How to Start an S-Corp in Kentucky


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Start an S-corporation in Kentucky

Kentucky, popularly known as The Bluegrass State, offers a bunch of benefits for business owners, especially the state capital Frankfort has a lot to offer to the rising entrepreneurs in the state. If you want to start a business in Kentucky, you must choose an appropriate corporate structure. You can have a corporation or a sole proprietorship or set up an LLC in Kentucky. There are a few guidelines that you should be aware of when it comes to starting an S-Corporation. In Kentucky, S-Corporation is businesses’ most common corporate structure, especially start-ups. It was developed in order to give companies limited liability protection while preserving the advantages of being a distinct legal organization. 

In this article, you will learn about how to start an s-corporation in Kentucky. You will also learn whether an s-corporate business structure suits your business. Please read all the points carefully before starting your business in Kentucky.

What is an S-Corp in Kentucky?

An S corporation (S-corp) is not a type of corporate entity, unlike a limited liability company (LLC) or other business structures. It’s a tax classification that might result in significant financial savings for both corporations and LLCs but in different ways. S-corp is similar to LLC, except that the IRS treats it as a corporation for tax purposes. 

If you want an S corp status for your business, you can always form an LLC to protect your personal assets from business debts. It takes some basic steps to have a successful s-corporation in Kentucky. S-Corps do pay corporate income taxes, but they are still treated as disregarded companies for federal tax purposes.

S-corps pay corporate taxes that LLCs do not have to pay. If you want to have an S-corp status, then we would recommend you have an LLC instead. This will protect your personal assets from your business liabilities and you don’t have to pay any corporate taxes.

LLCBuddy Editorial Team

Limitation and Requirements of S-Corp in Kentucky

As you have decided to have an S-Corp structure for your business, you must know the limitations and requirements to qualify for S-Corp status. We have listed some important points to consider following for your reference-

  • Be a domestic corporation.
  • Not be an ineligible corporation, such as specific financial institutions, insurance providers, or domestic corporations engaged in overseas sales.
  • Have just one type of stock.
  • Have a maximum of 100 shareholders or members.
  • Have only permitted individuals, certain trusts, and estates as stockholders or members.

If you are qualified for the limitations and requirements, you can apply for an S-Corp in Kentucky.

How to Start an S-Corporation in Kentucky?

To create S-Corp in Kentucky, you must follow the below guidelines that include forming a business name, hiring a Registered Agent, filing your Articles of Organization, creating an operating agreement in Kentucky, requesting an EIN, filing a form 2553. 

Step 1: Register a Business Name in Kentucky

After you have decided on the idea to start an S-Corp in Kentucky, deciding the name for your corporation is significant. Legal procedures should be taken into account when choosing your partnership name. Choose a business name that will enable you to develop a strong brand identity.

If you want to set up an LLC, there is a complete guide on Kentucky LLC name guidelines for a proper LLC name. Here are some guidelines you must follow while naming your S-corp.

  • Avoid profanities
  • The name should be available, and no other entity should have the same name in Kentucky.
  • Limit of restricted words that need a license in Kentucky, for example, doctors, attorneys, etc.
  • Do not use a business name that sounds like a government agency or entity (like “police,” “county,” and “state”)

Step 2: Hiring the Kentucky Registered Agent

The next step in starting an S-corp in Kentucky is hiring a Kentucky Registered Agent, a person that accepts legal paperwork on behalf of your business. This person or business will receive important tax forms, legal documents (such as subpoenas), all notices of lawsuits, and other official government correspondence in Kentucky. Forming an LLC and an S-corp will be easier if you have Registered Agent in Kentucky.

Step 3: File Your Kentucky Articles of Organization

The Articles of Organization is an important document to start your limited liability company (LLC). Kentucky Articles of Organization is a simple document that contains the business name and address as well as the name and address of the person who received lawsuits on behalf of the organization. In order for the “Articles of Organization” to be filed, you need to pay a filing fee to the state. In Kentucky, the filing fee is $40. 

