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Starting a business in Kentucky, especially a Limited Liability Company (LLC), is a great choice. Before starting, it’s essential to understand the costs involved. These include application fees and ongoing expenses to maintain your LLC.
This guide will cover all potential costs for setting up an LLC in Kentucky. For additional support, services like Northwest Registered Agent are available to help with the paperwork and ensure accuracy.
Knowing the right information and getting help when needed will prepare you to handle the expenses and processes of establishing your LLC in Kentucky.
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What Is the Cost of Forming an LLC in Kentucky?
The main expense for setting up an LLC in Kentucky is the $40 charge to file your LLC’s Articles of Organization online with the Kentucky Secretary of State.
Kentucky Foreign LLC Formation Costs
If you own an LLC registered in another state and plan to expand your business to Kentucky, you need to register your LLC as a foreign LLC in the state.
The cost to register a foreign LLC in Kentucky is $90. This involves submitting a Certificate of Authority (Form FBE).
Annual Cost for LLCs in Kentucky
When setting up a Limited Liability Company (LLC) in Kentucky, understanding the continuous costs related to maintaining the LLC is essential. These ongoing expenses include several important parts:
- The Annual Report Fee requires a $15 payment for sending the annual report to the Secretary of State.
- The Assumed Name Renewal requires businesses using a DBA in Kentucky to renew it every five years for $20.
- The Registered Agent Fee means every Kentucky LLC needs a registered agent. While self-representation is allowed, many companies hire a professional service, costing between $100 and $300 annually.
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How Much Does It Cost to Start an LLC in Kentucky With the Best LLC Service?
Northwest Registered Agent LLC Formation Cost
The starting cost to file an LLC in Kentucky is $40, which may change based on certain conditions. Normally, it takes 2 to 3 weeks to process. But you can speed up this process to 4 to 6 days for an extra $50. For the quickest service, within 1 to 2 days, there’s a rush option available for $100.
The Northwest Registered Agent Lite LLC plan offers LLC formation services with the standard processing time at only the state filing cost.
The Essential LLC plan is priced at $199 plus state fees and includes LLC formation with faster processing, yearly compliance support, and an operating agreement. To keep these services, Northwest Registered Agent asks for an annual fee of $199.
The Elite LLC plan, the top-tier option, costs $249 in addition to state fees. It covers everything in the Essential plan plus more business tools, like a free business domain for one year, website creation tools, an online store, logos, digital and physical business cards, and social media posts. An annual fee of $249 is required to maintain these additional services with Northwest Registered Agent.
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Additional Costs When Starting an LLC in Kentucky
Kentucky LLC Name Costs
In Kentucky, choosing a business name for your Limited Liability Company comes at no cost. When the state approves your Articles of Organization, it also approves your LLC name without extra fees.
Some online sources may claim you must reserve an LLC Name, but this isn’t required in most states. Normally, there’s no need to reserve a name to start an LLC.
If you decide to reserve your LLC name before setting up your company, you can fill out a Reservation or Renewal of Reserved Name (Form RES) with a $15 fee. This reservation keeps the name for your LLC available for up to 120 days before you officially form your LLC.
Kentucky Registered Agent Costs
The annual fee for a Kentucky Registered Agent ranges from $0 to $125. Having a Registered Agent is mandatory for LLC formation in Kentucky.
A Registered Agent in Kentucky can be either an individual or a business entity that agrees to accept legal documents and official state communications on behalf of your LLC. They’re required to have a physical address in Kentucky and must be available during standard business hours.
Choosing yourself or someone you know as your Registered Agent incurs no cost.
Opting for a professional Registered Agent service may cost between $100 and $300 annually. These services manage your official paperwork, provide additional business services, and help maintain your privacy.
It’s recommended to use a Registered Agent service if:
- If you don’t have an address in Kentucky, state rules require Registered Agents to have one
- If keeping your address private is important to you, some companies can use their address to keep your secret
Kentucky Operating Agreement Costs
A Kentucky LLC Operating Agreement is a document that outlines how the LLC will be run, including details on ownership, management, and how profits will be shared among members. It’s advised for both single-member and multi-member LLCs to draft an Operating Agreement, keep it with their business documents, and give every member a copy.
