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Forming an LLC for a Hair Salon in Kentucky

Kentucky makes the LLC itself cheap and the upkeep specific. Articles of Organization cost $40, the lowest formation fee in this fifty state series, but Kentucky then asks for a step most states dropped: a copy of the articles filed at the county courthouse. The annual report costs $15 and is due by June 30, the assumed name filing splits between the Secretary of State and the county clerk depending on who is filing, and every LLC owes a $175 minimum entity tax whether it profits or not.

Researched from Kentucky state sources. Our guides are free. We may earn a commission when you use a partner service, at no additional cost to you.

Entity choice in Kentucky terms

A Kentucky salon owner choosing a structure is really choosing who stands behind the salon's debts and claims. As a sole proprietor, you and the salon are the same legal person: the booth rent income, the product liability, and the slip at the shampoo bowl all reach your personal assets, and Kentucky gives you no filing that changes that. A corporation separates the business from the owner, but it brings a board, minutes, and a second tax conversation most single salon owners do not need. The LLC is the middle route Kentucky salons usually take: a separate legal entity whose members are not personally liable for its obligations merely because they own it, taxed by default as a pass through, with formation and upkeep priced in tens of dollars.

Two Kentucky limits on that protection deserve plain statement. The shield covers the entity's obligations, not your own hands: a stylist who burns a client is personally answerable for her own work no matter what entity employs her, which is why the Kentucky salon insurance page treats professional liability as a separate purchase rather than something the LLC replaces. And Kentucky taxes the entity itself. The limited liability entity tax, covered below, means an LLC is never a zero cost structure in this state, even in a year with no profit. Form the LLC because the separation is worth $175 a year and a $15 report, not because a filing service told you every salon needs one.

Forming the LLC, step by step

Step 1: name the LLC. The name must carry a limited liability company designator, such as LLC, and must be distinguishable from names already on the Secretary of State's records. If the name you want is not ready to file under, reserve it: the fee schedule prices an application for reservation of a name at $15, and the reservation holds the name for 120 days. Check the salon's public facing name against the entity name now, because if they differ you will need the assumed name filing in the next section.

Step 2: file the Articles of Organization. Kentucky's formation document is the Articles of Organization, filed with the Secretary of State for $40, the cheapest articles fee among the fifty state guides on this site. The articles name the LLC, its registered office and registered agent in Kentucky, and its principal office. The registered agent receives legal papers for the LLC and must be reachable at a Kentucky address; letting the agent lapse is one of the grounds for administrative dissolution in the calendar section below. Later changes are cheap on the same schedule: a statement of change of registered agent or office costs $10, and Articles of Dissolution cost $40.

Step 3: file the county clerk copy. This is the step Kentucky keeps and most states do not. Under KRS 14A.2-040, a copy of the Articles of Organization must also be filed with the county clerk of the county where the LLC's registered office is located. The Frankfort filing creates the entity; the courthouse filing completes the Kentucky record, and it is the copy a local bank or landlord is most likely to ask about. Do not skip it because the state portal shows your LLC as active. Kentucky's formation is a two stop process, and the second stop is the clerk's office in your registered office's county.

Step 4: write the operating agreement and open the tax accounts. Kentucky does not file your operating agreement with the state, but the agreement does real work beyond the salon: as the insurance page explains, whether an LLC member counts as a qualified member for workers compensation turns on what the agreement says about profit sharing and decisionmaking. Put it in writing before money moves. Then register with the Department of Revenue and the Office of Unemployment Insurance, covered below.

The assumed name: Kentucky's two place filing

Most salons trade under a name that is not the LLC's legal name, and Kentucky regulates that name directly. Under KRS 365.015, no one may conduct business under an assumed name without filing a certificate of assumed name, and where the certificate goes depends on who is filing. A sole proprietor files with the county clerk of the county where the business keeps its principal place of business, and that is the whole filing. An entity files in two places: first with the Secretary of State, whose fee schedule prices the certificate at $20, accompanied by one exact or conformed copy. The Secretary of State stamps one copy as filed, and that stamped copy is then filed with the county clerk of the county where the entity maintains its registered agent, or its principal office if no registered agent is required. Only an entity with neither in Kentucky files with the Secretary of State alone.

The certificate runs on a five year term, renewed by filing a renewal certificate within six months before the term expires, at the same $20 on the Secretary of State's schedule. The county clerk's share is priced from the clerk fee schedule at KRS 64.012 rather than a single statewide figure, so the courthouse quotes its own fee when you file the stamped copy. Keep the names consistent across the certificate, the salon license, the lease, and the bank account: a mismatch is the kind of small discrepancy that slows a loan or a lease, as the Kentucky business loans page covers.

The EIN: free, federal, and separate

The Employer Identification Number is the LLC's federal tax ID, issued by the IRS, and it is free. Apply on the IRS website and the number issues immediately; any service charging you for an EIN is selling you a form the IRS gives away. A Kentucky salon needs the number even before its first employee, because the bank requires it for the business account, the Department of Revenue's tax registration asks for it, and the unemployment insurance employer account is keyed to it. The EIN does not replace any Kentucky filing; each agency wants its own paperwork.

