Paducah KY Business License: Six Gross Receipts Classes from 0.045% to 0.5%, Required Above $600, Plus 2.0% Payroll Tax

If your business brings in more than $600 a year in gross receipts inside Paducah, the city requires a business license. The rule also reaches home businesses, rental property owners, and out-of-town contractors doing work in city limits. Paducah also levies a 2.0% payroll tax on gross wages earned in the city. This guide walks through what to gather, how to work out your bill, and which offices to call before you apply. It is based on Chapter 106, Article III of the Paducah Code of Ordinances, and the city's Business License and Payroll Tax page at paducahky.gov.

What You Need Before You Start

Gather these items before you call or apply. Most delays come from missing records, not from the city process itself.

• Gross receipts for last year. This is total sales, fees, and other income from the business, before expenses. If the business is new, use a realistic written estimate.
• A list of every location where you do business. The city issues a separate license for each location.
• A list of your business activities. You will need these to match each activity to a license class.
• Payroll records showing gross wages paid to employees who work in Paducah.
• Your entity documents, such as Articles of Organization or Articles of Incorporation, and any Certificate of Assumed Name you have on file.
• Your Kentucky Department of Revenue tax account information, if you have already registered.
• Contact numbers: Paducah Community Development at 270-444-8690, and the McCracken County office.

Step 1: Confirm Whether You Must Get a License

The test is gross receipts, not profit. Under Sec. 106-63, anyone with gross receipts over $600 a year needs a license. A business with thin margins still counts, and so does a landlord who collects rent on a Paducah property. The license also applies to real estate sales, janitorial work, security, gardening, property management, and similar services performed in the city, even if the provider lives outside Paducah.

If your total receipts for the year are at or under $600, you are not required to hold a license. Keep your records anyway. If receipts grow past the threshold, you will need to apply.

Step 2: Identify Each Location and License Class

Paducah uses a modified gross receipts system with six classes. A separate license is required for each location and for each class of business. The rates below are the percentage of gross receipts for each class.

Class	Rate on Gross Receipts
A	0.045%
B	0.075%
C	0.150%
D	0.300%
E	0.450%
F	0.500%

The city places each business in one of the six classes with a rate based on profitability, and this guide does not say which class fits which business. Do not guess. Ask the City of Paducah Finance Department or Community Development which class applies to each activity and get the answer in writing before you calculate your bill.

Step 3: Calculate Your City License Amount

Multiply your gross receipts by the rate for your class. Repeat the calculation for each location and class.

Here is an illustration with a hypothetical class. Suppose a business in Class C has $150,000 in gross receipts for the year. Then $150,000 multiplied by 0.150% (0.0015) equals $225. If the same business had a second location in a different class, you would calculate that location separately. The city's ordinance is the controlling source for the method, so confirm with the city whether any minimum or other adjustment applies to your case.

Step 4: Check Home Business and Zoning Rules

If you run the business from your home, call Paducah Community Development at 270-444-8690 before you apply. The office may require a conditional use permit for a home business. Ask about this before you sign a lease, buy equipment, or start taking customers, because a permit requirement can change your start date.

Step 5: Add the McCracken County License

The city states that a McCracken County license is required in addition to the Paducah license. The county's payroll fee is listed at 1.00% in the Kentucky Association of Counties' January 2026 county brief. Treat that as a starting point and confirm the current figure with the county. Because the two offices run separate processes, ask both for your combined bill and the deadlines for each. Do not assume the city application covers the county requirement.

Step 6: Complete the State Registrations

Kentucky has no statewide general business license. Registering an entity or an assumed name is a filing, not a license. Still, the state filings are part of forming a business in Paducah, so complete them alongside the local steps.