In California, along with the Articles of Organization, you must send the Statement of Information to file your company. The statement of information is a mandatory document in California, but other states do not have this document.

Step 4: Creating an Operating Agreement in Kentucky

After you have filed your Articles of Organization in Kentucky, the next step is to create an LLC operating agreement in Kentucky. The Kentucky LLC operating agreement is essential and necessary since it will cover your corporation’s important documentation and rules. The operating agreements usually include the following-

  • Article I: Organization
  • Article II: Management and Voting
  • Article III: Capital Contributions
  • Article IV: Distributions
  • Article V: Membership Changes
  • Article VI: Dissolution

After creating the LLC operating agreement, you can benefit in several ways since it will discuss how decisions for the business will be made, including management and member voting structure. For more details about how an operating agreement works, please check Operating Agreement.

Step 5: Request for EIN in Kentucky

After documenting the operating agreement, you should get or request an Employer Identification Number (EIN). An EIN will serve as the tax ID for your general partnership. EIN can be obtained from the Internal Revenue Service (IRS). It is a 9-digit number similar to Social Security Number. EIN, however, is distinct from SSN. It is only used for business-related activities, particularly for submitting general taxes. The form must be completed and uploaded to the IRS website. 

The application of an EIN in Kentucky can be through the following:

  • Apply Online- You can apply for EIN online, the most desirable and fastest method for users.
  • Apply by Fax- Another method of obtaining EIN is to fax Form SS-4 (PDF) after entering all the correct information to (855) 641-6935.
  • Apply by Mail- The EIN application Form SS-4 can be filed via mail. The processing time frame to receive the mail is 4 weeks.
  • Apply by Telephone-International Applicants – International applicants may call 267-941-1099 (not a toll-free number) from 6 a.m. to 11 p.m. (Eastern Time) Monday through Friday to obtain their EIN.

If you would like to be assisted in getting an EIN in the Internal Revenue Service, we can get your EIN for you. Our EIN service is quick and hassle-free. For more details about EIN for your business, check why you need EIN.

Step 6: File Form 2553 for Your S-Corp Business in Kentucky

Once you have obtained your EIN and Articles of Organization to form an S-Corp,  you must file Form 2553, Election by a Small Business Corporation, to apply for S-corp status. Filing a form 2553 should be done 75 days after the formation of your S-Corp, or not more than 75 days after the beginning of the tax year in which the election is to take effect. 

If your LLS-Corp has passed the deadline of 75 days, you must also file Form 8832, Entity Classification Election, in order to opt to be taxed as a corporation. Then you would send Form 2553 and Form 8832 jointly by certified mail from the USPS. In Kentucky, you can send your form 2553 to the Department of the Treasury Internal Revenue Service Center – Kansas City, MO 64999 Fax: 855-887-7734​. 

Advantages of Starting an S-Corporation in Kentucky

Filing an S-Corp in Kentucky has numerous benefits and advantages. 

  • Writing Off Losses: With S-corp, owners can deduct business losses from their individual income statements. If the company loses money in the first few years, it may balance its other sources of revenue. Even so, understand the shareholder loss limitations set by the IRS.
  • Pass-Through Taxation: Starting an S-Corp is the widely known advantage in forming this kind of business structure since an s-corp uses a pass-through taxation structure. The company does not pay twice the tax in this kind of taxation. Because of this structure, most start-ups and entrepreneurs in Kentucky apply for an S-Corp LLC.
  • Qualified Business Income Deduction: A qualified business income, or QBI, is the total of all qualified items of income, gain, deduction, and loss from any qualified trade or business, including S-Corp. With this, S corp owners may deduct up to 20% of their eligible earnings under the Tax Cuts and Jobs Act.

