Many business owners in Arkansas opt for a limited liability company (LLC) because it provides restricted liability and legal protections while being simpler and less expensive to run.
But before you can start running your business, it’s wise to get familiar with LLC formation expenses in this state.
To help you fully grasp what costs you must pay to form an Arkansas LLC, we browsed through the Arkansas Secretary of State’s website and obtained additional information on the outlay you can expect.
Here’s everything you need to know.
Quick Summary
- The filing fee for an Arkansas LLC is $45, covering the submission of your Certificate of Formation to the Arkansas Secretary of State.
- The state mandates LLCs in Arkansas to pay a franchise tax of $150 annually.
- Because all LLCs in Arkansas are pass-through entities, they're subject to a 1-6.9% individual tax rate.
How Much Does an LLC Cost in Arkansas?
An LLC in Arkansas costs $195, paid to the Arkansas Secretary of State. This amount covers your Certificate of Formation filing ($45) and payment of the franchise taxes ($150).
However, the LLC cost will be higher based on the extra services you add during the formation process.
Arkansas LLC Filing Fee
Establishing an LLC will cost you $45 if you file your Certificates of Incorporation online or $50 if you file it in person.
The processing period usually takes two to three weeks. For an extra $50, you may expedite it to 7 days, or if you want it sooner, you can pay an additional $100 for a 3-day turnaround.
Your LLC is only operational once the SOS approves your Certificate of Incorporation documents.
Arkansas Registered Agent Service Fee
During the initial LLC process, the Arkansas Secretary of State mandates you employ a registered agent to handle the submission and be the primary point of contact with the SOS.
The good thing is that in Arkansas, you can act as your own Registered Agent or designate your business partner as your registered agent.
While serving as your own Registered Agent costs a $0 filing fee, running the business and acting as a registered agent simultaneously can be overwhelming.
Hence, hiring professional registered agent services in Arkansas is the best choice for LLC owners to stay in compliance with state laws and manage their LLCs efficiently.
In Arkansas, registered agent service costs vary depending on the company you collaborate with.
Some services offer free registered agents, while others charge an Arkansas registered agent fee ranging between $0-$300 per year.
Arkansas Annual Franchise Tax
All LLCs in Arkansas are legally bound to collect a yearly franchise tax. The state charges a yearly $150 filing fee for each submitted LLC Franchise Tax Report.
This is a standard amount for both mail and online submissions.
The deadline for this is May 1st each year after you form your LLC. Note that you will be assessed a $25 penalty filing fee and 10% interest for each year that your tax report is late.
Also, if you manage several LLCs in Arkansas, you must submit an individual annual franchise tax report for each LLC under your ownership.
Other LLC Filing Costs
When forming an LLC in Arkansas, you may incur additional LLC filing costs, including the following:
1. Arkansas LLC Name Reservation
Suppose, as a business owner, you have the name of your LLC but aren't ready to incorporate the firm immediately. Before sending your name reservation to the SOS, make sure your Arkansas LLC name is available.
In that case, you can reserve that name with the Secretary of State.
The name reservation for Arkansas involves submitting an Application for Reservation of Entity Name form for $22.50 if you do it online and $25 for mail filing.
Once approved, your name is reserved for up to 120 days and won't be available for other businesses to claim.
2. Doing Business As (DBA Name)
A DBA, also known as a trade name or a fictitious name, is a pseudonym that your LLC can use to do transactions if you don't wish to use your legal business name.
A DBA name is required by Arkansas banks when you want to open a business bank account for your LLC.
It's also a good option if you use your legal name on the LLC and don't want it to be publicized; the DBA name will be publicized instead.
A DBA name in Arkansas costs $22.50, and you must apply for it with the SOS. You can complete this process on the Arkansas Corporation Online Filing System.
If you prefer doing a mail-in order, the filing will cost you $25.
3. Arkansas Certified Document Copies
A certified copy is a duplicate of the primary document. In Arkansas, each certified copy costs $25.
Certified copies are obtained from the Secretary of State. They help register your Arkansas LLC in different states, source investment funds and provide additional proof of authenticity of your Arkansas LLC.
