How to Start an LLC in Arkansas? | In 6 Easy Steps
Forming a limited liability company (LLC) can be confusing, but it doesn't have to be. You can apply for your LLC in Arkansas with a clear roadmap in six easy steps. Furthermore, just like any other state, Arkansas LLC has unique advantages.
With my expertise in Arkansas business regulations and extensive research, I’ve ensured accurate and up-to-date information at your fingertips. This guide will help you gain the confidence to navigate the LLC formation process smoothly.
In this blog post, we’ll go over the basics of what you need to know about getting a limited liability company in Arkansas so that you can get started with your new business.
Quick Summary
- To start an LLC in Arkansas you must select a unique name, appoint a registered agent, and file the Articles of Organization
- You can further create an operating agreement, and obtain an Employer Identification Number (EIN)
- An Arkansas LLC offers benefits such as limited liability protection, flexible management structure, and pass-through taxation
Arkansas LLC’s Formation Steps
Before the state of Arkansas officially acknowledges your new LLC, it must go through several stages.
You must ensure that everything is done correctly and by Arkansas law, or you will have to start from scratch. The formation documents of LLCs are crucial, so double-check everything.
1. Choose an LLC Name
Picking a suitable name for your Arkansas LLC involves a few steps.
Here are the simple steps you need to consider:
1. Conduct thorough research to ensure your chosen name is unique and not already in use by another Arkansas LLC. Check the Arkansas Secretary of State's website or contact them directly for availability [1].
2. Ensure your LLC name meets the Arkansas state’s legal requirements. It must include the term "Limited Liability Company" or an abbreviation like "LLC" or "L.L.C."
3. Next, you’ll consider selecting a name that accurately reflects your business and that customers can easily remember.
4. Your branding strategy should also matter. Choose a name that will align with your company's mission, vision, and values.
5. Conduct a trademark search to ensure your name doesn't infringe on existing trademarks. You can use the United States Patent and Trademark Office's online database or seek legal advice if necessary [2].
6. You also have the option to reserve your LLC name if you are not ready to form your LLC immediately. You can do this through the Arkansas Secretary of State by filing an application and paying the required fee.
7. Before finalizing your LLC name, thoroughly check to ensure it's available for registration. Double-check with the Arkansas Secretary of State's office to confirm its availability.
See our article for more information on how to change an LLC name in Arkansas.
The LLC name you choose shouldn't contain any other designation, such as:
- A geographic location not associated with your business
- Words like Bank, Government agency, Insurance Company, or Corporation unless it is incorporated under law
- Names of public officials (such as a judge)
- Fictitious names that may mislead others about your LLC's nature
You can reserve an LLC name for up to 120 days without starting business operations or incurring fees. If you file online, the mail filing fee is $25 or $22.
To learn about additional costs associated with forming an LLC in Arkansas, consult our guide.
2. Appoint a Registered Agent
An Arkansas registered agent service is a person or business designated to receive legal papers and tax notices on behalf of your LLC. They will then forward these documents to the appropriate individuals within your company.
Arkansas is an "at-will" state so you can change LLC registered agents with the Secretary of State.
A registered agent must be a resident of the state. If you hire an outside business to serve as your registered agent, there are specific statutory requirements they must meet for them to qualify.
In addition to being available at their physical address during normal business hours, Arkansas law requires that a registered agent service has regular access via fax or e-mail before the Secretary of State's office requires an on-site visit.
The Arkansas Secretary of State has a list of companies approved as registered agents and other businesses offering such services.
It is best to choose a registered agent from this list so that there is no question about whether or not their service will meet statutory requirements.
3. File Articles of Organization
Once you have decided on the registered agent service, you’ll need to proceed with the formalities required by law. One crucial step in this process is filing the Articles of Organization.
This legal document serves as the foundation of your LLC and contains vital information about your business.
Arkansas Articles of Organization, also known as Certificate of Organization (CO) in Arkansas, are filed with the Secretary of State.
