How to Start a Business in Kentucky

Kentucky offers four ways of forming your business. Review these closely and pick the one that fits your business best.

When choosing the right name for your business, be sure to consider your services and products, target market, and the brand you're trying to build. Ultimately, your business name should sound unique and modern to help attract customers.

Nearly all businesses will need to register for federal taxes by applying for an employer identification number.

Once you've chosen a suitable business name and legal structure, you can officially register your business with the state. Businesses are regulated by Kentucky state laws and must be registered through the Kentucky One Stop Business Portal which is managed by the Kentucky Secretary of State.

To register a business in Kentucky, you'll need to complete and file the articles of formation. The type of formation documents you need to complete will depend on the legal structure you choose. The process for registering a business is the same for most legal structures. However, sole proprietorships and general partnerships are not required to file any formal documents.

The state of Kentucky does not require businesses to have a statewide business license. You may, however, need to obtain specific business licenses and permits, depending on your business's location, industry, and the products and services you'll offer.

For example, if you're looking to open a restaurant in Kentucky, you'll need to obtain a food handler's permit and a liquor license, both of which are issued by different regulatory organizations in the state.

However, if your new business in Kentucky is selling physical products, you will need to register for Kentucky Sales and Use Tax through the Kentucky Department of Revenue. This applies to most businesses operating in the state.

Every individual or entity selling personal property in the state of Kentucky is required to pay a sales tax. Services rendered are not taxable. Kentucky Sales and Use Tax is imposed at the rate of 6% of gross receipts or the purchase price.

All employers based in Kentucky are legally required to withhold a flat income tax of 5% from salaries and wages. This applies to both resident and nonresident employees. Before registering for withholding tax, read through the Kentucky Department of Revenue's guide regarding withholding tax.

In Kentucky, your small business is required to establish a Kentucky unemployment insurance tax account with the Kentucky Career Center. When you register for an account, the details provided will determine if you're liable for unemployment insurance tax.

If your business is required to contribute towards the unemployment insurance tax, you will be given an eight-digit account number and be required to file quarterly reports.

You will need to register at the Kentucky New Hire Reporting Center when you employ staff. Each employee will need to be reported to the registry within 20 days of their employment date. This does not apply to independent contractors.

Kentucky’s law requires all employers to provide workers’ compensation coverage to their employees. An employer is liable for workers' compensation when any injuries, occupational diseases, or death occur due to the job. Read through the Commonwealth of Kentucky Labor Cabinet's complete guide on workers' compensation.

In Kentucky, it's the employer's responsibility to share important information with their employees regarding minimum wage, labor laws, and unemployment insurance, among others. This is done through state-mandated posters that should be displayed in populated spaces in the workplace.

Mandatory Workplace Posters in Kentucky:

• Ky. Minimum Wage.
• Ky. OSHA.
• Ky. Equal Employment Opportunity.
• Ky. Wage Discrimination Because of Sex.
• Ky. Public Accommodation.
• Ky. Unemployment Insurance.
• Ky. Child Labor Laws.
• Ky. Workers' Comp Notice.
• Ky. Fair Housing.