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Welcome to the world of starting a business in Kentucky! If you’re thinking about creating a Limited Liability Company (LLC), you’re on the right path. But before you dive in, it’s important to know about the costs involved. These are the fees you need to pay when you apply and the money you’ll need to keep your LLC running.
This guide will explain all the costs you might have when you’re forming an LLC in Kentucky. And if you want some extra help, LLC services like ZenBusiness can assist you with the paperwork and make sure everything is done correctly.
With the right information and help, you’ll be all set to manage the expenses and details of making your LLC in Kentucky.
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What Is the Cost of Forming an LLC in Kentucky?
The primary cost to form an LLC in Kentucky is the $40 fee required to submit your LLC’s Articles of Organization online to the Kentucky Secretary of State.
Here’s the LLC Cost Guide for all US States:
Kentucky Foreign LLC Formation Costs
In case you already possess an LLC that’s officially registered in a different state and you’re considering broadening your business presence in Kentucky, you must enroll your LLC as a foreign LLC within the state.
The expense associated with registering a foreign LLC in Kentucky is $90. To achieve this, you’ll need to complete the process by submitting a Certificate of Authority (Form FBE).
Annual Cost for LLCs in Kentucky
In establishing a Limited Liability Company (LLC) in Kentucky, comprehending the ongoing financial obligations linked to LLC maintenance is crucial. These continuing expenses encompass the following key components:
- First, the Annual Report Fee necessitates a $15 payment for the submission of the annual report to the Secretary of State.
- Secondly, the Assumed Name Renewal obliges those utilizing an assumed name (DBA) in Kentucky to renew it every five years at a cost of $20.
- Lastly, the registered agent Fee, wherein each Kentucky LLC must possess a registered agent; although self-representation is an option, numerous enterprises opt to engage a professional service, incurring annual charges typically ranging from $100 to $300.
How Much Does It Cost to Start an LLC in Kentucky With the Best LLC Service?
ZenBusiness LLC Formation Cost
The initial expense for filing an LLC in Kentucky starts at $40 and can vary depending on specific factors. To process times, the standard processing period spans 2 to 3 weeks. However, there’s an option to accelerate this procedure by selecting expedited processing, which shortens the timeline to 4 to 6 days at an additional cost of $50. For even more immediate processing, a rush option is available, guaranteeing results within 1 to 2 days for a fee of $100.
ZenBusiness provides a range of three distinct pricing plans tailored to meet various requirements for business formation services: Starter, Pro, and Premium.
- Starter plan: This is an ideal selection for fundamental business formation necessities and carries a price of $0 alongside applicable state fees.
- Pro plan: Stepping up, this plan encompasses added functionalities such as expedited filing and registered agent services, available at a cost of $199 in addition to state fees.
- Premium plan: For a comprehensive offering, this encompasses all aspects of the Pro plan and introduces the advantage of unlimited Worry-Free Compliance, a service designed to assist businesses in adhering to state and federal regulations seamlessly. The Premium plan is attainable at a rate of $349, along with state fees.
As a further incentive, ZenBusiness extends a complimentary year of Worry-Free Compliance with the acquisition of the pricing plans.
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Additional Costs When Starting an LLC in Kentucky
Kentucky LLC Name Costs
The expense for a business name in Kentucky is $0. It doesn’t incur any cost to name your Limited Liability Company. Approval of your Kentucky LLC Name is included without any additional charges upon the approval of your Articles of Organization filing by the state.
You might have come across information online suggesting that LLC Name Reservations are obligatory. However, this isn’t the case in most states. Forming an LLC in most states rarely necessitates a Name Reservation.
If you wish to reserve your LLC name before forming the company, you can do so by submitting a Reservation or Renewal of Reserved Name (Form RES) and paying a filing fee of $15. This allows you to hold the name for up to 120 days before the LLC formation.
Kentucky Registered Agent Costs
The Kentucky registered agent Fee can either be $0 or $125 per year. When establishing an LLC in Kentucky, it’s mandatory to select a registered agent.
A Kentucky registered agent, whether an individual or a company, serves as the recipient of legal documents and official state communications regarding your LLC. The registered agent should possess a physical address within the state and be accessible during standard business hours.
Opting to act as your LLC’s own registered agent or designating someone you’re acquainted with incurs no extra charges.
Alternatively, you can choose to enlist the services of a registered agent provider. This choice comes with a price range of $100 to $300 annually. Nonetheless, these service providers offer supplementary beneficial business services and aid in safeguarding your confidentiality.
Engaging a registered agent service is advisable if:
- You lack a physical address in Kentucky (state regulations mandate registered agents to possess an address within the state).
- You wish to shield your address from public exposure (depending on the chosen company, their address could potentially be utilized to maintain your address’s confidentiality).
Kentucky Operating Agreement Costs
A Kentucky LLC Operating Agreement serves as a written contract among the LLC Members. This agreement contains detailed information about ownership, management practices of the LLC, and the distribution method for profits.
For both Single-Member and Multi-Member LLCs, it’s recommended to create an Operating Agreement, store it with their business records, and provide a copy to each Member.
While many websites typically require payment ranging from $50 to $200 for generating LLC Operating Agreements, you can save money by composing your own Operating Agreement at no cost.
