How to Form an LLC in Arkansas in 7 Steps
Starting a limited liability company (LLC) in Arkansas involves naming the LLC, choosing a registered agent, filing a certificate of organization, applying for an EIN for tax purposes, and obtaining necessary business licenses and permits.
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A limited liability company (LLC), also called a “limited company” in Arkansas, is a business entity that many small businesses choose to organize themselves when they are just starting. If you’ve decided to form an LLC in Arkansas, here is a step-by-step guide.
7 Steps to Form an LLC in Arkansas
Name Your LLC
First, you must create a legally proper name for your LLC. Arkansas law A.C.A §4-38-112(b) requires that the name be unique and different from any other company’s name.
The name you decide on must contain one of the legal abbreviations per A.C.A §4-38-112(a):
- Limited Liability Company: L.L.C. or LLC
- Limited Company: L.C. or LC
If the limited company is in the business of providing professional services, it must be a Professional Limited Liability Company, P.L.L.C. or PLLC, or a Professional Limited Company, P.L.C. or PLC. A PLLC cannot contain the name of a person who is not a member unless that person is deceased.
The name cannot contain any other business entity indication, like “Co.”, “Corp.” etc. However, “company” can be abbreviated “Co.” and “limited” can be abbreviated “Ltd.” when designating a limited company.
Search for Name Availability. You want to search the Secretary of State Business Services business name search page to make sure that your chosen name is available and not already used by an existing business.
Reserve the Business Name. Once you choose a name, you can reserve that name as you go through the process under A.C.A 4-38-113.
Reserving the name does not guarantee final approval, but no one else can use it while you have it reserved. The online fee for name reservation is $22.50, and the fee for mail-in registration is $25.
Check the Domain Name. Next, make sure that no one else can use your name on the internet. You do this by doing a name search to make sure that the internet domain name is available. If it is available, register it so no one else can use it for their website.
Trademark Name. If you want to do business nationally or operate in several other states, you should trademark the nonprofit’s name with the United States Patent and Trademark Office (USPTO). This process takes some time and money. The name is still protected as a common law trademark while that application is pending. Once you receive your federal trademark, apply to the Arkansas Secretary of State to register it as an Arkansas trademark or service mark. You may also trademark the Arkansas LLC name with just the state, without a federal trademark.
Get a Registered Agent
Under A.C.A §4-38-115 the State of Arkansas requires an LLC to appoint a registered agent for service of process before formally filing with the state. A registered agent is designated to receive process (legal documents) on behalf of the LLC. An Arkansas registered agent can be an individual Arkansas resident or a company (domestic or foreign) with a physical Arkansas street address.
You should choose a company or person that is available during regular business hours. You will list the registered agent’s name and address of the registered office (a physical street address in Arkansas) in your certificate of organization. Entrepreneurs often choose a professional registered agent service to serve as the LLC’s registered agent.
File Your Certificate of Organization
You are now ready to start your business registration with the Arkansas Secretary of State Business Services Division.
You can either download the form from the Secretary of State’s website, use your own form, or file it online.
Under A.C.A §4-38-201, your LLC certificate of organization must contain the following information:
- Name of the LLC
- Address of the principal place of business
- Name and physical address of the registered agent
- Management structure, designating the LLC as a member-managed or outside-managed company
- Signatures and printed names of the forming members
- Duration of the LLC, if not perpetual
The state fee for the certificate of organization is $45 if filed online or $50 if filed by mail.
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Draft an Operating Agreement
An LLC can be (and should be) governed by an operating agreement. The operating agreement is similar to the bylaws of a corporate organization. Arkansas does not require an operating agreement, but it is a good idea to have one.
The Arkansas LLC operating agreement is a private contract among the members/business owners. You do not file it with the state, but it is an essential document for your LLC. According to the Small Business Administration, an operating agreement should include the following:
- Percentage of members’ ownership
- Voting rights and responsibilities
- Powers and duties of members and managers
- Distribution of profits and losses
- Holding meetings
- Buyout and buy-sell rules
The members may manage an LLC or hire an outside manager. You will indicate which you have chosen on your registration application.
Get an EIN
Unless you’re a single-member LLC with no employees, you need an Employer Identification Number (EIN). An EIN is a unique number issued by the Internal Revenue Service (IRS) and used to identify your business for tax purposes. You can think of it as your business’s Social Security number.
You use your EIN for:
- Filing payroll tax reports
- Opening a business bank account
- Applying for a company credit card or small business loans
You can apply for an EIN by mail, fax, or online with the IRS. There’s no fee to get an EIN, and the process takes just a few minutes.
