Fact checked for accuracy by Billie Anne Grigg, a bookkeeper and Mastery Level Certified Profit First Professional.
You might assume that starting a business requires specialized business know-how or legal knowledge. However, this is not the case in most states, especially when setting up an LLC. If you know the precise steps to take, you can get a new business up and running in a matter of days.
You’ll find that compared to many states, setting up an LLC in Arkansas is a straightforward process that you can do on your own, and filing fees are affordable.
Follow this easy-to-follow guide to forming an LLC in Arkansas that complies with state requirements.
Step 1: Choose a Name for Your LLC
In the state of Arkansas, you must comply with the following naming guidelines when choosing your LLC name:
- The name must include (usually at the end) one of the following: Limited Liability Company, Limited Company, LLC, LC, LC, or LLC.
- The name of a professional LLC in Arkansas must include one of the following: Professional Limited Liability Company, Professional Limited Company, PLC, PLC, PLLC, or PLLC.
- The name cannot be that of an individual who is not a member of the LLC.
- The name must be distinguishable from any existing business on file with the Arkansas Secretary of State. Perform a name search before filing any forms for setting up your LLC.
It might be beneficial to view all Name Availability Guidelines before searching for and selecting a name for your LLC.
If you are not ready to register your business but have a business name you wish to use, you can reserve the name of your LLC for 120 days for a fee. You can file an “Application for Reservation of a Limited Liability Company Name” online or by mail.
Keep in mind that names are not guaranteed. Until your LLC forms are filed and certified by the BCS Division of the Secretary of State, do not order any business supplies with your company name.
Step 2: Designate a Registered Agent
You must appoint a registered agent, either an individual or a business, who will be responsible for accepting documents regarding any legal action against the LLC and other communications for the company.
The individual or business designated as the registered agent must either be an Arkansas state resident with an Arkansas street address (not a PO Box) or be registered with the Arkansas Secretary of State if the individual or business is out of state.
You may designate yourself as the registered agent if you are 18 years of age or older and have an Arkansas street address. Some LLCs chose to use an attorney or professional registered agent service.
Step 3: Determine and File Your LLC Articles of Organization
You must file your Articles of Organization with the Arkansas Secretary of State before your LLC can become a legal business entity. The Secretary of State will process and approve your request and then issue a Certificate of Organization.
Filing can be completed online or by printing out the form and mailing it to the Secretary of State.
Your LLC Articles of Organization must include:
- The name and address of the LLC
- Whether the LLC is member-run or manager-run
- Name and address of the registered agent you chose in Step 2 above
Listing the LLC member names and addresses on the Articles of Organization is not required.
Consult the Doing Business in Arkansas handbook published by the Arkansas Secretary of State for a complete list of details you may wish to include in your LLCs Articles of Organization.
Step 4: Create an Arkansas LLC Operating Agreement
An operating agreement outlines the operating procedures and ownership structure of the business. An operating agreement should include:
- A description of the LLC’s business structure
- A listing of individual responsibilities and obligations of LLC members
- How to distribute profits and losses to LLC members
- How changes to the LLC structure or dissolution should be handled
While the State of Arkansas does not require this legal document, an operating agreement is recommended for most LLCs to protect the LLC’s operations. The operating agreement does not get filed with the state.
Step 5: Obtain an EIN Crom the IRS
An EIN, or Employer Identification Number, is a number assigned to your company by the IRS for tax purposes.
A single-member LLC is not required to get an EIN. However, an EIN is necessary if you intend to hire employees. You will also need an EIN if you choose to treat your LLC as a corporation for tax filing purposes.
An LLC with more than one member must have an EIN, regardless of whether the hiring of employees will occur. An EIN is necessary to file and pay taxes and open a business banking account.
You can obtain an EIN on the IRS website.
Cost to Start an LLC in Arkansas
The cost of starting an LLC in Arkansas is relatively inexpensive.
Fees that may pertain to forming your LLC are:
- Reserving an LLC name (optional): $22.50 online / $25 by mail
- Filing of Certificate of Organization: $45 online / $50 by mail
- Filing for Fictitious Name (optional): $22.50 online / $25 by mail
What to Do After Forming Your LLC in Arkansas
Registering your LLC makes your business a legal entity in the State of Arkansas. Still, you must also have practices in place to legally account for your business income and expenses once your LLC is established.
To help ensure the success of your new business, we recommend these additional steps:
Establish Accounting Practices
Every business must legally track and report all income and expenses and pay associated taxes to the required local, state, and federal government. As soon as your business is set up, determine any tax returns and annual reports you’re required to file for your business and get an accounting system in place.
