A Kentucky LLC operating agreement defines the structure of your company and how the financial decisions are made. The document allows the members to create rules or the terms and provisions on how the LLC operates and protects them from personal liability of the LLC.
You’ll need your LLC operating agreement, especially when there are new investors — the document can help them review how your LLC is managed before making any major financial commitments.
Is an LLC Operating Agreement Required in Kentucky?
NO, an LLC in Kentucky doesn’t require an operating agreement, but having one is highly recommended.
By Type
Single-Member LLC Operating Agreement
Establish operational guidelines for a limited liability company with a single owner and manager.
Multi-Member LLC Operating Agreement
Establish a clear understanding of how your LLC will operate.
Laws
Kentucky LLC laws are highlighted in Title 23, Chapter 275 – Limited Liability Companies which include the following operating agreement statutes:
- § 275.175: Number of votes required to do business – Circumstances requiring affirmative vote of members – Written operating agreement for company without members – No right of dissent – Written operating agreement provisions relating to right to vote, approve, or consent.
- § 275.177: Enforcement of limitations on amendment of operating agreement.
- § 275.180: Operating agreement provisions on personal liability and indemnification.
Costs and Fees
The fees to set up an LLC in Kentucky include:
- Articles of organization filing fee – $40 ($90 for foreign LLCs).
- Name reservation fee – $15.
- Annual report fee – $15.
How to Form an LLC in Kentucky
Below are the detailed steps on how to set up an LLC in Kentucky:
Step 1 – Choose a Name for your Kentucky LLC
Ensure that you adhere to Kentucky’s guidelines to avoid problems when choosing an LLC name. Your business name also has to be unique and easy to remember. Ensure that you also follow government regulations when choosing an LLC name.
As soon as you have chosen a name, consider the option to reserve it so that no one else uses it. The state of Kentucky allows you to reserve it for up to 120 days for a fee.
Step 2 – Choose a Registered Agent in Kentucky
You need to appoint a Kentucky registered agent responsible for receiving legal notices and submitting important documents on your behalf. The registered agent serves as the third party between your LLC and the Secretary of State. Should you decide to hire a registered agent service, make sure that they have a physical address in Kentucky and not a PO box address.
An LLC member may also decide to be their own registered agent. While this is allowed, we highly encourage you to hire someone else instead. Hire an individual familiar with how LLCs in Kentucky work and the paperwork needed for the business.
Step 3 – File Your Articles of Organization
The articles of organization must be filed with the Kentucky Secretary of State. You can do this either online or through the mail. As soon as your LLC is approved, ensure you safely store all essential documents, including the operating agreement, contracts, member certificates, transfer ledger, etc. Make soft copies of these and store them in the cloud if possible.
Step 4 – Create your LLC Operating Agreement
Although not required, consider creating an operating agreement for your LLC in Kentucky. This document clearly outlines your company’s structure, addresses how disputes are dealt with or resolved, and creates business rules.
Step 5 – Get an EIN
The last step is to apply for an EIN or Employer Identification Number with the IRS. Your EIN allows the government to identify your LLC and can help you open business accounts. Acquiring an EIN is easy — you can do this through the Internal Revenue Service website, fax, or mail.
To sort out finances, ensure you have a separate business account for your LLC. It’s difficult to manage your finances and work on your taxes if your business finances are deposited into your personal bank accounts.
Sample
Use our Kentucky LLC operating agreement template below to get started.