Set Up Business and Tax Accounts
When starting your Arkansas business, you must register for state taxes, withholdings, sales tax accounts, and necessary licenses and permits. Visit the Internal Revenue Service (IRS) website to learn about your federal tax requirements. Determine your state obligations by contacting your local officials and using the state resources discussed below.
Check for Additional Federal or State Requirements
Check state and federal websites to determine if there are any specific rules for your business. For example, some LLCs may have to file a Beneficial Ownership Information Report (BOIR) with FinCEN. Under current law, LLCs created in the United States are “domestic reporting companies” and are exempt from the BOIR requirement.
However, laws may change, so stay up to date with state and federal requirements.
‘Business and Tax Requirements in Arkansas
Any business startup has numerous state and federal tax requirements. Start by accessing the Arkansas Taxpayer Access Point (ATAP) to register your new business.
State Business Tax
If you set up your LLC for pass-through taxation, the LLC does not pay corporate income tax. Instead, the profits go on the members’ individual tax returns. The individual members pay a state income tax on their share of the LLC income. If you set up your LLC for corporate tax treatment, the LLC pays a state corporate tax. The corporate income tax depends on the LLC’s profits.
Arkansas LLCs have an elective “pass-through entity” (PET) tax rate for owners, which is the highest individual income tax rate. In 2022, the income tax rate is 4.9%.
State Employer Tax
Your LLC will be subject to state rules if you hire employees, even if the employees are also members. Arkansas employers are responsible for withholding taxes and should do the following:
- Register with the Division of Workforce Services
- Report new hires within 20 days of employment date to the Arkansas New Hire Reporting Center
- Register for workers’ compensation insurance
- Provide unemployment insurance
Sales and Use Taxes
If your company sells goods and collects sales tax, it must register with the Arkansas Department of Finance and Administration (DFA).
The Arkansas sales tax rate is 6.5% of the sales price for most tangible personal property and some services. The use tax rate is the same and applies to property purchased outside of Arkansas for use, storage, or consumption within the state.
In addition to the state sales and use tax, cities and counties within Arkansas can levy their own sales and use taxes.
Business Licenses and Permits
The state of Arkansas issues licenses for certain kinds of businesses (professionals, construction, liquor businesses, etc.). In addition, there may be local business licensing requirements, environmental impact requirements, etc.
Registration in Other States
If you sell goods and services online, you may need to collect and pay sales taxes in other states. The requirements vary, but most states in the U.S. require businesses to register and pay sales tax if they have a minimum dollar amount or number of transactions in the state.
Sales tax laws and nexus requirements can change quickly, so be sure to read up on the requirements for any state where you do business.
If you want to do business in another state, you will likely have to apply as a foreign LLC. You may need to show a certificate of good standing from the Arkansas Secretary of State to prove your LLC entity and its compliance with state laws. The fee for the certificate of good standing is $25.
Annual Requirements in Arkansas
To maintain your LLC’s good standing, you must file an annual report with the state of Arkansas by May 1 of each year. Arkansas combines paying its annual franchise tax and filing an annual report into one form.
The annual franchise tax report fee is $150 for LLCs. You can file your report online or download the PDF to file by mail.
Arkansas LLC Formation FAQs
Arkansas charges a $45 filing fee to file an LLC certificate of organization online. If filed by mail, the fee is $50.
Single-member LLC. A single-member LLC is an LLC with only one member. For tax purposes, single-member LLCs are considered disregarded entities. This means the owner doesn’t file a separate business tax return and instead pays any taxes owed on business profits on their individual income tax return.
Multi-member LLC. A multi-member LLC is an LLC with more than one member. For tax purposes, multi-member LLCs file and pay taxes like partnerships.
Professional LLC. A Professional LLC is an LLC specifically for businesses that provide licensed professional services, such as accountants, attorneys, and physicians.
Series LLC. Arkansas is one of the few states that allow what is known as a "series LLC." This structure has several LLCs operating under the corporate status of one primary LLC. Each LLC is an independent business entity, so a lawsuit against one LLC under the parent LLC does not affect the other LLCs. For example, a landlord might form a parent LLC for property management, but each property is an asset of an individual LLC.
The certificate of organization is the form you file to register your LLC with the state. You may need to present a copy of your certificate of organization when you open a business bank account or merchant account or apply for a business loan.
A certificate of good standing is a certificate issued by the Arkansas Secretary of State certifying that your business has met all of the requirements governing that type of business in the state. While you don’t have to have a certificate of good standing, you may need one when you register as a foreign LLC in another jurisdiction, get a bank loan, or attract investors.
To get a certificate of good standing online, you go to the Secretary of State’s database and search for your business. Click on the link to purchase a certificate of good standing. The fee is $25, and you’ll be able to download a PDF version of the certificate for two weeks from the time of purchase.
