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How to Start a Business in Kentucky

If you’re looking to start a new business in the state of Kentucky, you’ve come to the right place!

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“The Bluegrass State” has a host of benefits for the new business owner. Kentucky’s efforts to create a pro-business climate have not gone unnoticed, resulting in the creation of more than 15,000 jobs in 2014, and over $3.7 billion in new investments — the most investments in the state’s history. Today, Kentucky provides a number of incentives for businesses, such as the The Kentucky Economic Development Finance Authority (KEDFA). With some of the nation’s lowest industrial electricity costs, affordable housing, and a competitive tax structure, Kentucky has definitely put itself on the map for globally competitive enterprises.

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How to Start a Business

Starting a business can be both exhilarating and challenging. It requires your full attention and energy. It all begins with an idea, an observation that there is a problem and the belief that you have a new solution – or a better one. Allow us to walk you through the steps in this free guide: How to Start A Business.

General resources for starting a business in Kentucky

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Fun facts about starting a business in Kentucky

Famous business headquartered in Kentucky: Fruit of the Loom

Fruit of the Loom manufactures clothing, particularly underwear. The company’s world headquarters is in Bowling Green, Kentucky. Fruit of the Loom is one of the largest manufacturers and marketers of men’s and boys’ underwear, women’s and girls’ underwear, printable T-shirts and fleece for the activewear industry. The company employs more than 32,000 people worldwide.

Famous inventor born in Kentucky: Garrett Morgan

Garrett Morgan (1877-1963) was an inventor and community leader, born in Claysville Community, Kentucky. He worked on the development of a chemical for hair-straightening. He also invented the first patented gas mask, and improved the traffic signal. Though Morgan’s was not the first traffic signal, it was an important innovation nonetheless: By having a third position besides just “Stop” and “Go,” it regulated crossing vehicles more safely than earlier signals had.

“If you can be the best, why not be the best?” – Garrett Morgan

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Which type of legal structure is best for my business in Kentucky?

At bizHUMM, we strongly recommend you incorporate, but you must consider the tax, legal, and liability implications carefully before deciding on the right legal structure for your business.

Here are 5 helpful steps to determine the best structure for your business:

Click one of the buttons below to learn more about the different types of business legal structures and how to start them in the state of Kentucky.
LLC (Limited Liability Company)
An LLC is a hybrid business organization that combines the pass-through taxation of a sole proprietorship or partnership with the limited liability of a corporation. Each owner of an LLC has limited liability, like a stockholder of a corporation.

Steps to starting an LLC in Kentucky:

  • Step 1 — Choose a name for your LLC.
  • Step 2 — File Articles of Organization.
  • Step 3 — Appoint a Registered Agent.
  • Step 4 — Prepare an Operating Agreement.
  • Step 5 — Comply with any publication requirements.
  • Step 6 — Comply with other tax and regulatory requirements.
  • Step 7 — File Annual Reports.
  • Step 8 — Register foreign LLCs doing business in Kentucky.

For help forming your LLC in Kentucky we recommend CorpNet (they have fees for their service).
Alternatively, you can visit the Kentucky Secretary of State website.

Other Kentucky resources for LLCs:

Secretary of State’s Business Name Database: Search for the availability of your LLC name here.
File your “Reservation or Renewal of Reserved Name” here.
File your “Articles of Organization” here.
File your “Annual Reports” here.

IRS EIN Online: Apply for an Employer Identification Number (EIN) for your LLC here. If your LLC has more than one member, you must get an EIN, even if you have no employees.

Kentucky Business One Stop: If you will be selling goods or will have employees, you’ll need to register here.

Sole Proprietorship
A sole proprietorship is a one-person business that is very popular among individual self contractors or business owners. Even though there aren’t complicated start-up requirements for establishing a sole proprietorship, there may be local registration, business license, or permit laws you need to comply with to make your sole proprietorship legitimate. The owner of the sole proprietorship is entitled to all profits, and is responsible for all the business’s debts, losses, and liabilities.

Steps to starting Sole Proprietorship in Kentucky:

  • Step 1 — Choose a business name.
  • Step 2 — File an assumed name with the county clerk.
  • Step 3 — Obtain licenses, permits, and zoning clearance.
  • Step 4 — Obtain an Employer Identification Number (EIN).

For help forming your sole proprietorship in Kentucky we recommend CorpNet (there are fees for their service).
Alternatively visit the Kentucky Secretary of State website.

Other Kentucky resources for Sole Proprietorship:

Secretary of State’s Business Name Database: Search for the availability of your business name here. A sole proprietor may use his or her given name, or an assumed business name.

U.S. Patent & Trademark Office: Federal database for existing trademark registrations. Click on the “TESS” link to conduct a search.

Kentucky Association of Counties: To file your assumed business name, you will have to fill out the assumed name certificate available from your county clerk’s office in the county where your business is located.

IRS EIN Online: Apply for an Employer Identification Number (EIN) for your sole proprietorship here. If you hire employees, you will need an EIN.

