--- title: "EOR or Entity in Kentucky, How to Decide" description: "Weigh an EOR against forming a Kentucky entity. See real costs, tax rates, and when Teamed's GEMO model makes sense to switch." canonical: https://www.teamed.global/country-hiring-guides/united-states/kentucky/eor-vs-entity --- ![Kentucky business district.](/cluster-assets/country-hiring-guides/united-states/kentucky/eor-vs-entity/images/hero.webp) # EOR or entityin Kentucky. Teamed hires your Kentucky staff under its own entity today, so you skip formation and tax filings while you decide. Served by Teamed US Inc., Delaware · Payroll via SUNA Solutions Last reviewed 22 September 2026 · Kentucky guide At a glance ## What it costs to run a Kentucky entity Kentucky charges a corporate income tax of 5.0% and a minimum franchise tax, called the LLET, of $175 a year regardless of profit. Forming the entity itself through the Kentucky Secretary of State costs $40. Those figures are just the state-level baseline, before you add payroll tax registration, a registered agent, accounting, and the ongoing filing work that comes with owning a legal entity. Corporate income tax5.0% Minimum franchise tax$175 Formation / registration fee$40 The mechanism ## How an EOR replaces the entity When Teamed acts as your employer of record in Kentucky, we already hold the state registrations, run payroll under our own entity, and handle the LLET and income tax filings that come with operating there. Your employee gets a compliant Kentucky employment contract and payslip, and you get an invoice. There is no new Kentucky corporation, no franchise tax return with your name on it, and no registered agent to hire. This matters most in the early stage of hiring in a state, when you have one or two people and you are not yet sure how long you will stay. Setting up a Kentucky entity commits you to the $175 minimum franchise tax every year the entity exists, whether or not it turns a profit, plus the ongoing income tax filing at 5.0% on anything the entity earns. An EOR lets you test the market first. The real comparison ## Entity costs versus EOR fees A Kentucky entity is not just the $40 formation fee. It is that fee plus a recurring $175 minimum franchise tax, plus the corporate income tax at 5.0% once you have taxable profit, plus the accounting and registered agent costs that a state filing requires every year after formation. None of that goes away if your headcount stays small. An EOR fee is a single line item that already prices in the local compliance work. Which one is cheaper depends entirely on your headcount, salary levels, and how long you plan to keep people in Kentucky. That is genuinely a math problem, not a philosophy, so run it through the crossover calculator rather than guessing. Before you commit ## Sometimes an employer of record is the better fit An employer of record is sometimes the better answer, not a lesser one, for a small or still-changing headcount in Kentucky, or while you are testing whether the market is worth a long-term commitment. If you are unsure which side of that line you are on, talk to a member of the team first, then run the numbers through the crossover calculator. Contractors, employer of record and your own entity all run on one platform at Teamed, so moving between them later does not mean changing provider or re-onboarding anybody. Real HR and legal experts handle the work rather than a ticket queue. Talk to a member of the team and we will tell you plainly which one suits where you are. If you would rather look at the numbers yourself first, the crossover calculator models it on local salaries and employer costs rather than on a headcount rule of thumb. Talk to a member of the team Model the crossover for the United States Who carries it ## Your own entity, when it's time. We set it up, migrate you in, and hand it back intact. Global Entity and Employment Operations, which we call GEMO, is how Teamed forms your company, registers it for tax and payroll, runs it month to month and keeps its filings current, across 100+ countries. You stay the employer. We do the work behind it. For Kentucky specifically, that means we register the entity, get it current on the LLET and corporate income tax filings, move your employment contracts across, and hand you a clean, fully operational company. GEMO works the same way across 100+ countries, so the handover process you experience in Kentucky is the same one we run everywhere else. Entity Management (GEMO) The Graduation Model Employer cost calculator > They set up our EU entity and moved hires across without missing a payroll. *Helene Dubois, COO* Talk to an expert about Kentucky Questions ## Kentucky EOR and entity questions Do I need a Kentucky entity to hire one employee there? No. Teamed can employ that person under its own Kentucky-registered entity as an EOR, so you avoid formation and the recurring franchise tax while you have just one or a few hires. What does a Kentucky entity cost every year, even with no profit? You owe the minimum franchise tax of $175 regardless of profit, on top of whatever accounting and registered agent costs you carry. Corporate income tax at 5.0% only applies once the entity is actually profitable. How much does it cost to form a company in Kentucky? The Kentucky Secretary of State charges $40 to file formation paperwork. That figure does not include the ongoing franchise tax, income tax, or professional services you will still need after the entity exists. When should I switch from an EOR to my own Kentucky entity? It depends on your salaries, headcount, and how long you intend to stay in the state, not a fixed number of employees. Use the crossover calculator to compare your actual EOR fees against the entity's fixed costs like the $175 minimum franchise tax. Can Teamed help me set up the entity later if I start with an EOR? Yes. Through GEMO, Teamed can register your Kentucky entity, get it current on state tax obligations, and migrate your existing employees over intact when the time is right. Where these figures come from ## Sources Figures on this page come from the Kentucky Department of Revenue's Form 720 corporation income tax and LLET instructions and the Kentucky Secretary of State's business filing fee schedule. ## More on entities in Kentucky - [Hiring in Kentucky, overview](/country-hiring-guides/united-states/kentucky)parent - [Kentucky setting up](/country-hiring-guides/united-states/kentucky/entity-setup)sibling - [Kentucky running costs](/country-hiring-guides/united-states/kentucky/entity-running-costs-and-filings)sibling - [Kentucky tax presence](/country-hiring-guides/united-states/kentucky/permanent-establishment-risk)sibling - [Kentucky moving from an eor](/country-hiring-guides/united-states/kentucky/moving-from-eor-to-your-own-entity)sibling - [Set up an entity, by country](/entity-setup-by-country)hub - [Entity Management (GEMO)](/entity-management)core - [Talk to an expert about Kentucky](https://www.teamed.global/contact?from=eor-vs-entity)CTA