How to Start your LLC in Kentucky

This guide will take you through all steps of establishing LLC in Kentucky including the process of picking up an appropriately picked business name that meets legal requirements and filing the Articles of Organization to the process of receiving an EIN, seeking licenses required as well as the process of compliant maintenance after formation. At the conclusion, you will have realized precisely how to secure your personal possessions as you transact your business with your Kentucky LLC without fear.

1. Name Your Kentucky LLC

Selecting your LLC name is one of the initial steps in organization that is the most critical one. Your LLC name is your brand name and it will be the first impression that the customers, partners, as well as regulators will have about your company. A good name must be original, catchy and based on what you are about (or what you sell).

It is always good to have a defined business concept before you decide the name to use. It will be easier to select a name that will not become irrelevant as your business develops by understanding your products, services, and target audience. It also comes in handy when many entrepreneurs request the feedback of their close friends or fellow workers to help in making sure that the name can be easily understood and pronounced.

After you have come up with a list of potential names, do a general web search to determine the existence of similar businesses. It is also prudent to check the availability of domain name when you are considering to create an online presence. This measure is taken so that there is no confusion of customers and clash of branding.

Kentucky Check Name Availability

After shortening your list, check the name as an official business name on the website of the Secretary of State of Kentucky. This will make sure that your preferred name is not registered or overly related to some other business already running in the state of Kentucky.

Kentucky LLC Naming Rules

The laws of Kentucky have rules in name of LLCs. The business name should contain Limited Liability Company or an acceptable abbreviation that is LLC or L.L.C. The name should not include a word that suggests that the name is associated with a governmental agency and it should be easily recognizable among all other registered business names in the state. There are some words which are restricted like bank, insurance, or university, and which must be specially approved by the state.

Check Federal Trademarks

The US patent and trademark office (USPTO) database should also be searched to ensure that your name of choice is not federally registered as a trademark. This is particularly necessary when you intend to go outside of Kentucky or do business online on the national scale.

Name Reservations in Kentucky LLC

In case you are not willing to create your LLC at the moment, Kentucky gives you the opportunity to reserve the name of your business. In order to achieve this, you will need to get the Name Reservation form on the site of the Secretary of State. Kentucky does not have an option of name reservation online and therefore the form should be sent through mail or hand.

Mailing Address:
Alison Lundergan Grimes
Office of the Secretary of Labor and Social Welfare.
PO Box 718
Frankfort, KY 40602-0718

Office Location:
Room 154, Capitol Building
700 Capital Avenue
Frankfort, KY 40601
Hours: 8:00 AM – 4:30 PM (ET)

Kentucky Doing Business As (DBA)

You might even wish to do business under a new business name even after registering your LLC. This is referred to as a Doing Business As (DBA) or assumed business name.

As an example, when the name of your LLC is JJ Waffles, LLC and you come up with a new product brand which is known as JJ Muffins, you do not have to create a new LLC, you can use a DBA. Another option is that DBA enables you to take payments and open bank accounts in the alternative name, which would be useful in terms of branding and customer understanding.

In the state of Kentucky, the DBA is known as an assumed business name. Registering one requires obtaining the assumed name form on the site of the Secretary of State and sending it either by mail or personally. Registration is not done online. The above-mentioned mailing and office addresses are applicable.

2. Select a Registered Agent

The state of Kentucky has to give every LLC a registered agent. This person or corporate organization will collect official business communications such as legal documents, tax bills, and state communications.

The registered agent is in charge of making sure that key documents are received in time and that your LLC is not in bad standing. Registered agent in the state of Kentucky may be a member of an LLC, a person or a business organization that is authorized to conduct its activities in the state.

Requirement of Registered Agent

To be eligible, a registered agent should:

• Be at least 18 years old
• Also keep a physical street address in Kentucky (P.O. Boxes are prohibited)
• Be accessible throughout normal hours of business

Although you can also present yourself as your own registered agent, a great number of business owners prefer to outsource a professional registered agent service. The services can be used to ensure privacy, limit chances of missing legal notices and enable you to concentrate on managing your business not compliance logistics.

3. Decide Which Structure of Management

The LLCs in Kentucky have either the option of being member-managed LLCs or manager-managed LLCs and the proper structure is determined by the extent to which the owners wish to be involved in the day-to-day running of the organization.

