If you want to start and run a Kentucky limited liability company (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 Kentucky LLCs.
The State of Kentucky requires you to file an annual report for your LLC. Annual report notifications should automatically be sent to your LLC. When filing your first annual report you must submit the names and addresses of your LLC's members and managers, confirm the principal and registered office/agent, and sign and date the report. For subsequent annual reports you must confirm the same information. Reports can be filed online at the SOS website or you can complete and return the card that the SOS sends to you. The annual report is due between January 1 and June 30. The current filing fee is $15.
When it comes to income taxes, most LLCs are so-called pass-through tax entities. In other words, the responsibility for paying federal income taxes passes through the LLC itself and falls on the individual LLC members. By default, LLCs themselves do not pay federal income taxes, only their members do.
Kentucky, however, imposes a Limited Liability Entity Tax (LLET) on LLCs that have more than $3 million in gross receipts or profits. The tax is on those same receipts or profits and is payable to the Kentucky Department of Revenue (DOR). Use DOR Form 720 to pay this tax.
In some cases, the owners of an LLC choose to have their business treated like a corporation for tax purposes. This choice is made by filing IRS Form 2553 with the IRS. (See the IRS website for the form.) Unlike the default pass-through tax situation, when an LLC elects to be taxed as a corporation, the company itself must file a separate tax return. The State of Kentucky, like almost every other state, taxes corporation income. Kentucky's corporation income tax applies to taxable net income and is calculated at a small series of marginal rates. Use DOR Form 720 to pay the tax. For more details, check Nolo’s article, 50-State Guide to Business Income Tax, or the DOR website.
Does your LLC have employees? If so, you'll need to pay employer taxes. Some of these taxes are paid to the federal government (the IRS) and are not covered here. (But note that federal employer tax obligations start with obtaining a federal employer identification number (EIN).) However, Kentucky employers also must pay taxes to the state.
First, you'll need to withhold and pay employee income taxes to the DOR. Begin by registering your business with the DOR either online (at the Kentucky One Stop Business Portal) or on paper (using Form 10A100, Kentucky Tax Registration Application). Once you've registered, you'll need to file withholding taxes on a periodic basis. For twice-monthly, monthly, and quarterly filings use Form K-1, and for annual filings use Form K-3. You'll also need to use some version of Form K-3 each year to reconcile your LLC's tax withholding. For more information, including regarding online filings, check the DOR website.
In addition, you'll probably need to register to pay state unemployment insurance (UI) taxes. These taxes are handled through the Kentucky Career Center (DWD). You can register for these taxes online or by using Form UI-1. Then, each quarter, use Form UI-3 to report on wages and pay the UI taxes. For more information, including regarding electronic filings, check the Career Center website.
If your LLC will sell goods to customers in Kentucky, you will need to collect and pay sales tax. This means you'll have to register for this purpose with Department of Revenue and then make periodic sales tax payments for goods sold. You can register online or mail in Form 10A100. After you've registered, you'll be sent a sales tax permit. Then, on a periodic basis, you must submit sales tax returns to the DOR. You can file on paper (but note that the state does not make sales tax returns--forms 51A102, 51A102E, 51A103, 51A113--available online) or file online(through the KY E-Tax website). For more information, check the DOR website.
If you will be doing business in states other than Kentucky, you may need to register your LLC in some or all of those states. Whether you're required to register will depend on the specific states involved: each state has its own rules for what constitutes doing business and whether registration is necessary. Often activities such as having a physical presence (a business location) in a state, hiring employees in a state, or soliciting business in a state (such as by telephone, print ads, mail, or the Internet) will be considered doing business for registration purposes. Registration usually involves obtaining a certificate of authority or similar document.
For more information on the requirements for forming and operating an LLC in Kentucky, see Nolo’s article, 50-State Guide to Forming an LLC, and other articles on LLCs in the LLC section of the Nolo website.