FAQs

What is an S-Corp?
An S-Corp is a type of corporation that is eligible for special tax considerations under the Internal Revenue Code. It is legally distinct from a regular corporation and offers several advantages, such as limited liability protection and pass-through tax treatment.
What is the process for forming an S-Corp in Kentucky?
To form an S-Corp in Kentucky, you must file the Articles of Incorporation with the Kentucky Secretary of State. You must also obtain an Employer Identification Number (EIN) from the IRS, and make sure you’re in compliance with all applicable state and federal laws.
What are the filing requirements for forming an S-Corp in Kentucky?
To form an S-Corp in Kentucky, you must file the Articles of Incorporation with the Kentucky Secretary of State. The Articles must include the name of the corporation, its purpose, the duration of its existence, the number of shares it is authorized to issue, and the names and addresses of its incorporators. You must also pay the applicable filing fee.
What are the fees associated with forming an S-Corp in Kentucky?
The filing fee for forming an S-Corp in Kentucky is $15. You may also need to pay additional fees for name reservations and registered agent services.
What is the annual filing requirement for an S-Corp in Kentucky?
All S-Corps registered in Kentucky must file an Annual Report each year. The Annual Report must include information such as the number of shares issued, the names of the officers and directors, and the names of the registered agents. The filing fee is $15.
What is an S-Corp in Kentucky?
An S-Corp in Kentucky is a type of corporation that allows its shareholders to be taxed like a partnership.
What are the benefits of forming an S-Corp in Kentucky?
Forming an S-Corp in Kentucky can provide shareholders with several benefits, including limited personal liability, tax savings, and flexibility in management structure.
What are the steps for forming an S-Corp in Kentucky?
The steps for forming an S-Corp in Kentucky include choosing a name for the corporation, filing articles of organization with the Kentucky Secretary of State, applying for an employer identification number (EIN) from the IRS, creating corporate bylaws, and issuing stock certificates.
Are there any restrictions on forming an S-Corp in Kentucky?
Yes, there are several restrictions on forming an S-Corp in Kentucky. The corporation must have at least one shareholder, no more than 100 shareholders, and must appoint a board of directors. Additionally, the corporation must be formed for a lawful business purpose and the articles of organization must be filed with the Kentucky Secretary of State.
What are the tax implications of forming an S-Corp in Kentucky?
Forming an S-Corp in Kentucky can provide certain tax benefits, including the ability to pass-through profits and losses to the shareholders, which limits the corporate tax burden. Additionally, the profits and losses of an S-Corp in Kentucky are taxed at the individual level, which may provide for a lower overall tax rate.
Do I need an attorney to form an S-Corp in Kentucky?
It is not required to have an attorney to form an S-Corp in Kentucky, however, it is strongly recommended to seek the advice of an experienced attorney to ensure that the process is completed properly.
How do I form an S-Corp in Kentucky?
To form an S-Corp in Kentucky, you must first choose a business name that is not already in use and file a Kentucky Secretary of State Certificate of Assumed Name. You must then file a Kentucky Articles of Incorporation with the Kentucky Secretary of State and obtain an Employer Identification Number (EIN) from the IRS. Once these steps are completed, you will be ready to operate your business as an S-Corp in Kentucky.
What are the requirements for forming an S-Corp in Kentucky?
The requirements for forming an S-Corp in Kentucky include filing a Kentucky Articles of Incorporation with the Kentucky Secretary of State, obtaining an Employer Identification Number (EIN) from the IRS, and registering the business name with the Kentucky Secretary of State.
What is the filing fee for an S-Corp in Kentucky?
The filing fee for an S-Corp in Kentucky is $15 for filing the Articles of Incorporation with the Kentucky Secretary of State.
What taxes do I need to pay for an S-Corp in Kentucky?
Depending on your business income, you may be required to pay taxes such as the Kentucky Corporate Income Tax, the Kentucky Employment Security Tax, and the Kentucky Corporate License Tax. You may also be responsible for federal income taxes, payroll taxes, and other taxes and fees.
Are there any other requirements to operate an S-Corp in Kentucky?
Yes, there are additional requirements to operate an S-Corp in Kentucky, such as filing an annual report, holding annual meetings, and maintaining corporate records. You should also consult with a qualified tax professional to ensure that you are meeting all of your tax and legal obligations.
