Kentucky is a state in the United States of America that is situated in the east south-central region. Bluegrass is the name given to the State. This diverse bluegrass state provides a variety of benefits that lead to its favorable business climate. The position of the State allows for the sale of products and materials to a large market. Vehicle production, air freight shipments, aerospace-related exports, jobs, and a large workforce have all ranked Kentucky first. The State ranks eighth among the best business climates in the nation. So, if you’re thinking about forming an LLC in Kentucky, this is a good choice.
The State provides free employee training and staff recruitment; the benefits to entrepreneurs include low energy prices, a market, and a central location. The government also offers several services, such as the Kentucky Innovation Network, which provides mentoring and capital to new businesses.
You’ve decided to start your company in Kentucky. So, here are all of the steps involved in forming an LLC:
Step 1: Settle on a business name
It can seem straightforward at first glance. I mean, how difficult can it be to come up with a name? That’s incorrect. It will seem that choosing a name is easy, but it is not. The name you decide will be known all over the world. As a result, you must be cautious about what you show to the consumer, as selecting the incorrect name will result in some complications. You can, however, alter it at any time. It would be best if you considered the following factors:
- It would be best to make sure that the name is distinct, well-defined, and simple to understand and pronounce. Being one-of-a-kind doesn’t mean it has to be a difficult-to-pronounce word. Please keep it brilliant but elegant.
- Conduct a systematic internet search to determine whether or not there is an issue. You don’t want your business name to be confused with that of another. It fits the company’s name to be distinctive and distinct from others, both nationally and globally.
- You may do a trademark search because certain firms may have trademarked those terms or names, so it’s best to double-check ahead of time.
To make sure your preferred name is accessible, look it up in the Kentucky business entity database. If a name with a similar spelling appears, you’ll need to change your keywords.
You must adhere to the following Kentucky state name regulations:
- The words Limited, Business, Corporation, or the abbreviation Corp, LLC, Ltd. Inc., Co. must appear in the name of an LLC.
- The name should not be similar to that of another organization.
- The terms Lottery and Bank are not allowed.
- Words that apply to veterans’ groups or educational institutions are forbidden.
- Similarly, words relating to civil servants or the military are limited.
Reservation of a name
Now that you’ve followed all of the rules, you’ve come up with a name, but you’re concerned that before you can register your company, someone will take it away from you. You have the choice of reserving your chosen name in that case. You will do so for 120 days that can be renewed. You can mail the reserved name reservation or the name renewal form, along with a $15 charge, to the following address:
Office of the Secretary of State
PO Box 718
Frankfort, KY 40602-0718
You can also personally deliver the application and fee to Room 154 in the Capitol Building at 700 Capital Ave between 8 am and 4:30 pm if you reside in Frankfort. The processing of hand-copy documents takes around three days.
Step 2: Pick an agent to serve as your registered agent.
In Kentucky, all limited liability companies (LLCs) must have a registered agent. Your LLC will not be officially established until a licensed agent is named. Following the registered agent’s appointment, he or she may receive official paperwork and correspondence on the company’s behalf. Individuals or Registered Agent Service Businesses may serve as registered agents.
What is the role of a registered agent?
An LLC’s registered agent may be a person or a business that has been approved to accept the legal notices and official government mail notices on the company’s behalf. The agent is an integral part of the LLC since it handles all diplomatic relations with the government. The registered agent acts as a contact point between you and the LLC, to put it another way. It collects and handles the paperwork and other official correspondence and manages litigation, taxes, and upkeep. Your job becomes more manageable with the assistance of a licensed agent.
However, an agent’s appointment is required; it is not up to you whether you want one. You may also serve as your registered agent. And one might wonder why the agent’s appointment is needed. The states want to make sure that your LLC has a clear point of communication.
The qualifications for a registered agent are as follows:
- An actual address, not just a PO Box, is required of the registered agent.
- During regular business hours, the licensed agent must be present.
The next question that arises is: who is qualified to serve as a registered agent?
The registered agent can be any of the following:
- An individual who lives in Kentucky and has a physical street address there.
- A Kentucky company or enterprise that has been granted a business license.
- If you have a physical street address in Kentucky, you can also serve as your registered agent.
The name and street address of the registered agent are made public, so if you want to be your registered agent, bear in mind that your personal information will be made public.
Step 3: Apply the Articles of Organization to the Commonwealth of Kentucky
The Articles of Organization filing with the Secretary of State is the most critical move in establishing a Kentucky LLC. The Articles of Organization are a legal certificate that shows your LLC’s legal status with the state government. The Articles of Organization are required because your company would not be legally recognized without them. As a result, consider the Articles of Organization to be a part of your company’s framework.
