At a glance
Can a solo on-site IT service work statewide in Kentucky?
The assumed entity is a single-member Kentucky LLC, disregarded for federal income tax, with no employees at launch. Kentucky charges $40 to form a domestic LLC and $15 for the annual report; a low-receipt liability-protected entity is generally subject to the $175 minimum Limited Liability Entity Tax. These are state costs, not local occupational taxes. Secretary of State fee schedule; Kentucky LLET guidance.
Startup scope
Kentucky startup cash is mostly runway, not real estate
A mobile IT-support founder avoids the leasehold and build-out costs that dominate storefront businesses. In the Typical case, $12,200 of the $25,230 opening requirement is liquidity rather than spend: $2,200 of initial net working capital plus a $10,000 operating-cash reserve.
The $40 LLC filing is official. Local-registration, insurance, legal, equipment and software amounts are modeled founder-scale allowances because no single statewide fee or market quote applies.
| Use of funds | Lean | Typical | Premium |
|---|---|---|---|
| Pre-opening fees, assets and setup | |||
| Kentucky LLC filing – official fee | $40 | $40 | $40 |
| Local registration / home-business checks – modeled allowance | $100 | $250 | $350 |
| Legal, accounting and bank setup | $600 | $1,200 | $2,200 |
| Laptop, secure backup and field/network tools | $2,600 | $4,000 | $6,500 |
| Software, RMM and communications setup | $450 | $900 | $1,600 |
| Existing-vehicle organization and branding | $300 | $800 | $1,800 |
| Website, CRM and launch marketing | $800 | $2,000 | $3,500 |
| Pre-opening training / certification | $400 | $1,000 | $1,700 |
| Insurance deposit or prepayment | $450 | $800 | $1,300 |
| Refundable deposits | $0 | $240 | $400 |
| Opening liquidity | |||
| Initial net working capital | $800 | $2,200 | $3,500 |
| Opening operating-cash reserve | $6,000 | $10,000 | $14,500 |
| Pre-opening overrun protection | |||
| Contingency – not operating reserve | $850 | $1,800 | $3,000 |
| Total project cost / founder cash required | $13,390 | $25,230 | $40,390 |
Sources-and-uses bridge. In the Typical case, initial liquidity funding equals $2,200 of net working capital plus $10,000 of operating reserve, or $12,200. The remaining $13,030 covers fees, assets, pre-opening spend, refundable deposits and contingency. No debt, equipment financing, landlord allowance, grant or reimbursement is assumed, so total project cost, permanent founder equity and peak interim cash requirement are all $25,230. A founder who finances equipment should rebuild both the opening cash schedule and payback calculation rather than merely subtracting the loan from this figure.
Launch path
A 2 – 5 week launch depends more on registration than build-out
There is no restaurant-style inspection sequence or retail construction critical path in the canonical case. The gating issue is establishing the entity, tax accounts, insurance and final-address local authority before taking money for work.
The IRS says an eligible U.S. business can receive an EIN online in minutes and without a fee; it also advises founders to form an LLC with the state first. IRS EIN guidance. Kentucky's Department of Revenue says entity formation comes before state tax registration and notes that paper business-registration applications can take up to three weeks. Kentucky business tax registration.
Licensing and tax map
What Kentucky lets this IT business do – and tax
No statewide occupational license was identified for ordinary computer user support in the scoped model, and Kentucky says it has no statewide general business license. That does not mean “no licenses”: the entity, tax accounts, local occupational registration and conditional employer obligations still matter.
| Requirement | Level / status | Fee / recurrence | Lead time | Dependency | Official basis |
|---|---|---|---|---|---|
| Articles of Organization for domestic LLC | State / mandatory for assumed entity | $40 initial | Processing time not stated on fee page | Before EIN and tax registration | Secretary of State |
| Annual Report | State / recurring | $15 annual | Filing deadline, not an approval SLA | Maintain entity in good standing | Secretary of State |
| Kentucky tax registration / MyTaxes | State / mandatory for entity tax accounts | No registration fee published | Online not published; paper up to 3 weeks | Entity and EIN first | Department of Revenue |
| Sales and use tax account | State / conditional on taxable sales | No permit fee published; 6% state tax where taxable | Not published | Taxability map before invoicing | Department of Revenue |
| Limited Liability Entity Tax | State / recurring tax for assumed LLC | $175 minimum when receipts/gross profits are $3M or less | Tax filing cadence, not launch approval | Assumed LLC form | Department of Revenue |
| Local occupational / business registration | City/county / varies by address | Varies by city/county | Not statewide; confirm locally | Exact work and home-office addresses | Business One Stop |
| Workers' compensation and unemployment accounts | State / conditional when hiring | Insurance quote required; UI rate/wage base depend on employer status | Before or when covered employment begins | First employee | Workers' Compensation |
Labor-only troubleshooting
Modeled treatment Ordinary troubleshooting/consulting where the provider does not sell taxable tangible personal property, digital property or another specifically taxable service is treated as non-taxable in the Base model. Confirm fact patterns with Kentucky DOR before launch.
