Most LLCs do not need a DBA. The name of the LLC can serve as company’s brand name, and you can accept checks and other payments under that name as well. However, you may wish to register a DBA if you would like to conduct business under a name other than that of your LLC. Learn more here.
STEP 2: Choose a Registered Agent
You are required to nominate a Registered Agent for your Kentucky LLC.
What is a Registered Agent? a Registered Agent is a person or business that agrees to send and receive legal papers on behalf of your LLC. Such papers include service of process of legal action (if you are sued) and state filings.
Who can be a Registered Agent? a Registered Agent must be a resident of Kentucky or a corporation authorized to transact business in Kentucky. You may elect an individual within the company including yourself.
Learn more about the role of a registered agent and why you should consider hiring a professional service.
STEP 3: File the Articles of Organization
To register your LLC, you will need to file the Articles of Organization with the State of Kentucky. This can be done online, by mail, or in-person.
When filing the Articles of Organization you will need to decide if your LLC will be member managed or manager managed. Read our article on the topic to learn more.
File the Articles of Organization
OPTION 1: File Online with the State of Kentucky
OPTION 2: File by Mail or In-Person
State Filing Cost: $40, payable to "Kentucky State Treasurer" (Nonrefundable)
Alison Lundergan Grimes
Office of the Secretary of State
P. O. Box 718
Frankfort, KY 40602
Room 154, Capitol Building
700 Capital Avenue
Frankfort, KY 40601
Hours of Operation: 8:00 AM-4:30 PM ET
If you’re expanding your existing LLC to the State of Kentucky, you need to form a Foreign LLC.
STEP 4: Create an Operating Agreement
An operating agreement is not required in Kentucky, but it's a good practice to have one.
What is an operating agreement? An operating agreement is a legal document outlining the ownership and operating procedures of an LLC.
Why are operating agreements important? An operating agreement is an important document because it ensures that all business owners are on the same page and reduces the risk of future conflict.
For more information on operating agreements, read our Kentucky LLC operating agreement guide.
Recommended: Use our free Operating Agreement Tool to draft a customized operating agreement for your LLC.
FAQ: Creating an Operating Agreement
Do I need to file my operating agreement with the state?
No. The operating agreement is an internal document that you should keep on file for future reference. However, many states do legally require LLCs to have an operating agreement in place.
STEP 5: Obtain an EIN
What is an EIN? The Employer Identification Number (EIN), or Federal Tax Identification Number, is used to identify a business entity. It is essentially a social security number for the company.
Why do I need an EIN? An EIN is required for the following:
- To open a business bank account for the company
- For Federal and State tax purposes
- To hire employees for the company
Where do I get an EIN? An EIN is obtained from the IRS (free of charge) by the business owner after forming the company. This can be done online or by mail.
FAQ: Getting an EIN
How do I get an EIN if I don’t have a social security number?
What tax structure should I choose for my LLC?
When you get an EIN, you will be informed of the different tax classification options that are available. Most LLCs elect the default tax status.
However, some LLCs can reduce their federal tax obligation by choosing S corporation status. We recommend consulting with a local accountant to find out which option is best for you.
Considering Using an LLC Formation Service?
We reviewed and ranked the top 5 LLC formation services.
Find out which is best for you.
State Taxes for your Kentucky LLC
You should also be aware of important Kentucky taxes that may apply to your business:
If you are selling a physical product, you’ll typically need to register for a sellers permit through the Kentucky Department of Revenue website.
This certificate allows a business to collect sales tax on taxable sales.
Sales tax, also called "Sales and Use Tax," is a tax levied by states, counties, and municipalities on business transactions involving the exchange of certain taxable goods or services.
Read our sales tax guide to find out more.
If you have employees in Kentucky, you will have to register for the Unemployment Insurance Tax with the Kentucky Office of Employment and Training. You will also need to sign up for the Employee Withholding Tax with the Kentucky Department of Revenue.
INDUSTRY SPECIFIC TAXES
If your business falls within a specific industry, additional state taxes may apply. Most of these additional taxes apply to Hospitality or Service Industry businesses.
Business Banking for Personal Asset Protection
Using dedicated business banking and credit accounts is essential for personal asset protection.
When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your LLC is sued. In business law, this is referred to as piercing your corporate veil.
You can protect your business with these two steps:
1. Opening a business bank account:
- Separates your personal assets from your company's assets, which is necessary for personal asset protection.
- Makes accounting and tax filing easier.
Recommended: Get $200 when you open a business checking account with Chase. Learn more.
2. Getting a business credit card:
- Helps you separate personal and business expenses.
- Builds your company's credit history, which can be useful to raise capital later on.
Recommended: Compare business credit card offers at CreditCards.com. Learn more.