The Articles of Organization must include the following information:
- LLC's name, street address, and registered agent's physical address
- Name and full business or residential addresses of each organizer/member that is not a corporation or limited partnership
- Purpose of the LLC (must be specific enough to show intent)
- Signature by an organizer/member who is not a corporation or limited partner
- Management structure
Once you have gathered the necessary information, you can file the Articles of Organization with the appropriate state agency, typically the Secretary of State's office or a similar governing body.
Review the filing fee and submission requirements to ensure accurate and timely submission. The Arkansas filing fee is $50.
Once the LLC articles are filed with the state, they become public records. Another step requires submitting articles to local county registrar offices so your company becomes publicly searchable on their websites.
This step also solidifies your business's legal standing and lays the groundwork for future operations, including obtaining necessary licenses and permits, opening an LLC business bank account, and entering into contracts.
4. Make an Arkansas LLC Operating Agreement
Crafting an Arkansas LLC operating agreement is vital to establishing a solid foundation for your business.
An operating agreement serves as a crucial document that outlines the following:
- Internal operations
- Management structure
- Decision-making processes of your LLC.
This agreement ensures a clear understanding between the members, provides legal protection, and minimizes potential disputes.
While no legal requirement mandates an operating agreement in Arkansas, having one in place is highly recommended. The LLC operating agreement helps define the rules and procedures that govern your company's internal affairs.
You should complete it before filing for LLC status with the state government to avoid confusion about how the company will operate.
Operating agreements also require keeping financial records and accounting logs. This makes it easier for individuals who leave the company (such as when they retire) to hand off their responsibilities properly without causing issues with tax returns and bookkeeping.
5. Obtain Business Licenses
If you want to open a professional LLC in Arkansas, you must ensure you get all the required licenses.
Business licenses and permits differ depending on where you live, so it's important to find out what your city or county needs. You'll also want to know any state and federal requirements that may apply.
If you don't know where to start, the Arkansas Secretary of State Office maintains a Professional Licensing website that can help answer some questions and point you in the right direction about what business license you need.
Also, note that licenses are not transferable from one location to another; whatever license applies for this LLC is only valid at its registered address (not necessarily where it does most of its work).
6. Obtain an EIN
An LLC in Arkansas will require you to obtain an Employer Identification Number (EIN) to serve various purposes, such as:
- Opening a business bank account
- Filing taxes
- Hiring employees
- Conducting certain financial transactions
You can apply for an Employer Identification Number through the Internal Revenue Service (IRS) website online filing system free of charge.
Once you are on the EIN application page, you must provide certain information about your Arkansas LLC, including:
- Its legal name
- Registered address
- Responsible party
- Type of business you operate
After submitting the online application, the IRS will immediately provide you with an EIN for your Arkansas LLC if all the information is in order. You can receive the EIN confirmation letter electronically or by mail, depending on your preference.
What Is an Arkansas LLC?
An Arkansas LLC refers to a limited liability company formed in Arkansas. It provides a legal structure that combines limited liability protection's benefits with pass-through taxation's flexibility.
An LLC in Arkansas may offer business owners protection for their personal assets and potential tax advantages.
One person or multiple persons may own an Arkansas LLC. The state does not require any minimum number of owners for an LLC.
Arkansas LLC Benefits
An Arkansas LLC has many benefits, including:
- Limited liability protection: The owners, known as members, enjoy limited personal liability for the company's debts and obligations. Their personal assets are generally protected from business liabilities.
- Flexible management structure: An Arkansas LLC allows for a flexible management structure, allowing members to choose between member-managed or manager-managed LLC options based on their preferences and expertise.
- Pass-through taxation: An Arkansas LLC is typically not subject to separate corporate taxes. Instead, profits and losses "pass-through" to the members, who report them on their personal tax returns. This helps avoid double taxation.
- Easy formation and maintenance: Forming an Arkansas LLC is relatively straightforward and requires minimal paperwork compared to other business entities. Additionally, LLCs have fewer ongoing compliance requirements, reducing administrative burdens.
- Business credibility and professionalism: Operating as an LLC can enhance the credibility and professionalism of a business, as it indicates a formal legal structure and limited liability protection. This can be particularly advantageous when dealing with customers, vendors, and partners.
