LLC Annual Report and Tax Filing Requirements in Kentucky

Limited liability companies (LLCs) offer many advantages. They have flexible management and tax structures. LLCs also give their owners limited liability for the business's debts. However, LLCs often have ongoing costs and filing requirements.

If you want to start and run a Kentucky LLC, you'll need to prepare and file various documents with the state. This article covers the most important ongoing reporting and state tax filing requirements for LLCs in Kentucky.

Kentucky LLC Annual Report

The State of Kentucky requires you to file an annual report for your LLC with the Kentucky Secretary of State (SOS). When filing your first annual report you must submit or confirm:

• the names and addresses of your LLC's members and managers
• the LLC's principal office address, and
• the address of the LLC's registered agent and office.

For subsequent annual reports, you must confirm the same information. You can file the report online at the SOS website or you can mail in a completed form. The annual report is due between January 1 and June 30. As of 2023, the filing fee is $15.

State Business Taxes in Kentucky

By default, most LLCs are considered "pass-through tax entities" for the purpose of income taxes. Specifically, multi-member LLCs are taxed as partnerships and single-member LLCs are taxed as disregarded entities. With a pass-through tax entity, the responsibility for paying federal income taxes passes through the LLC itself and falls on the individual LLC members (owners). So, the LLC doesn't pay taxes on its income. Only the LLC members pay taxes on their share of the LLC's income.

As an LLC member, you'll file a personal tax return and pay your share of the LLC's taxes to the Kentucky Department of Revenue (DOR). You can register your business and manage your taxes using the Kentucky Online Gateway (KOG).

Limited liability entity tax (LLET). Kentucky imposes a tax on businesses that have limited liability, including LLCs, corporations, and S corporations. The tax is based on the business's gross receipts or gross profits. Small businesses with gross receipts or gross profits of $3 million or less only have to pay the $175 minimum LLET. If a business has more than $3 million in gross receipts or profits, then it multiplies its earnings (profits or receipts) by the applicable tax rate.

Electing corporate tax status. While multi-member LLCs are taxed as partnerships by default, you can elect to have your LLC taxed as a corporation. You can make this election by filing IRS Form 2553 with the IRS. If you elect to have your LLC taxed as a corporation, your LLC will also be taxed as a corporation in Kentucky. The State of Kentucky, like almost every other state, taxes corporation income. As of 2023, the Kentucky corporate income tax rate is a flat 5%.

Electing pass-through entity tax status. Many states, including Kentucky, are allowing pass-through tax entities to elect to be taxed at the entity level. Typically, owners of a pass-through tax entity would report and pay taxes on their share of the LLC's income. However, with this election, the Kentucky LLC can pay the tax on behalf of the members. In Kentucky, you can make the election, pay the tax, and file the return using Form 740-PTET.

Visit the DOR's corporation income and LLET webpage for more details on the corporate income tax and LLET.

Kentucky Employer Taxes

If your LLC has employees or plans to, you must pay employer taxes to the federal and state governments. You should get your federal employer identification number (EIN) from the IRS to report and pay these taxes as an employer.

Withholding employee wages. As a Kentucky employer, you must withhold and pay employee income taxes to the DOR. Use the Kentucky One Stop Business Portal and KOG to register your business for an employer's withholding tax account. You'll need to file withholding taxes on a twice-monthly, monthly, quarterly, or annual basis. You must also reconcile your LLC's tax withholding each year.

Unemployment insurance (UI) tax. In addition to withholding taxes for employees, your LLC will probably need to register to pay state UI taxes to the Kentucky Career Center. You can register online with the Office of UI. Each quarter, you must file Form UI-3 to report on wages and pay UI taxes. You can file quarterly reports using Kentucky's UI Self-Service Web.

Kentucky Sales and Use Tax

If your LLC plans to sell taxable goods or services to customers in Kentucky, you must collect and pay sales tax to the DOR. You can register for sales tax with the DOR using the Kentucky One Stop Business Portal and KOG. Then, on a periodic basis, you must submit sales tax returns to the DOR. You can file online with your OneStop user account

For more information, check the sales and use tax section of the DOR website.

LLC Registration in Other States

You might find that you've organized your LLC in Kentucky, but you have business activities in another state, like Tennessee or Virginia. If you're organized in one state but do business in another, you might need to register as an out-of-state (foreign) business in those states. Typically, you'll need to register as an out-of-state LLC if you have a physical presence in a state, hire employees in the state, or advertise directly to residents of the state. But you should check the state's laws around qualifying as a foreign business.

If you'd like more guidance, see our state guide to qualifying to do business outside your state.

More Information About Kentucky LLCs

Kentucky's Business One Stop is a helpful resource for entrepreneurs. Check out the Start My Business section for a step-by-step guide on forming a Kentucky business. You can find guidance on:

• business registration
• tax obligations
• business licenses and permits, and
• employer responsibilities.

You can also find links to resources, such as a startup checklist, the DOR website, and worker's compensation.

If you need general guidance on operating your LLC, check out the LLC section of our website. You can find articles on how to manage, fund, and protect your LLC. If you'd like information about other states' LLC requirements, you can review our article on LLC tax and filing requirements. If you have particularly complicated tax or employer obligations or specific legal questions, you should talk to a Kentucky business lawyer.