Kentucky Business Registration: Everything You Need to Know

Kentucky business registration is important if you're looking to take advantage of the state's competitive tax climate. Kentucky is a great state in which to form a business, having jumped from No. 33 in the last two years to No. 18.

Kentucky Business Taxes

If you are looking for an in-depth overview of federal, state, and local taxes required for businesses operating in Kentucky, one resource is The Kentucky Business One Stop website. It includes:

• Federal tax registration requirements. The Internal Revenue Service (IRS) also has resources to help in this area.
• State registration requirements. To enroll your new business under most common business taxes, complete the multiuse Kentucky Tax Registration Application.
• Special state tax registration requirements. Other taxes might apply, depending on the product or service you will be providing.
• Local requirements. Your city or county might have other licenses or tax requirements, so check with the municipality in which you are starting your business.

Steps to Start a Small Business in Kentucky

1. You can take training seminars at the Kentucky Small Business Development Center (SBDC). Online courses are available for free. An SBDC consultant can help you determine your options and needs.
2. Depending on your product or service, consider zoning and environmental regulations, such as those put in place by the Environmental Protection Agency. You might also have to consider the Occupational Safety and Health Administration's safety and health regulations.
3. A business plan is vital and will help you outline what you know about the industry and how you plan to be successful in your new endeavor. Create a business plan if you intend to request financing or are seeking investors.
4. Pick your business name, and select your business form (e.g., limited liability company, corporation, partnership).
5. Register at the Kentucky One-Stop Business Portal. Register trademarks or service marks, if needed, with the Secretary of State.
6. Obtain permits for remodeling, new construction, or signage from the local zoning department.
7. Apply with the IRS for a federal employer identification number (FEIN).
8. Determine if you need special licenses by checking with your local city and county clerks.
9. Call 1-800-817-2262 to report employees to the Kentucky New Hire Reporting.
10. Open a business checking and savings account.
11. Secure insurances, liability, worker's compensation, or other coverage depending on your business.

Do You Need a Sales Tax Number?

Sales tax must be collected on a variety of sales. The Kentucky Department of Revenue website can help you determine if your product or service is taxable. There is no charge to apply for a sales tax number, and you won't need to renew it. It might take several weeks to process your application and receive your number.

You can use the Kentucky Business One Stop portal to get your sales tax permit. Contact the Kentucky Taxpayer Service Center Department's Division of Sales and Use Tax at P.O. Box 181, Frankfort, KY 40602-0181. Or call 502-564-5170. Review the Kentucky Revenue Cabinet registration for information about what is taxable. All businesses also need a North American Industrial Classification System (NAICS) code.

The Kentucky License Division

If you start a for-profit business, you will need to apply in writing to the license division prior to doing business. A business will be considered a Kentucky local business if it owns property or has a lease for six months or longer. You must pay a $50 fee. A $275 deposit might be required along with the application. You must also obtain an occupational license with an occupational tax of 1.85 percent.

If a business performs regular visits to its customer base, such as water delivery, it might be considered a Kentucky local business, even without an established location.

A business not considered local might be considered a transient business, contractor, peddler, or professional service business. The fees for these types of businesses will vary, depending on how many days of operation are within Kentucky and how many employees are working. These businesses won't be required to submit employee withholding or annual net profit returns.

If you plan to sell alcoholic beverages, the licensing process can take five weeks and will include a comprehensive set of forms. Call 270-393-3000 to get an appointment with the Occupational License Division to discuss the application process.

If you need help with Kentucky business registration, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.