How Much Does an LLC Cost in Arkansas (Filing Fees)
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.
Through my experience as a Mergers and Acquisitions specialist and collaboration with LLC experts in the state, we browsed through the Secretary of State’s website and obtained additional information to help you fully grasp what costs you must pay to form an Arkansas LLC.
Quick Summary
- An LLC in Arkansas costs $45 to file the Certificate of Organization online and $50 for in person submissions.
- Upon approval of the business, additional expenses you may incur include a registered agent service, licenses and permits, franchise tax, taxes, and other documents.
- According to the Arkansas Secretary of State, about 80% of LLC formations are filed online due to the convenience and lower cost.
- Based on my observation, the most successful LLCs in Arkansas are in the agricultural industry. The state is a major exporter of agricultural related products.
Cost to Start an LLC in Arkansas
Before your business can legally operate in the state, there are expenses associated with forming an LLC that should be shouldered. These include the following:
1. LLC Formation Filing Fee ($45/Online-$50/In Person - Mandatory)
Establishing an LLC will cost you $45 if you file your Certificates of Organization online or $50 if you file it in person.
The state does not offer expedited service, and the LLC processing period In Arkansas usually takes 3 to 4 business days if you filed online and by mail.
According to the Arkansas Secretary of State, around 80% of LLC formations are filed online, reflecting a preference for the convenience and slightly lower cost associated with digital submission.
To streamline the process, I visited the Corporation Division's office and filed the application in person. The documents were processed within 1 business day.
2. Registered Agent Service Fee ($80-$300 Annnually - Optional)
The Secretary of State mandates you employ a registered agent to handle the submission and be the primary point of contact with the SOS. You can act as your own Registered Agent or designate a qualified member of the LLC.
While serving as your own Registered Agent costs a $0 filing fee, I advise new business owners to employ a registered agent service for at least a year to get a general idea of the functions of the position.
According to a survey by the National Business Registration Bureau, approximately 55% of new LLCs opt for professional registered agent services in their first year to ensure compliance and proper handling of legal documents.
Some companies offer the service for free, while others charge a fee ranging between $80-$300 per year.
3. Name Reservation Fee ($22.50/Online-$25/Mail - Optional)
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.
"By reserving the name, you secure exclusive rights to it for 120 days, with the option to extend the reservation for another 120 days through a free renewal request if you're not yet prepared to form your LLC within that timeframe."
- Jon Morgan, CEO, Co-Founder & Editor-in-Chief of Venture Smarter
Expenses Following the Approval of Your LLC
When forming an LLC in Arkansas, you may incur additional LLC filing costs, including the following:
1. Local Business Licenses (Depending on the Line of Business - Mandatory)
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.
2. Annual Franchise Tax ($150 - Mandatory)
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.
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.
3. Taxes (Depending on Income Bracket - Mandatory)
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.
You can, however, arrange to have your Arkansas 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%.
4. Operating Agreement (Optional, but Recommended)
An LLC operating agreement is an essential legal document that specifies who owns the company and gives vital details about member responsibilities and profit distribution.
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 to $200 for it.
For clients who have budget to spare, I advise them to employ a legal professional to draft the document to ensure its legality.
Read our article for more information about LLC operating agreement in Arkansas.
5. Doing Business As ($22.50/Online0$25/Mail - Optional)
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.
It costs $22.50 to register a DBA in the state, and you must apply for it with the SOS. You can complete this process on the Corporation Online Filing System. If you prefer doing a mail-in order, the filing will cost you $25.
6. Certified Document Copies ($25 - Optional, but Recommended)
A certified copy is a duplicate of the primary document. In Arkansas, each certified copy costs $25.
When clients ask the importance of the document, I inform them that certified copies help register your LLC in different states, source investment funds, and provide additional proof of authenticity of your Arkansas LLC.
7. Certificate of Existence ($25 - Optional, but Recommended))
In Arkansas, it costs $25 to get a Certificate of Existence which you can get online from the SOS. This document is essential as it proves that your business entity complies with state laws and is current on all tax filings.
8. Employer Identification Number ($0 - Optional, but Recommended)
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, I opted to apply for an EIN on the IRS platform. This service is free and takes less than 10 minutes if you have all your information ready [1].
FAQs
What is the Penalty for Filing Taxes Late in Arkansas?
The penalty for filing taxes late in Arkansas ranges between 5% to 35% of the amount due for each month of unpaid tax.
How Can I Pay My Arkansas State Taxes Online?
To pay your Arkansas state taxes online, you can use the Arkansas Taxpayer Access Point and select 'Make Income Tax Payment".
References:
- https://www.irs.gov/businesses/small-businesses-self-employed/apply-for-an-employer-identification-number-ein-online
