How to form an LLC in Kentucky

Kentucky charges $40 to file Articles of Organization — the cheapest in the U.S. The annual report is $15, due June 30 each year. The catch is the Limited Liability Entity Tax (LLET): $175 minimum every year. So realistic year-one cost: $40. Ongoing yearly cost: $190 ($15 annual report + $175 LLET minimum).

Online filings through the Kentucky OneStop Business Portal approve in roughly 1 business day. Mail filings take 5–7 business days.

The LLET is a Kentucky-specific entity-level tax that applies to most LLCs with Kentucky-source receipts. The minimum is $175 per year. The full tax is calculated as 0.095% of Kentucky gross receipts OR 0.75% of Kentucky gross profits, whichever is greater (with the $175 minimum). LLCs with less than $3M in Kentucky gross receipts pay only the $175 minimum.

No traditional franchise tax — but the Limited Liability Entity Tax (LLET) functions similarly. The $175 minimum applies to virtually every Kentucky LLC. Pass-through income still flows to owners' personal returns at Kentucky's graduated income tax rates.

June 30 each year. The fee is $15 — among the lowest annual report fees in the U.S. File through the Kentucky OneStop Business Portal. The LLET return has a different deadline (April 15).

Yes. Kentucky has no residency requirement for LLC members or managers. You only need a Kentucky-based registered agent. Out-of-state owners commonly use a commercial registered agent service.

For Kentucky residents and businesses tied to bourbon, automotive manufacturing, or logistics (Louisville UPS): yes. The $40 filing fee is unbeatable, the $15 annual report is among the lowest, and the OneStop Portal is fast. The $175 minimum LLET is the real annual cost most owners overlook — but still cheaper overall than many states.

Kentucky does not have a state-level general business license, but most cities and counties require an occupational license tax registration. Louisville, Lexington, and other major cities have separate occupational license fees that can be 1–2% of gross receipts. Industry-specific state licenses also apply for many fields.

Kentucky LLCs are subject to the Limited Liability Entity Tax (LLET), which is calculated as the greater of $175 minimum or a rate applied to Kentucky gross receipts or gross profits. Single-member LLCs are taxed as sole proprietorships at the federal level, while multi-member LLCs default to partnership taxation, meaning profits pass through to members who pay Kentucky individual income tax at a flat rate of 4%. Kentucky also imposes a state sales tax of 6% if your LLC sells taxable goods or certain services, requiring a sales tax permit from the Kentucky Department of Revenue. LLCs with employees must also register for employer withholding tax and unemployment insurance tax through the Kentucky One Stop Business Portal.

Kentucky does not issue a single statewide general business license, but most LLCs will need licenses or permits at the local level depending on the city or county where they operate. Louisville, Lexington, and other municipalities require an occupational license and may charge an annual occupational tax based on net profits earned within their jurisdiction. Industry-specific professions such as contractors, healthcare providers, and food service businesses must obtain state-level licenses through the relevant Kentucky licensing board. You can research required permits through the Kentucky One Stop Business Portal at onestop.ky.gov, which consolidates state licensing requirements in one place.

Yes, non-residents and foreign nationals can form an LLC in Kentucky without being a Kentucky resident, as the state imposes no residency requirement on LLC members or managers. You will need a Kentucky registered agent with a physical street address in the state to receive legal and official documents on the LLC's behalf. If you plan to conduct business in your home state as well, you will likely need to foreign qualify that LLC there by filing a Certificate of Authority and paying that state's registration fee. Non-resident members are still subject to Kentucky LLET and must file Kentucky tax returns for income sourced from Kentucky business activities.

To dissolve a Kentucky LLC, you must file Articles of Dissolution with the Kentucky Secretary of State, which can be done online through the Kentucky One Stop Business Portal or by mailing Form DSO-LA to the Secretary of State's office. The filing fee for dissolution is $40, the same as the formation fee. Before filing, the LLC should settle all debts, notify creditors, liquidate assets, and distribute remaining assets to members per the operating agreement. You should also cancel any local business licenses, close your Kentucky tax accounts with the Department of Revenue, and file a final annual report if one is due for the year of dissolution.

Kentucky law does not legally require an LLC to have a written operating agreement, but the Kentucky Limited Liability Company Act strongly encourages one and allows LLCs to customize their governance through this document. Without an operating agreement, your LLC defaults to the state's standard statutory rules, which may not reflect how you actually want to run the business or split profits among members. An operating agreement should cover member ownership percentages, voting rights, profit and loss allocations, procedures for adding or removing members, and what happens if a member dies or wants to exit. Even single-member LLCs benefit from having one, as it reinforces the separation between personal and business finances that protects your liability shield.