With its low cost of living and affordable tax rates, Arkansas is a great state to start a business. But how do you even begin starting a business? If you have no idea where to start or what to do, this article will cover everything step-by-step. By the end of the 12 steps, you will be running your own successful business in no time. This guide will cover everything from choosing your idea to marketing your business once it’s officially formed.
Step 1: Choose Your Idea
Every business starts with an idea. You may already have a million ideas running around in your head, or you may not know how to come up with an idea in the first place. Whatever your situation, you must decide on a single idea that will work. The last thing you want is to go through all 12 steps of starting a business only for it to fail due to an ill-conceived business idea.
Choosing the right business idea can be challenging at first, but there are some questions you can ask yourself to help you land on a good business idea.
Here are some questions to ask yourself:
- What are my passions and hobbies?
- How can I turn them into a business?
- Will I enjoy or be able to run the business?
- What is currently missing from the marketplace?
- Is there a gap in the market for my business?
- Are there any businesses out there like mine?
- Who will I be competing with?
Step 2: Pick a Name
Once you have decided on a good idea to build a business on, you need to pick a name for your business. A lot of thought needs to go into choosing a name as it has to be easy for people to read and pronounce, unique, and needs to meet Arkansas naming regulations.
One of the regulations is that you cannot use a name already registered with the Arkansas Secretary of State. To check if your desired name is still available, you can search on the business entity search database.
Thinking up a name and picking one can require a bit of creative thinking. Here are some ways to pick a business name:
- Create a mindmap with all words related to your business
- Have a brainstorming session with friends
- Use online name generators
Step 3: Write Your Business Plan
Like a house under construction needs a set of plans and drawings, so does a business. A good business plan will have everything you need to know about the business and can be used to present it to potential investors.
There is no official guideline on what a business plan should look like, but a good business plan should include the following:
- Your business idea
- What your business offers, and what gap in the Arkansas market it fills
- Who your potential customers are, and how do you plan on getting them to purchase your services
- What staff will you need to hire, and what state regulations do you need to adhere to when doing this
- All the financial information about your business, such as how much you will need to start the business and much you will need to make a profit monthly
Step 4: Get Funding
Starting a business can be costly, especially if you don’t have the startup money. Getting funding for your business can help with business start-up costs and expenses. There are several ways you can go about getting the money you need.
Grants
Applying for a grant is always the most desired option as you do not have to pay the money back. In Arkansas, several grants are available if you meet the correct requirements. You can find more information through this government affiliate website.
Loans
If you do not meet the requirements for a grant, you can always take out a loan in an amount and interest rate that you are happy with. In addition, you can take out loans with banks in Arkansas and other private programs.
Friends and Family
Alternatively, you could even reach out to your friends and family to see if they would be happy to invest in your business. If they are, make sure to draw up a properly written contract. The last thing you want is for you to lose a loved one over finances when disagreements and misunderstandings can be avoided by drawing up a contract.
Investors
Investors are another great way of acquiring funds for your business. One place to start is by looking for Angel Investors in Arkansas. Or you can use your business contacts through networking to seek out potential investors for your business.
Step 5: Choose a Business Structure
When starting a business, you will need to choose what business structure you want to use, as each has different benefits depending on your wants. There are four main types of business structures you can choose from. These are sole proprietorship, partnership, LLC, and corporation.
Sole Proprietorship
A sole proprietorship is the easiest and simplest business structure to form. It is not a formal business structure, and there is no separation of the business from its sole owner. Unlike other business structures, sole proprietorships do not need to be registered with the state of Arkansas. Small companies with little to no risk typically use this type of business structure.
Partnership
A partnership is just like a sole proprietorship, except the only difference is that it has more than one owner. Like a sole proprietorship, there is still no asset separation. There are two types of partnerships: general partnerships and limited partnerships. The difference between the two is that in limited partnerships, there are limited partners that are typically outside investors that do not share in the company’s liability.
LLC
A limited liability company is one of the most commonly used with small businesses as it combines the flexibility and simplicity of a sole proprietorship with the liability protection and legal structure of a corporation. In addition, LLCs are easy to form and maintain, making them a favorable option.