Member-Managed LLC

In a member-managed LLC, members are all included in the running up of business and daily decisions. This is an appropriate structure in small businesses where the owner would prefer to have a direct control of the business.

Manager-Managed LLC

The members are passive investors in the manager-managed LLC where one or more managers manage the operations of the LLC on a daily basis. One of the members can be a manager, however in combination with another manager, who is not a member. This formation is common when there are numerous owners of an LLC who do not want to be overly involved.

Kentucky has specific management structure that you are expected to declare in your Articles of Organization.

4. Complete Articles of Organization

In order to officially create your LLC you have to submit Articles of Organization to the Secretary of State of Kentucky. This filing is done using the Kentucky Online Gateway.

Information Required

The Articles of Organization are in need of information that includes:

• LLC name
• Principal office address
• Registered agent details
• Registered office address
• Management structure

Upon logging in, go to the drop-down menu and select Enroll, Use My Account, and then register a New Business. Based on your business information, you will be guided with various screens to input your information, preview, and pay.

Contact Information of Kentucky Secretary of State

Office of the Secretary of State in Kentucky.
700 Capital Avenue, Suite 152
Frankfort, KY 40601

Phone: (502) 564-3490
Fax: (502) 564-5687

5. Write an Operating Agreement

An Operating Agreement describes the way your LLC is managed, organized, and is owned. Even though Kentucky does not mandate an operating agreement of LLCs, it is highly advisable to possess the document including single-member LLCs.

This document assists in clarifying the percentage of ownership, the management authority, voting rights, division of profits and losses, and disputes and changes in the business process. It also enhances the protection of your limited liability in that, it shows that the LLC is a separate legal entity.

Although templates may be found online, some business owners prefer that an attorney drafts or reviews their operating agreement so as to make it accurate and enforceable.

6. Register Your Employer Identification Number (EIN)

The IRS issues an Employer Identification Number (EIN) that is used to identify your LLC to the IRS. You need an EIN when your LLC will have over one member, when you hire employees or open a business bank account.

Application of EIN is free on the IRS site. In the application, you should find a responsible party and that is the person who will control and manage the funds and operations of the LLC.

7. Acquire Business Permits and Licenses

The state does not provide one statewide business license which covers all businesses in Kentucky. In lieu of this, the requirements of licensing are determined by your industry, location, and business operations.

There are professional and industrial licenses that require special state or federal licenses and local governments could have zoning, signage, health or safety requirements. One Stop Business Portal in Kentucky assists the business owners in determining the licenses and permits which are applicable to their case.

Being in operation without the necessary licenses may attract fines or penalties and therefore it is worth checking the requirements before starting your business.

8. Determine Your Tax Status

Unless indicated, Kentucky LLCs have a pass through treatment under federal taxation. This implies that LLC is not subject to income taxation. Rather, the profit and loss are recorded on the individual tax returns of the members.

Default Tax Treatment

Unless another tax election is made, single-member LLCs are taxed as a sole proprietorship and multi-member LLCs as a partnership. Depending on their tax strategy, LLCs can choose to be either C-Corporation or S-Corporation by submitting the relevant IRS forms.

The state of Kentucky has the Limited Liability Entity Tax (LLET) also that is on the basis of gross receipts or profits.

Additional Kentucky LLCs Ongoing Requirements

Open a Business Bank Account

Once it has been formed, create a special business bank account to maintain the separation of personal and business finances. This segregating is necessary to get the accounting accuracy intact and to maintain the liability protection.

Apply to get Business Credit Card

Business credit is also established and used by many LLCs to cover start up funds using business credit cards.

Get Business Insurance

Business insurance, including general liability, professional liability, workers' compensation, and commercial auto insurance, can get you out of financial risk in your company.

Maintain LLC Records

Maintenance of proper records such as formation documents, operating agreements, contracts, and financial statements is essential in terms of compliance and success in the long term.

In Kentucky, Reporting Requirements

On an annual basis, Kentucky LLCs are required to submit annual report before June 30 th of a year. The amount of the filing fee is 15, and non-filing may lead to administrative dissolution of the LLC.

Kentucky LLC FAQs