Although numerous websites charge between $50 and $200 to create LLC Operating Agreements, you can write your own Operating Agreement without spending any money.
Kentucky EIN Cost
An Employer Identification Number (EIN), also known as a Federal Employer Identification Number (FEIN), fulfills several essential functions. It’s used for filing income taxes, opening a bank account for your LLC, and hiring employees when needed. While some online services may charge a fee to secure an EIN for your LLC, it’s actually available for free.
You can easily obtain an EIN directly from the Internal Revenue Service (IRS) at no cost. The process is simple, can be done online, and takes just a few minutes to complete.
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Kentucky LLC Taxes
Owners of Kentucky LLCs must pay several taxes each year, which add up to a considerable amount. These taxes include:
Federal Income Taxes
The Internal Revenue Service (IRS) provides different tax treatment options for LLCs.
Single-Member LLC Taxes (Default Status)
Single-member LLCs are considered disregarded entities by the IRS, meaning they don’t submit their own federal income tax returns independently. Instead, the responsibility for filing and paying taxes falls to the owner. When owned by an individual, the LLC is taxed similarly to a Sole Proprietorship. If a corporation owns an LLC, it’s taxed as a division or branch of that corporation.
Multi-Member LLC Taxes (Default Status)
When an LLC is owned by multiple individuals, the IRS treats it as a Partnership for tax purposes. This means that the LLC must submit a Form 1065, known as the Partnership Return, and distribute a Schedule K-1 to each owner.
The Schedule K-1 outlines each owner’s share of the earnings. Subsequently, owners are required to pay taxes on their respective portions of the profits by reporting this income on their personal tax returns using Form 1040.
Husband and Wife LLC Taxes
In certain states, married couples running an LLC together can treat their business for tax purposes as a Single-Member LLC (the Qualified Joint Venture) in place of a Multi-Member LLC. This condition is available in community property states, such as Texas, but not in states that don’t adhere to community property laws, like Kentucky.
Electing Corporate Taxation
In addition to their standard tax classifications, LLCs can opt for corporate tax treatment, with two possibilities: as an S-Corporation or a C-Corporation.
- Submitting Form 2553 grants S-Corporation status, which lowers taxes for the self-employed
- Sending in Form 8832 achieves C-Corporation status, which is good for big companies’ health benefits
Kentucky State Income Tax
In Kentucky, individuals who own single-member LLCs are required to report the profits or losses of their LLC on their personal state tax returns. For those owning Multi-Member LLCs, there may be a need to submit a state Partnership tax return. Each owner must declare a portion of the LLC’s profits or losses on their own state tax returns.
Kentucky Limited Liability Entity Tax
Every LLC in Kentucky is subject to the Limited Liability Entity Tax (LLET), calculated on their gross receipts and profits. The tax is at least $175, or an amount determined by the state’s rate formula.
Local Income Tax for Kentucky LLCs
LLCs or their owners may be required to file and pay income taxes at the local level, such as in cities or counties. It’s advisable to hire an accountant for assistance.
Kentucky Sales Tax
If you’re selling products in Kentucky, you might need to collect sales tax and get a Seller’s Permit from the Kentucky Department of Revenue (DOR).
Kentucky LLC Payroll Taxes
LLCs that have employees manage payroll taxes. This includes withholding federal and state income taxes, Social Security and Medicare taxes, unemployment taxes, and any deductions. It’s important to set up payroll correctly and file accurately to prevent penalties, and getting expert help is often necessary.
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Kentucky LLC Cost FAQs
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Conclusion
To set up an LLC in Kentucky, you need to look at the costs involved, which include the state’s welcoming laws and advantages. These expenses cover filing fees, registered agent fees, and possible costs for legal or consulting advice. Companies such as Northwest Registered Agent make the process easier with different package options.
Business owners must consider these costs alongside the benefits of Kentucky’s legal environment and its reputation in the market. Before starting an LLC, They should ensure these align with their business aims and budget.
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