How to Qualify a Foreign LLC in Arkansas

Getting a foreign LLC qualification in Arkansas is a smart move for global business, and our guide below simplifies the process with clear steps and insights, empowering you to navigate the Arkansas business landscape effortlessly.

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Your business is growing, and you’re planning an expansion to other states. It’s a good problem to have!

But it’s not quite as simple as choosing another location. Because each state has different rules and requirements for business operations, you may need a “foreign qualification” in each state where you plan to do business.

It’s a common misconception that foreign qualification is only for businesses operating outside the U.S. But in this case, “foreign” refers to any business operating in a state that isn’t the state where the LLC was originally formed.

For example, if your LLC is registered in Washington and you are looking to open a second location in Arkansas, you may need to complete a foreign qualification in Arkansas before you can expand there.

Important Note: If you’d like to save time and have the foreign qualification paperwork taken care of for you, many of the best LLC services can handle this task for you.

What happens if I fail to foreign qualify before doing business in Arkansas?

Foreign qualifying is essentially asking permission to do business in the state of Arkansas. And the notion that “it’s easier to ask forgiveness than permission” doesn’t apply here. Failing to foreign qualify before starting a business in Arkansas yields consequences that are far costlier than registering in the first place. If you fail to foreign qualify, your business:

  • Will not be able to maintain a lawsuit or proceeding in any Arkansas court
  • Will owe the state an accumulation of any fees and LLC taxes it would have paid had it registered normally (the Application for Certificate of Registration fee, for example, which is $270, or the annual franchise tax for LLCs, which is $150)
  • Will be liable for a civil penalty of up to $5,000

Let’s add up those penalties. Say you’ve been doing business in Arkansas for three years without foreign qualifying. The maximum civil penalty is $5,000, plus you’d have the annual franchise tax of $150 per year, not to mention your $270 Application for Certificate of Registration fee. It could end up costing you $5,720. It’s simply not worth the risk.

For more information on these penalties, take a look at A.C.A. 4-27-1501.

What is considered “doing business” in Arkansas?

We’ve established why you shouldn’t do business without a foreign qualification. But what exactly does it mean to “do business” in Arkansas? You are considered to be “doing business” in Arkansas and required to foreign qualify if:

  • You have offices, warehouses, stores, or other physical presences in the state. Generally, a physical presence, or nexus, in any state counts as “doing business.”
  • Your LLC has salespersons or representatives operating in the state on its behalf.

Then there are those pesky taxes. As mentioned in the section above, Arkansas requires a “franchise tax.” All LLCs, domestic or foreign, are required to pay this annual tax of $150. Foreign qualifying in Arkansas lets the state know that you’ll be paying a franchise tax each year. It’s important to always stay on top of your LLC’s taxation requirements to avoid any unwelcome surprises.

If you’re unsure whether or not you need to file for a foreign qualification in Arkansas, we suggest seeking legal counsel.

Could I be exempt from foreign qualifying in Arkansas?

The foreign qualification, however, isn’t a hard and fast rule for all LLCs performing any kind of action in Arkansas. Certain actions do not qualify as “doing business” and therefore don’t require a foreign qualification. Some examples are:

  • Maintaining or defending any legal proceeding in Arkansas courts
  • Holding LLC member and/or manager meetings in the state
  • Opening or maintaining a bank account in the state
  • Selling products or services through independent contractors
  • Securing and collecting debts, or enforcing mortgages and security interests
  • Transacting business in interstate commerce
  • Completing a single transaction, in no more than 30 days, that falls outside your typical business dealings
  • Owning real or personal property in Arkansas

For more detail on these exemptions, refer back to A.C.A. 4-27-1501. If you find your LLC’s only actions in Arkansas on this list, it’s likely that you won’t need to foreign qualify. But when in doubt, it’s best to seek legal counsel instead of risking the steep penalties.

