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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.
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.
Lexington – The Lexington-Fayette Urban County Department of Finance requires businesses operating in the county to obtain an Occupational License.
The cost of the license 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 license tax rate on any profits made by operating in the city.
Owensboro – All businesses will need to obtain an Occupational License from the City of Owensboro. The cost of this license 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 fee will be required with the application. An additional percentage on profits will also be due annually.
Hopkinsville – An Occupational License is required for all businesses operating in the City limits of Hopkinsville. The initial fee for this license is $100 in addition to 1.5% of the profits of the business.
Employer Identification Number (EIN) – Many businesses will register with the Internal Revenue Service (IRS) for an EIN or Employer Identification 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 it only takes a few minutes to get.
Kentucky Sales Tax Account – All businesses in Kentucky will need to register for Tax Accounts with the 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.
Professional License – A variety of professions in the state are regulated and need to be registered before offering certain services. A few common professions 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.
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 or DBA) with the County Clerk’s Office in the county where the business is located.
These are a few of the most common business licenses, but there are way too many licenses and permits in Kentucky for us to keep track of. Before starting your business, check with the City Hall, County Clerk, Chamber of Commerce and/or Economic Developer in your area to get more information regarding business licensing. Additionally, there are companies like IncFile or CorpNet that can do the research to ensure you have the proper federal, state and local licenses.