To start an LLC in Kentucky, file Articles of Organization with the Secretary of State and pay a $40 filing fee.1Kentucky Secretary of State. Fees The filing itself is quick, but several post-formation obligations catch new owners off guard, most notably Kentucky’s Limited Liability Entity Tax, which applies to every LLC in the state no matter how small. Here is the full sequence, from picking a name through the ongoing compliance that keeps your company in good standing.
Pick and Clear Your LLC Name
Your name must be distinguishable on the Secretary of State’s records from every other registered business entity in Kentucky, and it has to end with “limited liability company,” “limited company,” “LLC,” or “LC.” “Limited” can be shortened to “Ltd.” and “company” to “Co.,” so an ending like “Ltd. Liability Co.” is valid.2Kentucky Legislative Research Commission. Kentucky Revised Statutes 14A.3-010 – Entity Name
Run your candidate name through the Secretary of State’s online business search before you commit. If you want to lock in a name before filing, you can reserve it for 120 days for $15.1Kentucky Secretary of State. Fees
Planning to operate under a name that differs from your legal LLC name? File a Certificate of Assumed Name with the Secretary of State.3Kentucky Secretary of State. Business Filings Information This is Kentucky’s DBA filing, and it’s required any time your trade name doesn’t match what’s on your Articles.
Appoint a Registered Agent
Every Kentucky LLC must continuously maintain a registered agent and a registered office in the state. The agent accepts legal papers and government notices on your behalf, and can be either a Kentucky resident or a business entity authorized to operate in Kentucky. The agent’s business address has to match the registered office address.4Kentucky Legislative Research Commission. Kentucky Revised Statutes 14A.4-010 – Registered Office and Registered Agent Required
The registered office must be a physical street address. P.O. boxes don’t qualify. You can serve as your own agent if you live in Kentucky, but your home address becomes public record and you need to be reachable during business hours to accept service. Many owners hire a commercial registered agent service to avoid both problems.
Changing your agent or office address later takes a Statement of Change filed with the Secretary of State, at a fee of $10.1Kentucky Secretary of State. Fees
File the Articles of Organization
The Articles of Organization is the document that actually creates your LLC. Kentucky law requires it to contain four items:5Kentucky Legislative Research Commission. Kentucky Revised Statutes 275.025 – Contents of Articles of Organization
- The LLC name, meeting the naming rules under KRS 14A.3-010.
- The full name and physical street address of your registered agent and office.
- The principal office address where the company keeps its records. This address does not have to be in Kentucky.
- Whether the LLC is member-managed (owners run it directly) or manager-managed (designated managers, who may or may not be owners, run operations).
Most single-owner and small-group LLCs go member-managed because the owners want direct control. Manager-managed makes more sense when some owners are passive investors or when you plan to bring in non-owner professional managers.
How to File and What It Costs
Submit the completed Articles with the $40 filing fee. You have two options:
- File online through the Kentucky Business One Stop portal at onestop.ky.gov. Online filings are processed faster and give you digital confirmation.
- Mail the completed form and payment to Office of the Secretary of State, Business Filings, P.O. Box 718, Frankfort, KY 40602.3Kentucky Secretary of State. Business Filings Information
Filings are usually processed the same day they arrive, though up to three business days is possible.6Kentucky Secretary of State. FAQs Kentucky does not offer paid expedited processing, so there is no line to jump. Once the Secretary of State approves your filing, your LLC officially exists.
Get an EIN and Handle Federal and State Taxes
After the state confirms formation, apply for an Employer Identification Number from the IRS. You need one to open a business bank account, hire employees, and file taxes under the LLC’s name.7Internal Revenue Service. Get an Employer Identification Number The application is free and takes a few minutes online at irs.gov. Wait until your LLC is registered with Kentucky before you apply. The IRS warns that applying before your entity is formed can delay the EIN.8Internal Revenue Service. Employer Identification Number
Default Tax Classification
By default, the IRS treats a single-member LLC as a disregarded entity, so all income passes through to your personal return. A multi-member LLC is treated as a partnership at the federal level. Kentucky follows the same classification: single-member LLCs file Form 725, and multi-member LLCs file as pass-through entities.9Kentucky Department of Revenue. Corporation, LLC, and Pass-Through Tax Frequently Asked Questions
You can elect a different classification. Filing IRS Form 2553 within two months and 15 days of formation lets you be taxed as an S corporation starting with your first tax year.10Internal Revenue Service. Instructions for Form 2553 The election can reduce self-employment tax for owners who pay themselves a reasonable salary, but it adds payroll complexity. Talk to an accountant first, and know that if you miss the window, you generally have to wait until the following tax year.