How to Foreign Qualify Your LLC in Arkansas

Foreign qualification in Arkansas is simple if you know where to find and send your forms. If you or your legal counsel has decided to foreign qualify your LLC in Arkansas, go to the S.O.S. Business and Commercial Services “Forms/Fees” webpage. The form you need is FL-01, the “Application for Certificate of Registration of Foreign LLC,” which you can file online or by mail. For either option, you’ll need to gather the following information:

  • Your LLC name (or your LLC’s fictitious name, used only if your name is unavailable in Arkansas)
  • The state and date of your LLC’s formation
  • The name and address of your Arkansas registered agent
  • Your LLC’s physical address
  • Certificate of Good Standing from the state in which your LLC was formed, issued not more than 30 days prior to your application. Without this, your application will not be processed.

If you have all this, you’re ready to foreign qualify! The most efficient way is to file online.

But if you’re so inclined, you’re also welcome to download the form, fill it out, and mail it to:

Office of the Secretary of State

1401 W. Capitol, Suite 250

Little Rock, AR 72201

Or, if you live nearby, feel free to deliver your document and payment in person to the same address.

Of course, this application isn’t free. You’ll need to pay a $300 fee if filing by mail or in person, and a $270 fee to file online. Pay with a credit card online and with a personal check by mail or in person.

After your form is in and your fee is paid, sit back, take a deep breath, and pat yourself on the back. Your LLC is foreign qualified and you’re embarking on another chapter in the life of your business.

To reach Arkansas Secretary of State call; 501-682-3409

Name Requirements to Remember

It’s important to remember Arkansas’ LLC naming requirements, as they still apply to foreign companies. When foreign qualifying, your business name must:

  • Use a signifier that identifies it as a limited liability company, like L.L.C. or LLC
  • Be available and distinguishable from all other Arkansas business entities. If your existing name is already taken in Arkansas, you’ll need to register under a “fictitious name.” Check your name availability by searching for it in the Arkansas business entity database.
  • Remember that punctuation, capitalization, and entity type signifiers (LLC, Inc., etc.) do not make a name distinguishable. For example, New Company LLC is considered the same as New Company Inc., and new company LLC is the same as NEW COMPANY LLC.

You can also reserve your Arkansas business name if you’re not quite ready to foreign qualify your LLC.

Frequently Asked Questions

  • We think you should foreign qualify your LLC before you begin conducting business in a new state. If you don’t, your business could be subject to a broad range of fines and penalties for operating an LLC in a state where you don’t have permission to do so.

  • You’ll typically need to wait roughly two business days for Arkansas to process your foreign qualification documents. The state also typically offers to process walk-in orders as you wait, but at the time of this writing, these were backed up to the point where they also had a two-day turnaround.

  • Chances are, you’ll require at least one license or permit to operate your LLC in compliance with Arkansas state law. Unfortunately, the state provides no official online resources to provide more info about business licensing. However, we did find some helpful info in the Arkansas Small Business and Technology Development Center’s “License, Permit, & Tax Requirements for Arkansas Small Businesses” document.

  • Yes. Whether you operate a domestic or foreign LLC in this state, you are required to file an Arkansas Annual LLC Franchise Tax Report.

  • The overall costs of operating an Arkansas LLC can vary considerably based on the specifics of your business. However, we created a helpful guide to help you identify and plan for every expense your LLC will face in this state.

  • The answer to this question lies in your personal preferences, but we can give some general pointers. An attorney will cost the most by a mile, but also provides expertise you won’t find with the other options. The DIY route is free of charge but can require quite a bit of legwork and provides no peace of mind that the process is being completed correctly.

    Using an LLC service means your business will be foreign qualified by professionals who know what they’re doing, while also costing significantly less than a lawyer. This “best of both worlds” attribute is what makes LLC services our preferred option.

  • Using an online LLC service removes much of the hassle from the foreign qualification process. With these services, all you need to do is provide them with the name, location, and industry your business operates in, along with some info about yourself and your Arkansas registered agent.

    The service then registers your Application for Certificate of Registration with the state to qualify your LLC to do business in Arkansas.

Disclaimer: The content on this page is for information purposes only and does not constitute legal, tax, or accounting advice. If you have specific questions about any of these topics, seek the counsel of a licensed professional.

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Written by Team ZenBusiness

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