In Kentucky, you may incorporate a S corporation (S corp) by founding a limited liability company (LLC) or a corporation and then choosing S corp status from the IRS when applying for an EIN.
An S corporation is a tax categorization, not a company structure, according to the IRS. The S corp classification is used to lower a company’s tax burden.
In our How to Start a S Corp in Kentucky tutorial, we’ll walk you through the steps.
You must examine the following things before founding a S corporation:
S corporations are restricted to one class of stock and 100 stockholders, among other things. For more information, see our What Is a S Corporation? guide.
As entrepreneurs, we feel that incorporating a S corporation via an LLC is the best option since the benefits of founding a corporation are offset by S corp limitations. LLCs are also less difficult to manage than corporations.
You must determine if the S corp tax status is preferable to the default LLC tax status for your company. Read our LLC vs. S corp tutorial to fully grasp the tax benefits of a S corp.
There are two major methods to form a S corporation:
We do not advocate forming a company with the S corp tax status since it undermines all of the advantages of forming a corporation.
Forming an LLC and Choosing S Corp Status in Kentucky
Step 1: Give Your LLC a Name
Step 2: Select a Registered Agent.
Step 3: Submit the Articles of Incorporation.
Create an Operating Agreement in Step 4
Step 5: Obtain an EIN and submit Form 2553 to elect S Corporation tax status.
The first and most significant step in forming an LLC in Kentucky is deciding on a name.
Make sure your name conforms with Kentucky naming regulations and is readily searched by prospective customers.
1. Follow the Kentucky LLC naming guidelines:
The words “limited liability company” or “limited company” or one of its acronyms must be in your name (LLC or LC). “Limited” may be shortened as “Ltd.” and “business” can be abbreviated as “Co.”
Without permission, you may not use the term “cooperative” in your name.
Your LLC’s name cannot include terms that may be confused with a government organization (FBI, Treasury, State Department, etc.).
Restricted terms (for example, bank, attorney, university) may need extra documentation and the participation of a licensed professional in your LLC.
Your name must be distinct from any other current company name on file in the state.
2. Does the name exist in Kentucky? To determine whether your selected LLC name is available, visit the Kentucky Secretary of State’s FastTrack name availability search.
3. Is the URL accessible?
We suggest that you check to see whether your company’s name is accessible as a web domain. Even if you don’t intend to construct a company website right away, you may want to purchase the URL to prevent others from gaining it.
Your Kentucky LLC must have a registered agent.
A registered agent for your LLC will accept legal papers and tax notifications on your behalf. When you submit your LLC’s Articles of Organization, you will name your registered agent.
Many company owners opt to use the services of a registered agent. Many of these firms will incorporate your LLC for a modest price and provide free registered agent services for the first year.
Consent to Appointment of a Kentucky Registered Agent
Kentucky registered agents must agree to their appointment by personally or electronically signing the Articles of Organization.
If the registered agent is unavailable to sign the physical formation document, a Statement of Consent of Registered Agent form must be submitted. The following information is included on this form:
To properly register an LLC, the Kentucky Articles of Organization are utilized.
An LLC operating agreement is a legal document that defines your LLC’s ownership and member responsibilities.
An EIN is a number assigned by the US Internal Revenue Service (IRS) to companies in order to identify and tax them. It is basically a business’s Social Security number.
When you apply directly with the IRS, EINs are free.