The following is a list of the details contained in the Articles of Organization:
- Your company’s name and address
- The registered agent’s name and address
- The organizer’s name who is filing the paperwork
- The management system of an LLC
- The LLC’s size, including the number of employees and representatives.
- LLC’s business market
- The organizer’s signature and the registered agent’s signature
The Articles of Organization may be registered via online, mail, or by hand. You are free to select any choice. Each choice has the same filing fee of $40.
Filing Forms Online
You can finish the whole process by going to the Kentucky one-stop business site. You must first log in or build an account if you do not already have one. After that, obey all of the on-screen instructions.
Filing forms by postal mail
You can fill out the application and mail it along with your payment to the following address:
Office of the Secretary of State
Division of Business Filings
PO Box 718
Frankfort, KY 40602 – 0718
Filing form by hand-delivery
You reside near the area; you can likewise deliver the document to:
Room 154 of the Capitol Building, 700 Capital Ave., Frankfort, KY 40601. The processing time for in-person filings will take around three working days.
A copy of the LLC’s Articles of Organization must also be filed with the County Clerk’s office. Additional fees will vary by county and will range from $10 to $15.
Step 4: Draft an Operating Agreement for your LLC
The Kentucky Secretary does not require this document of the State of State, but it is necessary for the LLC’s effective activity.
What is an Operating Arrangement for a Limited Liability Company (LLC)?
The Operating Agreement is a legal document that specifies the business’s operating procedures. The record establishes the members’ positions, voting rights, and each person and directs day-to-day activities, ensuring structure continuity and reducing conflicts.
What information is used in an LLC Operating Agreement?
Every company has its information and norms. However, the following points are present in the majority of agreements:
- Names of all representatives and staff, as well as their duties
- In the LLC, the power is delegated.
- Both members’ voting percentages and voting designations
- What were the members’ initial capital contributions?
- Laws for adding or withdrawing members, as well as other limitations
- How will the benefit be distributed?
- The agenda for the meetings
The operating agreement will be very beneficial for your company in the event of any future disputes. Since all the terms are laid out, it would be easy to function.
Step 5: Obtain an Employer Identification Number (EIN).
Every Kentucky limited liability company (LLC) must have its own EIN (Employer Identification Number). The Internal Revenue Service gives this number. To file income taxes, open a bank account, and pay staff, you’ll need an EIN. The IRS will provide you with the number at no cost.
What is an EIN?
It’s a unique nine-digit number that the Internal Revenue Service (IRS) assigns to the company to identify it to the federal government. A Federal Tax ID is another name for the EIN.
An EIN is needed for the following types of businesses:
- Any corporation or enterprise that employs workers
- A collaboration, such as a C-corporation or a limited liability company (LLC).
- Any organization or business with more than one member is referred to as a multi-member company or industry.
Why is it essential to have an EIN?
The following are some of the reasons why you would need an EIN:
- To open a bank account
- Employees to recruit
- To submit your LLC’s tax returns
- to reward private contractors
In simple terms, if your LLC generates revenue and employs people, you must obtain an EIN. Also, keep in mind that the LLC will be public information. Furthermore, since LLCs are listed as pass-through corporations, they must not file corporate income tax returns. As a result, their owners must report the taxes on their tax returns. But, as previously said, you must pay tax under such cases, such as when you hire workers, and you must have an EIN.
The following three options are available for acquiring an EIN:
Monday to Friday, from 7 am to 10 pm; you can apply online. The online approach is the easiest, and you will obtain your EIN right away. It is the most effective approach and saves a significant amount of time. You must have your social security number or a valid taxpayer number when applying.
The second choice is to submit a fax. You must download and complete the SS-4 form. You can Fax the form to (855) 641-6935 after you’ve finished it. This approach is the second quickest, taking only four working days.
Postal mail is the third choice. Many people do not like it because it is the most delayed route, with processing taking about four weeks. You might prefer this route, then fill the Form SS-4. After that, mail it to the following address:
Internal Revenue Service Operation
Attn: EIN Operation
Cincinnati, OH 45999
Obtaining Business Licenses and Permits (Step 6)
Step 6: Obtaining the permits and licenses that your company may need.
Your business is legitimized thanks to the Articles of Organization, but some formalities are still complete, such as licenses. These licenses are based on the kind of company you conduct. To open a restaurant, you must first obtain a Food Service license/permit from the Kentucky cabinet of health and family services, food safety branch. Similarly, different licenses are available for various business forms.
