Starting a corporation in Kentucky can be a challenging but rewarding experience. The step-by-step process may seem overwhelming, but with a little patience and persistence, anyone can set up a successful business. This article outlines the key steps you should follow to start your Kentucky corporation.
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What is a Kentucky Corporation?
A corporation is a legal entity that is separate from its owners. It can be formed in any state, including Kentucky. As a separate entity, the corporation can own assets, borrow money and enter into contracts in its own name.
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In Kentucky, a corporation is formed by filing articles of incorporation with the Kentucky Secretary of State. The corporation must appoint a registered agent, who will accept service of legal process on behalf of the corporation.
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Step 1 - Choose a Name
The first step in forming a corporation in Kentucky is choosing a legal name. The name must not already be in use and should meet the state’s criteria for corporate names.
Kentucky corporate names must include one of the following designations:
- Incorporated (Inc.)
- Corporation (Corp.)
- Company (Co.)
- Limited (Ltd.)
Step 2 - File Articles of Incorporation
Once you have chosen a name for your Kentucky corporation, the next step is to file Articles of Incorporation with the Kentucky Secretary of State.
To prepare your Articles of Incorporation, you will need to include:
- The name of the corporation.
- The name and address of your registered agent.
- The number of shares you are authorized to issue.
- The names of your directors.
The filing fee for Articles of Incorporation in Kentucky is $40.
Step 3 - Appoint a Registered Agent
As mentioned previously, a registered agent is a person or company that will accept legal documents on behalf of your corporation. Kentucky law requires that every corporation have a registered agent.
Your registered agent must have a physical address in Kentucky, available during normal business hours. You can appoint an individual or a company as your registered agent.
Step 4 - Obtain an Employer Identification Number
The next step in forming a Kentucky corporation is obtaining an Employer Identification Number (EIN) from the IRS.
An EIN is a unique number that identifies your corporation for tax purposes. You will need an EIN to open a bank account and to file tax returns.
You can obtain an EIN for free from the IRS website.
Step 5 - Draft Bylaws
Bylaws are the rules for how your Kentucky corporation will operate. They outline things like the duties of the officers and directors, shareholder meetings, and how decisions will be made.
Bylaws are not filed with the state, but they are required to be kept at the principal office of the corporation. They help the corporation maintain order and establish a framework for decision-making.
Step 6 - Issue Stock
As a corporation, you will issue stock to your shareholders. This represents their shares of ownership in the corporation.
When you file your Articles of Incorporation in Kentucky, you must specify the number of shares the corporation is authorized to issue. Issuing stock comes after incorporation and usually requires a vote by shareholders.
Step 7 - Obtain Licenses and Permits
Finally, your corporation may need licenses or permits to operate legally in Kentucky. The types of licenses or permits required will depend on the nature of your business.
Some common licenses and permits include the Kentucky Sales Tax Permit, Wholesale Drug Distributor License, and Motor Carrier Permit.
Before operating your Kentucky corporation, ensure you have fulfilled all the necessary requirements for licensing and permits.
Conclusion
Starting a Kentucky corporation requires a number of steps, both at the state and federal levels. Understanding the process involved and taking the right actions to form and run your corporation can create a pathway to success and prosperity. Use this guide as a starting point to start your Kentucky corporation today!
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