What Business Licenses & Permits are Needed in Kentucky?

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What Business Licenses & Permits are Needed in Kentucky?

Starting a business in Kentucky will mean potentially registering with a number of federal, state, and local agencies. Let’s take a look at common licenses and permits a business will register for in Kentucky.

Before applying for any licenses, the legal entity of the business will need to be established. Learn more about the differences between the sole proprietorship, general partnership, corporation, and Limited Liability Company (LLC). Corporations and LLCs will register with the Kentucky Secretary of State.

Related: Comparison of Business Entities

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 what the business does. Below are a few cities that have licensing requirements.

LexingtonThe Lexington-Fayette Urban County Department of Finance requires businesses operating in the county to obtain an Occupational License.

The license’s cost is $100 initially, and then 2.25% of net profits of every business from activities conducted within Fayette County will be due.

A Certificate of Occupancy may 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.

A one-time license registration of $50 will be made payable to the City of Bowling Green. The business will be charged a 1.85% occupational tax on any profits made by operating in the city.

Owensboro – All businesses will need to obtain an Occupational License from the City of Owensboro. This license’s cost is $75, and 1.78% of profits will also be due to the city. Businesses such as junk yards, towing services, bowling alleys, and more will need to register with the city.

Covington – In order to do business in the City of Covington, businesses will need to apply for an Occupational License. A $50 filing fee will be required with the application. An additional tax called the Occupational License Fee will also be due annually, which is a tax based on a percentage of the business profits.

Hopkinsville – An Occupational License is required for all businesses operating in the City limits of Hopkinsville. The initial fee for this license is $100 plus 1.5% of the business’s gross profits.

Building & Zoning Permits

Zoning – Depending on the location of the business, it’s important to verify whether the business needs an occupancy permit or has specific zoning regulations to follow. Depending on city requirements, home-based businesses may need to apply for a home occupation permit.

Building PermitA building permit may be needed from the city or county building and planning department if there is any construction or renovations to a facility.

Signage Permit Some municipalities require a permit before adding signage.

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 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 usually want to obtain a Kentucky Resale Certificate in order to not pay sales tax for merchandise that is being resold 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)

Many businesses will register with the Internal Revenue Service (IRS) for an EIN (also referred to as a FEIN, Federal Employer Identification Number, or Federal Tax ID Number). The EIN is the business equivalent for a Social Security Number for an individual. Corporations, Limited Liability Companies, Partnerships, and Sole Proprietorships with employees will all need to register for one. Sole Proprietorships without employees can use the owner’s Social Security Number.

There is no cost for an EIN, and the application process only takes a few minutes to get.

Learn how to apply for an EIN

Assumed Name Registration

While not a business license, it’s common for Sole Proprietorships and Partnerships operating under a name that is different from the full name of the owner(s) to register for an Assumed Name (also known as a Doing Business As, DBA, or Fictitious Business Name) with the County Clerk‘s Office in the county where the business is located.

These are some of the most common business licenses, but there are far too many licenses and permits for us to keep track of. Before starting your business, be sure to check with City Hall, County Clerk, Chamber of Commerce, and/or Economic Developer in your area to get more information regarding business licensing.

For some additional peace of mind, companies like IncFile or CorpNet can do the research and ensure you have all of the proper federal, state, and local licenses to start your business.