How Much Does an LLC Cost in Kentucky - Fees & Taxes in KY
The decision to open a business in the state of Kentucky is often made not only by locals but also by foreigners or residents of other states. Especially, if the business is related to the IT or eCommerce sphere, as well as any other activities that can be done remotely.
Affordable LLC fees in Kentucky are often the main reason why entrepreneurs choose this state for business registration. The same goes for fairly low corporate taxes and the registration procedure itself, which is quite simple and quick.
You can read our step-by-step guide on how to open an LLC in Kentucky right here.
How Much Does an LLC Cost in Kentucky?
You can form a domestic LLC in the state online through the Kentucky Business One Stop Portal (KYBOS) website or by mail. No matter how you apply, the filing fee is the same.
Alternatively, if you already have an LLC in another state, you can register as a foreign LLC and expand your business into Kentucky.
The main LLC fees in Kentucky are as follows:
| Service | Cost |
|---|---|
| Articles of Organization (for domestic LLCs) | $40 |
| Certificate of Authority (for foreign LLCs) | $90 |
| Annual Report (for domestic/foreign LLCs) | $15 (paid annually) |
| LLC Name Reservation | $15 |
| Assumed Name Registration | $20 |
| Certified Document Copies | $5 + $0.50 for each page above 5 pages |
| Certificate of Existence | $10 |
Online LLC registration is easier and faster. However, some business owners prefer to submit their registration documents to the Secretary of State by mail. If you're one of them, you can send your completed form to the following address:
Mailing address:
Michael Adams
Office of the Secretary of State
P.O. Box 718
Frankfort, KY 40602-0718
Office location:
Room 154, Capitol Building
700 Capital Avenue
Frankfort, KY 40601
Hours of Operation: 8:00 AM-4:30 PM ET
To answer the question of how much is an LLC in Kentucky, below, we'll get into more detail about the different types of mandatory and additional fees associated with LLC formation in Kentucky.
Kentucky LLC Online Filing Fee: $40
As you already know, the state filing fee is $40 - this is the amount you pay when filing your Articles of Organization with the Secretary of State. Once the Secretary approves your articles, the LLC is considered officially established.
The Articles of Organization include the basic information about your company including the following points:
- LLC name;
- LLC registered street and mailing address;
- Registered agent name and address;
- LLC management type (member- or manager-managed);
- Effective date, and other important information.
The easiest way to file your Statute is through the Secretary of State's website. You will simply answer a few questions and indicate the required information about your LLC on the website. After that, you will be prompted to pay the state fee using the most convenient way.
That said, you can download and print the form in PDF, fill it out, and mail it along with the $40 check, which should be made payable to the "Kentucky State Treasurer."
This way, it will take longer to process your application.
Annual LLC Fee Kentucky: Annual Report: $15
Kentucky law requires you to file an annual report with the Secretary of State each year. In this report, you will need to certify that the information about your Kentucky LLC is up to date, or, otherwise, update the information if necessary.
An annual report must be filed each year due by June 30, and the Kentucky LLC annual fee is $15.
You can fill out the report form on the Secretary of State's website or send it by mail. It's much easier to fill out the information on the website since after logging in, you will see an already partially completed document. Thus, you can simply make any necessary edits.
It's essential to timely file your annual report and pay the fee. Otherwise, you will face administrative fines and penalties. In addition, the reputation of your company will suffer. If you keep repeating such mistakes, the administrative dissolution of your LLC may follow.
LLC Fees in Kentucky: Registered Agent Fee: >$50
Kentucky requires every LLC in the state to designate and maintain a registered agent (RA). This will be your link with the state, i.e. a person (or an entity) that will receive important legal/tax documents, including service of process, on behalf of your company.
That said, your RA for the LLC can be:
- Any individual that you trust who is 18 y/o with a permanent physical address in the state (a PO box will not do);
- A legal commercial entity that is registered in the state and has a physical office in Kentucky;
- Yourself, as your own registered agent for the LLC.
An RA must be constantly available at the office address, indicated in your Articles of Organization, to receive important correspondence for your company from the state.
It may seem like the last option is the cheapest way to start an LLC in Kentucky - after all, you won't have to pay anyone for things that you can do yourself. However, it's not really a good idea since being your own RA brings an entire list of inconveniences as follows:
- Lack of privacy. Your name, address, and phone number will be publicly available on the Kentucky Secretary of State's website;
- The abundance of spam. Public contact information is often used by various agencies for marketing purposes and newsletters;
- Tough work schedule. You’ll have to be available at your office during business hours. This means no vacations, business trips, and sick leaves.
A professional RA service will provide a highly experienced agent who will always be available to receive and forward your business docs. In addition, a reliable resident agent service can also help with other things, including the following points:
- Timely reminders about deadlines for submitting annual reports and other important documents;
- Legal advice on complex business issues;
- Convenient online document storage with powerful data security;
- Other business-friendly services, including discounts and special business offers;
- The cost of RA companies’ services is often fairly low at $99 per year, on average.
Make sure the company you choose is reliable. If your RA proves unavailable to obtain documents, you run the risk of gaining a negative business reputation and eventually, your LLC may be dissolved as the one operating without an RA.
Thus, choose a reliable RA service with a good reputation and extensive experience in the field. Our 2022 rating can help you choose the best registered agent in Kentucky.
Cost to Form a Foreign LLC in Kentucky: $90
If you already have a business in another state and want to expand into Kentucky, you can register as a foreign LLC. In this case, the steps are not much different from those when registering a local LLC.