Accounting for your LLC
Even if you haven’t officially opened for business – it’s critical to get your books in order. A well managed accounting system will help you:
- Track your business finances, including bills, expenses, and income.
- Simplify your annual tax filings.
The right software makes accounting easy. Look for software that:
- Syncs with your bank automatically.
- Matches transactions to invoices, bills and purchase orders.
- Can be accessed from your phone.
Kentucky Business Permits and Licenses
To operate your LLC you must comply with federal, state, and local government regulations. For example, restaurants likely need health permits, building permits, signage permits, etc.
The details of business licenses and permits vary from state to state. Make sure you read carefully. Don't be surprised if there are short classes required as well.
Fees for business licenses and permits will vary depending on what sort of license you are seeking to obtain.
Find out how to obtain necessary licenses and permits for your business or have a professional service do it for you:
Federal: Use the U.S. Small Business Administration (SBA) guide.
State: Use Kentucky's One Stop Business Portal to learn more about business licenses.
Local: Contact your local county clerk and ask about local licenses and permits.
Recommended: If you are a first-time entrepreneur, consider having a professional service research your business’ licensing requirements. Our friends at Startup Savant have reviewed and ranked the top five license research services.
Insuring Your Business
Business insurance helps you manage risks and focus on growing your business. The most common types of business insurance are:
- General Liability Insurance: A broad insurance policy that protects your business from lawsuits. Most small businesses get general liability insurance.
- Professional Liability Insurance: A business insurance for professional service providers (consultants, accountants, etc.) that covers against claims of malpractice and other business errors.
- Workers' Compensation Insurance: A type of insurance that provides coverage for employees’ job-related illnesses, injuries, or deaths. In Kentucky, businesses with one or more employees, excluding business owners, are required by law to have workers' compensation insurance. Get a free quote with ADP.
How much will the right insurance cost you? Click here to find out.
If you plan to hire employees, stay compliant with the law by following these steps:
- Verify that new employees are able to work in the US
- Report employees as "new hires" to the State
- Provide workers' compensation insurance for employees
- Withhold employee taxes
- Print compliance posters and place them in visible areas of your work space
Check out Kentucky's "Managing Employees" resource.
Recommended: A payroll service saves you time and makes it easier to follow these requirements.
We understand that creating an LLC and getting your business up and running comes with many challenges. To help you succeed, we compiled the best local resources in every major metro area in Kentucky. You can get free assistance in the following areas:
Kentucky requires LLCs to file an annual report with the Kentucky Secretary of State.
File your Annual Report
File Online with the Secretary of State
Fee: $15, payable to the Secretary of State (Nonrefundable)
Due Date: Due between January 1st and June 30th each year
Late Filings: Kentucky does not charge late fees if you miss your filing deadline, but will dissolve LLCs after 60 days for failure to file an annual report.
How to Obtain a Certificate of Good Standing
A Certificate of Good Standing, known in Kentucky as a Certificate of Existence, verifies that your LLC was legally formed and has been properly maintained. Several instances where you might need to get one include:
- Seeking funding from banks or other lenders
- Forming your business as a foreign LLC in another state
- Obtaining or renewing specific business licenses or permits
You can order a Certificate of Existence online or by mail.
Order a Certificate of Good Standing
Request Certificate of Existence Online
Request Certificate of Existence by Mail
Fee: $10, payable to the Secretary of State (Nonrefundable)
Note: A Certificate of Existence is known as a Certificate of Authorization for foreign LLCs.
Dissolve Your Kentucky LLC
If at any point in the future you no longer wish to conduct business with your LLC, it is important to officially dissolve it. Failure to do so in a timely fashion can result in tax liabilities and penalties, or even legal trouble. To dissolve your LLC, there are two broad steps:
- Close your business tax accounts
- File the Articles of Dissolution
When you are ready to dissolve your LLC, follow the steps in our Kentucky LLC Dissolution Guide.
Report LLC Income
Avoid Automatic Dissolution
LLCs may face fines and even automatic dissolution when they miss one or more state filings. When this happens, LLC owners risk loss of limited liability protection. A quality registered agent service can help prevent this outcome by notifying you of upcoming filing deadlines, and even submitting reports on your behalf for an additional fee.
Recommended: Incfile offers a reliable registered agent service and excellent customer support.
Forming a foreign LLC allows your company to operate as one entity in multiple states. If you have an existing LLC and want to do business in Kentucky, you will need to register as a foreign LLC. This can be done by mail.
Register as a Foreign LLC in Kentucky
File by Mail with the Secretary of State
Fee: $90, payable to the Kentucky State Treasurer (Nonrefundable)
Alison Lundergan Grimes
Secretary of State
P.O. Box 718
Frankfort, KY 40602