Start an Arkansas Corporation

Step 1: Name Your Arkansas Corporation

After you’ve decided to form a Corporation, the next step is to name your new business.

Corporate Designator

It seems like a simple thing to do; however, you must consider requirements set forth in Arkansas naming laws. For example, the name must contain one of the following words or abbreviations:

• Corporation
• Corp.
• Incorporated
• Inc.
• Company
• Co.
• Limited
• Ltd.

Arkansas Corporation Naming Rules and Considerations

By law, the name can’t have any words that imply the business is organized for any other purpose than what is stated in your Articles of Incorporation. The name you want to use must also be distinguishable from:

• The name of a corporation incorporated or authorized to do business in Arkansas
• A corporate name that is already reserved or registered with the state
• The fictitious name, or “doing business as” (DBA) name, of a foreign corporation that does business in Arkansas
• The name of a nonprofit corporation already incorporated with the state

Perform a Corporation Name Search

You must do a name availability search before filing your Articles of Incorporation. This is also the time to conduct a domain name search to see how the name translates to use as a website address. Since there may be a period between deciding on a name and officially forming your business, it’s a smart move to reserve the available name so that no one else can use it.

Reserve the Name for Up to 120 Days

An Arkansas Application for Reservation of Entity Name can be filed online for $22.50 or through the mail for $25. The name reservation is good for 120 days. If necessary, it can be renewed one time for another 120 days. 

Trade Name

The corporation’s name can’t infringe on anyone else’s trade name, trademark, or service mark rights at the state and federal levels. A trade name, also known as a fictitious name or “doing business as” (DBA) name, is any name under which you plan to do business that isn’t exactly like the name you registered with the state.

If you plan to use a trade name, file an Application for Fictitious Name with the Arkansas Secretary of State for $22.50 online or $25 by mail. You must also submit a copy of the returned application with the county clerk of the county where your registered office is located, except in Pulaski County.

Trademarks

A trademark is a symbol, phrase, word, or a combination of such that represents your company’s goods, while a service mark represents your services. Searching state trademark records and those of the United States Patent and Trademark Office (USPTO) are necessary to determine name availability. You should do this before registering your corporation name, applying for a fictitious name, or reserving a domain name.

Register a mark

Once your corporation’s trademark or service mark is in use, you have the option to register a mark in Arkansas and at the federal level with the USPTO. State registration costs $50 and is good for five years. Federal registration costs $225 or $275 per class of goods/services, depending on how you complete your application; it must be renewed every 10 years.

It is often easier and quicker to register a trademark at the state level, but the federal level can offer broader protection, which is valuable to corporations wanting to do business outside of Arkansas.

Step 2: Appoint Directors

A board of directors usually manages a corporation. They are an elected group whose goal is to represent shareholders, set policies, and ensure prosperity. Directors meet together regularly to discuss business and make decisions.

Director Rules and Requirements

Corporation owners can be directors, but directors don’t need to be owners. Arkansas law requires a corporation to appoint at least three directors to oversee business operations. There is one exception to this law. If one or two shareholders own all shares of a corporation, you can have one or two directors. In this case, the number of directors must be at least equal to the number of shareholders.   

Incorporators

Incorporators are those who initially formed the corporation by filing the Arkansas Articles of Incorporation. As an incorporator, you should hold an organizational meeting before submitting your articles to:

• Choose initial directors
• Create and approve corporate bylaws
• Determine your share structure
• Execute an incorporator’s statement 

Meetings

Additional directors may be elected at the first annual meeting of members. Directors can also be appointed at successive annual board meetings or at any other time, as detailed within the company’s articles.

Step 3: Choose an Arkansas Registered Agent

A registered agent is an individual or entity appointed to receive service of process and other legal notices for your corporation. You’ll want to choose an agent who is available at all times during regular business hours. They’ll also need a physical address in Arkansas or be authorized to provide agent services in the state.

Registered Agent Requirements

Arkansas requires you to appoint a registered agent when filing your Articles of Incorporation. If your corporation fails to appoint or maintain an agent, the Secretary of State will act as the company’s registered agent by default.

Step 4: File the Arkansas Articles of Incorporation

To form a corporation in Arkansas, incorporators file the Articles of Incorporation with the Secretary of State. This legal document officially forms your company and provides the state with many important details about your new business. The articles are sometimes called the Certificate of Incorporation or the Corporate Charter.

What should Articles of Incorporation include?

You’ll want to file the Articles of Incorporation in Arkansas if it’s going to be the main location for your business operations. You’ll need the following information to file your articles:

• Name of corporation
• Number of shares to issue
• Value of each share
• Name and street address of the registered agent
• Name and address of each incorporator
• Purpose of the corporation

Additional space is provided on the form for more details about shares. Shares of stock are units of ownership interest in a company. Those who invest in the company and own shares are called shareholders. You may choose to issue the following:

Common Stock

This benefits shareholders through dividends and appreciation. While it is riskier than preferred stock, it comes with voting rights. This type of stock allows shareholders to buy new shares when new stock is issued.

