Here's What You Need To Know About Starting An LLC In Kentucky

Choosing to form a Kentucky limited liability company (LLC) will help protect your personal assets against the possible debts, obligations, and actions of the company. That is why many startups opt for this legal business entity structure. Aside from that, LLCs are also allowed to be pass-through entities in terms of taxation.

Here are some of the main advantages of an LLC that makes it an appealing choice for new companies:

• The structure offers liability protection for the owners’ assets as long as they ensure the company remains a separate entity and that they do not engage in any fraudulent or illegal activities.
• The business profits can go directly to the owners, known as members, who will then report them on their individual tax returns.
• LLCs can avoid double taxation.
  The filing, management, and compliance requirements of an LLC are simpler than that of a corporation.
• Forming an LLC establishes the credibility of a business.
• The structure helps build the company’s credit history, which can be advantageous in acquiring loans of credits in the future.

Doing Business in Kentucky

All states have regulations governing companies. That is why it is necessary for entrepreneurs to formally register their business operations. Generally, the process of how to file an LLC includes the submission of paperwork and payment of corresponding fees.

Doing business in this state comes with many opportunities and advantages. The state has a business-friendly climate in general. Aside from what the structure offers, a company can also enjoy the following benefits:

• The cost of doing business in the state is low.
• The state is home to great infrastructure.
• The state offers various incentives and programs that you may be qualified for, including the Tourism Development Act, Business Investment Program, Direct Loan, and Small Business Loan.

Register an LLC

Before launching your business, you have to make sure you understand how to file an LLC. This way, you can prevent facing issues in the future. It will also legalize your operations in the state.

After submitting the necessary formation documents, there may also be other requirements that you will have to comply with during the existence of your company.

Here are some of the things that you need to know about starting an LLC in the state:

• Naming the Company – Among the first steps that you have to take after deciding to launch a business in the state is choosing an appropriate name for your LLC. Think about the values of your company. What does it stand for? Then, come up with a name that will reflect these values and represent the vision of your company well. Additionally, you will also have to comply with the naming regulations of the state. That means that your LLC name has to have the correct indicator. You can use the phrase Limited Liability Company or any of its abbreviations. Business entities are not allowed to use any term that could mistake them for any government agency. The state also requires the distinguishability of company names. So, if another entity has already taken your desired company name, you cannot use it. To ensure its availability, you may need to conduct a business name search. You can do this by calling the office of the Kentucky Secretary of State or doing an online search on their website. LLCs also have the option to reserve their desired names. You can do this by filing a completed Reservation or Renewal of Reserved Name form with the Secretary of State by mail, online, or personally. The filing fee for this submission is $15. It will reserve the name for 120 days. If you decide to use a name different from the legal company name stated in the formation documents, you will have to file a Certificate of Assumed Name with the Secretary of State and pay the $15 corresponding fee. Once approved, the registration of your assumed name or doing business as (DBA) will be good for five years. Take note that you can only proceed to this step after formally registering your LLC.
• Compliance Requirements – As stated earlier, doing business in the state requires you to register your company. That means you will have to prepare and file formal paperwork and complete various state compliance requirements.
  • Articles of Organization – Submission of a formation document is necessary to register your business with the Secretary of State. Use the Articles of Organization for a Limited Liability Company form and pay the $40 filing fee. To accomplish the said form, you will need the following information:
    • Company Name
    • Complete Street Address of the LLC
    • The Name, Address, and Signature of the Company’s Registered Agent
    • The Mailing Address of the Company’s Initial Principal Office
    • The Management Structure, whether it is a member- or manager-managed LLC
    • The Effective Date of the Articles of Organization
    • The Size of the Company
    • The General Nature of the Business
    • Signature of the Organizer
  • Registered Agent – All companies operating in the state will have to appoint a registered agent. You will also need to inform the Secretary of State of the name and address of your agent. Your LLC’s registered agent will be in charge of receiving all legal correspondence and business mail on behalf of your company. So, you need to make sure the one you nominate accepts the obligation and can handle the task. You should also make sure they qualify based on the state requirements.
    • If you choose an individual, make sure that they:
      • are a resident of the state,
      • maintains an address, not a P.O. Box, in the state,
      • is at least 18 years old, and
      • is always available in the registered office during normal business hours.
    • If you nominate a commercial registered agent, they should:
      • be a corporation, non-profit organization, or LLC that is authorized to transact in the state, and
      • is always available in the registered office during normal business hours.
  • Operating Agreement – While the state does not require LLCs to submit a copy or create an operating agreement, having one will help protect your business. This internal document will establish the processes of how you will run your company. It will also set the rights, duties, and responsibilities of the members and managers. Additionally, it can also be a good way to protect the limited liability protection that the business entity offers. That is because it proves that the LLC is a separate entity. If you want to learn more, read our article on the LLC operating agreement.
  • Ongoing Obligations – Aside from the requirements you will have to complete during the formation stages, your LLC will also have ongoing compliance requirements. For instance, you may have to obtain an Employer Identification Number (EIN) from the Internal Revenue Service (IRS). You may need this for filing taxes, opening a business bank account, and hiring employees. Depending on the industry your company is in, its activities, and location, you may also have to acquire certain state and local business licenses. To find out more about state licenses, check the Occupational Licenses and Permits Section of the One-Stop Business Portal of the Secretary of State. Meanwhile, you will have to check with the clerk office in the city or county where the primary place of business of your company is located. If you plan on selling goods that require the collection of sales taxes, you will have to register with the Department of Revenue by filing a Tax Registration Application form. The same applies for companies that have employees. The state also requires companies to file an annual report on or before June 30 of every year. You have to submit this document to the Secretary of State. It costs $15. The deadline for submitting the initial report of your company is between January 1 and June 30 of the year after you formed your company.

Once you decide to do business in Kentucky, you will have to understand the requirements on how to file an LLC. You can also get help from a reliable company like DoMyLLC.