LLC Kentucky: Everything You Need to Know
If you want to form an LLC in Kentucky, then you will want to ensure that you are aware of how an LLC operates. 4 min read
If you want to form an LLC in Kentucky, then you will want to ensure that you are aware of how an LLC operates. An LLC, also referred to as a Limited Liability Company, is a hybrid business structure that shares common characteristics between a corporation and sole proprietorship.
It is similar to a corporation in that LLC members are shielded from personal liability. This means that members’ personal assets cannot be used to collect any debts or obligations of the LLC. The LLC is also similar to a sole proprietorship in that the taxes pass through to the owners, which means that the LLC is not taxed at the federal level. Portions of the LLC profits are filed in member’s personal tax returns, to the extent of capital they input into the LLC.
Choosing a Business Name
Establishing a Kentucky LLC is a straightforward process that can be done simply by ensuring that you are aware of all of the steps necessary in order to form your LLC.
First and foremost, you will need to choose a business name for your LLC. There are certain requirements to what terms can/cannot be used in your name. Most importantly, you must use a name that is unique and available for use. In order to know if your business name is available, you will need to conduct a business entity search on the Kentucky Secretary of State website.
Some requirements for naming your business include:
• Your name must be in only English letters or Arabic/Roman numerals
• Your business name must contain the LLC designator, i.e. L.L.C., LLC, Limited Liability Co., Limited Liability Company, etc.
• You cannot use terms like Federal, FBI, Secret Service, Treasury, etc. as these are prohibited names which would imply that you operate as a federal or state agency
• You cannot use terms like Doctor, Lawyer, or Dentist unless you are licensed in this field.
After you’ve conducted your business name search, and identified that your name is in fact available, you can reserve that name for up to 120 days by filing a form and paying a fee of $15. If, however, you are ready to move to the next step in establishing your LLC, then you need not reserve your name.
Next, you’ll want to file the Articles of Organization. This must be filed with the Division of Business Filings for the Office of the Secretary of State in Kentucky. There is a form that can be found on its website, which is two pages in length.
The type of information to be included on this form includes your business name and mailing address, the LLCs principal place of business, your registered agent name and address, and member names/addresses. Also required is whether your business will be member or manager-managed. If your LLC is member-managed, that simply means that you and the other members (also referred to as owners) will oversee the daily operations of the business. If, however, you all decide to have a designated manager to do this, then you will identify the manager of the LLC.
With regard to the registered agent designation, there are certain requirements when choosing a registered agent for your Kentucky LLC. Your registered agent will act as a third party who will collect all important legal documents pertaining to your LLC. This includes potential lawsuits that your LLC might encounter. The agent must be located in Kentucky, at the registered office that you indicate on the Articles of Organization. A P.O. Box cannot be used. The registered agent must be a resident of Kentucky and must be authorized to transact business in the state. Your LLC itself cannot be used as the agent. The agent must sign the document, or at the very least, provide his or her written consent to act as the agent.
Once you are ready to file the Articles of Organization, you will be required to pay a $40 filing fee. You can file either online or by mail.
While this is not required, it is very beneficial and can act as the legal document if potential problems arise with your LLC. Particularly, if the members cannot agree on something, the Operating Agreement will be the go-to document when determining decisions to be made.
You’ll also need to obtain an employer identification number (EIN) from the IRS. This number is used to identify your business.
Another requirement is to open a business bank account, along with a company credit card, and also apply for business licenses and permits depending on the type of industry you operate in.
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