The 2026 Kentucky individual income tax rate is 3.5%.11Kentucky Department of Revenue. 2026 Kentucky Withholding Tax Formula If your LLC sells tangible goods, digital products, or certain taxable services, you’ll also need to register for a sales tax permit with the Department of Revenue. Kentucky’s sales and use tax rate is 6%.12Kentucky Department of Revenue. Sales and Use Tax
Plan for the Limited Liability Entity Tax
This is the one that surprises people. Kentucky imposes an entity-level tax, called the Limited Liability Entity Tax (LLET), on every LLC regardless of federal classification. Even though your LLC’s income passes through to your personal return, the LLC itself owes this separate tax.13Kentucky Department of Revenue. Corporation Income and Limited Liability Entity Tax
The LLET runs on a sliding scale tied to gross receipts or gross profits:
- $3 million or less in gross receipts or gross profits: a $175 minimum LLET. Most new LLCs land here.
- Between $3 million and $6 million: a sliding-scale formula applies.
- Over $6 million: calculate 0.095% of gross receipts and 0.75% of gross profits, and pay the lower of the two.
The $175 minimum means even a brand-new LLC earning modest revenue owes this tax. Budget for it from your first year. The LLET can be credited against Kentucky corporation income tax, but since most LLCs are pass-throughs and don’t pay corporate income tax, the credit is of limited use for the typical small LLC.13Kentucky Department of Revenue. Corporation Income and Limited Liability Entity Tax
Draft an Operating Agreement
Kentucky doesn’t require you to file an operating agreement, and doesn’t require you to have one at all. But for any LLC with more than one member, going without one is a mistake. The operating agreement is the internal document that sets how your LLC actually runs: who contributes what, how profits are split, what happens when a member wants out, and how disputes get handled.
Kentucky’s LLC statute explicitly favors freedom of contract in operating agreements and gives them significant legal weight. The agreement can include penalty provisions for members who fail to meet their financial obligations, up to reducing their ownership interest, forcing a sale, or forfeiting it entirely.14Kentucky Legislative Research Commission. Kentucky Revised Statutes 275.003 – Construction of Chapter
Where the agreement is silent or doesn’t exist, Kentucky’s default LLC rules under KRS Chapter 275 fill the gaps. Those defaults may not match what you and your co-owners verbally agreed to. Putting the deal in writing keeps the state’s defaults from overriding your intent.
File Your Annual Report Every Year
Every Kentucky LLC must file an annual report with the Secretary of State between January 1 and June 30 each year.15Kentucky Secretary of State. Annual Reports The fee is $15. The report updates basic information: registered agent, principal office, and the names of members or managers. Simple filing, real consequences for missing it.
If you don’t file within 60 days of the deadline, the Secretary of State can start proceedings to administratively dissolve your LLC, stripping its good standing and its authority to do business. You can reinstate, but it costs $100 in reinstatement penalties plus any delinquent annual report fees.1Kentucky Secretary of State. Fees Mark June 30 on the calendar.
Licenses, Local Taxes, and Workers’ Comp
Kentucky has no statewide general business license.16Kentucky Business One Stop. Occupational Licenses/Permits Whether you need a state-level license depends on your industry. Construction, cosmetology, food service, and healthcare typically need professional licenses or permits from the relevant state agency. The Kentucky Business One Stop portal has a searchable database.
Local Occupational License Taxes
Another one that catches owners off guard: many Kentucky cities and counties impose local occupational license taxes on wages and net profits. Over 170 cities and roughly 87 counties levy these taxes, so most LLCs owe in at least one jurisdiction. The tax hits both what you earn personally from the LLC and what you pay employees. Rates and filing requirements vary, so check with each city and county where you operate.
Workers’ Compensation Insurance
If your LLC has even one employee, Kentucky requires workers’ compensation insurance. There is no minimum-employee threshold. A single hire triggers the obligation, and the state counts family members, part-time workers, and temporary workers as employees for this purpose.17Kentucky Education and Labor Cabinet. Frequently Asked Questions – Workers’ Compensation Operating without coverage exposes you to personal liability and state penalties, which undoes much of the reason to form an LLC in the first place.