- Transferability of ownership: An Arkansas LLC provides flexibility in transferring ownership interests. Members can easily sell, assign, or gift their ownership stakes, allowing for smooth transitions or changes in ownership.
- Business continuity: An Arkansas LLC has perpetual existence, meaning it can continue operations even if a member dies. This ensures business continuity and stability for the company.
Arkansas is an excellent option for starting an LLC because it has one of the country's most flexible and comprehensive set-up procedures, especially compared to states with narrower personal protection for LLC owners who form a new firm under their own name (a sole proprietorship).
Arkansas LLC Taxes
Taxes are an important aspect of business finances. LLCs are under the obligation to pay taxes in the same way as other business entities in Arkansas.
Income from your company will appear on your individual tax return -- but only if you've elected LLC pass-through taxation with the IRS (which has its own set of rules).
A professional limited liability company in Arkansas can be taxed as a corporation (S or C corporation) or a partnership. The default tax treatment for all LLCs is as a pass-through withholding entity.
This means the LLC does not pay taxes; all profits and losses are passed to their owners (members), who report them on their personal income tax returns using Schedule K-1 Form or Form 8832 [3].
If your Arkansas LLC sells goods, it is responsible for paying sales tax to the state.
However, if your business is involved in buying and selling goods or providing services, they are not required to pay taxes on their purchase invoices.
Arkansas LLCs must also file an annual franchise tax report with the Arkansas Department of Finance and Administration, requiring them to pay a filing fee.
The annual franchise tax is $150 for Arkansas LLCs, regardless of their business assets. Annual franchise tax reports are payable online or by mail.
They can issue fines or penalties to any company that fails to comply with state law and doesn't pay the tax.
If your Arkansas LLC has employees within the state, you'll have to withhold federal and state income tax from their wages and pay a matching amount of Social Security and Medicare taxes.
You can read more about this topic in our article on Arkansas LLC taxes.
Related Articles:
- How to Dissolve an LLC in Arkansas
- How to Look Up an LLC in Arkansas
- Top LLC Formation Services in Arkansas
- How Long Does It Take To Form an LLC in Arkansas
FAQs
Does Arkansas Allow Professional LLCs?
Arkansas allows professional LLC formation for licensed professionals such as doctors, attorneys, and accountants.
PLLCs provide liability protection for members while allowing them to practice their respective professions. Individuals seeking to establish a professional practice in Arkansas can form a PLLC to meet the state's legal requirements.
Does Arkansas Recognize Single-Member LLC?
Arkansas recognizes Single-Member LLCs. Single-member LLCs provide limited liability protection for the owner and are recognized as legitimate business entities in Arkansas.
To register a single-member LLC, you must file the Arkansas LLC formation application with the Arkansas Secretary of State and create an operating Agreement even though you are the only LLC member.
How Do I Pay Arkansas Franchise Tax?
To pay Arkansas franchise tax, you can either fill in the franchise tax form online or file it by mail. Both the online form and the mail-in option can be accessed on the Arkansas Department of Finance and Administration website.
How Do You Find Out Who Owns a Limited Liability Company in Arkansas?
To find out who owns an LLC in Arkansas, search the Arkansas Secretary of State's public records.
The Secretary of State's online database LLC displays all ownership information available to the public, including owners' names. You can also contact their office directly.
Establishing an LLC in Arkansas
Setting up your LLC in Arkansas is a straightforward process.
However, suppose you are new to the business world, and this seems overwhelming. In that case, it may be best for you to seek legal advice from an attorney or a company like ZenBusiness, with vast experience forming companies.
It becomes handy, especially with the operating agreement and other vital documents.
References:
- https://www.sos.arkansas.gov
/uploads/bcs/BCS_Name_Availability_Guidelines.7__.28__.21__.final__%281%29_.pdf - https://www.uspto.gov/
- https://www.irs.gov/businesses/small-businesses-self-employed/llc-filing-as-a-corporation-or-partnership
