If you’re a licensed professional thinking about starting a practice in Arkansas, an Arkansas professional corporation may work for you. Once incorporated, your company will have advantages such as shielding from liability. Before you incorporate, there are many factors to consider. You can read Title 4 of the Arkansas Code Annotated to find out whether you can incorporate as a professional corporation (PC) in Arkansas. Read below to find out what a professional corporation is in Arkansas.
Steps to Form an Arkansas PC
- Choosing a name for your Arkansas PC
- Select an Arkansas registered agent
- Complete your Arkansas Articles of Incorporation
- Establish a corporate record in Arkansas
- Designate an Arkansas PC board of directors
- Create Arkansas corporate bylaws
- Hold the first board meeting
- Handle Arkansas tax obligations
- Obtain all Arkansas business licenses and permits
- Acquire insurance for your Arkansas PC
- Open a business bank account
Is an Arkansas PC structure right for you?
All businesses should consider a formal entity structure, but there are some that would do better as a corporation than other types. See the ZenBusiness entity guide to see what’s right for you.
To be eligible to form an Arkansas PC, your business must provide a state-licensed service:
- Doctor or dentist
If your business isn’t listed above, you may still be eligible. Arkansas requires that the majority of your business conducts one of these professional services and that the owners provide those services.
How company ownership is divided
Professional corporations in Arkansas have shareholders who each own a certain percentage of the company. There can be one, two, or many shareholders; you and your group as the owners can decide the percentage of ownership.
Step 1: Choosing a name for your Arkansas PC
Arkansas has certain regulations for naming corporations. The name must include either “Professional Corporation” or “PC,” and the name can include your business’s profession, such as “Attorney at Law.” If you want to include a person’s name, that person has to be part of the company.
When you’ve decided on a name for your corporation, you can check for name availability in Arkansas through the Secretary of State’s website. If no other business in Arkansas has taken that name, you have the option to reserve it. You can do so through the Secretary of State website. Options to reserve are online and via mailing an Application for Reservation of Entity Name. The address to mail it to and payment methods are on the form. Check the Secretary of State website for the current fee amounts for mailing versus online filing.
You can also save yourself the headache of paperwork and use the ZenBusiness name reservation service.
Step 2: Select an Arkansas registered agent
A registered agent is a person or entity that will accept documents from the Secretary of State and receive legal notices, such as service of process for a lawsuit. Your registered agent must be a resident of Arkansas, have a physical address, and be available during regular business hours. Since that can be cumbersome, many businesses opt to use a registered agent service. Try ours, and we’ll help connect you with a registered agent to fit your needs, accept documents on behalf of your corporation, and upload them to your personal dashboard promptly.
Step 3: Complete your Arkansas Articles of Incorporation
The Articles of Incorporation is a document that’s filed with the state to establish your business as a corporation once approved. In Arkansas, an incorporator needs to be over the age of 21 but doesn’t need to be an officer or shareholder of the corporation.
You can file your articles online with the Secretary of State or download a form from the Secretary of State website and mail it in along with the payment. There’s a filing fee for both methods.
You’ll need to include:
- Name of corporation
- Number of shares the corporation has the authority to issue and their par value
- Name and address of the registered agent
- Name and address of each incorporator
- Name and title of at least one corporate officer
- The nature/purpose of the corporation
Step 4: Establish a corporate record in Arkansas
When creating your own company, you’ll have more documents than you know what to do with. Creating and maintaining a corporate record is key to keeping everything in order and easily accessible. Either a records binder or digital storage like the cloud will do. You want to make sure your records are safe and easy to access in case they need to be quickly referenced.
Step 5: Designate an Arkansas PC board of directors
Your board of directors manages how your corporation will be run, including deciding your corporation’s officers and share structure. The board will hold meetings that may be annual or semi-annual and must be composed of three unrelated directors (unless there are fewer than three people in the corporation).
Step 6: Create Arkansas corporate bylaws
Corporate bylaws establish all the important details of a corporation, such as its official name, location, the structure of shareholders, when meetings are held, and the general requirements of the corporation.
Step 7: Hold the first board meeting
When the general details of a company are set up, the first board meeting is held so the company participants can determine the details of how the company will be run. They’ll discuss the bylaws and financial considerations, such as your designated bank and tax structure.
Step 8: Handle Arkansas tax obligations
For tax purposes, an employer identification number (EIN), or federal tax ID number, needs to be established whenever a company is incorporated in Arkansas. You can get an EIN through the IRS by filing a form online or by mail. You also have the option of using our EIN service to save yourself time.
The state of Arkansas also requires a sales tax identification number, which you can get through the Arkansas Secretary of State. Businesses in Arkansas pay several types of tax, including corporate income tax and sales tax, among others. You may also have to register with your county and city to pay local taxes.
Step 9: Obtain all Arkansas business licenses and permits
Each corporation is responsible for obtaining any licenses or permits required by the state of Arkansas and the federal government. You’ll need to check with your county and city as well to find out what licensing is required for your specific locale. You may also need to check with officials of your practice type for any licensing requirements they may have. To make sure you have every license and permit you need, use the ZenBusiness business license report service.
Step 10: Acquire insurance for your Arkansas PC
You’ll need to establish a few different types of insurance, depending on your business. Arkansas law requires a general business insurance policy as well as professional malpractice insurance. And if you have three or more employees, you’ll need workers’ compensation insurance.
Step 11: Open a business bank account
You’ll need to open a bank account specifically for your business. It’s essential for tracking expenses and income. In a corporation, the business’s finances have to be kept separate from any personal accounts to have corporate liability protection. You’ll likely need your EIN and Articles of Incorporation on hand when you open the account. To be safe, call ahead to find out exactly what the bank wants.
Ready to start your business?
At ZenBusiness, we’re proud to support small businesses through a variety of different tools and services. Whether you need a registered agent service, want to reserve a business name, or are looking to register a domain name for your business’s website, our goal is to help you stay on the road to success. Check out our services and contact us today to see how we can help you grow your company.
Arkansas Professional Corporation FAQs
What are the filing fees for an Arkansas professional corporation?
Check the Secretary of State website for the current fee schedule.
Do I need a lawyer to form an Arkansas professional corporation?
No. You don’t need to have a lawyer to go through these steps of incorporation, but you do need to know the details regarding incorporation.
Does Arkansas have a professional limited liability company (PLLC) entity?
Yes. A company that’s incorporated as a PLLC has certain tax advantages and requires less paperwork.
Can professionals from different fields form an Arkansas professional corporation together?
It depends on the structure of your corporation and its bylaws.
Will I be taxed as an S corporation or C corporation in Arkansas?
After you form your corporation, you can decide if you want to be taxed as a C corporation or an S corporation. The default structure is C corporation. However, you can apply for S corporation status. A qualified accountant can help you decide what’s best for your business.