How Much Does an LLC Cost in Kentucky?

How Much Does an LLC Cost in Kentucky?

Sometimes new entrepreneurs are intimidated by the process and expense of starting a limited liability company. It’s a process that’s fairly straightforward, however, and the costs can be determined beforehand.

Kentucky is a particularly business-friendly state to start an LLC in. The initial filing fee is only $40 — one of the lowest in the country — and other fees are similarly affordable. The process required is also something you can navigate.

Depending on your knowledge, time and budget, you might navigate the process yourself or use an LLC formation service. Doing each step yourself keeps costs extremely low. Using an LLC formation service can save you time, so you can focus more on your business itself.

Here’s a breakdown of the LLC costs if you do things yourself or use an LLC formation service. Knowing the associated expenses should help you decide how to proceed with your business’s filing.

General Steps and Costs When Forming a Kentucky LLC

Forming an LLC involves a few steps, and each has costs associated with it. Some costs (e.g. the state filing fee) are required, but others are discretionary depending on your budget. See our Kentucky LLC formation guide for a more detailed explanation of each step.

Naming Your Kentucky LLC

The first step is to find a good name for your business. Every business needs a name that’s well-suited for branding, and you’ll need your LLC’s name when filing forms.

Kentucky requires that LLCs include “Limited Liability Company,” “LLC” or another approved designator in their name. Certain words like “Cooperative” are restricted, and other words like “Treasury” and “State Department” are prohibited for obvious reasons. The complete regulations for naming businesses in Kentucky are found in the 2022 Kentucky Revised Statutes 14A.3-010.

Your name also must be distinguishable from all other business names used within the state. You can check business names using the Kentucky Secretary of State’s Name Availability Search. To further check if a name is available, you can also call the Kentucky Secretary of State at (502) 564-3490 or write the office. (Final availability determination is made when filing your Articles of Organization.)

There’s no fee for using the Name Availability Search, nor for calling or writing to further check availability. You can then include an available name on your Articles of Organization, and you won’t need to pay any specific fee for naming your LLC.

While there’s no fee for obtaining your LLC’s official name, you could incur a couple of fees if you need a reservation or DBA:

Estimated Cost for Naming Your Kentucky LLC: $0 – $35

Filing Articles of Organization

Filing Articles of Organization is how you officially register your LLC with the Kentucky Secretary of State. The articles get filed with the Kentucky Secretary of State. You can complete and mail in the Articles of Organization form, or file online through the Kentucky Online Gateway (KOG).

The LLC filing fee is due when you submit Articles of Organization, and this is the one unavoidable LLC formation fee. Even LLC formation services that are themselves free still must collect and pass on this fee.

The Kentucky LLC fee is just $40, though, which makes it one of the lowest in the country. Most states have LLC fees closer to or more than $100.

Estimated Cost for Filing Articles of Organization: $40

Appointing a Registered Agent

You’ll need to appoint a registered agent when filing Articles of Organization. Your LLC’s registered agent is responsible for receiving official communications, including from the state and if someone sues the business. They must have a physical address within Kentucky.

You can serve as your own registered agent, or another member can if you’re starting a multi-member LLC. This option requires that you’re in the state, and you can’t miss an official mailing. It’s free to be your own registered agent, though.

You can alternatively use a registered agent service. Using a service provides several advantages: your name and address remain private, you don’t have to be in the state, and you don’t have to worry about missing something important. Registered agent services normally cost $200 – $400 annually, but the first year is often included as part of an LLC formation package.

Estimated Cost for a Registered Agent: $0 – $400

Creating an Operating Agreement

An Operating Agreement is a document that outlines important details about your business. It should cover ownership, responsibilities and roles, distributions, dissolution situations, and other similarly important matters.

Kentucky doesn’t require that you file an Operating Agreement, but it’s still recommended that you have one. An operating agreement will make you think through these details if you’re starting a sole-member LLC. It’ll serve as a governing document if you’re starting a multi-member LLC and major disagreements arise.

Creating an Operating Agreement can vary in cost. Writing one yourself is free, and might be suitable if you’re the sole member. Getting assistance through an LLC formation service would likely be part of a $200 – $400 package, and having an attorney draft an agreement could be $1,000+.

You probably should use an LLC formation service or attorney if you’re starting a multi-member LLC or have complexities to cover. Being a legal document, an Operating Agreement isn’t something you want to have mistakes in.