Parts installed during repair
Official rule Kentucky classifies computer repairers as retailers of taxable parts/materials sold, and service, installation or repair charges associated with applying taxable property are taxable. See 103 KAR 27:150.
Software, hosting and bundles
Tax-sensitive Kentucky's current taxable-service statute includes categories such as website design/development, hosting and access to prewritten computer software. Separately stating taxable and non-taxable components is operationally important; get tax review before selling mixed bundles. See KRS 139.200.
Prices are quoted exclusive of sales tax, with customer-supplied hardware/software for most work. Collected tax is a pass-through liability, not revenue. If the service adds hardware resale, hosting, software access or bundled managed services, rebuild the taxability map.
Revenue engine
Ninety-two billable hours is the Base revenue engine
The model uses the billable technician hour as the natural revenue unit. A three-market Kentucky planning basket of observed on-site labor quotes – $100, $119.99 and $135 per hour – has a median of $119.99, supporting a $120 Base on-site rate. The observations are vendor listings, not a statewide survey, so they are evidence anchors rather than an official average.
Remote work is modeled at $95/hour, directly anchored by a current in-state small-business IT quote and below another observed $120/hour quote. Scoped project/configuration work is modeled at $145/hour; that is a planning assumption supported by a limited sample of higher network/project rates, not a measured statewide price. Public listings used in the basket include Repair IT MSP, ComputerLAN, Gorrell's Computer Services, and Etoc IT.
| Driver | Downside | Base | Upside |
|---|---|---|---|
| On-site hours × $120 | 39 / $4,680 | 55 / $6,600 | 65 / $7,800 |
| Remote hours × $95 | 16 / $1,520 | 23 / $2,185 | 27 / $2,565 |
| Project/config hours × $145 | 10 / $1,450 | 14 / $2,030 | 16 / $2,320 |
| Total billable hours / month | 65 | 92 | 108 |
| Capacity utilization vs. 110-hour practical cap | 59.1% | 83.6% | 98.2% |
| Modeled business miles / month | 600 | 810 | 950 |
| Net operating revenue / month | $7,650 | $10,815 | $12,685 |
| Net operating revenue / year | $91,800 | $129,780 | $152,220 |
The Upside case at 108 hours is deliberately close to the 110-hour practical cap. It is not “free upside”: the founder would need strong route density, reliable remote triage and compressed administrative time. Any plan materially above 110 billable hours should add a second technician or change the operating design and then recompute payroll, workers' compensation, UI, software seats, vehicle capacity and management time.
Operating economics
Owner labor is the largest hidden operating cost
A solo service company can look extraordinarily profitable if the founder's labor is treated as free. This model therefore shows two views: the cash benefit to a working owner, and a normalized passive-owner result after charging market-rate replacement labor for both service delivery and the owner's administrative role.
The May 2025 BLS-derived Kentucky estimate reports a $27.81 median hourly wage ($57,850 annual) for computer user support specialists. A modeled 22% payroll burden produces a rounded $34/hour loaded replacement rate; actual benefits, UI and workers' compensation require quotes. Current 2025 values are republished from BLS OEWS by FedSalary. BLS Kentucky OEWS.
| Cost line | Behavior | Base / month |
|---|---|---|
| Card / digital payment processing | Variable, 1.8% of revenue | $195 |
| Vehicle mileage proxy | Variable, 810 miles | $616 |
| Service consumables / tool wear | Variable, $1.50 per billed hour | $138 |
| RMM, endpoint and security stack | Fixed within one-tech band | $375 |
| General liability + tech E&O/cyber allowance | Fixed; local quote required | $225 |
| Phone, internet and hotspot | Fixed | $170 |
| Ongoing marketing / lead generation | Fixed planning budget | $600 |
| Accounting and legal reserve | Fixed planning budget | $300 |
| Home office, admin, training and small supplies | Fixed / step-fixed | $475 |
| Kentucky LLET + annual report accrual | Fixed state amount | $16 |
| Total non-owner cash operating costs | Variable + fixed | $3,109 |
The vehicle line uses the IRS optional standard mileage rate as a transparent proxy for automobile operating/ownership cost, not as a Kentucky market quote. The IRS revised the business rate to $0.76 per mile for July 1 – December 31, 2026. At 810 modeled business miles, that is $615.60 per month. IRS standard mileage rates. If the founder drives an unusually expensive vehicle or has a dense route, replace the proxy with actual fleet economics.
