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How to Incorporate in Kentucky (May 2024 Update)

Meow Technologies, Inc.

Meow Technologies, Inc.

If you’re looking to legally establish a corporation in Kentucky, you’ve come to the right place. Incorporating formally registers your business with the state by creating a separate legal entity that can enter into contracts, sue and be sued, maintain Continuous operations, and more. It’s an important step for scaling your business while limiting personal liability.

This comprehensive guide will walk you through everything you need to know to successfully incorporate in the state of Kentucky, from choosing a business name all the way through keeping your corporation compliant after formation. You’ll learn key details on taxation, registered agents, annual filing requirements, and more so you can make the best decisions when starting your KY corporation. Let’s get to it!

Why Incorporate in Kentucky?

There are a few reasons why you may choose to incorporate your business in Kentucky rather than forming in another state:

  • You plan to operate/have a physical presence within KY
  • Kentucky has favorable corporate tax rates
  • You want to take advantage of KY’s business-friendly legal environment

Incorporating provides benefits like personal asset protection, tax savings, and credibility with customers. It also makes ownership transfer simpler through sale/transfer of stock shares.

Kentucky Corporate/Personal Income Tax Rates

Whether an LLC or corporation, Kentucky actually has reasonably low income tax rates:

  • Corporations pay a flat 5% corporate income tax
  • Individual income tax is also a flat 5%

For pass-through entities like LLCs, owners just pay 5% personal income tax on their share of profits. Kentucky does however charge an extra Limited Liability Entity Tax (LLET) on gross receipts from sales of tangible property. This starts at a minimum of $175.

Steps to Forming a Kentucky Corporation

Follow these main steps to properly set up your corporation in KY:

Choose a Business Name

Your legal entity name must include a corporation identifier like “Corporation” “Incorporated” or “Corp.” It also can't conflict with names already on file with the Secretary of State.

Appoint a Registered Agent

A registered agent accepts official documents/correspondence on behalf of your KY corporation. They must have a physical address within Kentucky available during normal business hours.

File Articles of Incorporation

This document makes your corporation official with the state. It must include details like your business name, shares structure, registered agent/office, and the incorporators.

Draft Corporate Bylaws

Bylaws legally establish operational rules and procedures for your corporation. Get guidance from templates then customize as needed.

Hold an Organizational Meeting

Document the initial corporate board meeting where you adopt bylaws, elect directors, issue stock certificates, and more.

Obtain an Employer Identification Number (EIN)

An EIN serves like an SSN for tax purposes. It’s required to pay employees, file returns, open business bank accounts, and complete other IRS paperwork.

Consider S-Corp Election

Filing IRS Form 2553 elects a special “pass-through” tax status for your corporation where profits/losses pass onto owners’ tax returns. This avoids ‘double taxation’ and may lower overall rates.

Get Licenses and Permits

Make sure to register for any federal, state or local licenses needed to operate your Kentucky corporation legally. Requirements vary by location and business type.

File Annual Reports

All KY corporations must submit annual reports to the Secretary of State to stay compliant. This costs $15 and closes on June 30th each year.

Maintaining Your Kentucky Corporation

Stay on top of these key compliance tasks to keep your corporation in good standing:

  • File annual reports
  • Hold/document annual shareholder meetings
  • Send annual IRS tax returns
  • Keep records of stock, bylaws changes, meeting minutes, etc
  • If you ever need to dissolve the corporation, voluntarily file Articles of Dissolution with the state then submit IRS Form 966.

Who Serves on the Board of Directors?

Kentucky corporations must have at least one director listed in the articles of incorporation or appointed later. Shareholders elect board members who oversee policies, financials, public image, executive performance and more. Common roles like Chairman, Vice President, Treasurer and Secretary carry out day-to-day management.

Difference Between S-Corp and C-Corp

All Kentucky corporations default to a standard “C-Corp" tax status. If more favorable, you can file IRS Form 2553 to elect S-Corp taxation. The key differences include:

C-Corp

  • Separate taxable entity
  • "Double taxation” on profits
  • Lower rates on dividends
  • Can have unlimited shareholders

S-Corp

  • Profits/losses pass onto owners
  • Avoids double taxation
  • Limits of 100 shareholders
  • Can only issue one class of stock

For most small businesses, S-Corps offer the better tax treatment. But C-Corps allow for greater fundraising flexibility which tends to benefit larger corporations.

How to Contact the Kentucky Secretary of State

You can call the Kentucky Secretary of State’s office at 502-564-3490 or submit questions online for any corporation formation needs. Their office at 700 Capital Avenue, Suite 152 in Frankfort is open 8:00am to 4:30pm on weekdays.

Should I Get an Assumed “DBA” Name?

Registering a Doing Business As (DBA) name establishes an alternate trade name for your Kentucky corporation. This opens up branding flexibility without forming a separate legal entity. It also aids marketing efforts and pursuit of trademarks. If interested, first check availability with the Secretary of State then file a simple Certificate of Assumed Name Form.

And that covers the core steps for incorporating your small business in the state of Kentucky! Follow this guide to get your corporation legally compliant then maintain good standing each year.

Here’s to officially launching your Kentucky corporation on a path to future growth and success!

