- [Host] How to form an LLC in Kentucky.
Kentucky's modest cost of living, low sales tax rate,
and minimal business formation fees
make the Bluegrass State a great place to start an LLC.
Every state has slightly different requirements
for forming an LLC.
Follow along closely to learn the required steps
for creating your own Limited Liability Company
in the state of Kentucky.
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There are two ways to form an LLC in Kentucky.
You can form one yourself,
or you can hire a service to do it for you.
Let's start by looking at the five basic requirements
to form an LLC in Kentucky on your own.
You can also find these steps in more detail
on our website, linked in the description below.
One, name your LLC.
Every state has it's own rules about
what kind of names are allowed for LLC's.
In general, you will need to
observe these naming guidelines.
Your name must include the phrase
Limited Liability Company, or
one of its abbreviations, LLC or L.L.C.,
with a period following each letter.
Restricted words such as bank, attorney,
law office, et cetera, may require additional paperwork
and may also need a licensed professional
to be part of the LLC.
Your name cannot include words that
could confuse your LLC with a government agency,
such as FBI, treasury, state department, et cetera.
You cannot use a name that has already been registered.
To see if your name is available in your state,
you'll need to do a name search.
This free service is available on your state's
Secretary of State website.
Check out our free guide for finding
the direct link to your state.
We also recommend that you check to see
if your business name is available as a web domain.
Even if you don't plan to make a business website today,
you may want to buy the Url
in order to prevent others from acquiring it.
Two, choose a registered agent.
Kentucky requires that you nominate
a registered agent for your LLC
who is your business's point of contact with the state.
The registered agent can be
an individual within the company, including yourself,
or you can hire a professional service
authorized to do business in Kentucky.
They will send and receive legal papers on your behalf.
These documents include official correspondents like
legal summons and document filings,
which your registered agent will receive
and forward to you. Your registered agent will
help remind you to file the necessary reports.
Failure to properly maintain your LLC
can result in fines and dissolution,
so this assistance is valuable.
Three, file the articles of organization.
To register your Kentucky LLC,
you will need to file the articles of organization
with the state of Kentucky.
This can be done online, by mail, or in person.
You will need to state whether your LLC will be
member-managed or manager-managed.
Member-managed means all members of the LLC
manage the company.
This is good for small organizations,
where everyone is involved in the day to day
operations. The second option is manager-managed,
where individuals are appointed to manage the LLC.
This is appropriate for larger organizations,
where not everyone is involved in the day to day affairs
of the business.
Four, create an operating agreement.
Although not every state requires it,
you should always create an operating agreement
to establish ownership terms
and member roles for your LLC.
This foundational document is the core of your LLC
and will help you maintain your organization,
as well as further establish your LLC
as a separate legal entity.
There are six main sections
of an operating agreement. Organization outlines
when and where the company was created,
who the members are,
and how the ownership is structured.
Management and voting addresses how the company is managed,
as well as how the members vote.
Capital contributions covers which members
financially support the LLC, and
how more funds wills be raised in the future.
Distributions outlines how the company's
profits and losses are shared among members.
Membership changes describes the process for
adding or removing members, as well as
if and when members can transfer their ownership shares.
And dissolution, which explains the circumstances
in which the LLC may be dissolved.
An operating agreement is an internal document.
It does not need to be filed with the state.
However, it should be updated every time there is a change
in membership or management at the company.
You can download a free sample operating agreement
or create a custom one using our free
operating agreement tool at howtostartanllc.com.
Five, obtain an EIN.
Lastly, you'll need to get an
Employer Identification Number, or EIN, from the IRS.
Also known as a Federal Tax Identification Number,
your EIN is like a social security number for your LLC,
and is how the IRS tracks your business for tax purposes.
An EIN is also necessary to open a business banking account,
and legally hire employees. EINs are free of charge,
and can be obtained from the IRS, online
or through the mail.
And with that, you'll have formed a Kentucky LLC
on your own.
Option two, hire a professional service.
The second way to create a Kentucky LLC is to hire
a professional service to create your LLC for you.
Hiring a professional service to file your forms
and act as your registered agent for the LLC,
will cost you an additional 50 to 150 dollars.
However, there are several benefits to working with a pro.
A hired registered agent helps
with getting your reports filed on time,
helps you stay organized by keeping
your business mail separate,
and is available at all regular business hours
to accept official mail
and legal papers on your LLC's behalf.
A final and important additional benefit of
using a service is privacy.
A professional service will provide a level
of privacy by withholding your personal name
and home address from the LLC's contact information.
There are many reasons why you might
not want your personal information easily accessible
and associated with your business.
Hiring a professional LLC formation service
is an easy way to accomplish this.
Now that you've seen the different requirements
and ways you can form an LLC in Kentucy,
visit our site and take some time
to research your options
and establish a solid foundation
for your business activities.
Click on the links in the description below
to research the top five professional formation services
or get more information on
how to form an LLC on your own.
Now you know all the steps to form an LLC in your state.
For our more detailed guide, go to howtostartanllc.com.
You can also create an operating agreement
and use our business plan tool, free of charge.
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And if you have questions or encounter any road blocks,
leave a comment below.
Good luck on starting your small business.
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