• Entity formation. An LLC files Articles of Organization (Form KLC) for a $40 filing fee. A corporation files Articles of Incorporation (Form PAI) for a $50 filing fee. Online filing is the fastest route through the Kentucky One Stop Business Portal. The state lists no expedited tier or fee. Processing is usually the same day, but may take up to three business days.
• Annual report. LLCs and corporations file a $15 annual report each year. It is due June 30, and the filing window opens January 1. Domestic entities that miss June 30 are administratively dissolved.
• Limited Liability Entity Tax (LLET). LLCs and corporations owe the LLET, with a $175 minimum if Kentucky gross receipts or gross profits are $3 million or less. Kentucky has no franchise tax. Confirm your filing obligation with a CPA if your revenue is near the thresholds.
• Tax account registration. Register with the Kentucky Department of Revenue using Form 10A100 through MyTaxes.ky.gov. Kentucky has no general business license, but this registration is how you establish your tax accounts.
• Sales tax. Kentucky's state sales tax is 6%, and there are no local sales taxes. The tax reaches about 50 services, so check whether your services are covered. If you sell taxable goods or services, apply for a permit through the Department of Revenue's business registration page.

Step 7: Apply and Pay the City

Once your class, location, and calculation are confirmed, submit your application to the city. The city's business license page at paducahky.gov and Community Development can confirm the current application method, any city fee, and the payment options. Get a receipt and keep a copy with your entity records. The license expires on December 31, so the first year you hold it may be shorter than a full calendar year depending on when you start. Ask the city how it prorates a partial year.

Step 8: Set Up the 2.0% Payroll Tax

Paducah imposes a payroll tax of 2.0% on gross wages earned in the city (Sec. 106-182). This is a tax on wages, not on profit. Paducah does not tax net profit. Set up payroll so that wages for work performed in the city are tracked separately from wages earned elsewhere. Employees who work partly outside the city will need that split. Ask the city how to register as a payroll taxpayer and how often to remit.

Step 9: Calendar Your Renewal

The license expires December 31. Renewal is due on the 15th day of the fourth month after the taxpayer's year. For a business that runs on a calendar year, that date falls on April 15. Put the renewal and the payroll remittance dates on your calendar when you receive the license, and confirm the exact dates with the city.

Tips and Common Mistakes to Avoid

• Using profit as the base. The license is figured on gross receipts. A business that loses money can still owe the license.
• Forgetting a location. Each location needs its own license. A second storefront, a warehouse, or a job site with a fixed address may count.
• Skipping the county. The city says the McCracken County license is required in addition to the city license. Ask both offices for the combined cost.
• Assuming a state license covers you. Kentucky has no general license. Some trades need state licenses from specific agencies, such as the Department of Housing, Buildings and Construction for electricians, plumbers and HVAC, ABC for alcohol and tobacco, and local health departments for food permits. Kentucky has no statewide general contractor license, but Paducah and McCracken may still require local licenses for construction work.
• Ignoring home business rules. A conditional use permit may be needed before you start. Ask Community Development first.
• Misreading the payroll tax. The 2.0% rate applies to gross wages earned in the city. It is not a percentage of profit.
• Assuming the rate table is the whole story. The state directory does not list a rate for Paducah, so take the class rates from the city ordinance and confirm them before you pay.

Expected Results

With the license, county requirements, and state registrations in place, you should be able to bill customers and hire employees in Paducah without a compliance gap. Many owners find the first application takes longer than renewals, because the class and location questions are settled once. If the city or county finds a gap, the most likely cause is a missing location, a class that was guessed rather than confirmed, or a county license that was not requested. Results will vary by business type and by how complete your records are.

What to Confirm With Each Office

Item	Confirm With
Class assignment for each activity	City of Paducah, Community Development (270-444-8690)
Conditional use permit for a home business	City of Paducah, Community Development (270-444-8690)
Combined city and county bill	City of Paducah and McCracken County
Current county payroll fee	McCracken County
Renewal and payroll remittance dates	City of Paducah
Sales tax obligations and permit	Kentucky Department of Revenue
Entity filings and annual report	Kentucky Secretary of State

Important Note

This article is informational content, not legal or tax advice. Rates, thresholds and deadlines can change, so confirm each one with the agency named before you act. If your business has multiple locations, employees in more than one jurisdiction, or revenue near the LLET thresholds, consult a qualified attorney and a CPA before you file.