Unless you have business accounting experience, you might consider hiring an accountant. At a minimum, hire an accountant to file your taxes each year. An accountant can make sure you benefit from qualifying tax deductions, saving you money. More importantly, an accountant can ensure you pay the total amount of federal taxes owed to the IRS and any local and state taxes, such as sales tax.
Open a Business Bank Account
You cannot pay business expenses or deposit income into a personal bank account for liability reasons. If your business requires high operating costs, applying for a business credit card may also be beneficial.
Consider Business Insurance
At a minimum, you should look into General Liability Insurance to cover common risks associated with operating a business. If you provide professional business services or have employees, you may need Professional Liability Insurance and Workers’ Compensation Insurance.
Obtain Any Necessary Licensing or Permitting
To operate your business in Arkansas, you must follow federal, state, and local licensing guidelines. This can include regulations like health permits and building permits. You can find out more about Arkansas licensing and permitting requirements here.
Set Up a Website
Establishing a web presence can help legitimize your business to prospective customers and be an inexpensive means of advertising your business. Regardless of the size of your company or whether you operate entirely offline, you could miss out on potential customers and revenue if you do not have a website.
How to Keep Your LLC Compliant in Arkansas
It is essential to keep your LLC compliant once formed. An Arkansas LLC is considered non-compliant if any relevant compliance issue is not met. Each year, ensure no licenses, permits, filings, or payments are pending for your LLC.
One of the most common compliance issues is not filing an annual franchise tax report with the Arkansas Secretary of State. The franchise tax is a privilege tax all Arkansas businesses must pay. LLCs must file a franchise tax report each year by May 1. Yearly franchise taxes are $150+ and reports filed after May 1 will incur penalties.
While not mandatory, an Arkansas LLC may file for an Arkansas Certificate of Good Standing (CGS). This certificate proves your business is registered and operating in compliance with the state’s legal requirements. Occasionally, this certificate may be required to purchase business insurance, apply for a business loan, or even open a business checking account.
Tax Filing Requirements for LLCs in Arkansas
You must determine all taxes you are required to pay as a business owner. Failure to pay taxes can result in steep penalties.
You will likely have to register for different forms of Arkansas state tax depending on your business. This may include sales tax, Unemployment Insurance tax, and withholding tax. If you are required to file state taxes, you can obtain a sales tax identification number from the Revenue Division of the Department of Finance and Administration. LLCs are required to file informational returns with the Arkansas Income Tax Division.
As mentioned above, Arkansas businesses must also pay a $150+ annual franchise tax to the Arkansas Secretary of State. You can file your annual franchise tax report online or by mail. This report summarizes your business’s finances for the past year and updates your business’s basic information when applicable.
Arkansas LLCs must file tax returns annually and sometimes quarterly with the IRS depending on how your LLC is structured.
Frequently Asked Questions
If you still have questions about how to form an LLC in Arkansas, here are some of the most common questions others have on the subject and their respective answers.
How long does it take to register an LLC in Arkansas?
You can register your LLC online, by mail, or by visiting the Arkansas Secretary of State Business and Commercial Services Division in person. The Division completes most filings within two business days of receipt.
If you go in person, filings can often be completed while you wait. However, there is a 48-hour turnaround time for all drop-offs during times of heavy volume.
The quickest and most convenient way to register your LLC is by filing online. You enter all required business information into any applicable forms, pay your fees, and can typically download your certified LLC documents in 2 to 3 days.
You can also print paper copies of all required documents and submit them by mail. Once received, your documents will be processed in the same 2 to 3 days as if filing online.
Unless a post-effective date is specified in your filing documents, the effective date of a filing (and your business) is the date the Business and Commercial Services Division receives your documents.
What tax structure should I choose for an LLC in Arkansas?
LLCs are flexible in how they can be taxed. Depending on your business needs, you can structure your LLC as a sole proprietorship, a partnership, or a corporation. You just need to file the appropriate forms with the IRS.
You may wish to consult a tax attorney or accountant before choosing your LLC’s tax structure. This will help ensure you choose the best tax structure for your type of business. A tax professional can also explain how your tax structure may differ at federal and state levels. Setting up the wrong kind of tax structure for your LLC can be costly.
Should you hire an LLC formation service in Arkansas?
These steps to forming an LLC in the state of Arkansas might be more than you want to attempt on your own. Or maybe you do not feel confident you can adequately complete these steps without guidance. You can hire an LLC service to perform these tasks.
These services are well-practiced in the LLC formation process. They can answer any questions you might have and guide you through the process of forming an Arkansas LLC. A formation service can also act as the registered agent for your LLC if you choose while helping to keep your LLC compliant and in good standing with the State of Arkansas.
Before hiring a formation service, consult the Doing Business in Arkansas guide published by the Arkansas Secretary of State. It can answer many of the common questions you may have about forming an LLC in Arkansas.
Filed under: Arkansas Business Guides