If you have your heart set on starting a new business in Kentucky but worry about risking your assets and your family's future, bring yourself a little peace of mind by considering establishing an LLC in Kentucky.
Sadly, you could spend hundreds or thousands of dollars setting up such a limited liability corporation. Still, you also have options to spend considerably less and gain the protection that can let you sleep at night. And as anyone who has started a business can tell you, you don't want to waste money from the launch if you can get a goal accomplished much cheaper.
The process of setting up an LLC can seem quite complicated, and maybe your friends or mentors have scared you into believing the only way to accomplish it is by paying the lawyers. Not true. Let us take you through the details and show you the best way to simplify the process and save your capital for other expenses your new business will face on the road to success.
What We'll Cover
Starting an LLC in Kentucky, What’s Involved?
A limited liability corporation is a business structure designed for smaller businesses — those that don't see the need to incorporate — that protects the business's owners from personal liability for actions taken by the business.
Creating an LLC in Kentucky can cover sole proprietors, general partnerships, or companies with multiple owners. Without an LLC, if your company is sued or falls into debt, the owners' personal property, such as a house or vehicles, can be seized to cover debts or losses. An LLC protects personal assets, to a certain degree.
Taxes for an LLC generally fall under the same standards as basic ownership, so there is no real tax advantage to forming an LLC. For example, if you are a sole proprietor and form an LLC for your company, the income still will pass back to you and you'll be taxed at the self-employment rate, rather than as a corporate entity.
If you're looking at the tax advantages or think you will grow to the point you'll need to attract investors, then you will need to consider incorporating. Operating as a corporation does come with more complicated filings and costs.
Step 1 Forming Your LLC in Kentucky
Each state sets its requirements for LLCs, but many similarities exist from state to state, as well.
Setting up an LLC in Kentucky, requires registering with the Kentucky Secretary of State's Office and filing annual reports with the office.
Kentucky offers three types of in-state LLCs: a general LLC that applies to most businesses; a professional LLC that is designed for doctors, lawyers, etc.; and non-profit LLCs, which are geared toward non-profit agencies that operate in Kentucky. Out-of-state companies also can apply for a Certificate of Authority (Foreign LLC) if they operate as an LLC in another state or country but plan to have a business in Kentucky. For the remainder of this article, we'll focus on in-state LLCs as that's mostly likely the business model you are following.
The first step in establishing an LLC in Kentucky is to select a name. The legal name for your business must be unique, so you can check through the Secretary of State's website's Name Availability Search to ensure you've chosen a qualifying name. The name must contain some variant of LLC, L.L.C., Limited Liability Corporation.
You can operate your business under a different name than the legal name, but you must file a Certificate of Assumed Name with the Secretary of State's office and then provide a copy of that to the county where your business will operate.
Once you've chosen your name, you are required to file Articles of Organization with the Secretary of State's office. This is an example of Articles of Organization for Kentucky. The secretary's office can accept your articles, ask for revisions or reject them outright. This is why you might want some professional help with this part of the process. Getting your Articles of Organization correct at the beginning will get your business up and running quicker and more smoothly.
You can hire an attorney to prepare and file the articles, but that's where you start running into big money. Many online services also offer to provide your LLC paperwork at a greatly discounted price. We'll offer some suggestions for the best and least-expensive sites in a bit. The great thing about these sites is they specialize in filing LLC paperwork in all 50 states, so they know how to put together the proper Articles of Organization for your business.
You also must choose a Registered Agent, who will be designated to receive any legal papers filed in regard to your company. The registered agent can be an individual residing in Kentucky or a corporation doing business in Kentucky. You or anyone in your company can serve as the registered agent. You also can hire a service to do this. If you contract with one of the online services to file your LLC, they generally provide a registered agent.
Finally, the filing fee for registering an LLC with the Kentucky Secretary of State is $40.
Once the secretary approves your LLC, you'll receive two copies of the Articles of Organization, stamped with the state seal, and you must provide one of those copies to the county where your company will operate.
The entire application can be done online through the Secretary of State's One Stop Business Portal or you can file paper copies, but that likely will slow the process.
Cheapest Kentucky LLC Registration Service Providers
Attorneys, business consultants, and even accounting offices likely offer services to register your LLC in Kentucky, but the better bargain will be to use one of these online services that specialize in LLC registration. We're featuring three of our favorites:
You can't get a better deal than with IncFile, as the company has incredible rates and is very clear and transparent so you won't need to worry about hidden costs. With IncFile you'll get a high quality service that will make your process much easier, smooth and at great prices.
