Kentucky Small Business Statistics

With a population of over 4.52 million, Kentucky ranks 25th among all other states. The Bluegrass State has an area of 40,408 sq. miles (104,659 sq km) and is the 37th largest state by area rank.

Small businesses in Kentucky essentially affect the economy of the state. After all, they represent 99.3% (360,756 small businesses) of all businesses in the state and employ 43.6% of all employees (716,731 small business employees) in the private-sector labor force.

This article provides the latest information on available statistics about small businesses in the state.

Quick Small Business Statistics on Kentucky

Kentucky can become an ideal location for your small business. Especially, if you're looking for highly skilled workforce companies and great logistical benefits. In other words, if you want to be in the middle of international commerce, this state is for you.

The state's government has worked really hard to create a suitable business climate that not only supports startups and existing small businesses but also allows them to thrive by turning their ideas into reality.

• According to CNBC, Kentucky ranks 6th in the nation for Cost of Doing Business;
• The cost of living in the state is 10% lower than the U.S. average. Housing costs alone are up to 30% lower;
• Kentucky has 5 commercial airports and a few dozen regional airports, 19 interstate highways, and parkways, 3 international air shipping hubs (operated by DHL, Amazon Prime, and UPS); 2,800 miles of mainline rail, 1,100 miles of commercial waterways, and 7 public river ports;
• Kentucky has the lowest industrial power costs among states east of the Mississippi River;
• The state is the #1 in vehicle production in the U.S. per capita. The state also takes the leading position in FDI jobs by percentage and whiskey export;
• In 2021, the state trained more than 95,000 people and supported more than 5,000 companies;
• In 2021, there were 360,756 small businesses in Kentucky, which is 99.3% of all Kentucky businesses;
• In 2021, there were 716,731 small business employees in the state, which is 43.6% of Kentucky employees;
• Kentucky is home to 7 of the Largest Fortune 25 Global corporations, 14 of the Largest Fortune 25 U.S. Corporations, and over 400 international companies.

Kentucky Employment Statistics: Key Takeaways

Backed by a competitive tax structure and the lowest electricity rates in the industrial sector, Kentucky is one of the most affordable states for small businesses.

Located at the geographic center of the eastern United States, the state is a suitable place to ship your products across the country or all around the world.

• Kentucky added 26,700 net payroll jobs. The unemployment rate rose from 3.7% to 3.8% in August 2022;
• Kentucky added 58,400 (3.1%) payroll jobs over the past 12 months. The unemployment rate fell by 1% from 4.8%;
• Kentucky’s private sector added 11,700 (0.7%) payroll jobs in August 2022. Over the past 12 months, 60,300 (3.8%) private-sector payroll jobs were added. The payroll employment of the state has increased in 10 of the past 12 months;
• In the household survey, the number of unemployed rose by 1,029 in August 2022. Employment rose by 40,552 over 2021;
• Kentucky’s labor force participation rate fell from 58.1% to 58% in August. Since the end of 2021, the labor force participation rate has risen by 0.2%;
• Kentucky added 26,700 (1.4%) net payroll jobs during August 2022 (seasonally adjusted);
• Government (2,800) and Professional & Business Services (2,200) were the sectors with the best results in payroll employment in August 2022 (seasonally adjusted);
• In the same month, Trade, Transportation, & Utilities (-600), and Construction (-700) were the sectors with the poorest performance;
• Over the last twelve months, the sectors with the best performance were Professional and Business Services (17,200) and Leisure and Hospitality (10,500);
• The sectors with the poorest performance were Financial Activities (300) and Government (-3,900).

KY Labor Force Statistics: Key Takeaways

• In August 2022, Kentucky's rate of labor force participation dropped to 58%. In July 2022, the rate was 58.1%, which results in the state ranking 45th among all other states. The rate rose by 0.2% since August 2021;
• As for Kentucky's employment-to-population ratio (16-year-olds and older counted as employed), in August 2022 the ratio dropped to 55.8% (55.9% in July 2022). At such percentage, Kentucky is 45th among state employment-to-population ratios of all other states.

