Sole Proprietorship
A sole proprietorship is owned and operated by an individual. It does not have a separate existence apart from its owner. No filing with the Secretary of State is necessary to form a sole proprietorship, but if the sole proprietorship is operating under assumed name, an assumed name filing with the county clerk is required. The individual owner is personally responsible for the debts of the business. KRS 365.015(3).
Corporation
A corporation is a business organization that is separate and apart from its owners. KRS 271B.1-400. A corporation has the same powers as an individual to do all things necessary to carry out its business. A board of directors manages the corporation and officers are responsible for the daily operations of the corporation. Shareholders are not personally responsible for the debts of the corporation. A corporation is formed by filing Articles of Incorporation with the Office of the Secretary of State.
NOTE: If you intend to apply for IRS federal tax exemption as a charitable organization, your articles of incorporation must contain a required purposed clause and a dissolution of assets provision. Valuable information of 501 (c) (3) qualification is on the IRS website, www.irs.gov. It includes sample articles of the incorporation. Click the "Charities and Nonprofits" link and, and then the Life Cycle of a Public Charity link.
Click on the following link for more information on Forming Non-Profit Organizations.
Foreign Corporations
A foreign corporation transacting business in Kentucky does not file Articles of Incorporation, but must obtain a Certificate of Authority from the Secretary of State by filing an Application for Certificate of Authority with a filing fee. KRS 271B.15-010; 271B.15-030; KRS 273-361. The foreign corporation must use an available name in order to obtain its certificate. If its name is unavailable, it must adopt a fictitious name for use in Kentucky. KRS 271B.15-060.
A foreign corporation not transacting business in this state may register its name by filing an Application for Registration or Renewal of Corporate Name with the Secretary of State. KRS 271B.4-030; KRS 273.179.
A foreign professional service corporation is entitled to procure a certificate of authority only if the corporation is organized for purposes for which a professional service corporation under KRS Chapter 274 may be organized and all the shareholders, not less than one-half of the directors and all the officers other than the secretary and treasurer are qualified persons. KRS 274-275. No foreign professional service corporation is required to obtain a certificate of authority unless it maintains an office in this state for the conduct of business. KRS 274-245 (2).
General Partnership
A general partnership is an association of two or more persons to carry on as co-owners of a business for profit. KRS 362.1-101. No filing with the Secretary of State is necessary to form a general partnership, but if the general partnership is doing business under an assumed name, an assumed name filing is required with the Secretary of State and county clerk. An Application for Certificate of Assumed Name is available on our site. Generally, every partner is an agent of the partnership and is personally responsible for the debts of the partnership. KRS 362.1-301.
Limited Partnership
A limited partnership is an association of two or more persons with one or more limited partners and one or more general partners. KRS 362.2-102. Limited partners are not personally responsible for the debts of the limited partnership unless they participate in management of the partnership. KRS 362.2.303. General partners are responsible for managing the business of the partnership and are personally responsible for the debts of the partnership. KRS 632.447. A limited partnership is formed by filing a Certificate of Limited Partnership with the Secretary of State. KRS 362.2.201. More information on forming a limited partnership is available on our site.
Limited Liability Company
A limited liability company is an unincorporated business organization formed by filing Articles of Organization with the Secretary of State. KRS 275.015. A limited liability company may be managed by members or managers. The members and managers are not personally responsible for debts of the limited liability company. The main advantage to choosing a limited liability company over a corporation is that LLC members enjoy limited liability but the entity can be taxed as a partnership, which is a more favorable tax treatment.
Registered Limited Liability Partnership
A registered limited liability partnership is a partnership that is registered with the Secretary of State. KRS 362.1-1001. Each partner is personally responsible for the debts of the partnership except for the debts of the partnership arising from negligence or misconduct committed by another partner while the partnership is a registered limited liability partnership. KRS 362.1-306. A registered limited liability partnership is formed by filing a Statement of Qualification with the Secretary of State. KRS 362.1-1001. More information on registering as a limited liability partnership is available on our site.