IncFile has operated since 2004 and helped more than 250,000 businesses get their start. With nearly 14,000 reviews, the company has a 4.8 average rating. The company also ensures you’re not missing any necessary information for your filings. You also will have a customer dashboard where you can track your filing status.
IncFile isn't doing this out of the goodness of their heart, though it certainly is a great option for cash-strapped startups. They will offer you many upsells along the way such as lifetime notification of filing deadlines, federal tax filings and many more. They also offer bookkeeping, banking, trademark registration, business licenses, website domain registration, business email, and more.
IncFile offers customer support through phone, email, and chat.
Northwest Registered Agent
Northwest Registered Agent offers its LLC registration service for a flat fee of $225. That might appear to be a much higher than other companies, but Northwest Registered Agent doesn't do any upsells or hidden fees.
Northwest offers same-day filing on your Kentucky LLC registration, checking name availability, drafting the Articles of Organization and providing one year of registered agent.
The registered agent fee is $125 per year after the first year with no contract, so you can cancel at any time.
A unique feature for Northwest is they use the company address on all filings, rather than your address or email, maintaining your privacy and reducing spam and junk mail. They also don't sell your information to other companies, ensuring complete privacy.
Northwest also offers top-notch customer service. They don't use any salespeople; the people answering the phones are the ones handling the filings and are knowledgeable about Kentucky LLC filings.
Northwest Registered Agent has operated since 1998 with the same business philosophy, so you can be assured that in 20 years you'll be getting the same great customer service you find today.
ZenBusiness offers a bargain price of $49 to get started with your LLC. That price includes name verification, articles of organization, online filing in Kentucky and one year of registered agent service.
ZenBusiness is the newest player in the game of the companies we recommend, having started in 2015. However, the company has helped more than 70,000 companies get started in the past five years and has a 4.7 average rating from more than 4,000 reviews on Trustpilot.
The registered agent fee on the basic plan kicks up to $199 after the first year.
ZenBusiness also offers a Pro package at $199 a year that includes expedited filing and EIN application, plus compliance with annual filing requirements. The Premium plan at $299 a year includes rush filing plus domain registration and business website and email.
As a Public Benefit Corporation, ZenBusiness fits the business owner looking for a socially conscious company to do business with. ZenBusiness has a partnership with Kiva.org to help minority- and women-owned businesses through grants and loans.
Other Service Providers
Other LLC service providers also can help you register your LLC in Kentucky, but we believe the three above provide the best value and customer service for budding small businesses in Kentucky.
For example, LegalZoom would be the most famous brand in the field with more than a million companies started through them, but their $99 package requires you to wade through so many upsells before you even get started, you'll probably run away screaming.
Rocket Lawyer is another company that actually includes consultation with an attorney in their service, but if you don't need to discuss your business with a lawyer, their other services aren't at the level of the other companies.
Step 2 Obtain a Kentucky LLC Operating Agreement
Of course, you can take care of all the paperwork and form an LLC on your own. We've shown you a sample Articles of Organization that you could adapt to meet your purposes. You know you can serve as your own registered agent.
But why would you want to take the chance? You might mess up something in the paperwork and delay the process. You might get the whole thing rejected and have to start over from scratch.
You need to understand that the time you would commit to working on the LLC is time better spent on working on your business. Experts are standing by out there waiting to do in hours what could take you days and weeks. They are virtually guaranteed to get it right the first time.
Are you still thinking you could save a few dollars? Why? IncFile can get the bare bones of what you absolutely need done for free! You just need the ability to say no to all the upsells they offer you along the way. Later, if you decide the services they offer could benefit your business, you can upgrade and do it with the cash that is flowing into your successfully crafted LLC.
Are you concerned about giving up some control? In many ways you are not. You're making the decision to work with experts who will work with you to craft the kind of organizational agreement that best suits your company, rather than handing control over to attorneys. And you have the ongoing support of experts in the field for at least the first year and beyond, if that's what you see fit to do.
You've made the bold decision that you want to operate your own business, so now make the right decision about how to build your business and protect your family and personal property. Move ahead today with your plans to form an LLC in the Commonwealth of Kentucky. Pick the best name for your company. Pick the best online service to handle the application process. Get back to work on building your dream by running your own small business. And sleep better tonight, knowing you've made the best choices to move forward.
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