Certificate of Authority Kentucky
Certificate of authority Kentucky is the requirement for a business to register with the Secretary of State prior to doing business in Kentucky.4 min read
Certificate of authority Kentucky is the requirement for a business to register with the Secretary of State prior to doing business in Kentucky. Companies that have incorporated in a different state usually apply for a Kentucky certificate of authority, which removes any need for them to incorporate as a new business entity. You will find that the state is not the only one that will request a certificate of authority. Vendors, banks, and licensing agencies may ask for one as well.
Obtaining a Certificate of Authority in Kentucky
Businesses that are organized or incorporated in other states are considered a foreign business entity in Kentucky. As such, they require a certificate of authority. You may hear this referred to as qualification, which means they have filed with the Secretary of State. Once approved, the business can operate the same as one that was founded in Kentucky.
You must obtain authority in Kentucky when any of the following conditions apply:
- Open a physical location or office in Kentucky
- Hire an employee who resides in Kentucky
- Prior to starting a new job or contract
- The bank or vendor requests
- Requirements by licensing authorities
Approximate turnaround times and fees for Limited Liability Companies, corporations, and non-profit corporations are:
- $90 for three weeks turnaround
- $240 for 1-2 business days
To obtain the certificate of authority, submit the application and certificates from your home state and appoint a local registered agent, otherwise your application will be denied. Follow instructions closely otherwise the application could be denied for a small mistake. Mail everything to the Kentucky Secretary of State's office at 700 Capital Avenue, Frankfort, Kentucky.
Don't risk doing business without the authority or you can be fined $2 a day and not be able to maintain a proceeding in court until you do obtain one.
What is a Registered Agent?
A registered agent will receive government notices and legal service of process on behalf of the company. The agent will then forward any legal documents and notices to the business entity itself. If you don't keep a registered agent in the state for 60 or more days, the state may revoke authority for your foreign-registered business entity.
Requirements for choosing a Kentucky registered agent include:
- A local resident who registers their business address as the registered office address.
- A domestic business organization that is already registered in Kentucky and has their business address as the registered office address.
- Any foreign business entity who is qualified to conduct business in the state and has a Kentucky business address as their registered office address.
It's important to note that the registered agent can't be the business entity itself, but it can be someone who is a director or officer in a corporation or an LLC manager or member whose business address is the registered office address.
What Does and Doesn't Constitute Business in Kentucky
Before starting the qualification process, determine whether the business entity is actually transacting business under state law.
Kentucky Revised Statutes lists certain activities in the income tax chapter that are not binding on the Secretary of State's decision on what defines “transacting business.” These include:
- Being organized under Kentucky law
- Having a Kentucky commercial domicile
- Leasing or owning property in the state
- One or more persons who perform services in Kentucky
- Have an interest in a pass-through entity that does business in the state
- Income derivation from or attributed to sources within the state, or income directly or indirectly derived from a single-member LLC doing business in the state and is a disregarded entity separate from the single member for the purpose of federal income tax
- Directing activities at local customers for the purpose of selling goods or services
These activities are not considered transacting business in the state:
- Defending, maintaining, or settling any legal proceeding
- Holding a meeting with shareholders, the board of directors, etc., regarding internal affairs of the foreign entity business
- Owning real or personal property in the state
- Having a bank account
- Obtaining or soliciting orders, by mail or through employees, if orders require acceptance outside of Kentucky before a contract is formed
- Maintaining an office for registration, transfer, or exchange of own securities, or maintaining depository or trustee for own securities
- Acquiring or creating mortgages and security interests in real, intangible, or personal property
- Debt collection or enforcement of security interests and mortgages in property securing a debt
- Use of independent contractors for sales
- Engaging in an isolated transaction that is finalized within 30 days; cannot be one in reoccurring part of repetitive transactions
- Interstate commerce transaction
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