Kentucky Small Business Demographics

• 5.2% of workers in Kentucky are military veterans who own 7.7% of small businesses in the state;
• 11.5% of workers and 7.7% of small business owners in Kentucky are ethnic minorities;
• There are more than 1,100 minority-owned businesses in the state;
• 47.9% of workers and 40.4% of small business owners in Kentucky are women.

Top 10 Kentucky's Largest Industries by Revenue

According to IBISWorld, Health & Medical Insurance, Automobile Wholesaling, and Hospitals are the top 3 largest industries by revenue in Kentucky. These industries have managed to generate $31.4b, $16.7b, and $16.3b respectively in 2022.

The rest of the industries included in the top 10 can be seen in the list below:

• Health & Medical Insurance - $31.4B;
• Automobile Wholesaling - $16.7B;
• Hospitals - $16.3B;
• New Car Dealers - $12.7B;
• Wholesale Trade Agents and Brokers - $11.5B;
• Warehouse Clubs & Supercenters - $10.3B;
• Gas Stations with Convenience Stores - $9.8B;
• Gasoline & Petroleum Bulk Stations - $9.7B;
• SUV & Light Truck Manufacturing - $9.6B;
• Commercial Banking - $9.1B.

Top 10 Largest Companies in KY by Employment

According to Zippia, Yum! Brands is the biggest company headquartered in the state with 90,000 current employees. A list of the top 10 biggest companies in Kentucky looks as follows:

Detailed List of The 10 Biggest Companies in Kentucky

According to Statista, in 2022, the fastest-growing private company in the state is Guardian Baseball (Louisville). Compared to 2021, the company has grown by 2,74%. Following Guardian Baseball, was eBlu Solutions, a software company that grew 2,77% since the previous year.

Kentucky's Existing Major Industries

Small businesses in Kentucky can choose any suitable option from the following major industries, as each of them has a bright future and rich heritage in the state:

• AgriTech. Kentucky farmers made $7B in cash receipts in 2022, with poultry and eggs being the leading agricultural product of the state. Moreover, 75,966 farms, 3M acres, make up more than 50% of Kentucky's total land acreage;
• Automotive. Kentucky has 520+ automotive-related companies, which employ over 100,000 workers;
• Aerospace. According to the University of Kentucky, the state is home to 79 aerospace-related employers that employ 20,000+ workers;
• Primary Metals. According to Team Kentucky, the state offers a large number of metal-related facilities, primarily aluminum and steel. Namely, more than 185 aluminum-related facilities, with over 20,000 full-time employed residents of the state, and 43 steel & iron production companies employing approximately 6,400 full-time workers;
• Food & Beverage. The state is home to 350+ Food & Beverage facilities, with over 52,000 employees in Kentucky's Food & Beverage related industries. 95% of the world's Bourbon is produced in Kentucky;​
• Logistics/Distribution. Kentucky is home to 540+ logistics & distribution facilities that employ around 75,000 workers;
• Manufacturing. There are 4,500+ manufacturing-related facilities in Kentucky, with 260,000 employees working in the manufacturing industry in the state;
• Chemicals. The state accommodates 210+ chemical manufacturing companies that employ 15,000+ workers;
• Plastics & Rubber. There are over 230 plastics & rubber manufacturers in the state, with 28,000+ Kentuckians working full-time in the sector;
• Healthcare. More than 30,000 people work for healthcare-related companies in Kentucky. In total, the state is home to 175+ healthcare-related companies.

Kentucky Economy at a Glance

According to the U.S. Bureau of Labor Statistics, the economic status of the state from April 2022 to September 2022 looks as represented in the table below. 

*P = Preliminary

KY Quick Import and Export Statistics

According to the Observatory of Economic Complexity (OEC), Kentucky exported $3.19B and imported $6.3B in August 2022. This results in a negative trade balance of $3.11B.

However, compared to the previous year (between August 2021 and August 2022), the exports of the state have increased by $658M (26%), namely from $2.53B to $3.19B. Kentucky's imports decreased by $-111M (-1.74%), from $6.41B to $6.3B.

• Kentucky's trade exports/imports in August 2022 - $3.19B/$6.3B;
• Kentucky's main country destinations in August 2022 - Canada/China;
• Kentucky's main product exports/imports in August 2022 - Other Aircraft Parts / Immunological Products & Packings for Retail Sale ($949M/$809M).