You can fill out the Certificate of Authority form online or download and print a PDF version. Once you list all the necessary information, you can mail it in to the Secretary of State.
Note that the Certificate of Authority paper copy is slightly different from the online version. Also, the cost of registering as a foreign LLC in Kentucky is $90. Other costs, including Kentucky LLC annual fees, are the same for local and foreign businesses.
Cost to Form a PLLC in Kentucky: $40
A professional LLC (PLLC) is a type of business entity for businesses that want to provide professional services in the state. To open a PLLC, depending on the service(s) you plan to provide, you will need to obtain a professional business license.
Just like regular LLCs, PLLCs protect their members/investors from claims of creditors and limit their personal liability.
Here's a list of professions that can form a Kentucky PLLC:
- Attorneys;
- Physicians;
- Osteopaths;
- Optometrists;
- Orthopedists;
- Chiropractors;
- Dentists;
- Nurses;
- Pharmacists;
- Psychologists;
- Occupational therapists;
- Veterinarians;
- Engineers;
- Architects;
- Landscape architects;
- Chartered accountants;
- Physical therapists;
Thus, to open a PLLC, you will need:
- Have a state professional license for each member/professional of your PLLC;
- Check with the Kentucky One Stop Business Portal, as well as with state, county and/or local licensing board to understand if you need pre-approval;
- If yes, obtain the document;
- Submit the PLLC registration paperwork to the Kentucky Secretary of State.
The PLLC registration form is slightly different from the one for a regular LLC, as you will need to provide additional information related to the type of business you have chosen.
However, the cost of starting a PLLC in Kentucky is also $40. Also, it takes 3-4 business days for the Secretary to process your Kentucky PLLC formation documents.
Kentucky LLC Taxes
So, you've opened your Kentucky business and now it's time to consider your taxes. In addition to the annual report filing fee, there are three main taxes you will need to pay to the Kentucky Department of Revenue:
- Income tax;
- Sales tax;
- Franchise tax (also known as the Kentucky Limited Liability Entity Tax).
These taxes vary slightly from city to city and county to county.
KY Income Tax: 5%
Kentucky income tax (5% flat rate) must be paid on any income you pay yourself, which flows through to your personal tax return. The same goes for your LLC's employees. You'll also be able to apply regular allowances and deductions.
Note that the tax rate in some cities can be anywhere from 2% to 6%, depending on the total amount of taxable income.
KY Sales Tax: 6%
If you sell physical goods (e.g furniture elements, cars, electronics, kitchen or other appliances, books, raw materials, and so on) or provide services in Kentucky, you must pay sales tax to the Kentucky Department of Revenue.
The flat tax rate is 6%. Note that there are no local sales taxes in Kentucky.
KY Franchise Tax: >$175
All LLC members are required to pay franchise tax (also known as the Kentucky Limited Liability Entity Tax (LLET) or a privilege tax). You can calculate the tax on your own. For example, by using the lesser of $0.095/$100 of Kentucky gross receipts or $0.75/$100 of Kentucky gross profits. No matter which calculation method you choose, as an LLC business owner, you are required to pay a minimum LLET of $175.
KY Federal Self-Employment and Income Tax
All LLC members and managers who take profits out of the company must pay estimated self-employment and income tax in Kentucky throughout the year. This depends on the amount of profit and income you expect to make.
The current self-employment tax rate is 15.3%.
You can find more information about estimated taxes on the IRS website. Also, make sure your consult your local accountant.
Kentucky Business License Renewal Fee
The Kentucky Secretary of State does not require a general business license from LLCs operating in the state. However, depending on your business industry, your LLC's business location, and your business type, you may still need certain types of business licenses for city, county.
Certain licenses or certificates can only be issued by the federal government. For example, if you own a restaurant in Louisville, you will need a health permit or a business license to conduct business in the city.
That said, certain fees can be charged to obtain a:
- Business license;
- Permit;
- Certificate.
Also, be sure to register with the state Department of Revenue if you plan to hire employees or if your business is taxable.
Other LLC Filing Costs
In the process of calculating how much a Kentucky LLC will cost for your business, you also need to consider some additional fees. Even though they are not mandatory, it's still worth to consider them in advance if you won't everything to go smooth.
LLC Name Reservation: $15
You can reserve your LLC name in advance so that no other existing busines takes it from you. This is more likely if you've already thought of a suitable (and available) name but are still not ready to open your LLC.
In such a case, you can simply download and fill out a Reservation or Renewal of Reserved Name (Form RES) and pay a $15 filing fee. This is how you can reserve your chosen business name for up to 120 days.
Assumed Name (DBA): $20
If you need an alternative name for your Kentucky LLC (e.g. for marketing purposes), you can create and register an assumed name (also known as a "doing business as" (DBA) name) on the Secretary of State's website. For this, you will need to:
- Complete and file a Certificate of Assumed Name (Form ASN);
- Pay a $20 filing fee to the Division of Business Filings.
Certified Document Copies: $5+
If you need certified copies of your registration documents, you can order them through the Secretary of State's website or download, fill out, and submit this form in PDF.
The filing fee is $5 + $0.50 for each page above 5 pages.
Certificate of Existence: $10
A Certificate of Existence (also known as a Certificate of Good Standing) may be required by a bank or lending institution when you need a loan from a bank or a separate bank account.
You can order your certificate copy through the Secretary of State's website or download this form and send it in to the following address:
Division of Business Filings
P.O. Box 718
Frankfort, KY 40602
Phone: (502) 564-3490
Fax: (502) 564-5687
Email: www.sos.ky.gov
The filing fee is $10.