Starting a Business in Kentucky
Kentucky is not just known for its famous fried chicken and the Kentucky Derby, it is also a great place for a company to expand its horizons. This is due to many reasons like its friendly pro-business attitude, low cost of doing business, strong workforce due to its extended network of universities, and its commitment to entrepreneurship. Kentucky offers many incentive programs in the form of tax credits, business grants and loans, as well as other development funds. It can be very confusing when starting a business in Kentucky. You need to see how to apply for business credit (in which case you will need a Tax ID Number first) pay Kentucky sales tax, apply for a business license or occupational license, and look up a Kentucky sales tax rate.
STEPS TO STARTING A BUSINESS IN KENTUCKYThe Kentucky Secretary of State shows you the protocol of how to form a company. Once you are done doing a corporation search and have formed an entity with the Kentucky Secretary of State, you can move on to other administrative tasks in order to remain compliant. Among the most important of these are seeing what Business Licenses you need to avoid costly penalties. If your business makes sales to clients out of state, there are some recent changes in laws governing sales tax that would effect if you are required to collect sales tax. If you make sales above a certain volume you may need to apply for a SST streamlined sales tax registration. After all the other administrative tasks have been done you can begin looking at benefit programs. Below is a listing of some of these advantageous programs offered to eligible businesses in Kentucky:
- The Kentucky Small Business Tax Credit is a program for businesses that make a minimum capital investment of $5000 towards qualified equipment. To qualify a company must also hire at least 1 new employee who is paid 1.5 times the federal level minimum wage.
- The Kentucky Investment Fund Tax Credit is a program that offers companies a 40% individual or corporate income tax credit for investing in a qualified venture capital fund.
- The Kentucky Business Investment Program provides tax credits to help new businesses as well as existing businesses grow. Certain industries such as manufacturing and alternative fuels qualify for the credits. Another similar program is the Kentucky Enterprise Initiative Act. This program is also geared toward new or existing businesses in specific industries such as tourism and manufacturing. The program offers Kentucky companies a refund of Sales and Use Tax (with a sales tax number) paid for approved equipment used in R & D and data processing as well as building materials used to improve real property used in business operations.
- Kentucky has two workforce development programs used to help a business fund its employee training. These are known as the Bluegrass State Skills Corporation Grant Reimbursement Program and the Skills Training Investment Credit. The reimbursement program is a grant that is offered to specific industries to help cover the expenses of employee training programs. The Bluegrass skills investment credit is an income tax credit offered to Kentucky businesses that offer ongoing skills training and education to their current workforce. Funds can be used for materials and equipment, as well as other training related expenses.
- The Kentucky Small Business Lending Program helps facilitate business loans between $15,000 to $100,000 to start-ups and existing businesses that are in the technology and service, manufacturing, or agricultural industries. One major stipulation to qualify is a company must hire at least 1 new employee within one year from the time the loan closes.