How to Start an LLC in Kentucky | Guide on Kentucky LLC

Forming an LLC (Limited Liability Company) in Kentucky is easy and affordable. The following are few procedural steps on how to start an LLC in Kentucky. LLCs can be formed in two ways, domestic and/or foreign. If you are planning to set up an LLC in states other than Kentucky, visit How to Start an LLC.

Kentucky LLC

Why an LLC in Kentucky

There is a whole list of advantages that a person will encounter if they are thinking of starting an LLC in Kentucky. Out of those detailed benefits, some of them are discussed in brief so that you can adequately make up your mind regarding the opening of your LLC.

The state tax rebate

If a small business is thinking of incorporating in Kentucky, their LLC gets enrolled with the Kentucky Small Business Tax Credit (KSBTC) program. It is specially designed to give benefits to the starting-ups. Under this program, the LLC who have to pay the state tax in Kentucky under the KRS 141.0401 act can apply for a return on the tax that they are paying.

This value may range from $3,500 to around $25,000 which is more than efficient for a small startup to thrive and pay up their bills for several months.

Sales tax credit through tourism attraction 

The Kentucky Tourism Development Act mainly targets the startup LLC’s who are formed in the Kentucky province. In case they will help the state to attract tourists and increase the income through tourism, then the state tax that they have to pay will be paid back to them in the form of an incentive. 

A direct loan is given to some essential businesses

According to the Kentucky state, the primary income source is agribusiness, tourist places, and the service industries. That is why they are giving very importance to a program that is started by Kentucky Economic Development Finance Authority. The main aim of this program is to provide some long-term finances by providing them a direct loan. 

It means that if you are entering the Kentucky LLC, even then also you can avail the services of loan, which is not readily available.

Kentucky Business Investment 

The KBI benefit is mainly available by the fuel-based industry dealing with energy-efficient fuels and companies producing alternative energy from non-renewable fuels. Such companies are provided an income tax credit under the KBI program. The reason behind this rebate is that the government thinks that these industries are doing some good work towards environmental improvement.

How to Start a Kentucky LLC

Suppose you’re planning to invest in some profitable business or maybe about to set up your business in Kentucky. In that case, forming an LLC in Kentucky is the simplest option for you.

An LLC or a Limited Liability Company a hybrid business entity combining characteristics of a corporation with a partnership or sole proprietorship. This section gives you a step-by-step guide on How to Start an LLC in Kentucky. 

Step 1: Decide a Name for Your LLC

If you are to start an LLC in Kentucky, the first thing you do is decide on a business or company name, and how to name your LLC may be tricky. Thus, you have the option to choose a name that complies with the Kentucky business naming requirements. It must also be easily searchable for potential clients. Here is a step-by-step guide to follow when naming your Kentucky LLC. 

Why do you need a proper business name?

If you want your LLC to have special identification, your company name is essential. However, many people face lots of issues by avoiding focus on choosing a business name for their LLC business formation filings.

Because of this, here are some of the major benefits of choosing the best LLC corporate names.

  • To help establish a company’s presence in the market, a proper corporation or business entity type will help you. This also creates a new identity that will resemble your LLC.
  • After you’ve properly chosen the name for your LLC, you will have no problems finishing the registration process.
  • You can only get the EIN number when you have your name registration certificate with you.

What are the requirements when deciding a name for your LLC? 

name search is vital to make sure your business’ name is unique. Check the availability of your name with Business Entity Search on the Kentucky Secretary of State’s website. Reserve the name by completing the Name Reservation Request Form for Domestic Entities.  

  • Don’t include words that could confuse people about your company. Words like ‘treasury, state department.’
  • You should also avoid restricted words like ‘bank, attorney, university,’ because they may require a lawyer and more paperwork.
  • As for a business website and your URL name, check if your name is still available for domain use with NameCheap.

Reserve a business domain

Even if you don’t have plans to set up a website today, it will help if you buy a domain to avoid others from using your name for their website, so do visit NameCheap for your domain name and Kinsta for web hosting.

If you have decided on your URL name and have reserved it, set up a professional email account with Google GSuite.  