4. Arkansas Local Business Licenses
A local business license is necessary for several counties and towns in Arkansas. The type of company may impact the fees, which vary by jurisdiction or county.
For instance, the average yearly cost of a business license in Fort Smith is around $100.
In comparison, the same in Fayetteville ranges from $15 to $52, depending on whether the LLC is domestic or foreign.
5. Arkansas Certificate of Existence
In Arkansas, it costs $25 to get a Certificate of Existence which you can get online from the SOS. A Certificate of Existence is also known as a certificate of compliance or good standing.
This document is essential as it proves that your business entity complies with state laws and is current on all tax filings.
As a business owner in Arkansas, you'll need a certified copy of this if you need bank loans or want to register your Arkansas LLC in a foreign jurisdiction.
6. Arkansas Employer Identification Number
An EIN is a unique number assigned to all business entities in Arkansas. You need this 9-digit number to open a business bank account, hire workers or file your taxes with the Internal Revenue Service.
To save money, you can apply for an EIN on the IRS platform [2]. This service is free and takes less than 10 minutes if you have all your information ready.
However, you can choose to delegate this responsibility to a professional at a fee. The service charge for EIN acquisition ranges from $50-100, depending on the company you hire.
7. Arkansas LLC Operating Agreement
An operating agreement is not necessary for your LLC in Arkansas, but it may assist in preventing disagreements and litigation that could jeopardize the viability of your LLC.
An LLC operating agreement is an essential legal document that specifies who owns the company and gives vital details about member responsibilities [2].
Moreover, it develops the financial link between participants and the managers running things daily.
If you manually draft one yourself, generating an operating agreement is cost-free. Alternatively, you can hire an LLC formation service and may spend about $100 for it.
8. Arkansas Taxes
Arkansas LLCs are frequently categorized as "pass-through businesses," which implies that the firm's shareholders only need to submit their individual income tax returns of 1-6.9% with the state rather than the LLC directly.
So, your LLC won't have to make any yearly tax payments besides the franchise/sales tax.
You can, however, arrange to have your LLC taxed similarly to a corporation. In such a scenario, your company would be required to submit its tax return and pay business taxes ranging from 1-6.2%.
9. Arkansas Trademark Application
Consider trademarking your company name if you want to operate nationwide or franchise your small enterprise. This guarantees that no other company in the United States can utilize your brand name.
The price of a trademark varies based on how many goods you are trademarking, how you decide to register, and if you hire an attorney to help you with the application.
On average, it will cost between $225 and $600 to file with the U.S. Patent and Trademark Office for a trademark on your company name.
Arkansas Foreign LLC Registration
Incorporating a foreign LLC in Arkansas costs $270 online or $300 if done via mail.
You must apply as an Arkansas foreign LLC if your LLC was created in another jurisdiction, yet you wish to conduct business there.
You submit an Arkansas Certificate of Registration application to the Arkansas Secretary of State.
FAQs
Is Arkansas a Good State For an LLC?
Yes, Arkansas is a good state for an LLC because of its special incentives to start and operate your business there, in addition to the personal asset protection and income tax benefits.
How Long Does It Take To Form an LLC in Arkansas?
It takes 2-4 days to form an LLC in Arkansas if you do the process online. However, if you make the application via a mail-in order to the office of the secretary of state, it will take up to 14 days to get your LLC, including the mailing time.
Do I Need an Arkansas Business License For My LLC?
No, you do not necessarily need an Arkansas business license for your LLC because Arkansas law doesn't mandate business owners to get one. However, you'll only need a seller's permit to run your business.
Do You Need Professional Help with Your Arkansas LLC?
Starting an LLC in Arkansas is more than just filing your Articles of Incorporation. There are other essential fees and documents you need to file for your application to be approved by the SOS.
If you want a more effortless and cost-effective LLC formation process, consider hiring the best LLC formation services in Arkansas.
These services offer professional LLC formation, punctual compliance filing, and tips on how to run and manage an Arkansas LLC. Our team reviewed each service thoroughly and provided the necessary information on each service.
References:
- https://www.irs.gov/businesses/small-businesses-self-employed/apply-for-an-employer-identification-number-ein-online
- https://casetext.com/statute/arkansas-code-of-1987/