| Metric | Downside | Base | Upside |
|---|---|---|---|
| Net operating revenue | $7,650 | $10,815 | $12,685 |
| Non-owner cash operating costs | $2,852 | $3,109 | $3,273 |
| Working-owner pre-tax business cash benefit | $4,798 | $7,706 | $9,412 |
| Variable replacement labor – direct work + travel | $2,542 | $3,597 | $4,223 |
| Fixed owner-admin replacement labor – 38 hr × $34 | $1,292 | $1,292 | $1,292 |
| Normalized passive-owner cash operating profit | $964 | $2,817 | $3,897 |
| Passive cash operating margin | 12.6% | 26.0% | 30.7% |
| Maintenance-capex reserve below operating profit | $150 | $150 | $150 |
No D&A schedule is fabricated, so the result is not labeled EBIT or EBITDA. Debt service is zero; no income-tax reserve is modeled. Results are pre-tax business cash figures, not guaranteed take-home pay.
Unit economics
One billable hour must carry travel, tools and labor
At the 60% / 25% / 15% Base mix, the weighted realized price is $117.50 per billable hour. The hour is economically attractive only because fixed overhead stays lean; route sprawl and unpaid troubleshooting can erase the margin quickly.
Working-owner cash contribution
$107.19/hour, or 91.2% of revenue, before any compensation for the founder's own labor. This is the cash-survival view, not an economic profit margin.
Passive/economic contribution
$68.09/hour, or 58.0%, after fully loaded variable replacement labor for direct service and travel. This is the correct contribution basis for passive-owner break-even.
Route-density guardrail
The Base mileage assumption is about 8.8 business miles per billed hour. Each additional 100 business miles costs another $76 at the current IRS proxy before considering extra unpaid travel time.
This is why minimum call charges and explicit travel policies matter. If a technician spends 45 minutes driving for a one-hour ticket but invoices only the service hour, the customer sees a $120 rate while the business consumes 1.75 hours of founder capacity. A profitable route is not simply “more jobs”; it is more paid work per mile and per calendar hour.
Break-even and capital recovery
Break-even arrives well before physical capacity
Break-even changes with the treatment of owner labor: cash survival excludes owner compensation; sustainable working-owner break-even adds a $4,500 target; passive break-even deducts direct replacement labor in contribution.
| Metric | Cash survival | Passive owner | Sustainable working owner |
|---|---|---|---|
| Matching contribution margin | 91.2% | 58.0% | 91.2% |
| Numerator | $2,161 fixed non-owner cash costs | $3,453 fixed costs + fixed owner-admin replacement | $6,661 fixed costs + $4,500 target owner compensation |
| Break-even revenue / month | $2,369 | $5,958 | $7,302 |
| Break-even billable hours / month | 20.2 | 50.7 | 62.1 |
| Capacity utilization at break-even | 18.3% | 46.1% | 56.5% |
Payback uses the Typical $25,230 founder contribution at month 0, no debt, a six-month ramp from 35 to 92 billable hours, and a $150 monthly maintenance-capex reserve. Working-owner cash available after maintenance capex rises from about $1,441 in month 1 to $7,556 in month 6, so cumulative founder-equity payback crosses zero in month 6. The passive-owner schedule is negative in the first two months, then grows to about $2,667 per month after maintenance capex at stabilization; cumulative payback crosses around month 14.
Working-owner payback includes the founder's labor value and is not a passive investment return. Passive payback charges replacement labor first. Both are pre-tax and exclude address-specific local net-profit taxes; financing would require a new equity cash-flow schedule.
State demand and sensitivity
Kentucky demand is broad, but route density decides local economics
A reliable Kentucky market-size amount for on-site IT support is not publicly determinable. Census and SBA figures are demand proxies because the categories mix outsourced support with internal IT and other substitutes.
