Individuals who own and organize an LLC are referred to as members. An LLC can have as few as one member. Kentucky law does not require that LLC members reside in Kentucky. LLCs offer business owners a large degree of flexibility when it comes to managing the business: LLC owners can elect to have a member-managed LLC or a manager-managed LLC. That means the members themselves can also manage the business -- like a partnership -- or can appoint different individuals as managers -- like a corporation. To form an LLC, members must file an Articles of Organization form with the Kentucky Secretary of State and pay the necessary filing fees.
All LLCs in Kentucky must appoint a registered agent with a registered office. The registered agent must have the authority to receive service of process on behalf of the LLC. That means the registered agent receives official state mail and legal papers in the event someone sues the LLC. The registered agent must be a Kentucky resident. The registered agent can be a person, a domestic corporation, LLC, or nonprofit or a foreign corporation, so long as it's authorized to transact business in Kentucky. The main requirement is that the registered agent’s office be the same as the LLC’s registered office.
LLC members enjoy limited liability akin to shareholders in a corporation. Kentucky law regards an LLC as a separate legal entity that has its own assets and liabilities. Accordingly, LLC members cannot be held personally liable for the LLC’s debts. If an LLC falls behind on bills, creditors cannot attempt to go after members’ personal assets. In addition, if the LLC lost a lawsuit and had to pay a judgment, in most cases, the members will not have to use their personal assets to satisfy the judgment.
While the law considers an LLC a separate entity for liability purposes, this is not the case for tax purposes. The IRS taxes an LLC like a sole proprietorship for single-member LLCs, or a partnership for multi-member LLCs. The LLC does not itself pay taxes. The profits and losses “flow through” the LLC and go on the members’ personal returns. This is unlike a corporation where both the corporation and the shareholders pay taxes. LLC members can, however, elect to be taxed like a corporation.
Contact a qualified attorney or tax professional licensed to practice in Kentucky to find out if forming an LLC in Kentucky can meet your specific business goals and needs. This article should not be construed as legal advice. It is for educational purposes only.