Step 1) Verify & Secure Your Brand Name
The first step in forming a Kentucky corporation is to choose a business name. Your business name needs to:
- Be free of restricted and prohibited words. The term “cooperative” is totally off-limits for Kentucky business names, and the following terms require approval by the state: bank, engineer, and insurance. And of course, no vulgarities!
- End with the a term indicating the business structure. Acceptable words/abbreviations are Company, Corporation, Incorporated, Limited, Co., Corp., Inc. and Ltd.
- Not be taken by any existing business in Kentucky.
What To Do:
Conduct a business name search via the Kentucky secretary of state website. Business names are first come first serve, so if yours is available but you’re not quite ready to register your business, you can reserve your business name for a $15.00 fee.
It’s also important to check that you’ll have a good domain name for your business website, even if you’re not planning on creating one right away. You can easily search these on GoDaddy. This part isn’t required for legal purposes, but you’ll want a good URL to make it easy for customers to find you.
Quick Note: Before you commit 100% to a name, you may also want to check that there’s a decent URL available for your business. Use WEEBLY to search your options. If there’s a quality domain name for purchase, we advise buying it right away. Even if launching a business website isn’t on your radar right now, it’s going to be soon, and you might as well nail down a domain name that’ll make it easy for customers to find you!
Step 2) Appoint A Registered Agent
Kentucky requires you to find a registered agent to represent your corporation. You’ll have to list your registered agent’s name on your Articles of Incorporation, so it’s important to take care of this beforehand.
A Kentucky registered agent is responsible for receiving service of process notices, tax forms, and other official documents for your business. Your registered agent can be a business entity or individual, as long as they are a legal resident or registered to operate in the state, and available during normal business hours at a Kentucky address.
Technically, you can act as your own registered agent in Kentucky, but there are quite a few reasons why you might not want to. For instance:
- If you run your business from home and don’t want your personal address affiliated with your business.
- If you don’t consistently work during normal business hours.
- If you’re concerned about the disruption of being served in front of your family, customers or employees.
What To Do:
If you’re unfamiliar with the duties of a registered agent, read our guide for more information. If you decide you’re up for the task, be our guest -- just keep in mind that it’s not a job to take lightly.
Otherwise, the easiest and cheapest way to get registered agent services is through an online incorporation service. Many companies will throw in free or discounted registered agent services when you incorporate with them!
Step 3) File Articles Of Incorporation
Now it’s time to register your Kentucky corporation. This requires filing Articles of Incorporation with the state, in which you’ll disclose the following information:
- Your corporation’s name and mailing address
- Your registered agent’s name and street address
- The incorporators’ name and mailing address
- The number of shares your corporation is allowed to issue
- The size of your business (under or over 50 employees)
- Your business type (retail trade, services, manufacturing, etc.)
Articles of incorporation need to be signed by your registered agent and incorporator, and they cost $50 to file. The $50 fee includes Kentucky’s corporate organization tax fee for 1000 shares or less, but if your corporation is going to issue more than 1000 shares, you may be subject to a larger fee.
What To Do:
Filing your Articles of Incorporation is actually a little trickier than it sounds. If they’re not filled out and filed properly, it can result in a whole mess of legal and financial repercussions. If you end up taking the task on yourself, just make sure that all the information you provide is 100% accurate.
Step 4) Obtain an EIN
Once you’re through with filing, it’s time to obtain your EIN. An EIN, or Employer Identification Number, is a corporation’s equivalent of a social security number -- it’s the federal government’s method of tracking your business’ activity for tax purposes. It’s also required to have before you set up a business bank account.
What To Do:
Getting hooked up with an EIN is actually a fairly painless process. Simply fill out the IRS online application and you’ll get your EIN for free as soon as you’re done!
Step 5) Appoint Directors, Meet, And Discuss Bylaws
Now it’s time to actually create the contents of your corporate records book -- but before doing so you’ll need to have a long chat with your directors, aka an organizational meeting. (If you haven’t appointed initial directors yet, do so now!) At this first board meeting, you’ll do a number of things, like:
- Write and adopt corporate bylaws
- Issue shares of stock
- Appoint corporate officers
- Establish the corporation’s fiscal year
- Create a banking resolution
You’ll also have to make sure to record the minutes of this meeting.