Kentucky had 94,402 employer establishments in 2023, while SBA's 2025 profile reports about 393,860 small businesses and 710,613 small-business employees. These are buyer-population proxies, not IT-support revenue or TAM. See U.S. Census Bureau Kentucky business data and SBA 2025 Small Business Profiles.
At the Base mix, each 10-hour move changes passive contribution by about 10 × $68.09 before step-fixed costs. Early warning KPI: billed hours versus the 62-hour sustainable-owner threshold.
At 92 hours, a $10 rate change moves revenue $920 and working cash by about $903 after the modeled 1.8% processing effect. KPI: realized revenue per billed hour.
That is before the opportunity cost of extra travel time. KPI: miles per billed hour, with the Base case at about 8.8.
The Base insurance allowance is $225/month. A higher cyber/E&O quote drops both working-owner and passive cash profit dollar-for-dollar.
Collected tax is not revenue. Poor invoice separation or a change in service mix can create a collection liability without improving margin. KPI: taxable receipts reconciled to returns.
Local net-profit and wage taxes are not averaged into a fictional statewide rate. KPI: local tax as a percentage of pre-tax business cash once the operating address is known.
Local variation and address checks
Three official examples show why local law stays outside the statewide Base P&L. Lexington-Fayette requires businesses engaged in business there to obtain an initial occupational license before starting; its page states a $100 initial fee and $100 annual minimum. Official local requirements. Bowling Green states that businesses must register before conducting business in city limits; a local-business registration is $50 and a $275 cash bond/deposit may also be required, while its occupational tax is 2%. Any required cash bond is restricted/refundable cash, not an operating expense or runway. Official local requirements. Louisville Metro directs businesses subject to occupational license tax to register with the Revenue Commission. Official registration page.
Sources and method
Evidence quality and what still needs a quote
Research was reviewed on August 28, 2026. Money is in 2026 USD unless noted. Official fees/rules are direct; pricing uses a limited state basket; insurance, software, professional services and several startup inputs are modeled and should be replaced with quotes.
The largest uncertainty is sustaining 60 – 90+ paid hours without excessive travel, rework or admin time. The next is the final local jurisdiction, whose occupational taxes and registration rules cannot responsibly be averaged statewide.
| Source / publisher | Geography / period | Evidence type | How used |
|---|---|---|---|
| Kentucky Secretary of State – business filing fees | Kentucky / current | Official fee or rule – High | $40 LLC filing; $15 annual report; $20 assumed-name fee if needed. |
| Kentucky DOR – Register a Business | Kentucky / current | Official fee or rule – High | Tax-registration sequence; paper application may take up to 3 weeks; local-license warning. |
| Kentucky DOR – Sales & Use Tax; 103 KAR 27:150; KRS 139.200 | Kentucky / effective 2026 | Official fee or rule – High | 6% sales tax; no local sales/use tax; computer-repair parts/labor association; taxable service categories. |
| Kentucky DOR – LLET | Kentucky / current | Official fee or rule – High | $175 minimum LLET for low-receipt liability-protected entities in assumed case. |
| Kentucky Education & Labor Cabinet – wages/hours; workers' compensation; unemployment insurance | Kentucky / 2026 | Official rule / reported government data – High | Hiring gate, $7.25 state minimum wage context, workers' comp when employees are added, UI planning. |
| BLS OEWS Kentucky; May 2025 BLS-derived state update | Kentucky / May 2023 & May 2025 | Government benchmark + commercial republication – Moderate | Computer user support wage anchor; current median $27.81/hour, then 22% modeled payroll burden. |
| IRS – Standard Mileage Rates | U.S. / Jul. – Dec. 2026 | Published federal benchmark – High | $0.76/mile vehicle-cost proxy; not represented as a Kentucky quote. |
| U.S. Census Bureau; SBA Office of Advocacy | Kentucky / 2023 – 2025 publications | Reported government data – High | Employer-establishment and small-business demand proxies; explicitly not market revenue. |
| Repair IT MSP; ComputerLAN; Gorrell's; Etoc IT | Multi-market Kentucky sample / observed 2026 | Observed market quotes – Low / model-dependent | Three-market on-site basket supports $120 Base rate; remote/project rates use limited quote evidence. |
| Lexington-Fayette; Bowling Green; Louisville Metro | Three local jurisdictions / current | Official local rules – High | Demonstrates local registration/tax variation only; not averaged into statewide law. |
| KRS 365.732 – breach notification | Kentucky / current | Official rule – High | Client-data incident-response risk and service-provider notification duty. |