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Kentucky Business License Basics

Kentucky Business License Basics

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Kentucky Business License Basics

Starting a small business in Kentucky often means registering with several federal, state, and local agencies. Let’s review common Kentucky business license registrations so your business starts off right.

Related: Guide to starting a business in Kentucky 

Setting Up the Business

Sole proprietorship: In Kentucky, a sole proprietorship is an unincorporated business owned by a single individual. The owner has complete control over the business but is personally liable for all debts and obligations. No formal registration is required, making it the simplest and most common form of business structure.

General partnership: A general partnership in Kentucky is an unincorporated business owned by two or more individuals who share management responsibilities, profits, and losses. Partners have unlimited personal liability for the partnership’s debts and obligations. No formal registration is required, but a partnership agreement is recommended to outline the partners’ roles and responsibilities

Corporation: A corporation in Kentucky is a legal entity separate from its owners, providing the owners (shareholders) with limited liability protection. Corporations are the most complex business structure to set up and have specific administrative requirements. 

Limited Liability Company (LLC): An LLC in Kentucky combines aspects of sole proprietorships and corporations, offering flexibility in management and taxation. Owners, called members, have limited personal liability for the LLC’s debts and obligations, but they aren’t as complex as corporations. 

Related: Comparison of Business Structures

What Licenses Do Kentucky Businesses Need?

With the business structure out of the way, we can begin looking at the different types of registrations businesses in Kentucky may need. There isn’t a standard business license, as requirements vary depending on where the business is located and what it does. Here is a general overview of the different registrations your business may need.

Business License

There is no general state of Kentucky business license; however, many cities require businesses to be licensed in order to operate. Rules for business registration vary depending on location and the business’s activities. Below are a few cities that have licensing requirements.

  • Lexington: The Lexington-Fayette Urban County Department of Finance requires businesses operating in the county to obtain an Occupational License. A Certificate of Occupancy may also be necessary in order to use a building or space legally.
  • Bowling Green: Any business activity within the City or City Annex is required to complete the Occupational License application.
  • Owensboro: All businesses will need to obtain an Occupational License from the City of Owensboro. Additionally, businesses such as junk yards, towing services, bowling alleys, and more will need to register with the city.
  • Covington: To do business in the City of Covington, businesses will need to apply for an Occupational License.
  • Hopkinsville: An Occupational License is required for all businesses operating within the City limits of Hopkinsville. The initial registration fee is $100.
Take the guesswork out of figuring out what licenses and permits are required to start your business with license research packages from Bizee and LegalZoom.

For as little as $99, you can save a lot of time and know your business is in compliance with local, state, and federal requirements. 

Assumed Name Registration

While not a business license, it’s common for sole proprietorships and general partnerships in Kentucky to operate under a name other than the full name of the owner(s). In this case they will want to obtain a Kentucky Certificate of Assumed Name (also known as a Doing Business As, DBA, or Fictional Business Name) with the County Clerk‘s Office in the county where the business is located.

Building & Zoning Permits

Zoning: In Kentucky, zoning laws are regulated by local governments, such as counties and cities. Check with your local planning and zoning department to ensure your business activities are allowed with the zoning district. For home-based businesses, review the local zoning ordinance, as some areas may require a conditional use permit or home occupation permit for certain types of home-based businesses.

Building Permit: A building permit is required for most construction, alterations, or additions to structures in Kentucky. To obtain a permit, submit plans, specifications, and an application to your local building department or inspection office.

Signage Permit: Most local units of government in Kentucky regulate the size, location, and type of business signage. Before installing any signs, check with your local planning and zoning department or building inspection office for specific requirements and to obtain a sign permit.

Kentucky Sales Tax Account

All businesses in Kentucky will need to register for Tax Accounts with the Kentucky Department of Revenue. Registering for a Tax Account will allow a business to obtain a Kentucky Sales Tax Permit to sell products (both physical and digital) and offer certain services.

After registering, a business will receive a Commonwealth Business Identifier (CBI), which is a unique identification number for the business.

Resale Certificate

Businesses purchasing merchandise to resell will want to obtain a Kentucky Resale Certificate. This allows them to avoid paying sales tax on the inventory they are reselling to customers.

Occupational License

A variety of professions in the state are regulated and need to be registered before offering certain services. A few common occupations that require licensing in Kentucky include; detectives, cosmetologists, barbers, architects, massage therapists, and many more. Additional information, fees, and licensing requirements for professions are available from the Kentucky Office of Occupations & Professions.

Employer Identification Number (EIN)

The Kentucky Employer Identification Number (EIN), also known as a Federal Tax Identification Number, is a unique nine-digit number assigned by the Internal Revenue Service (IRS) to businesses operating in Kentucky. It is used for tax filing and reporting purposes, similar to how an individual uses a Social Security number. Companies can apply for an EIN through the IRS website or by submitting a paper form.

Next Steps

While it’s a good start, there are so many different licenses that may be needed. Double-check with the City Clerk’s Office, Chamber of Commerce, and/or Economic Development office in your area before opening your doors.

Author

  • Greg Bouhl

    With over two decades as an entrepreneur, educator, and business advisor, Greg Bouhl has worked with over 2,000 entrepreneurs to help them start and grow their businesses. Fed up with clients finding and acting on inaccurate and outdated information online, Greg launched StartUp101.com to be a trusted resource for people starting a business.

Kentucky Business License Basics

Kentucky Business License Basics

2 Responses

  1. Hello, I was wanting to ask about getting a business license in Louisville Kentucky to start an auto body shop, but I’m not sure what the process is to do it. Your help would be much appreciated. Thank you

    1. There are several things that can fall under the umbrella of business license.

      Here is a general overview on what auto body shops need – https://startup101.com/what-licenses-does-an-auto-body-repair-shop-need/

      Here is some specific auto body rules for Kentucky sales taxes – – https://revenue.ky.gov/DOR%20Training%20Materials/103%20KAR%2027.230.%20Automotive%20body%20shops%20or%20suppliers.pdf

      Also the state of Kentucky, has the Business One Stop that helps identify the licenses they need to start – https://onestop.ky.gov/Pages/default.aspx

      Hope this helps! Let me know if you have any other questions!

      Greg

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