Kentucky is one of several states that is a member of the Streamlined Sales Tax Agreement. It uses the system set up by that agreement to register businesses for Kentucky sales and use tax. The businesses get a sales tax account and then use Kentucky sales tax forms to send money collected from customers to the Kentucky Department of Revenue.
Step 1:
Find out whether you need to incorporate or file any other formation documents with the Kentucky Secretary of State. Business entities that must file an initial business registration form with this office include partnerships, limited partnerships, limited liability companies, limited liability partnerships, some business trusts and corporations. Go to the “Business Filing Forms” page at sos.ky.gov/business/filings/forms/ and look through that to see if you need to file.
Apply for an IRS EIN number. These “employer identification numbers” are issued by the Internal Revenue Service to some, but not all, U.S. and Kentucky businesses. You will want to run a search for “EIN requirements” at the IRS.gov website to check up and see if you need an EIN from the IRS. As an example, if you have employees or operate as a nonprofit corporation with a tax exemption, you always need a federal EIN number.
Step 3:
Get a Kentucky sales tax ID number. To do this, you actually visit the website of the Streamlined Sales Tax System at streamlinedsalestax.org/index.php?page=technology—registration. When you use to get a Kentucky sales tax permit, you also register for the other states that are members of this system. This could be convenient for you in the event that you run a large business with a presence in other member states.
Visit the “Current Year Sales and Use Tax Forms” page to get various Kentucky sales tax forms. For example, you should read through the Kentucky sales tax exemption forms to see if you qualify for exemptions. You can also call to get sales tax returns or other forms. Call 502-564-5170. You should be getting return forms from the Kentucky Department of Revenue on a regular basis.
It is also advisable to read the “FAQs Sales and Use Tax” document at revenue.ky.gov/NR/rdonlyres/6D219FE3-329D-4535-AF6D-A1C5275C23A0/0/FAQSalesandUseTax020810.pdf. This will tell you about the kinds of transactions that are subject to Kentucky sales tax and those that have an exemption.
Step 5:
Collect 6 percent (as of 2010) on the sales made to your Kentucky customers. As always, this the current Kentucky sales tax rate, but states do often change their rates due to fiscal necessities. Unlike many states, no city or county can impose additional sales tax on Kentucky businesses.
Sources:
Kentucky Sales and Use Tax (from the Kentucky Department of Revenue)
