If you’re a professional in the industries, such as medicine, law, engineering, or architecture, and wondering how to start a PLLC in Kentucky, you’ve come to the right place.
In this article, we’re going to tell you everything you need to know about opening a professional limited liability company in the state of Kentucky, as well as what steps are involved after the company’s officially formed.
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So, to the question of how to get a PLLC in Kentucky. The first step to forming a PLLC is to get a business license for each member of the company who’ll provide services to customers.
The license can be obtained by applying with the state licensing agency for a certain fee that may vary depending on your business activities and location.
In addition to this, you may need to check if any other permits are required so that you don’t face any penalties once you get started.
When your license is sorted, it’s time to name your business venture. Choosing a good company name is important because it’ll be associated with your business and service. However, you can’t choose just any name. In KY, there are a few naming rules to consider:
If you’ve picked a name that you like but you’re not ready to form a PLLC yet, the state allows you to reserve the name for a period of up to 120 days. All you need to do is fill out the Application for a Reservation form and submit it online or by mail.
The name reservation fee in KY is $15.
Next, you need to find a registered agent. Each company, regardless of its structure, must have one, so this step cannot be skipped. Who is a registered agent though?
By and large, a registered agent (also known as a resident agent or a statutory agent) is a representative of a business authorized to accept legal documents on its behalf. It’s also the person who’s responsible for informing the government about the receipt of those notes.
With regard to who can be a registered agent for your PLLC, you have quite a number of choices. In general, any individual who is older than 18 and has a registered address within the state of KY can serve as an RA.
You can also hire a professional registered agent company, which will be a smart move if you’re planning to expand your business to other states and/or need a bundle of services in one.
So, here are a few ideas for who you can hire as your RA:
Please note that in addition to a registered street address in Kentucky, the state requires that your agent for service of process (whoever you hire) be available at that address during regular working hours, which is from 8 am to 5 pm.
As mentioned, you can be your own statutory agent, too. In that case, however, you’ll not have the advantage of privacy, as your personal details, such as your name and address, will be displayed in public documents, which can be a nuisance for home-based PLLCs.
Other reasons to consider opting for a professional agency include:
The next and most important step is to file your Articles of Organization. This document serves as proof of your PLLC registration on a state level. So, it must include the correct information about your PLLC.
Here’s what you’ll need to put in the form:
This document must be submitted to the Secretary of State of Kentucky, which can be done online or by mail, for a filing fee of $40. Processing time is usually only 3-4 business days, but it may take a few more days for your certified copy to get delivered in the mail.
Once you receive the document, it actually means your PLLC has been registered, and you’ve now become the official business owner in the eyes of Kentucky’s authorities.
In Kentucky, you don’t have to draw an operating agreement, but in most cases, it’s the best thing to do.
An operating agreement, unlike the Articles of Organization, outlines the internal rules of the company, so all members know what they’re doing and what rights they have. In addition, it explains what happens if you decide to dissolve or sell part of the business.
As a result, if you ever have any disputes, you’ll have the operating agreement to back you up.
However, not only is it a good operational tool to settle disputes, but it’s also a great tool to attract investors. With a detailed agreement that clearly sets out your business strategy, you’re more likely to get noticed and get funds.
If you’re going to hire at least one employee, you’ll need to get an Employment Identification Number (EIN) - a nine-digit number assigned to business entities for tax filing purposes. This number can be obtained with the IRS by filling out a form online for no fee.
Even if you don’t plan on hiring people, it’s still better to have the EIN, as banks require it when opening a business account.
To put it simply, a professional limited liability company (shortened as PLLC) is nothing else but a limited liability company formed by a group of licensed professionals.
This means that, apart from the fact that the organizer of the business must have a license to legally operate a business, the structure and steps required to form a PLLC are the same as for an LLC.
If you’re not sure if the skills you’re going to offer your customers qualify as professional service, here’s a short list of professions that require a license in KY:
Of course, this isn’t a complete list, and if it doesn’t include your profession, it’ll be best to check with the Department of Professional Licensing or reach out to a local lawyer or a business consultant for more details.
If you’re wondering how much a PLLC costs in Kentucky, you’d be very pleased to know that prices are among the lowest in the US. At the same time, they are not fixed and may vary depending on the services you use.
In general, the PLLC cost in KY is divided into two types:
Just so that you get an idea of what the PLLC cost in KY involves, here’s a quick guide:
|Business License||May vary depending on the industry|
|Articles of Organization fee||$40|
|Registered agent fee||$0-$125|
|Name reservation fee (optional)||$15|
|Annual reports fee||$20|
|Certified copies of documents||$10 per 5 pages + $0.50 per additional page|
|Certificate of Good Standing fee (optional)||$10|
|Articles of Amendments (optional)||$40|
|Articles of Dissolution fee (optional)||$40|
If you want to operate your business under a name other than your legal name, which most franchise business owners choose to do, you may want to get yourself a fictitious name or a trade name as it’s called by registering a DBA with the Kentucky Secretary of State.
Another document that is not mandatory but might be needed at some stage is a Certificate of Good Standing. Just as its name suggests, this document proves that your company is authorized and has been properly maintained throughout its existence.
When all these steps are finally crossed off the list, you can get to work. However, before that, you may want to sort through a few more things to make sure you start on the right foot.
To make it easier for you, we’ve outlined the important steps that you need to take after officially creating a PLLC. While some of them are optional, others are definitely not to be overlooked.
One of the reasons professional specialists are looking into setting up a professional limited liability company is that it ensures personal asset protection. However, it only works if there is a distinction between your business assets and personal ones.
So, the first thing to do after you get the certified proof of your PLLC registration is to open a business account. By separating business income and personal savings, you will not only protect them from liabilities but also make it easier to keep track of taxes correctly.
For this very reason, as we’ve stated earlier, you’d need to get an EIN, as banks ask for it when opening business accounts. Another document to bring with you is the Articles of Organization.
Depending on your business activity, you may also need to hire an accountant. In fact, even if there’s not much paperwork to do, it might still be a better idea to get help from a professional to minimize errors.
You may not have too much work to do at the beginning, but there’ll likely come a time when things change, and managing your finances on top of everything else will seem overwhelming. That’s where a professional as part of your team will come to your rescue.
Besides, the duties of an accountant are much more diverse than it might seem. In addition to helping with filing reports and managing, accountants also act as business consultants, giving helpful advice on how best to spend money in terms of making more profits.
In Kentucky, you’re not required to obtain general liability insurance (even though you’d certainly benefit from having it). However, if your PLLC has at least one employee, workers’ compensation insurance is a must-have.
Basically, this insurance covers medical expenses for employees injured at work and provides wage replacements to those unable to work due to illness.
If you have any company-owned vehicles, you’ll need to get an auto policy as well.
Whether you decide to file your reports yourself or entrust the work to someone else, it’s still necessary that you understand how it works.
In Kentucky, there are two types of reports to submit:
When it comes to the former, those, as you can decipher from the name, must be submitted on a yearly basis. The due time in KY is anywhere between the beginning of January and the end of June.
Annual reports are sent to update the state about the current standing of your PLLC.
In regard to the latter, all business entities in KY are needed to report on the tax income returns. The good news is, the state taxes are flat rates, making the whole process very straightforward.
Depending on whether you choose to be taxed as a corporation or an individual, the flat rates are 6% and 5% accordingly. If the service you offer is involved in the sale, you’d also be expected to pay a flat 6% rate.