This is a hefty step, for sure, and unless you and all your directors happened to study business together in grad school, you’ll probably need some help crafting these documents.
What To Do:
There tons of great online templates for corporate bylaws and meeting minutes that may be the perfect extra boost for you and your board to get organized. Shop around and see if any of them seem like they’ll be sufficient for your corporation’s needs. Depending on your comfort level, you may end up needing the hands-on assistance of an incorporation service or lawyer here.
Step 6) Open A Bank Account & Setup Finances
The banking resolution you create during your organizational meeting will outline who’s authorized to do what when it comes to financial responsibility, but you may or may not have settled on a specific bank for your corporation’s finances.
Your bank could have some major perks or serious downsides for your business depending on which you choose, so it’s important to take this decision seriously. Shop around:
- KY-based banks like Community Trust and First Southern National
- KY- based credit unions like Fort Knox Federal
- National banks like Capital One and Chase
Local and national banks both have benefits to offer small businesses, so both routes are worth exploring. Do your research and find out which will be the best choice based on the specifics of your business. Head over to our top 5 national business bank accounts ranking to get started!
What To Do:
When it comes time to actually open up your business bank account, keep in mind that your bank may need to see all sorts of important documents to make everything official. You’ll definitely need to have your EIN and articles of incorporation handy, and some banks require you to have a corporate seal to authorize certain paperwork. Just ask a representative at your bank ahead of time for details about what you’ll need to set up your account.
Once you’ve got it all set up, you’ll want to invest in some accounting software and sync it with your account. This is an easy and inexpensive way to keep your finances in order if you don’t have the budget to hire an accountant yet. See our top accounting software recommendations.
Step 7) Tackle Taxes & Licensing/Permits
The final step is to take care of any special taxes, licenses and permits your corporation needs in order to legally do business in Kentucky. This means you’ll need to understand the federal, state, and municipal requirements for your business, and make sure not to miss anything to avoid getting hit with hefty fines or other consequences.
What To Do:
- Federal: Head over to the Small Business Association website. You’ll be able to find out everything you need to know about federal licenses and permits and federal tax requirements, and see which apply to your business.
- State: For state requirements, you should be able to get the information you need on license and permit requirements and state tax registration through the Kentucky One-Stop Portal. However, if you have any trouble, you can always contact the Kentucky SBA District Office directly.
- Local: For information on county and city-specific taxes, permits and licenses, you’ll need to contact your local Chamber of Commerce directly. For an initial search, you can look up your locality’s requirements on Kentucky One-Stop.
If you’re working with highly regulated goods or are for some other reason required to jump through lots of hoops at this step, you can always hire a business license service to take care of it for you. They’ll obtain all the necessary documents and send them to you in a bundle, ready for your beautiful signature.
Step 8) Start A Corporate Records Book
Kentucky state law doesn’t actually require you to keep a corporate records book, but it does require you to have all the documents it would contain. This includes your:
- Articles of incorporation
- Corporation bylaws
- Meeting minutes
- Written consent forms
- Tax resolutions
- Permits and licenses
...and any other important legal paperwork you acquire. Having a corporate records book is simply the best way to keep everything in one place and ensure nothing gets lost.
What To Do:
As we mentioned, online filing services can provide you with a corporate records book and help out with pretty much all the documents you’ll need to assemble it.
You can always go the extra mile and get a full-on corporate kit, too, which includes special bonuses like personalized stock certificates and a corporate seal. It really just depends on how official you want your corporation to seem.
Need Help Incorporating?
Forming a Kentucky corporation is quite a task, and most entrepreneurs need some help staying organized and making sure everything is filed properly and on-time. An online incorporation service can be massively helpful with almost all of the steps we discussed above and allow you can focus your energy on bringing the company to life.
Here are 3 great incorporation services that handle everything but stand out in different ways:
- IncFile ($49 + state fee) = Best Price & Overall Value
- LegalZoom ($149 + state fee) = Best For Brand Recognition
- Harbor Compliance ($499 + state fee) = Better Customer Support