Step 2: Assign a Registered Agent in Kentucky

A registered agent, or business entity, is a person that will act or work on your behalf and provide you with registered agent service. This person or business will receive significant tax forms, legal documents, a notice of lawsuits, and other official government correspondence in Kentucky. Choosing a Kentucky-registered resident agent for service for your LLC is required. 

Make sure your registered agents are residents of Alabama. It could also be a business. Here are the recommended agents and employees for you:

These five LLC formation services are recommended agents’ registered services as they are authorized to conduct business in Kentucky. Compare them to check the best yet cheapest option for you. Besides, they can guarantee you professional service because they have been running a successful business for years. 

Step 3: File Articles of Organization in Kentucky

A Certificate of Name Reservation is needed to file Articles of Organization, as other states call it. You need to make reports of this certificate with the Kentucky Secretary of State, which costs $40. You may file them online. 

This Certificate of Formation is a legal document needed to form your business officially. It will indicate details about your LLC in Kentucky, like if it is a member-managed or managers-managed

Before you start filings, you must already have your LLC name and registered agents or employees. You will attach a copy of your Name Reservation Certificate along with a list of the services that your Kentucky LLC will offer.

How to File Online

Go to the Secretary of State Online Service. Select “non-subscriber.” Fill out the online form. The website will alert you if your county does not support online filings after selecting your principal county.

Step 4: Create Your Kentucky LLC Operating Agreement

An operating agreement is a document that legally outlines the proprietorship and operating procedures of your LLC This document is vital as it ensures that all business owners are on the same page regarding how they operate, thus reducing future conflicts. 

Starting an LLC in Kentucky does not require you to have an operating agreement, but it is ideal to have one that contains all your details of business operation.

Step 5: Filing a Kentucky LLC EIN

The Employer Identification Number or, simply, the E.I.N. is a nine-digit number given by the Internal Revenue Service (IRS) to make it easier to identify types of business for tax purposes. It is like a Social Security number dedicated to a business. 

It is also called a Federal Employer Identification Number (FEIN) or a Federal Tax Identification Number (FTIN). You will need this number for tax filing and to determine tax classification options.

Mail to:

Internal Revenue Service

Attn: EIN Operation

Cincinnati, OH 45999

Fax: (855) 641-6935

Fee: Free

After Starting your Kentucky LLC 

After forming your LLC, there are still some things that you will need. Take note of the following:

  • Get a company business account
  • File Kentucky business permits & licenses
  • Get liability for business insurance with coverage for employees
  • File a Kentucky LLC annual report or biennial report
  • Already existing LLCs that wish to operate in Kentucky must register as a foreign Kentucky LLC.  

This page has provided you with steps to LLC formation and filing processes. You now have to remember the annual report postcard, upcoming filing deadlines as well as filing fees or filing costs, including fees for late filings to make sure your LLC is up-to-date. 

Know The Top Business Industries Operating In Kentucky

If you are an entrepreneur who is looking to start an LLC in Kentucky, then you should know about the industry in detail. You should know their contributions and size in the state to take the help of the below-mentioned information.

Coal Mining

The coal mining in the state is producing more than 100 million tons which is the combined production of underground mining and surface mining. According to the census, 442 coal mines were operating in the state in the year 2017 with 4,000 registered mine workers, which increased to around 6,257 in the year 2017 who are working in underground mines.

Logistics Business

More than 540 logistics centers are currently present in the state, employing more than 75000-80000 people. The reason behind the logistics trade in Kentucky is the state is at a day drive for 65% of US residents, which makes it a perfect place for planning the logistics and distribution centers by businesses. Now in the country, there is a spend of around $600 billion, out of which 70% is served by Kentucky state.

Manufacturing

If you look at the most significant share in GDP, then it is of the manufacturing sector that is around 18% recently. In the year 2009, this value was half, which shows growth in the manufacturing business in the state. The state is raising jobs for more than 14% of the population that is living in the state currently.

For workers, this field has been the best as the pay scale has increased to around $44,000 per capita worker, which is 10-15% higher than other states and businesses.

