There are many states where an LLC can be created relatively easily, and Kentucky is among those states. With regulations that are fair and just, but completely thorough, Kentucky is one of the states where a company can get a foothold. Overall, the creation of any business is stressful, but choosing the right location and having knowledge about the process can go a long way toward making the right choices for LLC creation. From everything that’s needed to start up the business to operating it successfully long-term, there are many facets to an LLC.

Getting Started

Naming the LLC

Kentucky allows people to look for LLC names through an online search, which can be used to determine whther someone already has the name the company wants to use. At that same time, it’s important to look and see if the domain name is taken, since companies often want those two things to match. There are prohibited words that cannot be used in an LLC name, and these are generally tied to federal or state agencies. Usingn them for an LLC may cause confusion. Additionally, there are restricted words that can be used, but that are harder to get as company names. These require more paperwork to acquire.

Selecting a Registered/Statutory Agent

One of the things an LLC needs is a registered agent, which is someone who is designated to receive official correspondence on behalf of the LLC. That can be an individual person, or it can be a corporation. Either way, specific requirements are part of choosing this agent. One of the requirements that has to be followed is that the individual must be a resident of the state of Kentucky. If a corporation is used, that corporation must be authorized to work in that state. Without meeting that requirement, it is not possible for a person or corporation to be designated as a registered agent.

Filing Articles of Organization

A Kentucky LLC can be created by filing online. This filing has to include the Articles of Origination for a Domestic LLC, in order to be valid. The filing fee is $40. These Articles are the information that gives detail to what the business is offering, which is important for tax and insurance purposes. While not all states call these documents Articles of Organization, they are all designed to do the same thing.

Creating an Operating Agreement

Like most other states, Kentucky doesn’t require an operating agreement. This is largely due to the fact that the majority of states no longer require this. While there are some states that do, these are few and far between. However, some LLCs still choose to create these articles, simply because they can provide business information that would not otherwise be available. But the state of Kentucky won’t ask for them.

Running Your Business

Getting Your EIN

What’s an EIN?

An EIN is an employee identification number, issued by the Internal Revenue service. Sometimes it is also called a Federal Tax Identification Number. It’s a unique number issued to each business.

You’ll need an EIN to

  1. Open a business bank account.
  2. File Federal and State Taxes
  3. Hire employees.

Before you get your EIN:

  1. Make sure your new business has been properly formed before applying.
  2. Be wary of paid sites. EINs are free direct from the IRS.

How do I get an EIN?

  1. Apply online: The easiest way is to apply online for an EIN. Note, the IRS website has office hours, and is only available Monday through Friday, 7am to 10pm. Yes, we also agree this is one of the most ridiculous things we’ve ever seen.
  2. Call: You can call 1-800-829-4933, between 7am to 7pm of your time zone, Monday to Friday.
  3. Snail Mail – You can download the form and mail it in.

Keep Business and Personal Accounts Separate

  1. Get a business bank account for your business. This will help you protect your personal assets from potential creditors and lawsuits, and will also make life A LOT easier come tax time.
  2. Get a business credit or debit card. This will help you keep your expenses separate and easier to track.

Accounting

No matter what business you run, accounting software and processes is a must for any small business. If you have an accountant, ask them which software they work with and recommend.

A good accounting system is necessary to:

  1. Track income and expenses, so you can easily see if you’re making money
  2. Makes filing income taxes so much easier.

Always try and find something that will:

  1. Sync with all of your bank and credit card accounts automatically – not just downloads, but auto sync.
  2. Automatch vendors, customers and other accounts.
  3. Let you accept credit cards and ach drafts with ease.

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Kentucky LLC Taxes

For some businesses, licenses and permits may be required, and an LLC will also have to set up for various taxes.

Sales Tax

An LLC that does not sell goods or services that are taxable may not need to set up for sales tax, but the majority of LLCs will have to do so.

Unemployment

Kentucky requires an LLC to pay unemployment insurance tax.

Income Tax

The employee withholding tax is another state requirement, ensuring that income taxes are paid.

In addition to this, it is important for a business to have an EIN, so they can set up a bank account, hire employees, and pay taxes appropriately.

Getting Insurance for your LLC

Workers’ Compensation insurance is required for all LLCs in Kentucky. This is an important way to protect the businesses, and also to protect the employees if they become injured on the job. Despite this, though, Kentucky does not require other types of insurance. By not requiring other insurance, there could be important coverage gaps that and LLC is missing out on. Rather than only get what the state requires, an LLC being formed in Kentucky may want to consider what other insurance options it has or may need.

Keeping Your LLC Compliant

To stay compliant, an LLC in Kentucky must follow the hiring guidelines set out by the state. These reduce the hiring of people who are not legally authorized to work in the US, and also protect employees. An annual report is also necessary. It is due each year between January 1st and June 30th, and the fee for a paper filing is $15. For online filing the fee is $30. It’s possible to get a Certificate of Good Standing, as well.

How to File a Foreign LLC in Kentucky

A foreign LLC can be registered in Kentucky. The fee to register a foreign LLC is $90. Not all companies will qualify, as there are requirements that have to be met.