Kentucky Business License

Written by: Nik Ventouris

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Kentucky Business License

If you’re thinking about starting a new business in Kentucky, securing a business license is often a crucial step. Having said that, it’s important to understand that Kentucky does not have a one-size-fits-all business license, and so you’ll need to find the specific licenses and permits which are tailored to your business activities instead. These can be local, state, or even federal.

This Kentucky Business License article explains the common types of licenses you may need, walks you through the application process, and breaks down all of the necessary costs you may be subject to. By the end, you should have a clear idea of what to do in order to make your Kentucky business compliant.

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Do I Need a Business License in Kentucky

In Kentucky, businesses are required to obtain various licenses and permits at the local, state, and federal levels. Here’s a general breakdown:

Type of Business

Below, we’ve detailed common ways in which your business type can dictate the licenses you’ll be required to obtain, as well as specific examples of these:

  • Seller’s Permits: If you’re planning to sell tangible products or specific services in Kentucky, you’ll need a sales and use tax permit for collecting sales tax from your customers. You should keep in mind that to acquire this permit, you’ll need to submit an application to the Kentucky Department of Revenue
  • Professional Licensing: Kentucky has niche-specific licensing requirements in order to ensure the safety and well-being of its residents. Fields like medicine, engineering, and law are just a few examples of where a specific occupational license is mandated, with each profession having its own set of licensing criteria. The Kentucky Public Protection Cabinet is a great way to find out more about these prerequisites for various professions
  • Environmental Permits: If your business could potentially impact the environment, you’ll be required to obtain specific environmental permits in order to ensure that your business adheres to state standards and regulations. These are administered via the Kentucky Department for Environmental Protection

However, this is not the only factor influencing the exact combination of licenses you’ll need — the location of your business within Kentucky plays an important role as well.

Location

In this section, we’ve provided a succinct overview of the potential licenses and permits that your business may need due to local, state, and federal requirements:

  • Local: Each city and county in Kentucky can have its own specific set of rules. For example, if you’re setting up a restaurant in Louisville, you might need a local health department permit on top of other licenses. Likewise, businesses in Bowling Green might have different zoning or land-use permits
  • State: Kentucky’s state-level requirements can vary based on the nature of your business. For example, if you work in the distillery business, you’ll need to adhere to the specific distillery regulations in addition to obtaining an alcoholic beverage license. Similarly, someone opening a pharmacy would need to get licensed with the Kentucky Board of Pharmacy and adhere to both state and federal drug regulations
  • Federal: Some businesses tap into areas that are federally regulated. For instance, if you’re starting an agricultural business and plan to export goods, you’ll need to align with USDA standards and possibly require a federal export license. Another example would be a business involved in commercial fishing in federal waters, which would require a permit from the National Oceanic and Atmospheric Administration (NOAA)

Since the exact permits and licenses your business will need are entirely unique to your situation, you’ll have to conduct thorough research into your own local, state, and federal regulations to smoothly launch your business.

Alternatively, many entrepreneurs opt to leverage the expertise of third-party services to handle this on their behalf.

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How to Get a Business License in Kentucky

In order to get your business license(s) in Kentucky, you will need to complete the following steps:

  • Form Your Business
  • Obtain an Employer Identification Number (EIN)
  • Apply for the Required Licenses and Permits

Let’s take a look at each step in more detail below.

Step 1: Form Your Business

Before setting out to obtain a business license in Kentucky, it’s pivotal that you first choose an appropriate structure for your business. Sole proprietorships, general partnerships, and corporations are all common choices, however it’s often seen as the most advantageous for small businesses in Kentucky to register as a Limited Liability Company (LLC). Here are a few reasons for why:

  • Limited Liability: Members are protected from personal liability for business debts, safeguarding personal assets
  • Tax Benefits: LLCs typically enjoy a pass-through tax treatment, avoiding the double taxation that corporations are subjected to
  • Management Flexibility: LLCs allow for flexibility in management structure, either being member-managed or manager-managed based on the preferences outlined in the certificate of formation
  • Ease of Formation: With the Kentucky Secretary of State providing forms that meet the minimum state law requirements and the option to file online, setting up an LLC is relatively straightforward

Many small business owners opt to avoid the tricky process of forming an LLC by instead leveraging the help of third-party LLC formation services.

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Step 2: Obtain an EIN

The second step you’ll need to complete before applying for your business license is to obtain your EIN. This is a unique nine-digit number assigned by the Internal Revenue Service (IRS) to businesses in the United States so that their financial transactions can be identified and tracked.