Estimated Cost for an Operating Agreement: $0 – $1,000+

Other Annual and Additional Kentucky LLC Costs

In addition to the above common LLC formation costs, you may also have other one-time or annual expenses to budget for.

Business Licenses & Permits

Depending on the location of your business and its operations, you may need to obtain state and/or local permissions. These can include licenses and/or permits.

One permit that almost every business in Kentucky needs is a Sales Tax Permit. This can be done through the Kentucky Online Gateway. There is no fee for the permit.

You could also need other licenses or permits from the state if operating in select industries. For instance, liquor licenses, childcare licenses, and auto dealer’s licenses are needed if operating in these industries. Costs for licenses can range from ~$50 (for a childcare license), to $200 (for an auto dealer’s license), to $1,200+ (for a liquor license).

Many local municipalities and counties have their own license and permit requirements, too. These can be industry- or project-specific, or they might be generally required for all businesses located within the jurisdiction.

Costs for local licenses and permits can vary, but tend to be very affordable. Many are between $0 and $100. Check with your local town clerk, city clerk and county clerk to see what requirements and fees your LLC is subject to.

Estimated License and Permit Costs: $0 – $1,200

Annual Report

All LLCs in Kentucky are required to file an Annual Report with the Secretary of State. This is a basic update of your business’s information, including member information, registered agent information, and address.

This report is due by June 30th each year, and the filing fee is $15. You can file online through the Kentucky Secretary of State’s website.

Estimated Annual Report Cost: $15

Limited Liability Entity Tax

Kentucky assesses a Limited Liability Entity Tax (LLET) on the vast majority of LLCs in the state. A few sectors allow for an allotted exemption of certain gross revenues.

The LLET tax is a form of an annual franchise tax on LLCs, and it’s assessed annually based on gross profits:

New businesses should plan on paying an LLET tax of $175 initially, and most will only pay this amount. It’s only if your business grows a lot that you’ll need to pay a percent of receipts or profits.

Estimated Annual Limited Liability Entity Tax: $175

Assumed Name

If your LLC uses an assumed name (DBA), the name must be renewed each year. You can renew by completing and mailing in the Certificate of Renewal of Assumed Name. The fee for renewing an assumed name is $20.

Estimated Annual Assumed Name Cost: $20

Registered Agent

Continuing to serve as your LLC’s registered agent costs nothing. Should you choose to use a registered agent service, budget $200 – $400 for the service depending on what exactly you need.

Estimated Annual Registered Agent Cost: $0 – $400

What expenses you can write off

Most expenses directly related to forming or maintaining your LLC are tax-deductible. These generally include:

You can confirm that these and other LLC-related expenses are legitimate write-offs by talking with a qualified tax professional.

Kentucky LLC Costs - Summary

 

Fee/Cost

Amount

Articles of Organization (LLC filing fee)

$40

Business Name Reservation (optional)

$35

Assumed Name (DBA, optional)

$20

Sales Tax Permit (seller’s permit)

$0

Other Licenses & Permits

$0 – $1,000

Operating Agreement Help (optional)

$100 – $1,000

Commercial Resident Agent Service (optional)

$200 – $400

Estimated Total Kansas LLC Formation Costs*

$40 – $595

The total range allows for using an LLC formation service, and some naming or license/permit costs. Only a few LLCs will need licenses or Operating Agreement that cost more.

LLC Kentucky Costs – Annual Fees

Fee/Cost

Amount

Annual Report

$15

Licenses and Permits

$0 – $1,000

Limited Liability Entity Tax (LLET)

$175 (possibly more)

Assumed Name (optional)

$20

Commercial Resident Agent Service (optional)

$199 – $400

Estimated Total Kansas LLC Annual Costs*

$190 – $710

The range assumes gross profits below $3 million, and thus an LLET tax of $175. The range also allows for an LLC formation service and some license/permit costs.

Conclusion

You can navigate these steps, and the above costs are accurate estimates for each one. You can start an LLC for just $40 — less than a nice dinner out — and using an LLC formation service is still quite affordable. It’s less than a weekend away might be.

Ultimately, whether you go through the steps yourself or use an LLC formation service is one of the first decisions you’ll need to make as a new business owner. Either way, you can soon have an officially registered Kentucky LLC.

FAQ

Kentucky has an LLC fee of $40 that’s due when filing Articles of Organization.

The fee due when filing an Annual Report is $15.

Yes, Kentucky does have an LLC annual franchise tax, called the Limited Liability Entity Tax (LLET). Most small businesses pay $175 annually, although businesses with high revenues pay a percentage-based amount.