The entire list is available through the license database search on the One-Stop Business Portal. The request differs depending on the following factors:
- Your LLC’s physical address
- What kind of company do you run?
- The sort of business
Step 7: Submit an Annual Report
After your LLC is formed, it must file the annual report after one year of service and then every year after that. The LLC must request yearly information with a charge of $15 by 30 June. You will receive the Annual report postcard in your mail from the Commonwealth of Kentucky. You must fill out the card and send it, or you may file online. Remember to file the report on time; otherwise, the business will fail its good status with the State and face administrative dissolution.
The following information is contained in the annual report:
- The company/name LLC’s and address
- Your registered agent’s name and address
- Many of the members’ names
- The LLC’s tax identification number (EIN).
Your LIC is now ready to use after following these measures. It is operational and willing to do business. However, when starting a company, it’s a good idea to gather all of the required information. So, what can you do now that you’ve formed an LLC? We’re going to investigate.
Following the creation of an LLC, there are a few steps to take.
- Request a Certificate of Good Standing (Certificate of Good Standing). Your LLC is now ready to do business after being established; all needed now is a Certificate of Good Standing. It’s an official confirmation that the LLC follows all of the State’s laws and regulations. It’s also correctly formed: LLCs receive a Certificate of Good Standing from the Secretary of State.
What is the aim of obtaining a Certificate of Good Standing?
This Certificate is helpful for business since many financial institutions can prove that your company is in good standing with the government before participating in any business transactions. And the best part is that this Certificate will never expire or need to be replaced.
- Create a business bank account as well as a credit card account.
Please keep your personal and company expenses apart at all times. You can do so by opening a separate bank account for your LLC. Furthermore, obtaining the company’s credit card can help create a company credit profile background. It is simple to open a bank account; call your bank and inquire about the procedures.
- Typically, you’ll require:
- Your paperwork has been filed.
- EIN (Entity Identification Number)
The shareholders, managers, officers, and directors should sign a business resolution authorizing the company to open the account.
To summarise, a businessman or businesswoman needs to keep their personal and business assets apart to shield their assets from liability. Another benefit is that taxation becomes a lot easier to understand. You will have a different account for your company that will hold all of your business expenses.
- Organize and systemize
In the long run, and any company, a structured structure works well. You’ll need a system in place to pay bills, pay taxes, manage workers, and keep track of permits, among other things. Attempt to simplify and streamline the operating processes. You will be able to concentrate more on the business’s growth as a result of this.
- Marketing and branding
Now that your business is up and running, it’s time to get the word out. You must develop a marketing plan for your company. Build a marketing campaign that targets your ideal customers while also piquing the interest of potential new customers. So, how do you get started marketing your company? You should take the following steps to get started:
- Build a company website
Your online presence is essential to your success. This is how potential customers can learn about your brand. You must develop a website for your business. Designing a website is not as daunting as it once was, thanks to the various resources available.
You must first purchase a domain name, after which you must choose a hosting service for your website. Make sure your company’s website has all of the necessary details, such as which services and goods you provide, how to reach you, and business hours, among other things.
- Develop a logo for your company.
The face of your organization is its logo. It is a constant reminder of your brand. The logo will highlight your company anywhere there is customer contact, such as on the website, business cards, invoices, in your emails, and more.
- Making your business cards is a great way to save money.
It’s time to make business cards after you’ve created a website and a logo for your company. Business cards are the perfect way to advertise the company because they can hand out prospective clients or customers. Any interaction can turn into an opportunity for business, and business cards are an excellent way to network. It will assist clients in quickly contacting you with all of the details listed on the card.
- Prepare a press release.
It’s the simplest way to get the company’s name out there. A press release will help spread the word about the organization to a broader audience.
- With a trademark, you can protect the company’s name.
Trademarking is essential if you want to protect your organization’s name and status that you have worked diligently to build.
What exactly is a trademark?
When you trademark your company brand, you gain sole rights to your company’s slogan, name, logo, and everything else associated with it. It will shield your brand name and logo from being copied by others.
We’ve looked at the advantages of forming an LLC and how to do so in this article. We may infer that an LLC is the best business structure. It safeguards its members and encourages them to share responsibilities and ideas while also contributing to its growth. You’ve heard about different facets of the LLC, and if you follow any of these moves, you’ll be a good business owner one day. The procedure may tend to be lengthy and tedious, but it is well worth the effort.