Quick Trade & Destination Statistics

According to the resource, the major exports of the state in August 2022 were:

• Aircraft Parts ($949M);
• Delivery Trucks ($218M);
• Cars ($191M);
• Vaccines, blood, antisera, toxins, and cultures ($163M);
• Laboratory Reagents ($124M). 

The Bluegrass State mainly exported to the following countries:

• Canada ($851M);
• The United Kingdom ($318M);
• Mexico ($306M);
• Brazil ($211M);
• China ($206M). 

As for major imports in August 2022, the situation was as follows:

• China ($864M);
• Japan ($808M);
• Mexico ($686M);
• Canada ($477M);
• Ireland ($393M).

The overall increase in the state's annual exports was reasoned primarily by an increase in exports to the following countries:

• China ($81.1M); 
• Saudi Arabia ($17.3M); 
• Sweden ($13.6M). 

The increase in Kentucky's annual exports was also explained by the product exports increase in the following industries:

• Office Machine Parts ($24M);
• Cars ($21.8M);
• Laboratory Reagents ($21.2M).

The major imports of the state in August 2022 were as follows:

• Vaccines, Blood, Antisera, Toxins, and Cultures ($1.04B);
• Packaged Medicaments ($764M);
• Commodities not elsewhere specified ($376M);
• Video and Card Games ($304M);
• Computers ($289M).

The decrease in Kentucky's annual imports was due to a decrease in imports from the following countries:

• Mexico ($-194M);
• Netherlands ($-86.4M);
• France ($-84.4M).

Additionally, there was a product import decrease in the following areas:

• Gas Turbines ($-143M);
• Computers ($-60.5M);
• Medical Instruments ($-36.7M).

Kentucky LLC Formation Fees

Due to the limited personal liability of the owner, much less paperwork (compared to corporations), and great tax advantages, an LLC is the most popular business structure in the United States.

To properly open a limited liability company in Kentucky, before you complete and file your Articles of Organization with the Secretary of State, make sure you check our list of the main fees and documents to consider:

• You can file your Articles of Organization (the main registration document with basic information about your business) with the Secretary of State by mail or online. The filing fee is $40 for domestic LLCs and $90 for foreign LLCs (to register as a foreign LLC, you will need need to file the Certificate of Authority);
• Expedited processing is available for $50;
• To keep the state of Kentucky updated about several key facts regarding your business, you will need to file your annual report each year. The fee is $15 (must be paid each year by the LLC according to the state's annual report renewal requirements);
• If you would like to register a different (alternative) name for your LLC (e.g. for promotion or marketing purposes), you can create and file a "doing business as" (DBA) name with the Secretary of State. This will cost you $20;
• The average cost of registered agent services in Kentucky varies from $50 to $150 per year ($100/year on average);
• Kentucky does not require a general business license. However, depending on the industry of your LLC, its location, and the type of business you run, the cost of specific business licenses for LLCs in Kentucky can vary from $100 to 500$;
• In Kentucky, to reserve an available name for your LLC, you will need to pay a name reservation fee of $15 (the name can be reserved for up to 120 days);
• To obtain certified copies of your registration documents, you will need to pay $5 (+ $0.50 for each page above 5 pages) to the Kentucky Secretary of State;
• To get your Certificate of Existence, you will need to pay a $10 fee to the Secretary of State;
• As pay-through entities, Kentucky LLCs must pay the Limited Liability Entity Tax (LLET). Thus, if you make less than $3M annually, the minimum LLET tax for your business will be $175. If you gross more than that sum per year, the tax is the lesser payment between $0.095/$100 of gross receipts or $0.75/$100 of gross profits;
• The average cost of setting up an LLC in Kentucky is from $150 to $180.

For more information on all other fees for LLCs in the state, visit this page.

If you’re planning to open a business entity in Kentucky, here’s a list of useful links that can help you find the necessary information.

Sources:

1. The Observatory of Economic Complexity
2. Team Kentucky
3. University of Kentucky
4. Joint Economic Committee
5. Zippia
6. IBISWorld
7. 2021 Small Business Profile on Kentucky
8. U.S. Bureau of Labor Statistics
9. Incorporation Guru
10. Statista