These are the business industries that are at the top of the state list. If you want to know some low-investment businesses, then here are the options.

  • Gift Basket business
  • Airbnb
  • Calligraphy teaching business

Kentucky LLC Formation Review

Time needed: 1 hour and 5 minutes.

 Just to recap, here are the easy steps again when forming an LLC in Kentucky. Click on the steps in this list to read the full detail.

  1. Name your Kentucky LLC

    The first thing you must do is to choose a company name, which should include the phrase “limited liability company,” or one of its abbreviations (LLC or L.L.C.).
    name llc

  2. Choose a registered agent

    In Kentucky, it is mandatory to select a registered agent for your LLC. You can check out our list of our 5 Best LLC Services in the United States.
    get registered agent

  3. File a formation certificate

    Filing a formation certificate is necessary when forming an LLC. Depending on the state, it could be called any of the following: Certificate of Formation, Articles of Organization, or Certificate of Organization.
    file formation certificate

  4. Create operating agreement

    An operating agreement is not a strict requirement but something encouraged when you start an LLC.
    create operating agreement

  5. Get an EIN

    The Employer Identification Number (EIN), also called  Federal Tax Identification Number, serves to identify a business entity like a social security number but for a company.
    get an ein

F.A.Qs

What is the difference between ‘domestic LLC’ and ‘foreign LLC’?

A “domestic LLC” is one that conducts business in a state where it was formed. Meanwhile, a “foreign LLC” is an existing LLC that extended business to another state.

What do I need for Domestic and Foreign LLCs?

For Domestic LLCs, it is vital to have a Certificate of Name Reservation and Certificate of Formation. For the foreign LLCs, you must have a Certificate of Good Standing.

Is the cost to form an LLC the same across states?

The cost to form an LLC varies per state.

Does an LLC need to use a DBA?

Seldom do L.L.C.s use D.B.A. or a ‘Doing Business As’ name nor a fictitious business name. However, if you want to have one, you make read more about DBAs here

Why are operating agreements important?

This document is vital as it ensures that all business owners are on the same page regarding how they operate, thus reducing future conflicts.

Is there anything else I should keep in mind when naming my LLC?

>Your name should have “L.L.C. or LLC” or the phrase “limited liability the business.” 
>Do not include words that could create confusion between your LLC and any government business. 
>Words like ‘bank, attorney, university’ are restricted as well. 
>Lastly, your name should distinguish from other limited liability corporations, limited partnerships, or registered limited liability partnerships.

Where can I file my LLC name?

Typically, you can file your LLC name online or by mail. Check with the state where you will set up your LLC name. Take note that the fees for business names may also vary per state.  

How can I know if my URL name is available?

As for a website and your URL name, check if your name is still available for URL use with NameCheap to see if your name is available as a web domain. Even if you don’t have plans to set up a website today, it will help if you buy a URL. Buying it can help to prevent others from getting your name; check out WPEngine, Kinsta, and GoDaddy for hosting and building your website. 

Can I mail the LLC Certificate of Formation to the Secretary of State?

No. Never mail these documents or payments to the Secretary of State directly. 

Why do I need an EIN?

The reason you might need an E.I.N. is that it would help for three reasons:
>Opening a business bank account
>Filing and managing federal and state taxes
>Hiring employees or agents

How do I get an EIN when I do not have a Social Security number?

You are not required a Social Security number when getting an EIN. You can proceed to fill out I.R.S. Form SS-4 and leave section 7b blank. You must then call the IRS at (267) 941-1099 to complete your application. Agents or employees will help you with that.

I already have an EIN for a sole proprietorship; what now? 

Note that an LLC is different from a sole proprietorship. If you already have an EIN for your sole proprietorship, the IRS will require you to get a new one when your convert to an LLC. 

Do foreign applicants need an SSN to get an EIN?

International EIN applicants do not need an SSN to get an EIN.

What is an IRS?

The IRS is the one that will issue your EIN. You can request an EIN from the IRS ONLINE or download the FORM, fill it out, and send it by mail or fax.

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