Form a Kentucky Corporation
Register your Kentucky (KY) corporation online now. Kentucky incorporation has never been easier. Incorporate in Kentucky with the Kentucky incorporation experts. We will assist you with forming your Kentucky corporation, the right way. To get started, simply click on “Order Now.” Please feel free to call us, anytime, with any questions.
Incorporating in Kentucky
Incorporating in Kentucky can be vital to businesses based of Kentucky. At LawInc, we prepare your Kentucky corporation Articles of Incorporation, bylaws, stock certificates, stock ledger and more. We can even obtain your Kentucky corporation Tax ID number and file your Kentucky S corporation election with the IRS.
Kentucky Incorporation Information
The following Kentucky incorporation information will likely be helpful when deciding to incorporate in Kentucky.
Kentucky Corporation Name
The first step in forming a Kentucky corporation is selecting the business name. Kentucky corporation names:
- Must contain “Corporation,” “Incorporated,” “Limited,” “Company,” “Corp.,” “Inc.,” “Co.,” or “Ltd.” or words or abbreviations of like import in another language.
- Shall not contain language stating or implying that the corporation is organized for a purpose other than that permitted by law and its articles of incorporation.
- Must be distinguishable from any name of record with the Secretary of State.
An available Kentucky corporation name may be reserved for a 120 day period.
LawInc.com permits you to choose up to three names and will conduct a name search for your Kentucky corporation, prior to filing.
Kentucky Corporation Formation
Kentucky Filing Procedure: To incorporate in Kentucky, you must file Kentucky Articles of Incorporation with the Kentucky Secretary of State.
The Kentucky Articles of incorporation should include:
- Name of the Kentucky corporation.
- Number of shares the Kentucky corporation is authorized to issue.
- Name and address of the registered agent and address of the registered office in Kentucky.
- Mailing address of the Kentucky corporation.
- Name and address of each incorporator.
- Signature of Kentucky corporation incorporator.
Kentucky Corporation Authorized Shares: The maximum number of shares for the minimum organizational tax is 1,000 par value or without par value shares. There is no minimum amount of paid in capital required to commence business. There is a $10 minimum organization tax for one thousand (1,000) shares or less. The organization tax is based on the number of shares authorized by the articles of incorporation, at the following rates: one cent ($0.01) for each share authorized up to and including twenty thousand (20,000) shares, one-half cent ($0.005) for each share in excess of twenty thousand (20,000) shares and up to and including two hundred thousand (200,000) shares, and one-fifth cent ($0.002) for each share in excess of two hundred thousand (200,000) shares.
Kentucky Incorporator: Minimum number of incorporators is one (1) (person, partnership, association or corporation, singly or jointly with others) and there is no requirement that the incorporator be a resident of Kentucky.
Kentucky Corporate Directors: The minimum number of directors is 1. A Kentucky corporation director must be a natural person at least 18 years old. Directors need not be listed in the articles.
Kentucky Corporation Purpose: It is acceptable to state either alone or with a specific purpose clause, “The purposes for which the corporation is organized shall to engage in any lawful business for which a corporation may be organized pursuant to the Kentucky Business Corporation Act.”
Kentucky Corporation 1244 Stock: Election to have stock classified as IRC Section 1244 stock allows for a substantially larger application of the deduction from business losses to ordinary income than regular stock. With regular stock, you can only offset $3,000 against ordinary income. With the issuance of Section 1244 Stock, the corporation can claim an ordinary loss deduction of as much $100,000.
Kentucky Registered Agent: A Kentucky corporation must maintain a registered agent and office to receive service of process in Kentucky. The Kentucky registered agent should be available, at a Kentucky physical address, during normal business hours to accept important legal and tax documents on behalf of the Kentucky corporation. The registered agent can either be (1) an individual with a physical Kentucky address or (2) a corporation authorized to serve as registered agent.
