Business Planning and Formation Lawyers Assisting Clients in Starting a Business in Hopkinsville and Surrounding Areas

Starting a business in Kentucky is an exciting and, at times, a labor-intensive undertaking that requires some knowledge of business formation laws and regulations. Crow Estate Planning and Probate, PLC assists entrepreneurs and new business owners with all their business formation and planning matters, from establishing an LLC to crafting contracts and dealing with business succession planning and litigation. Our law firm receives many questions about forming a business in Kentucky—here are the most common ones.

How Do I Start a Business in Kentucky?

The first step a new business owner should think about is choosing the right business structure that will best protect you from personal liability and offer the most favorable taxation conditions. In Kentucky, there are several basic business entities that are legally recognized by the state. Each of them offers advantages and disadvantages in terms of degrees of complexity and asset protection.

Which Structure is Best?

It is true that simpler business structures such as a sole proprietorship or general partnership will offer the least amount of personal asset protection and liability protection. The more elaborate business structures, such as a corporation, will offer a higher degree of protection with the downside of requiring more formalities to establish and maintain it. An experienced business formation attorney can help you decide which structure is right for you.

• Sole Proprietorship: A sole proprietorship is owned by a single individual who solely operates it and is responsible for all business debts. A sole proprietor will use his or her tax return to file taxes for the business, as the business does not have a separate legal existence from its owner.
• General Partnership: A general partnership is an association of two or more co-owners who share personal responsibility for the debts of the business and serve as an agent for the partnership.
• Limited Liability Partnership: Though similar to a general partnership, in a limited liability partnership all co-owners are responsible for the debts of the business, except for those debts caused by the negligence or misconduct of another partner.
• Limited Liability Company (LLC): A limited liability company is owned and operated by members, who are called managers, who are not personally responsible for any debts of the LLC. This type of structure allows members to have limited liability and offers tax benefits because it can receive the same treatment as a partnership.
• Corporation: A corporation is different from all other business structures listed above because it exists as a separate entity from its owners and has its own powers to carry out business, file taxes, and purchase real estate. It offers more liability protection because shareholders are not responsible for the debts of the corporation, but it requires a board of directors to manage the corporation and officers that are responsible for daily operations. A corporation can be classified as an S-Corp (not taxed separately from its owners) or a C-Corp (taxed separately).

Do I Need a Business License in Kentucky?

Once you have chosen which business structure is best for you, you will need to file the appropriate paperwork along with any required business licenses. Not every business needs a license to operate in Kentucky. Examples of businesses that may require a state or municipal license to operate include restaurants, construction or contracting services, medical or physician services, beauty and cosmetology services, and nail salons, to name a few. Your business formation attorney can advise you on whether your type of business requires a license and any federal or state requirements that may need to be fulfilled, such as carrying worker’s compensation insurance or liability insurance.

Do I Need an Attorney to Open a Business?

If you are looking to start an LLC or any other business in Kentucky, you are not required to hire an attorney, but you may want to consider doing so. Besides business formation, an attorney can provide services and advice needed at every step of the journey, including contracts and necessary forms for your business to operate, hire employees, and purchase or lease commercial property.

Our business formation and setup law firm has assisted many business owners in Hopkinsville and across Western Kentucky to start their businesses, providing them with legal advice and services to help their businesses succeed. Crow Estate Planning and Probate, PLC can offer valuable insights and legal services for anyone wanting to start a business in or near Hopkinsville, KY.

Contact our office by calling 270-569-0006. We know how important a firm foundation is for your business, and we can help you create one.