The limited liability company (LLC) structure has become a popular choice for many startups. Who can blame them? This business entity structure offers many advantages. Aside from protecting the assets of the owners against the liabilities of the company, it also allows flexibility in terms of taxation and management. Once you choose to file an LLC in Kentucky, you have to be ready to take on the responsibilities that come with it.
As a business owner, who is called a member, you need to ensure the compliance of your company with various state obligations. You also have to know the paperwork you have to submit and the corresponding LLC fees.
Forming a Business
Among the first expenses you have to prepare for are the fees during the registration process. Here are some of them:
- Business Name – All Kentucky LLCs have to follow the naming guidelines of the state. Aside from having the appropriate designator, your company name also needs to be distinguishable. That means that you cannot use a name taken by another business entity.If you want to make sure that no other company takes the name that you want, you can file a Reservation or Renewal of Reserved Name form with the Secretary of State. The filing fee for this paperwork is $15. The filing for name reservation is not a state requirement. So, you have the option to not do it.
- Registered Agent – Kentucky, like other states, requires all companies doing business in the state to appoint a registered agent. It can be an individual resident or a third-party organization that is authorized to transact in Kentucky. The registered agent agrees to serve as the point of contact of your business with the state. They will accept legal and other business documents on behalf of your LLC. Check out our article on Kentucky Registered Agent to find out more about the requirements.Business owners that want to save money opt for a member, friend, or family to serve as their company’s registered agent. While it may seem practical, hiring an experienced third-party organization like DoMyLLC can offer more advantages. Having a team of experts by your side can help streamline state processes and ensure that your company remains compliant with state obligations. You can get our services for as low as $99.
- Articles of Organization – To formalize and legalize the operations of your business in Kentucky, you will have to submit a completed Articles of Organization to the Secretary of State by mail, in person, or online. The LLC fee for this filing is $40.
- Business Permits and Other Licenses – Being in certain industries or geographical locations may require you to obtain business permits and licenses. Check with state and local agencies if you need any. The cost of the licenses and permits will depend on the type.
Ongoing Compliance
Operating in Kentucky comes with continuous obligations. You will have to file an LLC report every year and pay the corresponding $15 fee. Through the annual report, you keep the state updated about the ownership and contact information of your LLC. Failure to submit this report between January 1 and June 30 can lead to administrative dissolution.
Tax Obligations
As an LLC, the company’s default tax treatment at the federal level is as a pass-through entity. That means that the members of the LLC report profits and losses in their individual tax returns.
If the company decides that corporate tax treatment is more suitable, the company will have to pay corporate income taxes. The rate will depend on the taxable net income. The breakdown is as follows:
- 4% for $50,000 and less
- 5% for over $50,000 to $100,000
- 6% for over $100,000
The state also imposes a Limited Liability Entity Tax for LLCs. The amount will be based on the annual gross receipts of the company.
If you decide to hire employees for your Kentucky LLC, you will have to withhold and pay employee income taxes to the Department of Revenue. First, register with the department. After that, you will have to file withholding taxes periodically. It can be two times a month, monthly, or quarterly using Form K-1. Annual filings require the use of Form K-3. Additionally, you will also have to register for and pay unemployment insurance to the Office of Unemployment Insurance. File quarterly using Form UI-3.
Depending on the business industry, you may also be required to pay for other taxes and forms. Some of these include the following:
- Alcohol
- Coal Seller or Purchaser Certificate ID Number
- Coal Severance or Processing
- Consumer Use
- Fuel
- Local
- Motor Vehicle
- Property
- Sales and Use
- Telecommunications
- Tobacco
- Transient Room
Other Possible Fees
Specific changes to your company require you to fulfill certain requirements. These may need the filing of formal paperwork and payment of corresponding fees.
Here are some possible circumstances that may lead to additional business expenses:
- Using a Fictitious Name – The state does not require the company to use the legal name that was registered in your LLC’s Articles of Organization. You can opt to have an assumed name, which is also known as doing business as (DBA) or fictitious name. File a Certificate of Assumed name with the Secretary of State and pay the $20 fee.
- Changing Registered Office Or Agent – There may come a time when you decide to change certain information related to your company’s registered agent. It may be due to a change in address or the appointment of a new agent. In such cases, you will have to file a Statement of Change of Registered Agent or Registered Office and pay the $10 filing fee.
- Amendments to the Articles of Organization – If you need to update the Articles of Organization of your LLC, you will have to file an Amendment of Articles of Organization with the Secretary of State. It comes with a $40 filing fee.
As a business owner, you may have to be familiar with other possible expenses. This responsibility, along with the management of your company, can be a bit overwhelming. If you think you need a team of experts to file an LLC or ensure the compliance of your business with state obligations, contact DoMyLLC.
Business Filing Section