What are the filing fees for forming an S-Corp in Kentucky?
The filing fee for forming an S-Corp in Kentucky is $40.
How long does it take to form an S-Corp in Kentucky?
It typically takes 5-7 business days to form an S-Corp in Kentucky.
Do I need a registered agent for my S-Corp in Kentucky?
Yes, you will need to appoint a registered agent for your S-Corp in Kentucky. The registered agent must have a physical address in the state.
Can an existing corporation become an S-Corp in Kentucky?
Yes, existing corporations can become S-Corps in Kentucky. This is done by filing Form 2553 with the IRS and filing an amended Articles of Incorporation with the Kentucky Secretary of State’s office.
Does my S-Corp in Kentucky need to hold annual meetings?
Yes, S-Corps in Kentucky are required to hold annual meetings. The meetings should be documented in writing and filed with the corporate records.
Is there a minimum or maximum number of shareholders for an S-Corp in Kentucky?
There is no minimum or maximum number of shareholders for an S-Corp in Kentucky. However, the shareholders must be US citizens or residents and the total number of shareholders cannot exceed 100.
Does my S-Corp in Kentucky need to have a board of directors?
Yes, S-Corps in Kentucky need to have a board of directors. The board should consist of at least three directors, although the exact number will depend on the size of the company.
What are the tax requirements for an S-Corp in Kentucky?
S-Corps in Kentucky are required to file an annual tax return with the Kentucky Department of Revenue and an annual federal tax return with the IRS.
What documents do I need to keep for my S-Corp in Kentucky?
You should keep all documents related to the formation, operation, and dissolution of your S-Corp in Kentucky. This includes Articles of Incorporation, operating agreement, minutes from meetings, tax returns, and financial statements.
Does my S-Corp in Kentucky need to issue stock certificates?
Yes, S-Corps in Kentucky are required to issue stock certificates to each shareholder. The stock certificates should note the number of shares owned, the par value of the shares, and the name of the corporation.
What is the deadline to file taxes for my S-Corp in Kentucky?
The deadline to file taxes for an S-Corp in Kentucky is March 15.
Does my S-Corp in Kentucky need to file a franchise tax?
Yes, S-Corps in Kentucky are required to file a franchise tax with the Kentucky Department of Revenue. The franchise tax must be filed by May 15.
Can I form an S-Corp in Kentucky online?
Yes, you can form an S-Corp in Kentucky online. You will need to file the Articles of Incorporation with the Kentucky Secretary of State’s office and obtain an EIN from the IRS.
What are the steps to Start an S-Corp in Kentucky?
To start an S-Corp in Kentucky, you must first choose a business name, file Articles of Incorporation with the Kentucky Secretary of State, obtain an Employer Identification Number (EIN) from the IRS, create corporate bylaws, and obtain any necessary state or local licenses or permits.
What are the advantages of forming an S-Corp in Kentucky?
Forming an S-Corp in Kentucky offers several advantages, including personal liability protection, tax savings, and the ability to raise capital by issuing company shares.
What are the filing fees for starting an S-Corp in Kentucky?
The filing fee for forming an S-Corp in Kentucky is $15.

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Conclusion

In conclusion, starting an S-corp in Kentucky is a strategic choice for entrepreneurs seeking the benefits of limited liability and favorable tax treatment. One can successfully establish an S-corp by following the outlined steps, including selecting a unique name, filing the Articles of Incorporation, obtaining necessary licenses, and adhering to state-specific regulations. Ultimately, this corporate structure offers a strong foundation for business growth and protection, making it a worthwhile consideration for those looking to launch a venture in Kentucky.


About Author & Editorial Staff

Steve Goldstein, founder of LLCBuddy, is a specialist in corporate formations, dedicated to guiding entrepreneurs and small business owners through the LLC process. LLCBuddy provides a wealth of streamlined resources such as guides, articles, and FAQs, making LLC establishment seamless. The diligent editorial staff makes sure content is accurate, up-to-date information on topics like state-specific requirements, registered agents, and compliance. Steve's enthusiasm for entrepreneurship makes LLCBuddy an essential and trustworthy resource for launching and running an LLC.

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