An EIN is often necessitated when applying for various permits and licenses as it allows local and state governments to ensure your business is operating within the confines of the law. You can obtain it in a number of ways:

  • Online: You can apply for your EIN on the IRS’s official website by using the EIN Assistant. You should be granted your EIN shortly after completing this application
  • By Fax/Mail: After completing Form SS-4, you can apply for an EIN by submitting it to the IRS via mail or fax
  • By Phone: International applicants and businesses located outside US Territories are required to call the IRS at (267) 941-1099 to obtain their EIN — which they should receive during this call

Note: If you are a sole proprietor, you will be able to use your Social Security Number (SSN) instead (as long as you do not have employees).

Step 3: Apply for Licenses and Permits

After settling on the appropriate business entity and initiating the application for your EIN, the next step is to focus on securing the necessary licenses and permits to operate legally within your locale and industry.

  • Local Licenses: Once you’ve identified the local licenses you’ll need (if applicable), you’ll be able to start your application process by visiting your local county or city clerk’s office. They’ll provide specific forms and guidance on the steps you’ll need to take. For instance, in Lexington, restaurants applying for a health department permit, will need to submit an application form, provide details about their establishment, and often undergo an inspection before approval
  • Statewide Licenses: On the state level, most licenses have dedicated boards or departments. For example, applying for a real estate license in Kentucky can be done via the Kentucky Real Estate Commission, which will require you to provide details that relate to your qualifications, undergo background checks, and take and pass a real estate license exam from an approved organization
  • Federal Licenses: While the federal government doesn’t mandate licenses for general business operations, if your business falls under any government-regulated category, such as agriculture, fishing, firearms, and alcohol sales, it may be required to obtain additional federal licenses or permits

Note: For a comprehensive view of the potential licenses your business may need in Kentucky, consider using the Kentucky One Stop Business Portal. This platform offers valuable insights tailored to the specifics of your business, ensuring you’re on the right track.

Step 4: Renewal of Licenses and Permits

In Kentucky, you must ensure that your state and local business licenses and permits remain current.

Since renewal timelines can differ significantly, we recommend referring to the appropriate department or agency or consulting your original license documentation to understand the specific renewal deadlines that you’ll need to follow.

Alternatively, you can use a third-party service or a professional attorney for this process. This can be a good choice if you want to ensure that you avoid potential fines, as well as if you want to be as time-efficient as possible.

If you’re interested in finding out more about this process, see our article on How to Get a Business License.

How Much is a Business License in Kentucky

The cost of getting licensed in Kentucky will depend on several factors, including the type of business in question and its location.

For instance, businesses in the Prosthetics, Orthotics & Pedorthics sector, can expect to pay between $350 and $450 in licensing fees. On the other hand, if you’re registering as a secondary metals recycler, your application costs will be significantly lower (i.e.,$75.).

To accurately estimate the total cost of getting your Kentucky business licenses, you’ll need to consider both the initial fees, renewal costs, as well as the specific licenses you’ll require.

Generally speaking, we recommend going with a third-party service or a business attorney when it comes to your business licensing; this is because it can save you a significant amount of time and also ensure that you understand exactly how much you will need to pay from the get-go.

Kentucky Business License FAQ

Does Kentucky require a business license?

Kentucky can require businesses to obtain various licenses and permits at local, state (i.e., occupational business license.), and federal levels, however this will ultimately depend on your business type and location. For more information on your business needs, we recommend getting in contact with your county clerk or having a look at our Kentucky business license article.

How much does it cost to get a business license in Kentucky?

Since your business license cost will depend on the number of licenses you’ll need (if any), as well as the type of licenses, it’s difficult to give a one-size-fits-all answer on the general cost of getting a business license. Check out our How to Get a Business License article for more information on your licensing costs.

What is considered a small business in Kentucky?

The definition of a “small business” for licensing purposes in Kentucky can differ based on several factors, such as the number of employees, annual revenue, and the specific industry in which your business operates. For a thorough understanding, we recommend referring to the Kentucky Secretary of State’s official guidelines.

How do I start an LLC in Kentucky?

To start an LLC in Kentucky, you will need to find an appropriate business name, file your Articles of Organization, and obtain a Federal Employer Identification Number (EIN) — if necessary. You may then be required to obtain a tax license in order to operate legally. Keep in mind that you can start an LLC independently via Kentucky’s One Stop Business Portal, although this is seldom recommended.

For all related articles, have a look at our How to Get a Business License page.