How to start a Kentucky LLC

An LLC is a type of business that helps protect its owners (called members). This means that if the business owes money or gets sued, the members' personal assets, like their house or car, are usually safe. 

In the state of Kentucky, an LLC is defined as “a limited liability company formed under this chapter and, except with respect to a nonprofit limited liability company, having one (1) or more members” (Kentucky Revised Statutes, 275.015). That means an LLC in Kentucky is a company created within the state or a company that becomes subject to Kentucky's state regulations surrounding LLCs.

If that sounds like a lot of legal jargon - that's because it is! What you need to know is that LLCs are popular with business owners because they are simple and flexible to run. They have fewer rules compared to comportations and the owners can choose if they want to manage the business themselves or appoint managers to do it. 

Another benefit is how taxes work: LLC owners can pay taxes through their own personal tax returns, or they can choose to have the business pay taxes separately, like a corporation. This gives owners more choices in how they handle taxes as their business grows.

Why should I register for an LLC in Kentucky?

You may want to register for an LLC in Kentucky when:

• You own or want to start a business in Kentucky, or want to expand an existing business into Kentucky, and want to stay legally compliant. 
• You own or want to start a business, and want more flexibility on how you will manage the business or pay taxes than a corporation would provide.
• You want to protect your personal assets from potential liability resulting from business you conduct in the state of Kentucky. 
• You own or want to start a business, and want to register in Kentucky to open accounts, lease or buy property, secure funding, or hire employees.

Do I need to file my LLC in Kentucky if I live in another state?

Any LLC that does business in Kentucky must file with the State of Kentucky. LLCs based in Kentucky are called "domestic LLCs," and out-of-state LLCs are called "foreign LLCs." If your LLC was organized and operates outside of Kentucky, establishing a foreign LLC within Kentucky will allow for you to conduct business there. 

Foreign LLCs and domestic LLCs may have different filing and compliance requirements -- Rocket Lawyer can help you navigate foreign LLC registration, regardless of where you live.

How to start an LLC in Kentucky

1. Find a unique name for your Kentucky LLC

The state of Kentucky requires that the names of all LLCs in the state:

• The real name of a limited liability company shall end with the phrase "limited liability company" or "limited company" or the abbreviation "LLC" or "LC."
• "L.L.C." and the abbreviations "Ltd." and "Co." are acceptable.
• They are not too similar to existing LLCs in the state.

Rocket Lawyer can help you determine whether your business' name is eligible for registration in Kentucky and may be able to help you reserve the name before you file your LLC.

2. Include your other LLC members (if any)

In Kentucky, you can in fact form as a one-person LLC. In this case, the LLC would be referred to as a single-member LLC (SMLLC), whereas if there is more than one owner, the LLC may be called a multi-member LLC. 

The main difference between single-member and multi-member LLCs lies in ownership structure and management. With a single-member LLC, you have full control over the business. In contrast, a multi-member LLC has multiple owners, each with a specific percentage of ownership as defined in the operating agreement. This means that in a multi-member LLC, owners share profits, losses, and tax responsibilities based on their ownership percentage.

3. Provide a Kentucky address

This will be used as your official LLC address. The address that you list may either be your home, an office, or another physical location, but it cannot be a PO box.

4. Choose a Registered Agent

A Registered Agent is the person or business responsible for receiving tax, legal, and government documents during regular business hours. It's important that every business has one. You can either serve as your own registered agent (if you have a Kentucky address) or choose one to do that service for you (if you are not located in Kentucky or would like an extra layer of privacy).

5. Register your LLC with the state of Kentucky

Once you have a business name and registered agent, you can register your business as a Kentucky LLC with the Kentucky Secretary of State by filing your Articles of Organization. This document may be referred to informally as an LLC's "Articles," or in other states, it may be called a "Certificate of Organization," "Certificate of Filing," or "Certificate of Formation."

6. Get an Employer Identification Number (EIN)

Kentucky LLCs are required to have a Federal EIN tax number. Think of your tax ID as the social security number for your company. It will be important for business contracts, tax filings, and all manner of documents down the line. Every company should have one to remain in good standing.

7. Pay the state filing fee

Every state has different fees for forming an LLC, which can also vary from one year to another.

Congratulations! After you have completed all these steps, you have formed your Kentucky LLC.

What to do after forming a Kentucky LLC

There are a few steps you need to take to maintain your Kentucky LLC:

1. Create an Operating Agreement: we can help you create your Kentucky LLC Operating Agreement online.
2. Hold a meeting: a first meeting with members of an LLC is not required by law, but it is highly suggested in order to get organized. Also, unlike corporations, LLCs are also not required to maintain Meeting Minutes, but these documents are also recommended as they provide records for important decisions made.
3. Pay taxes according to how you chose to be taxed: traditionally, LLCs are "pass-through entities." This means that you pay your business taxes on your personal tax form. That said, you can elect to be taxed like a corporation, if you choose to do so.
4. File an Annual Report: this is a requirement every year for all Kentucky LLCs and it is due between January 1st and June 30th.

What is needed to keep records for my Kentucky LLC

The State of Kentucky requires the following information to be kept:

• A current list, and all past lists, setting forth the full name and last known mailing address of each member and, if any, each manager.
• A copy of the articles of organization and all amendments thereto, together with executed copies of any power of attorney pursuant to which any articles of amendment have been executed.
• Copies of the limited liability company's federal, state, and local income tax returns and financial statements, if any, for the three (3) most recent years or, if those returns and statements were not prepared, copies of the information and statements provided to, or which should have been provided to, the members to enable them to prepare their federal, state, and local tax returns for those years.
• Copies of any effective written Operating Agreements and all amendments thereto, and copies of any written Operating Agreements no longer in effect.
• Unless contained in writing in an Operating Agreement:
  • A writing setting forth the amount of cash, if any, and a statement of the agreed value of other property or services, if any, contributed by each member and the times at which or events upon the happening of which any additional contributions are to be made.
  • A writing stating events, if any, upon the happening of which the limited liability company is to be dissolved and its affairs wound up.
  • Other writings, if any, prepared pursuant to a requirement, if any, in an Operating Agreement.

Still have questions? Rocket Lawyer can help you with the process of forming a Kentucky LLC. Get started today!

  

Key takeaways Registering an LLC in Kentucky can give you a lot more flexibility than a corporation, as well as protection for your personal assets from potential liabilities. Even if you live in another state, you must register your LLC in Kentucky if you do regular business there, like selling things or having employees. After starting your LLC, it's advisable to create an Operating Agreement and hold a first meeting. You'll also need to file an Annual Report every year. Keep records of your Kentucky LLC, like the names of all members, tax documents, and your business rules. These help you stay organized and follow the law.

Additional resources

Learning how to enforce a contract is just one step. Explore these additional topics to learn more and take the next steps.

• What is an LLC
• How are LLCs taxed
• How to start an LLC
• Do I Need a Registered Agent?
• How and when to file an Annual Report