If you’re ready to learn more about starting a small business in Arkansas, you’re in the right place. A limited liability company (LLC) is a business structure that works well for many startups. It combines the features of corporations and partnerships to offer more flexibility and protection. Check out our easy-to-follow guide below to learn more about forming your LLC in the Natural State.
The 5 steps to form an LLC in Arkansas:
To start an LLC in Arkansas, you’ll need to work with the Business and Commercial Services division of the Arkansas Secretary of State’s office. The first step is to secure a name for your LLC, followed by appointing a registered agent and filing your Articles of Organization. We’ll also go over the importance of having an Operating Agreement and how to apply for an EIN from the Internal Revenue Service (IRS).
Step 1: Name Your Arkansas LLC
One of the first things to think about when starting a new business is how to name your LLC. The name you choose will need to be available for use in Arkansas. It must also follow state naming laws and be distinguishable from any other existing name. This means your LLC can’t use a name identical to or confusingly similar to any other Arkansas business entity, whether foreign or domestic. The name must end with one of the following:
- Limited Liability Company, L.L.C., or LLC
- Limited Company, L.C., or LC
If your limited liability company plans to perform professional services, it must have one of these endings instead:
- Professional Limited Liability Company, P.L.L.C., or PLLC
- Professional Limited Company, P.L.C., or PLC
A PLLC must not contain the name of a person who isn’t a member of the company. An exception to this rule is if a member is deceased. In addition, “Limited” can be abbreviated as “Ltd.” and “Company” as “Co.” when designating an LLC or PLLC.
To see if the name you’ve chosen is available, you’ll need to conduct a name availability search online via the state’s business entity database. You can also call a business services representative at (888) 233-0325 for help over the phone. Additional research to do at this time includes an easy domain name search. A domain name is the address of your company’s website. It can serve as your official email address, too.
After you’ve determined your LLC name is available to use online and in Arkansas, you can think about reserving the rights to the name. ZenBusiness can quickly help you register a domain name and reserve your company name. An Arkansas Application for Reservation of Entity Name can be filed online for $22.50 or through the mail for $25. Once filed, the LLC’s name is reserved for a 120-day period and can be renewed one time for a further 120 days.
You can mail your application to:
Secretary of State
Business and Commercial Services Division
1401 W. Capitol, Suite 250
Little Rock, Arkansas 72201
If you plan to do business under a different name than your official LLC name, you’ll have to file an Application for Fictitious Name with the Arkansas Secretary of State. It costs $22.50 online and $25 by mail. You can’t operate under a fictitious name, known as a DBA or “doing business as” name unless you also file a copy of the returned application with the county clerk of the county where your registered office is located, Pulaski County excluded.
Finally, the last name-related registration you should look into has to do with trademarks. A trademark is a word, phrase, symbol, or a combination of any that depicts your company. It’s used in advertising and marketing to set your goods and/or services apart from others. You can register your trademark in Arkansas and at the federal level with the United States Patent and Trademark Office (USPTO) for added protection. State registration costs $50 and is good for five years. Even if you’re not interested in trademarking your business name, it’s wise to search the state and federal trademark databases to make sure someone else hasn’t already placed a claim on your desired name.
It tends to be easier and quicker to file for a trademark at the state level, but the federal level can offer broader protection, which is good for businesses planning to do business outside of Arkansas.
Step 2: Appoint a Registered Agent in Arkansas
Arkansas requires you to appoint a registered agent when filing your Articles of Organization. A registered agent is an entity or person appointed to receive legal correspondence, such as tax notices and service of process (lawsuits) for your LLC. You can serve as your own agent, but you may find that you lack time to do this and your regular day-to-day job duties.
A registered agent service, such as ZenBusiness, can provide you with privacy, security, and peace of mind. We’ll keep your legal documents organized in an online dashboard that you can access at any time. Our team will also keep your legal business private by receiving things like notices of a lawsuit, so you don’t have to be served papers in front of clients.
Step 3: File Arkansas Articles of Organization
To officially and legally form an LLC in Arkansas, you’ll need to file an Articles of Organization form with the Secretary of State. It’s a short and simple form to complete. The filing fee is $50 by mail and $45 online. You should mail your Articles of Organization to:
Arkansas Secretary of State
1401 W. Capital
Little Rock, AR 72201
You’ll need the following information to complete your form:
- The name of the LLC
- The address of the principal place of business
- The name and address of the registered agent (must be a physical address)
- If a manager or managers will manage the LLC. Most LLCs are managed by the members (owners), but some LLCs appoint a manager or managers, either from inside or outside the LLC membership, to run the company. If you don’t have such a manager, you can leave this item blank.
- Signatures and printed names of those forming the LLC
The state also requires that you file a Limited Liability Company Franchise Tax form with your initial organization documents. There’s no fee to do so. This form allows your LLC to receive its franchise tax reporting form each year. This annual state tax is due on or before May 1 of the year following filing or qualification in Arkansas.
Step 4: Create an Operating Agreement
It’s highly recommended that you create an Operating Agreement for your LLC, even though the state doesn’t require you to file it. This document details how your LLC will operate as agreed upon by all members. It answers questions such as these and much more:
- What did each member initially invest in the company?