S or C Corporation
S or C corporations are separate legal entities owned by several shareholders. Corporations have formal regulations and are favored by large companies due to the tax discounts. Investors prefer corporations over informal business structures like a sole proprietorship or partnership.
Step 6: Register Your Business
To operate legally in Arkansas, you must register your business with the state. The registration process will differ depending on which business structure you have chosen.
Sole Proprietorship
As sole proprietorships are not formal business structures, they do not need to be registered with the state to operate legally. However, they need to record the business name with the local county clerk.
Partnership
To form a partnership in the state of Arkansas, you must register your business name. For a general partnership, no other paperwork is necessary. However, for limited partnerships, depending on the type of partnership, you will need to fill out a form and pay the filing fee. You must also draft up a partnership agreement.
LLC
A limited liability company must be registered with the Arkansas Secretary of State. This is done by filling out and submitting the Articles of Organization online. Upon submission of your application, you will need to pay a non-refundable fee of $45. To learn more about this process, we have a detailed step-by-step guideline here.
Corporation
The registration process for an S or C corporation is very similar to that of an LLC. The Articles of Incorporation will need to be completed and submitted to the Arkansas Secretary of State. The application can be filed online, and a fee of $45 needs to be paid.
Step 7: Set Up your Finances & Accounting
A business that has its finances and accounting systems correctly set up will run smoothly. Setting up your finances simply involves opening a bank account and credit card for the business. Investing in good payroll software is a good idea, as well as using the services of a professional accountant.
You should consider using a payroll system to ensure that all employees receive their salaries on time and help the business manage employee taxes.
Having your finances and accounts set up will assist you greatly in managing and paying the business’s taxes. Tax season can be painful, but keeping track of your finances and hiring an accountant can make this stressful season much easier.
Step 8: Get Business Insurance
Business insurance is a must for a business owner. You never know when accidents or damages will occur and how much they will cost you. There are many different business insurance policies you can choose from.
Taking out general liability insurance is strongly recommended. This broad policy covers accidents and helps protect your business in the unfortunate event of liability claims.
Other popular insurance policies you can take out are:
- Workers compensation insurance
- Professional liability insurance
- Commercial auto insurance
- Commercial property insurance
- Business owners policy
If you’re unsure what type of insurance to get for your business, consult a business attorney or a broker.
Step 9: Obtain Any Permits or Licenses Needed
In Arkansas, any business that sells taxable goods must apply for a Sales Tax permit by registering on the Arkansas Taxpayer Access Point. The fee to apply for this permit is $50.
On top of that, you may need to apply for other permits or licenses, depending on industry and county regulations. More information about what permits you may need can be found here.
Step 10: Build a Website
Nowadays, all businesses should have their own website. Luckily, building your own website has never been easier. There are plenty of online web-building sites that you can use for free or for a subscription. Your website should be neat and easy to navigate. Your business name and purpose should be clear to build brand recognition.
Here are some helpful tips to keep in mind when building your website:
- Choose a domain name that is easy to read and spell. Avoid using numbers in your domain name.
- Ensure that your font is easy to read and the content is relevant.
- Your web face needs to be engaging, clear, and easy enough for all types of people to use.
- Link your other social media accounts to the website.
Having a website is a great way to market your business, create new leads, and get to know and engage with your customers.
Step 11: Hire Employees (If Any)
If you need to hire employees for your business, you must report any new hires to the Arkansas New Hire Reporting Center. First, create an account with the New Hire Reporting Center before completing an online report. In addition to reporting new hires to the state, you will need to register your business with the Internal Revenue Service so that you can manage and pay Unemployment Insurance Taxes. Use this link to register your business.
When hiring new people, you must do thorough background checks and ensure their qualifications meet your requirements. Having good and qualified workers will result in a smoothly run business.
Step 12: Market Your Business
The final step of starting a business in Arkansas is to market the business. Simply doing business is not enough to attract more customers and build brand recognition. You need to market your business too. Thankfully, there are many different methods to market your business successfully, whether you’re an expert or not.
Here are some ways to market your business:
- Use your business website and use SEO to rank higher on Google searches
- Market your business on social media like Facebook and Instagram
- Create a Google Business Profile
- Make use of pay-per-click advertising
- Use cold emailing
- Advertise in local newspapers
- Advertise on the local radio stations
Questions? Let us know.