Starting LLC in Kentucky: Peculiarities & Detailed Manual
Want to start an LLC in Kentucky? It is a profitable decision for a business, as the state has waived corporate tax in favor of gross corporate income tax. So you’ve decided to start an LLC? Not sure how to initiate the process? To start an LLC in Kentucky, you need to get ready for several stages.
We’ve prepared a guide for you with just six steps to form your LLC and to get success! You can also refer to the virtual LLC formation service.
Note: ZenBusiness is the best service to file the LLC. You’ll surely appreciate reasonable prices, company values, and other peculiarities.
An Kentucky LLC: The Notion & Essence
Many Kentucky business owners choose to start an LLC. So, unlike a corporation, they can take advantage of flexible management. We’re talking about the protection of personal assets that sole proprietorships and general partnerships lack.
The state of Kentucky puts forward simplified requirements for registration and maintenance of LLC and invites business owners to choose the type of taxation. Do you still have doubts about the LLC?
6 Stages to Form an LLC Correctly
Stage №1: Choose Your LLC Name
The LLC name is a significant aspect, as it is the name of your company that makes the first and strongest impression on the audience of your potential customers! The name must be different from existing company names and must meet Kentucky’s regulatory requirements. Now get started with the following aspects.
LLC name in terms of jurisdiction
The State of Kentucky obliges business owners to include the abbreviation DDS or the phrase – limited liability company in the name. Please note that the terms corporation or registered are prohibited. In addition, you cannot use the designations of other forms of business: banks or law firms.
Take care of the explanations
You must include in the title an explanation of the nature of your business. For example, if you are engaged in the computers’ repairing, write in the LLC title – computer wizard. If you have any values or principles, also indicate this. For example, if you are farming, use the term natural, nitrate-free, etc.
So, you need to get a little creative and fully comply with Kentucky’s legal requirements.
Stage №2: Hire a Registered Agent
A registered agent is called a statutory agent in Kentucky and will help you to start an LLC. The agent can be an Kentucky resident, natural or legal attorney responsible for sending and receiving legal documentation on behalf of the future company. A company representative can also be an employee of the company or its owner. The State of Kentucky notifies:
Every organization should assing a registered agent who can receive processes served upon the company (such as subpoenas or summons). The company is also obliged to open a registered office in Kentucky. Service on the registered agent is recognized as service on the entity, irrespective of whether or not the registered agent forwards the information.
A registered agent guarantees an excellent reputation for your Kentucky LLC. Also, if your business gets worse, Kentucky can take legal action against it without notifying you. The registered agent will always receive appropriate notification and will be able to take timely measures to protect your interests as an attorney.
You should apply to the online service to get started a business in compliance with all regulations and requirements. So, you will have the opportunity to filter spam and protect your personal and contact information. If you use the ZenBusiness and Northwest Registered Agent to form an LLC, you will receive the free services of a registered agent.
Stage №3: Applying for Registration
To register a business in Kentucky, you must file the Articles of Association with the Kentucky State Secretariat. If you are anxious about your LLC formation, you can submit your documents for pre-processing, which will allow the Secretary of State’s office to advise you of the eligibility. It can be a good option if you get started for the first time in an LLC without consulting an attorney. Be sure to provide:
- The desired name of your business.
- Personal and contact details of the registered agent.
- Business management form.
- Personal and contact details of the manager of your company.
- Signature of the applicant and registered agent.
- Date of application submission.
You can print out the pdf form and send it by mail or just fill it online.
Cost to form an LLC: The fee to form an LLC in Kentucky equals $40.
Processing time: The state will need 3-4 working days to process the paperwork for your Kentucky LLC formation, finalize the required documents, and send it back to you. Nevertheless, the majority of filings are processed online and completed throughout one working day. Please consider that the countdown of working days starts only after all the necessary documents are in order and filled out appropriately.
Stage №4: The Operating Agreement Background
While an operating agreement is not binding in Kentucky, creating one could significantly improve the company’s climate. An operating agreement is a document that describes the structure of a project, the way it works, the rights and obligations of each partner.
This document reflects the consistency of partners and thereby reduces the chance of controversy and disputes. Therefore, it is significant that all members of the future LLC carefully read this document before joining the company.
An attorney can help draw up an operating agreement and determine the way income and liabilities will be distributed among the owners of your LLC. You will find more information about the operating agreement here. Prepare to enter the following information:
- Names of all participants.
- The rights and obligations of each of the listed participants.
- Description of procedures for voting or resolving differences between members.
- Regulations on the financial share of participation of LLC members.
- Description of the way you’re going to manage the LLC.
So, do not neglect this stage of LLC formation. It largely guarantees your safety and the observance of your rights by all members of the business project.
Stage №5: Tax Compliance
To conduct a business that you want to register as an LLC successfully, you need to comply with several tax requirements at various levels.
Requirements of Federal Significance
Does your LLC involve multiple owners? Then you need to take care of the EIN! The EIN, or Employer Identification Number, is a unique nine-digit number assigned by the IRS to US corporations. This number must be obtained by all business owners under whose leadership the hired employees work. A business owner can obtain an EIN from the IRS in person or by mail.
Your state’s cess requirements
The amount of state-level taxes in the state of Kentucky differs depending on the sphere of your business.
Firstly, each registered LLC should pay a ‘limited liability tax.’ Secondly, the majority of LLCs must report the tax for sale and use. And if your business has any workers, you will also have to pay an employee withholding tax. Moreover, there are many specialized tasks for different industries: taxes for transient room, telecommunications, motor vehicle tire, etc.
You may think that determining and registering all the tasks you have to pay for sounds like a massive headache, but Kentucky made everything to help you ease this process. All you need to do is fill the form on their page called “One Stop Registration“, and they will instantly enroll you in all the taxes that apply to your company.
Local Tax Business Demands
Depending on the part of Kentucky where your company is located, you may also have to pay some local taxes. Every big city of Kentucky (including Louisville, Paducah, Bowling Green, and Lexington) has its online resources for business owners.
Stage №6: Getting Business Licenses & Permits
There’s no general business license that every LLC of Kentucky should acquire to function.
Nevertheless, in the state, certain fields of business should not just pay industry-specific taxes; they should also obtain some specialized permits and licenses.
There are hundreds of these licenses in Kentucky, so we can say with certainty that at least one of them applies to your business.
We advise every LLC owner to check out the database of industry-specific permits and licenses in Kentucky and remember that your local administration can also require licenses or permits. You can know more about the country-level licenses at this link.
Other Stages for Business Owners After LLC Registration
After completing the six mandatory steps towards starting an LLC, you need to take care of the following.
Opening a business bank account
Separate your personal and LLC accounts. Thus, you will be sure of the safety of your personal and financial data. Besides, you won’t have any hassle when filing your charge returns. Your EIN will help you open a business account quickly, no matter what you choose a bank or credit union.
All owners of companies/corporations, regardless of their form of management that attracts employees, must go through the compensation insurance procedure. All basic and detailed information is available with the Kentucky Bureau of Workers’ Compensation.
This policy aims to protect the rights of workers who are injured at work and unable to work. It will not be superfluous to get a civil liability insurance policy, as well as pay attention to some other types of insurance.
What is income reporting? Exactly what it sounds like — the report of the income you made from your company. Please note that this form should be filled, regardless of whether your business made or lost money during the year. In the state of Kentucky, there are some forms based on the way of how your business is organized; you can access these forms here.
Referring to the services of a qualified accountant
The laws of Kentucky demand that all limited liability companies should file annual reports. You can fill the report form online on this site. The purpose of the annual report is to keep the state updated about the actual information about the changes in your business during the year.