- Who will manage the company?
- How will profits and losses be distributed?
- What events may lead to a dissolution of the LLC?
- How does dissolution work?
- What happens if a member decides to leave?
- What are the voting rights of members?
The benefits of a solid Operating Agreement include:
- Additional protection of personal assets
- Fewer disputes among members
- Easier member and/or manager changes
- Clear rights and responsibilities for all owners
Step 5: Apply for an EIN
You’ll need to apply for an Employer Identification Number (EIN) to do things such as hire employees, open a business bank account, and pay taxes. An EIN is a number assigned to businesses by the IRS. It’s mainly a tax ID number to identify your LLC and apply the proper federal taxes.
To apply for an EIN, call the IRS Business and Specialty Tax Line at 800-829-4933 or fill out a free EIN application online. The ZenBusiness team can also help you answer the questions on the EIN form and easily apply for an EIN for you.
How much does it cost to start an LLC in Arkansas?
The Arkansas Secretary of State charges a variety of LLC filing fees. Your startup costs will vary depending on your company’s structure and needs. Discounts are usually offered on filing fees when you file online versus in-person or through the mail.
It will cost you at least $45 to start an LLC in Arkansas, which is the cost of the online filing of your Articles of Organization. Reserving a name, getting an Operating Agreement, registering a domain name, registering a trademark, and hiring a registered agent service will add more to your startup costs.
Another fee to be aware of is the annual franchise tax report. It’s due every year on or before May 1. You can complete the franchise tax form online or print and mail it to:
Business and Commercial Services Division
P.O. Box 8014
Little Rock, Arkansas 72203-8014
What are the benefits of an LLC in Arkansas?
Arkansas is a business-friendly state that offers a variety of competitive incentives for businesses, such as:
- Job creation incentives like tax credits and cash rebates
- Tax exemptions and reductions
- Investment incentives
- Research and development incentives
- Industry-specific incentives
Additional benefits of forming an Arkansas LLC include:
- No double taxation
- Flexible management
- Protection of personal assets
Learn more about the benefits of the LLC business structure.
How is an LLC taxed in Arkansas?
An LLC is taxed in Arkansas as a partnership or corporation. It depends on which tax structure you choose when filing your federal taxes. Most LLCs opt to be taxed as a partnership in order to avoid the double taxation a corporation is subject to. There are multiple business taxes that your Arkansas LLC may need to pay; however, profits are taxed through your personal income taxes; if you decide to have your LLC taxed as a corporation, profits will be taxed through both the business and your personal income taxes.
Every LLC must pay an annual franchise tax to the Arkansas Secretary of State. If you have employees, you’re required to pay unemployment insurance tax and employee withholding tax. If you sell taxable goods or services, a state sales and use tax will be levied against your business. Local city or county authorities may also levy additional sales and use taxes.
Arkansas LLC FAQs
- What is the processing time to form my Arkansas LLC?
If you file your Articles of Organization by mail, the processing time is typically one to two weeks. The online processing time is much faster, usually two to three days.
- Do I need to file my Operating Agreement with the state of Arkansas?
No, you don’t need to file your Operating Agreement with the state. However, it’s recommended that you have an agreement that all members agree on and sign. Keep it safely filed away with your other important business documents to refer to it as needed easily.
- What tax structure should I choose for my Arkansas LLC?
The right tax structure for your Arkansas LLC depends on a variety of factors. It’s best to talk to a tax professional to understand what will work the best for your company.
- Does Arkansas allow a Series LLC?
Yes, Arkansas is one of the few states that allows a Series LLC to be formed. A Series LLC is a new business structure that allows multiple LLCs, known as series, to be formed under one main LLC. Each LLC can have its own members, managers, assets, and interests. One LLC is not liable for another’s debts or losses. Series LLCs were created to help lower the risks of starting many new businesses.rnrnrnThe main LLC, known as the master LLC or Protected Series (PS), has to create a master Operating Agreement. Forming a Series LLC can be very complex when compared to the traditional LLC. The Arkansas Secretary of State strongly suggests anyone wanting to start a Series LLC first to seek legal advice from a licensed attorney. They also encourage contacting a certified public accountant for professional tax advice.
- Which licenses and insurance are required for an LLC in Arkansas?
In Arkansas, certain occupations and businesses need licenses and/or permits to provide services. Requirements vary by city and county, so begin by contacting your local government to see if your LLC needs a license to operate in that area legally. You’ll need to research what federal, state, local, and industry-specific licenses and permits your LLC needs.rnrn rnrnAs for business insurance, the insurance your business needs will depend on your circumstances; for example, if your company owns vehicles, it will need to have commercial vehicle insurance. Unexpected costs will happen in the course of doing business, so it’s smart to explore your options. Having insurance will safeguard yourself, your employees, and your company. Talk to an insurance professional to decide what works best for your LLC.
- How do I dissolve my Arkansas LLC?
To dissolve your Arkansas LLC, you must first pay all business taxes owed and close your business tax accounts. Then, you can file the Articles of Dissolution with the Secretary of State. The fee for filing online is $45. To file on paper, it costs $50.