To form an LLC with the Arkansas Secretary of State Business Services Division, you need to do the following:
- Find an acceptable business name with an LLC designation
- Name a registered agent and list a registered office address
- Complete the certificate of organization with the Secretary of State
- Pay the state filing fee
No. A certificate of organization is a legal document you file to establish your business as an LLC. An operating agreement is an internal company document you use to form key agreements among LLC members. You don’t need to file the operating agreement with the state. But you should keep it on record with your important company paperwork. You may need to share it with certain advisors, like accountants and lawyers.
To maintain your Arkansas LLC, you need to file an annual report with the state by May 1 of each year. The combined franchise tax/annual report fee is $150 per year.
Yes. You can do business under a name different from your business’s legal name. This is known as a fictitious name, trade name, or ‘doing business as’ (DBA). You must register a fictitious name with the Arkansas Secretary of State and pay a $25 fee.
Arkansas does not require all businesses to get a state-level business license other than the sales tax permit required for Arkansas sales and use tax. However, you may need to apply for permits and licenses from your city or county. Each jurisdiction has different requirements, so it’s a good idea to check with your city or county clerk, or revenue department.
One of the main reasons business owners prefer the LLC business structure is for personal liability protection. An LLC shields its owners’ personal assets from the company’s liabilities. In other words, the owner’s cars, home, and personal accounts aren’t on the line if someone sues the LLC or collects business debts.
In addition to liability protection, LLCs also allow for "pass-through taxation." As a single-member LLC, you can elect for taxation as a sole proprietorship. As a multi-member LLC, you can elect for taxation as a partnership. The member’s share of LLC profits goes on their personal income tax return. The LLC does not pay federal or state income tax.
Additionally, an LLC has fewer reporting and recordkeeping obligations than a corporation. An Arkansas allows for series LLCs.
Yes. You can file your certificate of organization and franchise tax report on the Secretary of State’s website. However, some entrepreneurs prefer using an LLC formation service company to start an LLC in Arkansas.
The Arkansas Secretary of State’s address is:
Arkansas Secretary of State
Business and Commercial Services Office
1401 W. Capitol Avenue
Suite 250
Little Rock, AR 72201
Yes. If no LLC owners are willing and able to act as the registered agent, you can use a registered agent service. With a registered agent service, you pay a small fee to another business or individual. They agree to receive your LLC’s legal papers on your behalf. The advantages of using a registered agent are:
- Your registered agent handles services of process and sensitive matters. Lawsuits and service of process go to the registered office address. Your customers aren’t aware of any business claims or disputes.
- You protect your privacy. Your registered agent’s address appears on the public certificate of organization, keeping your address private.
- They maintain your LLC’s good standing. Registered agents alert you to annual filing requirements. Missing a deadline is costly and will jeopardize your LLC’s status in Arkansas.
- Registered agents are available. A registered agent must be available to receive service of process during regular business hours.
- They provide administrative assistance. If you need a certificate of good standing or a copy of a certificate of organization, registered agents can help you with the documents.
A domestic LLC is any LLC formed within the state of Arkansas. An LLC formed under the laws of another state or jurisdiction is a foreign LLC.
If you do business in a state other than Arkansas, you can register your LLC as a foreign LLC in the other state. Foreign LLC filing requirements vary by state, so check the state’s Secretary of State’s website for instructions and filing fees.
Any foreign (out-of-state) LLC that wants to do business in Arkansas must register with the Secretary of State. To get approval to do business in Arkansas, you must do the following:
- Complete the application for certificate of registration of foreign limited liability company.
- Produce a certificate of existence (or state equivalent) proving your LLC is in good standing in your home state.
- File online or mail-in to the Secretary of State.
- Pay the state filing fee.
The filing fee for a mailed registration is $300. The online filing fee is $270.
To dissolve an Arkansas LLC, you must follow certain procedures to wind down the business operations:
- Follow any dissolution provisions in the LLC operating agreement
- Close all outstanding business and tax accounts
- File a statement of dissolution
- Pay the state filing fee ($45 online or $50 by mail)
No. Arkansas does not currently offer anonymous LLCs. Only Delaware, Nevada, New Mexico, and Wyoming have anonymous LLCs. An anonymous LLC does not reveal the LLC’s member names in the articles of organization which is a public record. Some business owners use professional registered agent services to help with privacy concerns.
Disclaimer: The information presented here does not constitute legal advice or representation. It is general and educational in nature, may not reflect all recent legal developments, and may not apply to your unique facts and circumstances. Consider consulting with a qualified business attorney if you have legal questions.
How to Start an LLC in Other U.S. States
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