How to Start an LLC in Kentucky
- Why Start a Business in Kentucky?
- 1. Top Location
- 2. Logistical Superstate
- 3. Networking
- 4. Lower Business Costs
- 5. Power Rates
- 6. Hiring Capital
- 7. Educational Approach
- 8. Innovation and Entrepreneurship
- 9. Quality of Life
- 10. Business Friendly
- Why Should I Start an LLC in Kansas?
- How to Start an LLC in Kentucky
- Step 1 – Choose a Name
- Step 2 – Reserve your Business Name
- Step 3 – Find a Registered Agent
- Step 4 – Articles of Organization
- Step 5 – Operating Agreement
- Step 6 – EIN
- How Much is it to Start an LLC in Kentucky?
- What Are Taxes Like in Kentucky?
- Final Word: How to Start an LLC in Kentucky
Kentucky is known to be an excellent location for starting a business in the United States. In this article, we look at how to start an LLC in Kentucky. This is a really important guide if you want to make the most of your business opportunities.
Why Start a Business in Kentucky?
There are numerous reasons why you will want to start a business in Kentucky. Here are some of those reasons for you to consider starting a business in the great state.
1. Top Location
The state is within a day’s drive of more than two-thirds of the US population. Its location is perfect for distribution to most of the US population, personal income, and manufacturing businesses.
2. Logistical Superstate
Kentucky currently ranks 2nd in the nation for total air cargo that passes through the state. The state has two international airports and three global shipping hubs. Therefore, you get to make your business truly international.
The state is served by 20 interstates and major highways, major rail networks, and more.
4. Lower Business Costs
There is no other state where starting a business is less costly. There are innovative and progressive tax incentive programs that can provide businesses with flexible financial assistance that can help a new brand’s cash flow.
5. Power Rates
Utility costs are much better in Kentucky, just another way that costs are much lower in the state.
6. Hiring Capital
There are support systems for helping employees train and find work. There is also help for brands to find the work that they need. In 2021, they helped 95,000 upskill and find new jobs and help 5,000 companies find the talent they needed.
7. Educational Approach
Colleges and universities are partners in the development of the workforce. They know what businesses need and they help keep the future workforce highly trained with the skills for future work.
8. Innovation and Entrepreneurship
The state is home to an array of unique and effective programs to help businesses get startup funding and more support.
9. Quality of Life
As well as being a great state for business costs, the state has one of the best cost-of-living rates. It is 10% lower than the rest of the US and the house prices are 30% lower. The state also hosts some of the most breathtaking scenic locations across the world.
10. Business Friendly
Finally, the state is one of the most business-friendly in the USA. There is support that offers fast, efficient, and personalized services. They help businesses to get going and be more successful. Therefore, you can build a highly successful brand in the state.
Why Should I Start an LLC in Kansas?
There are numerous reasons why you will want to start an LLC. For one, an LLC business has lots of unique benefits while also offering protection and having a few downsides.
For example, those businesses that have registered their LLC business name are protecting the branding from the use by other entities. This can be important because you don’t want entities using the same name, it can be very confusing for audiences. And you have control. If someone else was to try and use the name, then the other individual could be taken to court.
Another protection is that your personal assets are protected from being taken should the business run into debt. The property and debts of the business are counted separately from the individual. So your home, car, and other possessions are completely protected.
As an LLC you will also find that you have easier access to financing and credit. LLCs tend to find that banks are more willing to take a risk, allowing you to open a bank account, and while you will also be able to get better rates for taking out loans.
Those who want to get investors into the business can also be happier. They can get more investment at a better rate with venture capitalists.
Finally, you can benefit from a better tax burden because the owner is charged as an individual rather than a corporation. However, there is also the chance for your LLC business to be charged as a corporation. You should speak to an accountant about what is best for your business.