Kentucky Corporation Limitation of Directors’ Liability: The articles of incorporation may contain a provision eliminating or limiting the personal liability of a director to the corporation or its shareholders for monetary damages for breach of his duties as a director, provided that such provision shall not eliminate or limit the liability of a director:
- For any transaction in which the director’s personal financial interest is in conflict with the financial interests of the corporation or its shareholders;
- For acts or omissions not in good faith or which involve intentional misconduct or are known to the director to be a violation of law;
- For any vote for or assent to an unlawful distribution to shareholders; or
- For any transaction from which the director derived an improper personal benefit.
Kentucky Professional Corporation: Kentucky Professional corporations are corporations organized for the purpose of providing professional services. Typically, professional corporations must be organized for the sole purpose of rendering professional services of the licensed practitioners.
Kentucky Corporation Post-Filing Requirements
Kentucky Corporation Annual Report: Kentucky corporations are required to file an annual report with the Secretary of State between January 1 and June 30 of the year following the calendar year in which the corporation was incorporated. Subsequent annual reports must be filed with the Kentucky Secretary of State between January 1 and June 30 of the following calendar years.
Kentucky Corporate Minutes: Kentucky corporations should hold and document annual shareholder and director meetings.
Kentucky Corporation Taxes
Kentucky Corporation Taxes: For information on the Kentucky state income tax rate, visit: http://revenue.state.ky.us
Kentucky C Corporation: All Kentucky corporations formed by default are “C” corporations. A Kentucky C corporation is a Kentucky corporation that has not made an election to be an “S” corporation. The term C corporation is specifically used because the entity is taxed under subsection C of the IRS code. Kentucky C corporations are taxed at two levels (“double taxation”). This means that the corporation itself pays its own tax when it makes money (the first tax). The owners or shareholders are then taxed again when they are paid a salary or dividend by the corporation (the second tax). Despite double taxation, Kentucky C corporations offer many planning and benefit opportunities.Kentucky S Corporation: A Kentucky S corporation is a corporation that has made an election with the IRS to be treated for tax purposes as a “pass-through entity.” This means that corporate profits and losses are passed through to the shareholders (owners) who report them on their own personal tax returns and pay the tax at the individual level. The corporation pays no federal income tax at the corporate level. Kentucky S corporations are not subject to the double taxation C corporations encounter. The State of Kentucky recognizes S corporation status. Kentucky does not require a state election. However, Kentucky S corporations are still subject to a separate 1.5% S corporation fee, which is based on the corporation’s net income.
These are the 3 main advantages of forming a Kentucky S corporation:
- No double taxation: One of the main advantages of Kentucky S corporation status is that it avoids the double taxation that occurs with a regular Kentucky C corporation. In a Kentucky C corporation, the corporation pays income tax on its profits and, if those profits are distributed to shareholders, the shareholders pay income tax on the distribution.
- Loss deductions: The availability of losses. Shareholders of a Kentucky S corporation generally may deduct their share of the corporation’s net operating loss on their individual tax returns in the year the loss occurs. Losses of a Kentucky C corporation, however, may offset only the corporation’s earnings.
- Self-employment tax savings: By electing S corporation status, only the earnings actually paid out to you as salary are subject to payroll taxes; money left in the business is not subject to payroll taxes or self-employment tax. All income passes through, but its tax status depends on whether it is classified as salary or ordinary income.
Federal Tax Identification Number/Employer Identification Number (EIN): The Federal Tax Identification Number, also known as the Employer Identification Number (EIN) is a number that is assigned to a business by the Internal Revenue Service. An EIN is like a Social Security Number for a business. It is a requisite for certain business functions such as opening bank accounts or hiring employees. All Kentucky corporations should obtain an EIN.
Kentucky Corporation Dissolution
Kentucky Corporation State Dissolution Requirements: A Kentucky corporation can be voluntarily dissolved by filing Articles of Dissolution with the Kentucky Secretary of State.
Kentucky Corporation Federal/IRS Dissolution Requirements: Corporations are required to file IRS Form 966, Corporate Dissolution or Liquidation. A final tax return should be filed with the IRS. Form 966 should be filed along with the final tax return. Final state tax returns may also need to be filed. Follow up with an accountant regarding all tax related requirements.