Kentucky Business One Stop: If you will be selling goods or will have employees, you’ll need to register here.
Click here to see what local permits or licenses may be required of your business.

Partnership
A partnership is a single business where two or more people share ownership. Each partner contributes to all aspects of the business, including money, property, labor, or skill. In return, each partner shares in the profits and losses of the business.

Steps to starting Partnership in Kentucky:

  • Step 1 — Choose a business name.
  • Step 2 — File an assumed business name.
  • Step 3 — Create a partnership agreement.
  • Step 4 — Obtain licenses, permits, and zoning clearance.
  • Step 5 — Get an Employer Identification Number (EIN).

For help forming your partnership in Kentucky we recommend CorpNet (they have fees for their service).
Or, visit the Kentucky Secretary of State website.

Other Kentucky resources for Partnership:

Secretary of State’s Business Name Database: Search for the availability of your partnership name here. A partnership may use the surnames of the individual partners, or a fictitious business name.

U.S. Patent & Trademark Office: Federal database for existing trademark registrations. Click on the “TESS” link to conduct a search.

IRS EIN Online: Apply for an Employer Identification Number (EIN) for your partnership here. Your partnership must have an EIN, regardless of whether or not you have employees.

Kentucky Business One Stop: If you will be selling goods or will have employees, you’ll need to register here.
Check here to see what local permits or licenses may be required of your business.

S Corporation
With an S corporation (or S corp), income and losses are passed through to shareholders and included on their individual tax returns. As a result, there's just one level of federal tax to pay. The shareholders must report the income or loss on their own individual income tax returns. An eligible domestic corporation can avoid double taxation (once to the corporation and again to the shareholders) by electing to be treated as an S corporation.

Steps to starting S Corporation in Kentucky:

  • Step 1 — Choose a corporate name.
  • Step 2 — Prepare and file Articles of Incorporation.
  • Step 3 — Appoint a registered agent.
  • Step 4 — Set up a corporate records book.
  • Step 5 — Prepare corporate bylaws.
  • Step 6 — Appoint initial corporate directors.
  • Step 7 — Hold your first Board of Directors meeting.
  • Step 8 — Issue stock.
  • Step 9 — Comply with Kentucky annual report requirements.
  • Step 10 — Comply with other tax and regulatory requirements.
  • Step 11 — Register foreign corporations doing business in Kentucky.

For help forming your S corporation in Kentucky we recommend CorpNet (they have fees for their service).
Alternatively, you can visit the Kentucky Secretary of State website.

Other Kentucky resources for S Corporation:

Secretary of State’s Business Name Database: Search for the availability of your corporate name here.
File your “Reservation or Renewal of Reserved Name” here.
File your “Articles of Organization” here.
File your “Annual Reports” here.

IRS EIN Online: Apply for an Employer Identification Number (EIN) for your corporation here.

IRS S corporations: Specific instructions for your tax requirements as an S corp.

Kentucky Business One Stop: Register here for business filing and tax requirements for your corporation.

C Corporation
A C corporation, under United States federal income tax law, refers to any corporation that is taxed separately from its owners. A C corporation is distinguished from an S corporation, which generally is not taxed separately. C corporations are subject to double taxation; that is, one tax at the corporate level on the corporation's net income, and another tax to the shareholders when the profits are distributed.

Steps to starting C Corporation in Kentucky:

  • Step 1 — Choose a name for your corporation.
  • Step 2 — File Articles of Incorporation.
  • Step 3 — Find a registered agent.
  • Step 4 — Set up a corporate records book.
  • Step 5 — Prepare corporate bylaws.
  • Step 6 — Appoint initial corporate directors.
  • Step 7 — Hold your first Board of Directors meeting.
  • Step 8 — Issue stock.
  • Step 9 — Comply with annual report requirements.
  • Step 10 — Comply with other tax and regulatory requirements.
  • Step 11 — Register foreign corporations doing business in Kentucky.

For help forming your C corporation in Kentucky we recommend CorpNet (there are fees for their service).
Alternatively, you can visit the Kentucky Secretary of State website.

Other Kentucky resources for C Corporation:

Secretary of State’s Business Name Database: Search for the availability of your corporate name here.
File your “Reservation or Renewal of Reserved Name” here.
File your “Articles of Organization” here.
File your “Annual Reports” here.

IRS EIN Online: Apply for an Employer Identification Number (EIN) for your corporation here.

Kentucky Business One Stop: Register here for business filing and tax requirements for your corporation.

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Why choose Kentucky for my business?

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    Kentucky Business Incentives and Financial Programs
    “The Kentucky Economic Development Finance Authority (KEDFA), established within the Cabinet for Economic Development to encourage economic development, business expansion, and job creation, provides financial support through an array of financial assistance and tax credit programs.”

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    Think Kentucky: Financial Incentives
    “Kentucky's pro-business climate provides a number of incentives for businesses. Helping businesses in this way furthers the Commonwealth's goals of achieving long-term economic growth and employment opportunities for its citizens.”

  • 3

    Kentucky Small Business Development Center
    Resources for the new small business owner.

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