How to Form a Kentucky LLC
By Bazal Razzaq
Updated: August 30, 2023, 12:30pm
Editorial Note: We earn a commission if you use the services recommended on this page. Commissions do not affect our opinions or recommendations.
- Pick a name for your Kentucky LLC
- Create a business plan for your LLC
- Hire a registered agent
- Submit your Articles of Organization document
- Draft an Operating Agreement
- Apply for an EIN from the IRS
- File your Statement of Information
- Final Word
- How To Form An LLC In 50 States
- Frequently Asked Questions (FAQs)
Looking for ways to form an LLC in Kentucky with little to no difficulty? Well, you’re at the right place!
Our guide provides in-depth, meaningful, and factual information and figures so your Kentucky LLC formation process becomes completely effortless!
#1 Pick a name for your Kentucky LLC
The very first step in your LLC formation journey is to pick a name for your company. It’s best if your chosen LLC name is unique, memorable, and legally compliant enough to reflect your brand’s identity.
Sure, when naming a Kentucky LLC, you need to follow these requirements:
- The name must be distinctive and not too similar to existing business entities in Kentucky. You can check the Kentucky Secretary of State’s business name database for name availability.
- It should also include relevant abbreviations that display your company’s limited liability status, like,
- Limited Liability Company
- Limited Company
- LLC(Most entrepreneurs stick with this one)
- Remember that certain words, like “bank,” “insurance,” and “corporation,” require additional documentation before being used in the name.
- The name should not be misleading or imply a purpose that the LLC does not intend to pursue, like FBI, Treasury, or other government agencies.
- Avoid using words that are restricted and may require special approval or documentation, like “bank,” “insurance,” and “doctor.”
- Make sure your chosen name doesn’t violate any existing trademarks.
- Also, it goes without saying, but make sure your chosen name doesn’t include any vulgar, obscene, or forbidden terms(not even slang language).
If you do have the perfect legally compliant name in your mind but just aren’t prepared to form your Kentucky LLC just yet, you always have the option to reserve it by filing a Reservation or Renewal of Reserved Name (Form RES) with the Secretary of State. Using the form, you can hold your name for up to 120 days(4 months).
The filing fee is $15, and you can submit it either online or by mail.
Also, if you have plans to take your LLC online, you can check if your chosen business name is available as a web domain. Even if you don’t plan on creating a website right away, you may want to buy the URL in order to prevent others from obtaining it. Please note that registration isn’t mandatory and doesn’t grant ownership rights, but it does serve as a public notice of your claim over the name for the selected period of time.
Note: Remember that you’re under no obligation to use your registered business name(one that’s mentioned in your Articles of Organization document and other relevant legal paperwork) in the real world. You always have the option to use an Assumed Name Or Fictitious Name, more popularly known as a DBA (doing business as).
You can file a Certificate of assumed name (DBA) if you plan to conduct your business using a different name other than the exact legal name of your LLC. The filing fee is $20, and the name expires every five years. The trade name can be renewed either online or by filing a Certificate of Renewal of Assumed Name by mail or in person.
#2 Create a business plan for your LLC
Before you get ready with your official paperwork, the best thing to do would be to draft a structured, clear, and thoughtful business plan that properly outlines all the roles, rights, and responsibilities of the members/owners, as well as the day-to-day activities and due governance of your LLC. While it isn’t a mandatory requirement in Kentucky to create a plan, it’s still a good idea to have one in place. Why? Because a well-crafted plan offers multiple benefits from clarity of vision, strategic decision-making, risk management, and scope of improvement for the LLC members/owners.
Here’s a quick overview of what you can include in your Kentucky LLC business plan,
- Executive Summary
- Company Description
- Market Analysis and Competition Research
- Business Structure and Ownership
- Products and Services
- Marketing and Sales Strategy
- Operational Plan
- Management Structure
- Financial Projections and Funding Requirements(if any)
- Risk Management
- Key Milestones and their Timelines
- Exit Strategy
A proper business plan should always be tailored to your specific needs and goals. It should be well-organized, realistic, and honest to your LLC’s perspective. We recommend regularly updating and revising your plan to ensure it remains true to your company’s objectives.
#3 Hire a registered agent
Like every other U.S. state, Kentucky requires all their LLCs to hire an individual or service to receive and accept all legal, official, and financial documentation and notices on behalf of your LLC. This paperwork could include everything from government correspondence to lawsuit notices, so hiring an able, responsible agent is a must for every new company.
You have the following choices when it comes to choosing a registered agent for your Kentucky LLC:
- Act as your own registered agent.
- Go with another registered business entity.
- Hire a registered agent service.
- Choose an individual within the company(manager/employee/member)
- Hire an Attorney, lawyer, or legal facility.
Also, there are some other legal requirements to be a registered agent in the State of Kentucky. The chosen agent/service,
- Must have a physical address in Kentucky where legal documents can be served during business hours.
- Must be available during standard business hours to receive legal and official documents.
- Must provide written consent to act as the LLC’s registered agent.
- Must be at least 18 years old.
- Must be authorized to conduct business in Kentucky.
- Understand and fulfill the role’s legal obligations and responsibilities.
- Ensure reliable handling of important legal notifications.
Your chosen individual/service should meet these requirements, assisting legal communication with state authorities.
#4 Submit your Articles of Organization document
To formally register your LLC in Kentucky, you need to prepare and file your Articles of Organization document with the Secretary of State. It’s basically a legal document that lays out all the basic information about your LLC.
Here’s a general idea of what you can include in your article document,
- LLC Name: Clearly state the chosen name of your LLC.