And if you need to compare, here is a table of how Kentucky compares with some of the nearby states.
|State||LLC Filing Fee||LLC Annual/Biennial Fee||Corporate Tax Rate||Nominal GDP per capita|
|Kentucky||$40||$15 (every year)||5.00%||$52,002|
|Indiana||$95||$30 (every 2 years)||4.90%||$61,760|
|Tennessee||$300||$300 (every year)||6.50%||$59,969|
|Ohio||$99||$0 (no fee and no information report)||0%*||$62,517|
|US Average||$130.38||$89.34 (every year)||5.60%||$64,773.08|
How to Start an LLC in Kentucky
Here are the steps that you need to follow if you would like to start an LLC in Kentucky.
Step 1 – Choose a Name
The first thing that you need to do is select a name that you would like for your business. The name for the LLC does have to follow certain rules and regulations. For example, you must have LLC or Limited Liability Company or an abbreviation in the name.
You should also ensure that the name is not already taken. You can do a Kentucky business name search to check for use of the business name in the state. In addition, you should not have a name that can be confused with a government agency. And you cannot use names that are restricted unless you have permission.
You should always check for use and domain name availability as well.
You might also want to complete a domain name search to ensure the name has a corresponding domain name.
Step 2 – Reserve your Business Name
Once you’ve chosen your business name, reserve it with the state. There are costs to complete this, but it is a simple process. There is a cost to this as well, which is $15. This is one of the lowest amounts across the United States.
However, the reservation does not last forever. There are a couple of months before you would have to reserve the name again. In addition, you can also reserve a DBA name, which is a name you can trade under.
Step 3 – Find a Registered Agent
Now you need to find a registered agent in the state. The registered agent is an individual or corporate entity that acts on your brand’s behalf, receiving and sending information to the right government officials in the state. The registered agent must be over 18 years old, have an address within the state, and be available during the normal business house.
You can have someone who works in the business. Or you can hire a company like ZenBusiness and IncFile to act as the registered agent. The advantages of the LLC being registered with the help of the two companies are that they can help you remember important states, and they can also help you in numerous states.
Step 4 – Articles of Organization
Now you need to register your LLC by submitting your Articles of Organization. The cost for this is again relatively low compared to that of other states, with the estimated cost at $40. These documents should include several pieces of information that include:
- LLC name and address
- The registered agent’s details
- Manager-managed or member-managed
- The signature of the organizer
It is a relatively quick process, with the whole process finishing in about two weeks.
Step 5 – Operating Agreement
Now you should look at getting your operating agreement sorted. This is not a mandatory document, but it is highly useful. Banks, creditors, and investors will want to see this document.
The document details how you should deal with conflict with other senior members of the team, should there be any disagreements. It should also state how the business operates, who has what responsibilities, and other information.
Step 6 – EIN
The final step in the process is to request an EIN for the business. The free Employer Identification number can be requested from the IRS on their website. There is no fee and it takes about two weeks to be issued.
The EIN number is essential if you have more than one member of the LLC or if you have employees. Banks may also request you have one should you wish to open a business bank account.
And if you are looking to have financing, you might want to get an EIN as venture capitalists might request one.
How Much is it to Start an LLC in Kentucky?
As with all other states, there are costs for creating an LLC. However, these are some of the lowest across the country. For example, the reservation of a business name is just $20. And filing the LLC documents will cost just $20 for domestic and $36 for out-of-state businesses.
Therefore, the cost for everything will be $56 at most. In most states, the cost for the articles of organization cost double this.
What Are Taxes Like in Kentucky?
Kentucky leverages a 5% corporate income tax rate with a 6% state sales tax rate. But it doesn’t levy any local sales taxes.
Final Word: How to Start an LLC in Kentucky
Kentucky is one of the best locations for setting up a business. The startup costs are relatively low and the state is geographically in one of the best locations across the US. In addition, the state has a strong, highly educated workforce. Above are the instructions on how to start an LLC in Kentucky. All you now need is luck.