Business Law in Kentucky: Forming and Running an LLC
Kentucky owners ask the same few things. How do I form an LLC, what must I file every year, do I need an operating agreement, and what do managers owe each other if the relationship sours? The statute answers each, and its defaults are lower than most owners expect.
William J. Brown, our Managing Partner, is admitted in Kentucky and handles business law matters for the firm.
Filing deadlines and default rules for a Kentucky LLC
A Kentucky LLC exists when the Secretary of State files its articles of organization (KRS 275.020), for a $40 fee (KRS 275.055). An annual report is then due between January 1 and June 30 each year, starting the year after formation, for $15 (KRS 14A.6-010, 14A.2-060). Miss it and the Secretary of State may administratively dissolve the company (KRS 14A.7-010). Reinstatement takes a Department of Revenue tax certificate, the delinquent reports and a $100 penalty (KRS 14A.7-030, 14A.2-060).
The operating agreement is where the defaults matter. The statute treats it as any agreement among all members, written or oral (KRS 275.015). Unless a written agreement says otherwise, a member or manager is liable for breach of the duty of care only for wanton or reckless misconduct, and the duty of loyalty is to account for profit from company transactions or property made without consent of more than half of the disinterested managers or a majority-in-interest of members. A non-manager member of a manager-managed company owes no duties as a member (KRS 275.170).
Unresolved owner disputes end in Circuit Court, where a member may seek dissolution if it is not reasonably practicable to carry on the business under the operating agreement (KRS 275.290). Write buy-sell, deadlock and consent terms down before anyone needs them. Judgments on a written contract bear the contract's rate; otherwise 6% (KRS 360.040), so an interest clause is a drafting decision.
Entity Formation and Filings
Articles of organization, registered agent, and the annual report calendar.
Operating Agreements
Written terms on duties, consent, deadlock and buy-sell in place of the KRS 275.170 defaults.
Good Standing and Reinstatement
Annual report compliance and reinstatement after administrative dissolution.
Commercial Contracts
Customer and vendor agreements with an express interest rate, which controls judgment interest.
How do I form an LLC in Kentucky?
File articles of organization with the Secretary of State for $40 (KRS 275.020, 275.055). The LLC exists once they are filed. An annual report follows each year between January 1 and June 30, for $15.
Do I need a written operating agreement in Kentucky?
The statute does not require one and recognizes oral agreements (KRS 275.015). Without a written agreement the defaults apply, including the wanton-or-reckless standard for duty of care (KRS 275.170).
What happens if my Kentucky LLC misses its annual report?
The Secretary of State may begin administrative dissolution (KRS 14A.7-010). Reinstatement needs a Department of Revenue certificate, the delinquent reports, a $100 penalty and a statement that you have not begun winding up (KRS 14A.7-030).
What duties do LLC managers owe in Kentucky?
By default, care-based liability requires wanton or reckless misconduct, and loyalty means accounting for profit made without the required consent (KRS 275.170). A written agreement can change both.
Facing a business law question in Kentucky?
The first consultation is confidential, and we respond within one business day.