Formation Checklist

Entity selection refers to the legal structure a business owner chooses for their company—such as a sole proprietorship, partnership, limited liability company (LLC), or corporation. This decision is important because it affects the owner's personal liability for business debts, how the business is taxed, the paperwork and formalities required to operate, and the ability to raise capital or bring on partners.

You must choose a name for your business that is not already being used, and that meets the naming requirements under Kentucky law. 

A registered agent in Kentucky is a person or business entity designated to receive official legal and government correspondence—such as service of process (lawsuit notices), tax documents, and state filings—on behalf of a business. Kentucky law requires every LLC, corporation, and other registered business entity to maintain a registered agent with a physical street address in the state (a P.O. box won't suffice) who is available during normal business hours to accept these documents

Governance documents set out the internal rules for how a business is run—ownership or membership structure, voting and decision-making authority, and procedures for admitting or removing owners. While Kentucky law doesn't always require these documents to be filed with the state, having one in place is strongly recommended, since without it the entity defaults to whatever rules state law provides.

In Kentucky, most businesses need to register with the Department of Revenue for state tax purposes, and many cities and counties require a local occupational license or business permit, since Kentucky does not issue a single statewide general business license. Beyond these baseline requirements, certain professions and industries—such as contractors, healthcare providers, cosmetologists, food service establishments, and businesses selling alcohol—must obtain additional state or local licenses or permits specific to their field before operating legally.

An Employer Identification Number (EIN) is a unique nine-digit number issued by the IRS to identify a business for federal tax purposes, similar to a Social Security number for individuals. Most businesses need one to open a business bank account, hire employees, or file certain tax returns, and it can be obtained for free directly through the IRS website, typically with immediate issuance for entities with a U.S.-based responsible party.

Opening a dedicated business bank account helps separate personal and business finances, which is important for liability protection (especially for LLCs and corporations) and for keeping clean records for tax and accounting purposes. Banks typically require formation documents (such as articles of organization or incorporation), an EIN, and sometimes a governance document like an operating agreement or bylaws before they'll open the account.