Preferred Stock

This type doesn’t offer appreciation or voting rights, although some exceptions are made for voting in Arkansas. It usually has set payment criteria, such as a regularly paid dividend. Preferred stock is less risky and is prioritized over common stock, which means these shareholders receive payment before common stockholders.

Authorized Shares

The number of shares your board of directors may issue is called authorized shares. In Arkansas, the corporation creates and issues the number of shares of their choosing in their Articles of Incorporation. Your board of directors determines increasing or decreasing shares after this point.

A fee of $45 is charged when filing your Articles of Incorporation online. You can also file a paper copy through the mail for $50. You’ll send the document to:

Arkansas Secretary of State

1401 W. Capitol, Suite 250

Little Rock, AR 72201

For faster filing services, choose to file through the Secretary of State’s corporation online filing system. A corporate franchise tax form will need to be filled out and submitted along with your articles, so the state can send you the correct annual tax reporting form.

Step 5: Create Corporate Bylaws

Corporate bylaws are the rules by which your corporation will be governed. Initial corporate bylaws can be created by incorporators or a board of directors. It’s important to thoroughly detail how your business will operate to avoid disputes with other members about rules and regulations. Once agreed upon, corporate bylaws are a binding legal document.   You don’t have to file your corporate bylaws with the Arkansas Secretary of State, but it’s recommended that you create and maintain them for your corporation.   By state law, corporate bylaws can include any rules about the management or regulation of the business as long as they are consistent with other state laws and the company’s Articles of Incorporation.

What should bylaws include?

Your corporate bylaws should include rules about and items such as:

• Business purpose and location
• Members
• Board of directors
• Committees
• Officers
• Meetings
• Conflict of interest
• Amending the bylaws

Step 6: Draft a Shareholder Agreement

A shareholder agreement is a document that covers the rights and responsibilities of your corporation’s shareholders. Corporations adopt this agreement to ensure that shareholder rights are protected, and everyone is treated fairly. Your agreement should include information such as shareholders’:

• Names and contact information
• Responsibilities
• Voting rights
• Financial and time commitments

What should a shareholder agreement include?

The agreement should also cover details such as how to:

• Sell and transfer stock
• Distribute dividends
• Amend the shareholder agreement
• Divide assets during corporation dissolution

A shareholder agreement is useful in setting forth many important business details. Corporations can keep these details private since the agreement is a confidential contract between the company and its shareholders. You can use an online template to draft a shareholder agreement or seek other professional legal services.

Step 7: Issue Shares of Stock

Stock shares are a way for others to invest in your company. You can also issue shares to others as compensation for helping you to start your business. Issuing shares of stock is a requirement for all corporations. You must keep track of how many shares have been issued and to whom.

When you filed your Articles of Incorporation, you listed the number of authorized shares your corporation planned to issue. How many shares your corporation issues will be less than or equal to that number.

Rules for Issuing Stock

There are two ways to issue stock, privately and publicly. Private stock is usually issued to founders, managers, or employees. It can also be issued to a private group of investors. If you issue stock publicly, that means a portion of your stock shares is available to be purchased by the public. Public corporations must file quarterly statements with the U.S. Securities and Exchange Commission (SEC).

Whether public or private, a share is issued only once. However, it can be traded or sold in the future. To learn more about state regulations, contact the Arkansas Securities Department.

Step 8: Apply for Necessary Business Permits or Licenses

There is a wide variety of permits and licenses required at the federal, state, and local levels. You may need additional permits or licenses to legally operate in Arkansas, depending on your occupation or corporation’s business operations.

In Arkansas, you even need to check with the proper town or city and county authorities. There isn’t a statewide general business license, but some local governments require one. Since there isn’t a one-stop shop for all licenses and permits, it may be best to hire a service like ZenBusiness to research your requirements.

Step 9: File for an EIN and Review Tax Requirements

EIN stands for Employer Identification Number. It’s issued for free by the Internal Revenue Service (IRS) for identification and tax purposes. You’ll need one to do things such as open a business banking account, hire employees, and pay federal taxes.

You can apply for an EIN online to immediately receive your number. Other options include calling the IRS Business and Specialty Tax Line at 800-829-4933 or hiring ZenBusiness to file for an EIN for you.

In addition to federal taxes, Arkansas corporations must file annual corporate franchise reports and pay corporate franchise taxes to the Arkansas Secretary of State. For-profit corporations also need to file a return with the Arkansas Income Tax Division.

Step 10: Submit Your Corporation’s First Report

Your corporation’s first report to submit to the state is a corporate franchise tax report. Corporations with stock must pay 0.3% of the outstanding capital stock, with a minimum of $150, while corporations without stock pay $300. The fee is the same whether you file online or on paper.

The report and your taxes are due on or before May 1 each year. You can complete a corporate franchise tax report online or fill out a paper copy and mail it to: 

Business and Commercial Services Division

P.O. Box 8014

Little Rock, AR 72203

A nonprofit corporation must file an Annual Report for Nonprofit Corporation by Aug. 1 of each year. It can be filed for free online or by mail.