Kentucky tax accounts: revenue and unemployment

Kentucky's tax accounts open through the Department of Revenue's Kentucky Tax Registration Application, Form 10A100, which registers the LLC for the accounts its activity triggers. The entity tax is the one every LLC owes: the limited liability entity tax under KRS 141.0401 carries a $175 minimum, and an entity whose Kentucky gross receipts and gross profits are each $3,000,000 or less pays only the minimum. Above that line the tax is the lesser of 0.095 percent of Kentucky gross receipts or 0.75 percent of Kentucky gross profits, due the fifteenth day of the fourth month after the close of the tax year. The sales tax account matters only for the retail side: Kentucky's single statewide rate is 6 percent with no city or county sales tax on top, hair services are not taxed under 103 KAR 26:010, but take home product sales are, so a salon selling retail registers for a sales tax permit and collects on products while owing tax on its own back bar consumables as their consumer. Employers also withhold Kentucky income tax, and most cities and counties add an occupational license tax withheld the same way.

The second account is unemployment. A salon with employees registers an employer account with the Office of Unemployment Insurance, managed through the Kentucky Career Center, and the state is migrating employers from the older KEWES system to the Kentucky Unemployment Insurance Portal beginning in the summer of 2026. The Office's Employer Guide for 2026 puts the taxable wage base at $12,000 per employee and the new employer rate at 2.7 percent, no more than $324 per covered employee for the year. Quarterly wage reports ride on the same account. Neither account is optional once its trigger is met, so open both in the same week you open the bank account.

The bank account and keeping money separate

Open a business checking account in the LLC's legal name, run every dollar of salon income and expense through it, and pay yourself by transfer or payroll rather than swiping the business card for personal spending. The separation is not bookkeeping fussiness. The liability shield assumes the LLC is a real, separate business, and a bank record that mixes salon revenue with personal spending is the evidence an opposing lawyer uses to argue it is not. Kentucky hands you an easy consistency check: the name on the account should match the articles as filed in Frankfort and at the county clerk, or the assumed name certificate if the salon trades under a different name.

The annual duties calendar

Kentucky's recurring list is short, and every item on it is dated. The annual report is filed with the Secretary of State between January 1 and June 30 each year for $15. Missing June 30 is procedural, not instant: under KRS 14A.7-020, the Secretary of State advises the entity that grounds for administrative dissolution exist, and only if the grounds are not corrected within sixty days of the mailed notice does the Secretary dissolve the LLC by certificate. An administratively dissolved LLC still exists, but it may not carry on business beyond winding up. Reinstatement, under KRS 14A.7-030, is available at any time after dissolution: the application states the grounds did not exist or have been eliminated, and it is accompanied by the $100 reinstatement penalty, the $15 fee for each delinquent annual report, and a Department of Revenue letter of good standing, which the reinstatement process requires within 30 days of the letter's notice date. When reinstatement takes effect it relates back, and the LLC resumes business as if the dissolution had never occurred. Cheap as the fix is, a dissolved LLC on a Secretary of State search is a red flag any lender or landlord will find, so file the report in the spring and skip the cure entirely.

The rest of the calendar: the LLET return is due the fifteenth day of the fourth month after the tax year closes, with the $175 minimum owed even in a flat year. The assumed name certificate renews every five years, by a renewal certificate filed within six months before expiry. The board licenses renew on their own cycle, in the July 1 to July 31 window of even numbered years, at $200 for the salon and $100 per individual. Unemployment wage reports are quarterly through the employer account. And note what Kentucky does not require: no second annual state report beyond the one $15 filing, and no state filing for the operating agreement. Our Kentucky hair salon guide keeps the full license calendar, and the Kentucky hub collects every Kentucky guide in one place.

This page is general information researched from official Kentucky and federal sources, not legal, tax, or insurance advice. Requirements, fees and forms change; verify the current rules with the agency or regulator linked above before you file, sign or spend.

Frequently asked questions

How much does it cost to form an LLC in Kentucky?

The Articles of Organization cost $40, filed with the Kentucky Secretary of State, and Kentucky then requires one more step most states skip: a copy of the articles filed with the county clerk of the county where the LLC's registered office is located, under KRS 14A.2-040. Optional filings add to the total: reserving a name first costs $15 and holds it for 120 days, and an entity assumed name certificate costs $20 at the Secretary of State.

When is the Kentucky LLC annual report due?

Every year between January 1 and June 30, filed with the Secretary of State for $15. The report confirms the LLC's registered agent, registered office, and principal office. Missing the June 30 deadline starts the administrative dissolution process, so most Kentucky salons file it in the spring alongside their tax returns rather than waiting for the deadline.

What happens if a Kentucky LLC misses its annual report?

Under KRS 14A.7-020, the Secretary of State notifies the entity, and if the grounds are not corrected within sixty days of the mailed notice, the Secretary administratively dissolves the LLC by certificate. Reinstatement under KRS 14A.7-030 is available at any time after dissolution and costs the $100 reinstatement penalty plus $15 for each delinquent annual report, with a Department of Revenue letter of good standing. When it takes effect, reinstatement relates back, and the LLC resumes business as if the dissolution had never occurred.

Where does a Kentucky salon file its DBA or assumed name?

In two places for an entity, under KRS 365.015. An LLC files its certificate of assumed name with the Secretary of State for $20, then files the copy the Secretary stamps as filed with the county clerk of the county where its registered agent sits, or its principal office if no registered agent is required. A sole proprietor files only with the county clerk of the county where the business keeps its principal place of business. The certificate runs five years and is renewed by a renewal certificate filed within six months before it expires.

What is the Kentucky limited liability entity tax?

The LLET, under KRS 141.0401, is a tax every Kentucky LLC doing business in the state owes on top of its members' income tax. The minimum is $175, and an entity whose Kentucky gross receipts and gross profits are each $3,000,000 or less pays only that minimum. Above that line the tax is the lesser of 0.095 percent of Kentucky gross receipts or 0.75 percent of Kentucky gross profits. The return is due the fifteenth day of the fourth month after the close of the tax year.