- Registered Agent: Provide the name and physical address of your LLC’s registered agent in Kentucky.
- Principal Place of Business: Specify the primary location where your LLC conducts business.
- Duration: Indicate whether your LLC will have a specific end date or if it’s perpetual.
- Purpose: Briefly describe the general purpose of your LLC’s business activities.
- Management Structure: Declare whether your LLC will be member-managed or manager-managed.
- Management Information: If manager-managed, list the names and addresses of all managers.
- Organizer Information: Include the names and addresses of the individuals organizing the LLC.
- Effective Date: State the date when the Articles of Organization will become effective (can be the filing date).
- Signature: Sign and date the document, along with the organizers’ names and titles.
- Filing Fee: Include the required filing fee.
- Additional Provisions: Any optional provisions or clauses specific to your LLC.
Michael G. Adams
Office of the Secretary of State
P.O. Box 718
Frankfort, KY 40602
Room 154, Capitol Building
700 Capital Ave.
Frankfort, KY 40601
The state filing cost is $40, which is completely nonrefundable and payable to the “Kentucky State Treasurer.” Their service operates during regular business hours(8:00 a.m.–4:30 p.m. E.T.).
Before final submission, make sure that your Articles of Organization form meets the Kentucky Secretary of State’s requirements for proper filing.
Before moving forward with the rest of the pointers, you need to understand that Kentucky requires three different forms for three different kinds of business entities, namely,
Doesn’t matter which of the above forms you’re liable to fill; you need to pay a set fee of $40.
Also, if you own a Foreign LLC, you need to file and submit a Certificate of Authority with the State. The filing fee goes up to $90 in this case.
#5 Draft an Operating Agreement
While it isn’t mandatory in Kentucky to have an agreement in place, we’d still suggest creating one in case things go wrong in the future. An operating agreement is basically a legal document that outlines the internal structure, operations, and management of an LLC.
It explains how important decisions will be made, what ideally should be done in the face of a crisis, and how the daily operations of the business will go about.
Here’s what you can include in your Operating Agreement document,
- Name and main address of the LLC
- How long the LLC will exist
- Name and address of the registered agent
- Details about the Articles of Organization
- The main purpose of your LLC
- Members/owners and their shares/contribution
- Allocation of profits and losses.
- The whole process outlines how new members will join, and old members will leave
- Meetings and Voting Rights
- How the LLC is run
- Dissolution and Winding Up
- Indemnification and liability clauses
- Dissolution and winding up
A well-drafted agreement is crucial for many reasons, like member voting rights and the LLC’s dissolution. It is also helpful during member conflicts and clarifying financial responsibilities.
Also, in case of a lawsuit, if your LLC doesn’t have an agreement in place, then the courts will base their decisions on the state laws and regulations, which may or may not align with what’s best for your company and its employees.
#6 Apply for an EIN from the IRS
The next step in your Kentucky LLC formation journey is to obtain a Federal Employer Identification Number(EIN). It’s basically a nine-digit number used to identify your LLC for taxation purposes and to keep track of your tax reporting. The process of applying for an EIN is completely free of charge.
Internal Revenue Service
Attn: EIN Operation
Cincinnati, OH 45999
Fax: (855) 641-6935
You need a federal EIN if your LLC plans on,
- Hiring employees
- Opening professional business bank accounts
- Applying for business licenses and permits
- Meeting federal and State tax obligations
- And conducting day-to-day business operations
#7 File your Statement of Information
Kentucky requires all their LLCs to file an annual report with the Secretary of State on a yearly basis. These reports are due by June 30 every year. You can file a hard copy report, then fill out your information online, print it out, and submit it, or opt to complete the whole process online.
The filing fee is $15 for both online and offline applications.
Before we conclude, there’s another absolute requirement you must attend to while forming an LLC in Kentucky, and that is..
Paying the Limited Liability Entity Tax (LLET)
Kentucky LLCs might not pay taxes like big companies do. But, you have to pay LLET, a tax for pass-through businesses. If your earnings are under $3 million, you pay at least $175. If you make over $3 million, LLET is the lower of either $0.095 for every $100 in sales or $0.75 for every $100 in profits.
Once your Kentucky LLC is set up, don’t sit pretty just yet! There are many formalities you need to attend to, so it’s best to remain informed beforehand.
With a registered LLC, you can,
- Buy insurance to protect your LLC
- Open a professional business bank account
- Apply for a business credit card.
- Register your LLC with the state and federal tax agency.
- Trademark your name and logo
- Obtain required business licenses and permits.
If you’re looking to hire employees for your Kentucky LLC, make sure to follow the following legal guidelines by taking the necessary actions:
- Confirm eligibility of new employees to work in the U.S.
- Report newly hired employees to the State as required.
- Offer workers’ compensation insurance.
- Deduct and manage employee taxes appropriately.
- Display workplace compliance posters visibly in your workspace.
For any more information on any of the above pointers, you can check out Kentucky’s Managing Employees resource.
And that’s a wrap! That was all you needed to know before finally forming that LLC in the Bluegrass State.
Frequently Asked Questions
A registered agent is a person or entity responsible for receiving legal documents and official notices on behalf of your LLC. Kentucky law requires all LLCs to have a registered agent with a physical address in the State for legal correspondence.
While Kentucky doesn’t legally require an Operating Agreement, having one is highly recommended. An Operating Agreement outlines the internal rules, management structure, and ownership details of your LLC. It can help prevent misunderstandings among members and establish clear guidelines for business operations.
Yes, you can form a Kentucky LLC online through the Kentucky Secretary of State’s website. Online filing is generally faster and more convenient.