Benefits of a Corporation
When you form a corporation, your personal assets are protected from your business’s financial obligations and debts. This is called liability protection and is the most common reason people form corporations. Liability protection may shield your personal assets if one of your employees is sued. There may be other benefits to incorporating your business.
Requirements for Incorporating in Kentucky
Preparing Your Articles of Incorporation
A corporation officially exists as soon as you file its articles of incorporation with the Kentucky Secretary of State, unless the articles specify a later date. Filing requires a fee.
The following provisions must be included in the articles of incorporation:
- Name of the corporation
- Mailing address of the corporation’s principal office
- Stock structure
- Registered agent and registered office
- Names and addresses of incorporators
A corporation can have different types of stock, called classes or series. These types of stocks can have different advantages, for example one can offer voting rights while another may not.
In the section regarding stock structure, you must also include the following information:
- The articles of incorporation must state the classes and series of shares the corporation is authorized to issue and the number of shares in each class or series.
- If there is more than one class or series of shares, the articles must provide a designation for each class or series. Before shares are issued in any class or series, the articles must state the relative rights, limitations and preferences for that class or series.
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Naming Your Corporation
Before you form a Kentucky corporation, you should find out if your proposed corporation name is available. You can do this through the Secretary of State’s office, either online, in writing or by phone.
You can reserve a name for your corporation for 120 days by filing an application with the Secretary of State.
Your corporation’s name must meet the following requirements:
- It must contain the words “corporation,” “incorporated,” “company” or “limited,” or the abbreviations “corp.,” “inc.,” “co.” or “ltd.”
- It must be distinguishable from the names of other entities on file with the Secretary of State.
An incorporator is responsible for signing and filing the articles of incorporation. When specifying your incorporators in the articles, you must meet the following requirements:
- Your corporation must have at least one incorporator.
- An incorporator must be a person.
- If the articles of incorporation do not name initial directors, the incorporators must hold an organizational meeting to elect directors. The incorporators may also approve bylaws and appoint officers. The incorporators have no other duties.
Corporate directors manage the business of the corporation and establish corporate policies and strategies. Directors may delegate responsibilities to the corporation’s officers.
Although there must be at least one director, there is no maximum number of directors. The number of directors should be stated in the articles of incorporation or bylaws, which may also establish specific qualifications for directors.
Specifying a Registered Agent
A registered agent is the person or entity responsible for receiving legal documents on behalf of the corporation. The agent’s business address is the registered office.
The following are requirements for specifying a Kentucky registered agent for your corporation:
- You must list the name of the registered agent and the street address of the registered office in the articles of incorporation. The registered agent must sign a consent to serve as agent.
- The registered agent may be an individual who resides in Kentucky or a corporation, non-corporation or limited liability company formed or authorized to transact business in Kentucky. A corporation cannot act as its own registered agent.
- The registered office must have a street address in Kentucky that is identical to the registered agent’s business address. The registered office address can be the same as your corporation’s place of business.
Stating a Corporate Purpose
All Kentucky corporations are formed for the purpose of engaging in any lawful business. The articles of incorporation do not need to state any additional corporate purpose.
Determining Incorporation Bylaws
A corporation’s bylaws guide the directors, officers and shareholders on how the corporation is structured and how meetings are held and how votes are taken. Bylaws may include any provisions for managing the corporation’s business and regulating its affairs. Bylaws are not filed with the Secretary of State.
The following are requirements for incorporation bylaws in Kentucky:
- The directors or incorporators must adopt bylaws.
- Bylaws cannot include anything that is inconsistent with the law or the articles of incorporation.
Costs of Incorporating in Kentucky
The Kentucky Secretary of State requires a fee when filing articles of incorporation or reserving a corporation name. Corporations are also required to pay state and federal income taxes.
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