Limited liability companies in Kentucky (also known as LLCs) are very popular among business owners. They protect personal assets from lawsuits or bankruptcy, and offer simplified taxation and flexible management. You will need to choose a name for your LLC, appoint an agent registered with Kentucky’s Division of Business Filings, and file Articles of Organization. You can file the articles for $40 and mail them in, online or in person to Kentucky’s Division of Business Filings. Although it may seem daunting to start an LLC, if you follow our step by step guide, you will be able to complete the process without any problems and be ready for business.
Name Your LLC
Your LLC must have a name. It’s important that you choose the right name for your company. However, it must comply with state laws as set forth in KY Rev Stat.SS 14A.3-010. Name of your LLC must be:
- Include “limited liability company” (or “limited company”) or the abbreviation “LLC” or “LC.”
- Do not include abbreviations or words that could make it sound as if the LLC is another type of entity such as “corp” and “limited partnership”.
- You will be unique among Kentucky’s approved business names.
Can I reserve a Kentucky business name?
Yes. Kentucky allows you to reserve your business name for up to 120 days. You must submit your request in writing. Online name reservations are not possible. You will need to submit the Renewal or Reservation of Reserved Name form by mail, in person or via check.
What is the difference between a trade and LLC name?
The name of your LLC is the one that appears on any legal paperwork that you file with Kentucky. Your trade name (or DBA) is a name that you use for your business and is not the same as the one registered with Kentucky. DBA stands to “doing business under.” DBAs can also be called trade names, fictitious or assumed names.
DBAs are useful when the legal name isn’t exactly the same as the business name. John Doe, LLC, for example, may be a registered company name. However, a DBA such as “Doe’s Dog Walking”, does a better job at defining the LLC’s purpose. Your original LLC does not need to be registered as a LLC. Instead, it can operate under a DBA.
Kentucky requires DBAs be registered with the state. Fill out the Certificate Of Assumed Name and submit it to the Secretary of State. You can either mail it or bring it in.
Designate a registered agent
Next, you will need to name a Kentucky registered agent. You, another person, or a company such as ours, can be a registered agent. They are responsible for accepting important legal mail on behalf the LLC. All LLCs in Kentucky must have a registered agent. Before you can fill out your Articles of Organization, it is important to have the name and address of your registered agent.
What is a registered agent?
KY Rev Stat. SS 14A.4-010 outlines the requirements for a registered agents in Kentucky. Your registered agent must at a minimum:
- You must have a physical address in Kentucky (no PO boxes, virtual offices).
- Maintain regular business hours.
- You can accept legal mail from the Kentucky Division of Business Filings for your business and have them delivered to you quickly.
Are you able to be your own registered agent for Kentucky?
Darn tootin’. If you’re not against the idea, you can list your name and address in the Kentucky public records. This is what happens when your registered agent. You’ll also need to be available for legal mail personally and maintain regular business hours at the registered address. For business owners who work from home, this may not be a good idea.
Submit LLC Articles of Organization
The first step to officially establish your LLC is filing the Articles of Organization with Kentucky. Once the form has been completed, it will be submitted to the Kentucky Division of Business Filings.
Note: All information in this form will be made public.
To successfully complete your articles, please provide the following information:
- Company name. Add an indicator such as “LLC” to your company name.
- Registered office. Physical address in Kentucky at which your registered agent is available during regular office hours.
- Registered agent. A person or company that accepts official mail on behalf your LLC.
- Head office. Address to which the state will send official mail, in addition to legal notifications.
- Effective date. This is the date that the LLC begins its existence. You can also delay it by up to 90 days.
- Management of an LLC. Indicate if the LLC will have members- or manager-managed.
- Owned by a veteran. Check this box.
- The person who signs, completes, and submits articles for an LLC. This can be anyone outside your LLC.
Once you are done, you can either submit the document online or in person with your $40 payment. You can file your paperwork online or walk it in to get your LLC up and running in 24 hours. You can also mail your paperwork, but it may take up to three days for it to be processed after it is received.
What can I do to keep my personal data from being made public?
Unwanted sales calls and junk mail are modern-day scourges for business owners. You don’t have to live on an island or hide in a cave to keep your information secret. The only way to protect your information is to hire a registered agent who will make sure it appears on all public documents. It’s that simple.
How do I file the Kentucky Articles of Organization
Online submissions are possible by mail or in person. If you intend to pay the filing fees by cheque, please make payable to the “Kentucky state Treasurer”.
Mail:
Michael AdamsOffice of Secretary of State
P.O. P.O. Box 718
Frankfort, KY 40602-0718
In person:
Capitol Building
Room 154
700 Capital Avenue
Frankfort, KY 46001
Online:
4. Create an LLC Operating Agreement
Although operating agreements might seem to be another hassle in the tedious process of setting up a business, they are actually your most important document. They are second only to your Articles of Organization. Operating agreements are crucial because they dictate how the LLC conducts internal business. This includes how profits will be divided, how members can join or leave, who contributes what, and how the LLC is going to dissolve.
What should an operating agreement include?
Think about the major issues that you and your co-workers need to agree on before you enter into business together. These are the most common topics that operating agreements cover:
- Initial funding for the LLC
- Distribution of profits and losses
- Voting rights, decision-making power, and management
- How to add members
- Transfer of membership interest
- Dissolution of the business
Is an operating agreement required for a single-member LLC?
Yes. Although you won’t be able to disagree with your LLC’s management, banks will require you to sign an operating agreement before opening a bank account. An LLC’s liability protections can be established by opening a business bank account.
Register for an EIN
When you are forming your LLC, it is important to obtain an employer identification number (EIN). An EIN is a nine-digit number that the IRS assigns business entities in the US. EINs are required for tax filings as well as opening bank accounts. If you intend to hire employees, an EIN is required. An EIN allows you to keep your personal and business finances separate, which helps reduce the chance of identity theft.
6. Register for a Bank Account
Because your LLC is separate from you and other members, it makes sense to open separate bank accounts for your business. Separating personal and business accounts allows for better record-keeping, which will help strengthen your LLC’s liability protections. Customers and vendors will also notice that you are serious about opening a bank account for your business.
You will need the following documents to open a bank account in Kentucky for your LLC:
- Kentucky LLC Articles of Organisation (a copy of which is fine)
- Operating agreement for the LLC
- The EIN of the LLC
- An LLC Resolution to Open A Bank Account (if more than one member of your LLC).
Filing State Reports and Taxes
Kentucky requires that LLCs file an annual report every year. The annual report of your LLC is a simple update of information that informs the state of any changes in contact information or management. An annual report costs only $15 to file.
Jeff Beckley is a business expert, journalist, book author, and founder of the website Best Inc Services. Jeff can be reached at, info@bestincservices.com