Kentucky EIN Cost
An EIN Number, alternatively referred to as an Employer Identification Number (EIN) or Federal Employer Identification Number (FEIN), serves various purposes, such as facilitating income tax filing, enabling the establishment of an LLC bank account, and allowing employee recruitment when necessary. Despite some websites charging fees for acquiring an LLC’s EIN, the process can be conducted without cost.
The Internal Revenue Service (IRS) provides the option to obtain an EIN for your LLC for free, with a quick and simple online filing that takes just a few minutes to complete.
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Kentucky LLC Taxes
The range of Kentucky LLC taxes that proprietors are obligated to cover results in a significant annual expense, encompassing a variety of payments. These comprise:
Federal Income Taxes
The Internal Revenue Service (IRS) offers various tax treatment options for LLCs.
Single-Member LLC Taxes (Default Status)
The IRS designates Single-Member LLCs as Disregarded Entities, meaning the LLC doesn’t file its own federal income tax return. Instead, the owner files the return and pays the taxes. The taxation method depends on the owner: individual owners face taxation like a Sole Proprietorship, while ownership by a company leads to taxation as a branch/division.
Multi-Member LLC Taxes (Default Status)
For LLCs with multiple owners, the IRS taxes them as Partnerships. The LLC files a 1065 Partnership Return and issues Schedule K-1 to owners, reporting their share of profits. Owners pay income taxes individually based on their K-1 income on Form 1040.
Husband and Wife LLC Taxes
In specific states, a married couple operating an LLC has the option to elect for tax filing as a Single-Member LLC (Qualified Joint Venture) as opposed to being treated as a Multi-Member LLC. This election is available in community property states such as Texas; however, it’s not applicable in non-community property states like Kentucky.
Electing Corporate Taxation
Apart from default statuses, an LLC can choose corporate taxation. Two options are available: S-Corporation and C-Corporation.
- Filing Form 2553 leads to S-Corporation status, reducing self-employment taxes
- Filing Form 8832 brings C-Corporation status, beneficial for larger employers’ healthcare benefits
Kentucky State Income Tax
Single-member LLCs in Kentucky have the owner report the LLC’s profits/losses in their personal state-level return. Multi-Member LLCs may file a state-level Partnership return while owners include profits/losses in their personal state-level return.
Kentucky Limited Liability Entity Tax
All Kentucky LLCs pay the Limited Liability Entity Tax (LLET) based on gross receipts and profits. It’s either a minimum of $175 or the state’s rate formula result.
Local Income Tax for Kentucky LLCs
LLCs or owners might need to file/pay income taxes locally (city, county, etc.). Hiring an accountant is recommended.
Kentucky Sales Tax
Selling products in Kentucky may require collecting sales tax with a Seller’s Permit. It’s obtained from the Kentucky Department of Revenue (DOR).
Kentucky LLC Payroll Taxes
LLCs with employees must handle payroll taxes, including federal/state income tax withholding, Social Security tax, Medicare tax, unemployment taxes, and deductions. Setting up payroll and proper filing is crucial to avoid penalties, often requiring expert assistance.
Kentucky LLC Cost FAQs
How Much Does It Cost to Open an LLC in Kentucky?
Initiating a Kentucky LLC incurs a $40 commencement fee for submitting the LLC Articles of Organization, a singular expense. Depending on the industry and location of the LLC, obtaining a business license might be necessary, with differing costs for local business permits.
How Much Does an LLC in Kentucky Cost Per Year?
Every year, all Kentucky LLCs are required to pay $15 for their Annual Reports, which are submitted to the Secretary of State, constituting the sole mandatory state-based annual filing fees essential to maintain the LLC’s active status.
If a registered agent service was engaged, an annual subscription fee of approximately $125 is customary. Depending on the LLC’s industry and location, a business license might be obligatory; it’s advised to inquire with the local municipality regarding potential annual renewal charges associated with the business permit.
Should I Hire an LLC Formation Service?
Engaging a professional service firm for establishing your Kentucky LLC isn’t obligatory; you have the freedom to manage the LLC formation personally. When self-handling the process, only the filing charges apply. Nevertheless, for efficiency and accurate filing, enlisting the services of a ZenBusiness is suggested.
They provide exceptional customer support and offer a complimentary first-year registered agent service, along with additional options like an Operating Agreement and assistance with Annual Report filing.
Conclusion
In conclusion, establishing an LLC in Kentucky involves assessing the associated costs alongside the state’s business-friendly regulations and potential benefits. These costs encompass filing fees, registered agent charges, and potential legal or consultancy expenses. LLC service providers like ZenBusiness offer streamlined formation processes through various packages.
Entrepreneurs should carefully weigh these costs against Kentucky’s advantageous legal framework and market reputation, ensuring alignment with their business goals and financial capabilities before proceeding with LLC formation.
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- How to Register a Business in Kentucky
- How to Register a Business Name in Kentucky
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About the author
Dr. Gabriel O'Neill, Esq., a distinguished legal scholar with a business law degree and a Doctor of Juridical Science, is a leading expert in business registration and diverse business departments. Renowned for his academic excellence and practical insights, Dr. O'Neill guides businesses through legal complexities, offering invaluable expertise in compliance, corporate governance, and registration processes.
As an accomplished author, his forthcoming book is anticipated to be a comprehensive guide for navigating the dynamic intersection of law and business, providing clarity and practical wisdom for entrepreneurs and legal professionals alike. With a commitment to legal excellence, Dr. Gabriel O'Neill, Esq., is a trusted authority dedicated to empowering businesses within the ever-evolving legal landscape.