All businesses operating in Kentucky must adhere to the state’s licensing and permitting requirements. For many businesses, there may be local or federal requirements too. If you’re starting a new business in the state, here’s what you should know about Kentucky business licenses and permits.
Governments use business licenses and permits to ensure that businesses operate within certain parameters. Licenses can be used for everything from tax collection, to ensuring public safety and the general welfare of a community.
You’ll need to apply for and receive any required small business licenses and permits before your first day of operations. Not doing so could result in fines, other penalties, legal action, and possibly even temporarily closing your business.
Small business licenses and permits are sometimes quite similar, even to the point that the terms may be used interchangeably in certain contests. On the whole, however, there’s a general difference between licenses and permits:
One example of the distinction is in the commercial trucking space. Drivers need a commercial driver’s license (CDL) to operate trucks. They might have to obtain permits for specific loads that are oversized or contain hazardous materials.
You could need one or several small business licenses and permits from local, state or federal agencies. What your business has to apply for depends on its location, industry and activities.
Kentucky doesn’t have a general business license requirement that’s applicable to all businesses operating within the state. Businesses could need various state licenses and permits depending on what they do, however.
You can find state licensing information through the online Team Kentucky platform. The Permits, Licenses, and Renewals page has a list of state agencies that issue business licenses (at the bottom of the page). The Department of Professional Licensing has information on professional licenses issued by the state.
Be sure to budget for associated fees if you’re required to get one or more state licenses. State license fees can be anywhere from a few hundred dollars, to more than a thousand dollars for certain ones. A retail liquor license can be $1,000 to $2,000, for example.
Businesses that sell goods or services within the state need to register with the Kentucky Department of Revenue. If you use Kentucky Business One Stop to form your business, you’ll complete the Kentucky Tax Registration as Step 2 of the formation process.
Completing the One Stop process will automatically enroll your business to collect and remit most common taxes. You’ll be all set for collecting:
If you’re selling products that have additional specific taxes, those require an additional tax application. These additional taxes include alcohol tax, tobacco tax, motor fuels tax, bank franchise tax, insurance premiums tax, and dealer loaner/rental vehicle tax. Paying property taxes also requires a separate application, although you won’t collect this from others.
The One Stop process also includes being able to collect motor vehicle tire tax, coal processing tax, telecommunications tax and utility gross tax if any of these are applicable. Aside from the tire tax, these usually don’t apply to small businesses.
Locals can have their own small business licenses and permits. Towns and cities can have requirements, as can counties.
The licenses and permits that localities require vary from general business licenses and basic zoning permits, to industry-specific licenses for things like locksmithing and selling alcohol. Anything affecting the public at large, such as a road closure, festival or new building, typically requires a permit.
Some localities have their small business licenses and permits information posted online. It’s common for town, city and county websites to not be consistently updated, though. The best way to get current license and permit information is by talking with the town or city clerk, and the county clerk.
It’s a good idea to check with the clerks anywhere that your business operates, including anywhere that you have a location or offer services. Some localities may require licenses or permits even if your business’s primary location isn’t located there.
If your business activities are regulated by federal law, you may need to have specific federal licenses or permits.
Some federally regulated industries include alcoholic beverages, firearms, explosives and ammunition, aviation, agricultural production, logistics and transportation, maritime transportation, commercial fisheries, fish and wildlife, nuclear energy, mining and drilling, and television and radio broadcasting. The Small Business Administration (SBA) has a more comprehensive list.
Not all businesses in these industries need federal licenses or permits, but you should check with the relevant agency if you’re operating in one of these spaces.
The first step in getting the small business licenses and permits your business needs is determining what exactly those are.
Check with local governments, state resources, and the SBA’s list of federal requirements to see what’s needed. You should check with each even if you don’t think one applies, just in case you might miss one.
You’ll need to apply for each license and permit separately, and application processes vary both across government agencies and individual licenses/permits. Many applications can be submitted online, but some might still require a paper form. The information requested can range from basic contact information to detailed information on your business’s operations.
Most applications will have fees associated with them. These can range from just a few dollars for many local ones, to multiple thousands for complex federal approvals. Kentucky business licenses and permits that are issued by the state tend to be a few hundred, to maybe $2,000 in select cases.
Application processing times can also vary. Many will be approved in a few business days, or a couple of weeks. Some are instant and others can take longer, however. You can always ask the agency how long typical processing times are.
Most Kentucky business licenses and permits that are applied for through the One Stop portal can be tracked online. So too can many local and federal applications. In some cases, though, you may need to contact the agency directly for an update on your application’s status.
While not all licenses and permits need to be renewed, many do. Licenses may need to be renewed annually or at some other interval. Permits might also need to be renewed, or you may have to apply for a separate permit each time you need one.
You can find out from the issuing agency whether a specific small business license or permit has to be renewed. If one does, mark the date so that you don’t accidentally miss it.
Apply for any small business licenses and permits your business needs, and do so before you’re actually operating. Leave enough time for these to be approved. That way, you’ll be able to legally operate without potential licensing issues starting on day one.
Operating without required licenses and permits can result in fines, penalties, legal action, and even temporary business closure in certain cases. You’ll want to get all the required licenses before starting your business.
While Kentucky doesn’t have a general business license requirement, sole proprietors may still need to obtain other licenses and permits depending on their business activities and location.
Sole proprietors are normally subject to the same business license and permit requirements as other businesses that they’re similar to. Most licenses and permits aren’t based on a business’s structure, but rather what the business does.
Many business licenses must be renewed, but not all do. Check with the issuing agency to see whether your business’s licenses and permits have to be renewed — and make sure to renew by the date if they do expire.
Should you accidentally let a license or permit lapse, renew it as soon as possible to avoid more penalties. Fines and other penalties can compound each day that you’re operating without a license.
This portion of our website is for informational purposes only. Tailor Brands is not a law firm, and none of the information on this website constitutes or is intended to convey legal advice. All statements, opinions, recommendations, and conclusions are solely the expression of the author and provided on an as-is basis. Accordingly, Tailor Brands is not responsible for the information and/or its accuracy or completeness. It also does not indicate any affiliation between Tailor Brands and any other brands, services or logos.
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