Meow Technologies is a financial technology company, not a bank or FDIC-depository insured institution. Likewise, Meow Technologies is not an investment adviser and none of the information presented herein should be relied upon as financial advice or a recommendation to make any financial decision nor should it be considered to be tax or legal advice. The information is the opinion of Meow Technologies for educational purposes and may not be suitable for all companies. Products, like the one described herein, are offered through Meow Technologies and are not advisory services which are only offered through Meow Advisory, LLC.** The FDIC’s deposit insurance coverage only protects against the failure of an FDIC-insured bank.**

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**Disclaimer: Meow Technologies is a financial technology company, not a depository, bank or credit union, and your account at Meow is not, itself, an FDIC-insured product.

Meow currently partners with three banking providers. Banking services are provided by Third Coast Bank SSB; Member FDIC, Grasshopper Bank, N.A; Member FDIC, and FirstBank, a Tennessee corporation; Member FDIC.

By opening a Maximum Checking account through Meow and if you choose to receive banking services provided by Grasshopper Bank, N.A, you deposit your funds into a deposit account at Grasshopper Bank, N.A. which sweeps those funds into deposit accounts across a network of Federal Deposit Insurance Corporation (“FDIC”)-insured banks, for up to the current standard maximum deposit insurance amount (“SMDIA”) of $250,000 per eligible depositor, per destination institution, for each ownership capacity or category, subject to applicable terms and conditions, including Grasshopper's ICS Deposit Placement Agreement. Grasshopper Bank, N.A. uses a third-party vendor and agent to help administer this sweep process. Visit https://www.intrafi.com/network-banks/ for a list of the banks and savings associations with which we/Grasshopper, N.A. have a business relationship for the placement of deposits at destination institutions, and into which your deposits may be placed (subject to applicable terms with you, and any opt-outs by Grasshopper, N.A. or you). The current maximum deposit insurance amount for your funds is up to $125 million in FDIC insurance through the sweep network of Grasshopper Bank, N.A, subject to change at any time with notice from Meow and/or pursuant to applicable law. Terms and restrictions apply. Subject to applicable rate sheet. Interest rate on checking products quoted in Annual Percentage Yield (APY). Interest rates and yields are effective as per the date on the applicable rate sheet. See applicable terms and restrictions and refer to the applicable rate sheets for additional information.

By opening a Maximum Checking account through Meow and if you choose to receive banking services provided by Third Coast Bank SSB, you deposit your funds into a deposit account at Third Coast Bank SSB. If you also hold funds in a sweep program with Third Coast Bank SSB, Third Coast Bank SSB sweeps those funds into deposit accounts across a network of FDIC-insured banks, for up to the current SMDIA of $250,000 per eligible depositor, per receiving bank, for each ownership capacity or category, including any other balances you may hold at that receiving bank directly or indirectly through other intermediaries, including broker-dealers. Third Coast Bank SSB uses a third-party vendor and agent to help administer this sweep process. Visit Third Coast Bank SSB for a list of the banks and savings associations with which we/Third Coast Bank SSB have a business relationship for the placement of deposits at receiving banks, and into which your deposits may be placed (subject to applicable terms with you, and any opt-outs by Third Coast Bank or you). The current maximum deposit insurance amount for your funds is up to $50 Million in FDIC insurance through the sweep network of Third Coast Bank, subject to change at any time with notice from Meow and/or pursuant to applicable law. Terms and restrictions apply. Subject to applicable rate sheet. Interest rate on checking products quoted in Annual Percentage Yield (APY). Interest rates and yields are effective as per the date on the applicable rate sheet. See applicable terms and conditions and refer to the applicable rate sheet for additional information.

By opening a Maximum Checking account through Meow and if you choose to receive banking services provided by FirstBank, a Tennessee corporation, you deposit your funds into a deposit account at FirstBank, which sweeps those funds into deposit accounts across a network of FDIC-insured banks, for up to the current SMDIA of $250,000 per eligible depositor, per destination institution, for each ownership capacity or category, subject to applicable terms and conditions, including FirstBank's ICS Deposit Placement Agreement. FirstBank uses a third-party vendor and agent to help administer this sweep process. Visit IntraFi for a list of the banks and savings associations with which FirstBank has a business relationship for the placement of deposits at destination institutions, and into which your deposits may be placed (subject to applicable terms with you, and any opt-outs by FirstBank or you). The current maximum deposit insurance amount for your funds is up to $125 million in FDIC insurance through the sweep network of FirstBank, subject to change at any time with notice from Meow and/or pursuant to applicable law. Terms and restrictions apply. Subject to applicable rate sheet. Interest rate on checking products quoted in Annual Percentage Yield (APY). Interest rates and yields are effective as per the date on the applicable rate sheet. See applicable terms and restrictions and refer to the applicable rate sheet for additional information.

***FDIC insurance coverage is only available to protect you against the failure of an FDIC-insured bank that holds your deposits (and does not protect you against the failure of Meow or other third party). Your account with Meow and all services provided to you are subject to the Meow Terms of Service (“Account Agreements”) and other applicable terms and no other representations or warranties, express or implied, are provided to you except as expressly set forth in those written Account Agreements. If you have any questions regarding your account, please contact team@meow.com.

FirstBank Funds Availability Notice

FirstBank’s general policy is to allow you to withdraw funds deposited in your account on the first business day after the day we receive your deposit. Funds from electronic deposits will be available on the day we receive the deposit. In some cases, we may delay your ability to withdraw funds beyond the first business day. Then, the funds will generally be available by the SECOND business day after the day of deposit.